The Heart of The Messy Middle | Making a Millionaire

22:22Or it's going to be met with like, well, that's not a need. This is a big point of frustration. And please like give us some advice on this because this conversation comes up maybe once every six months. And he has different opinions of what a need versus a want is. And he is very much like Maslow's hierarchy of needs. Like our needs are food, water, shelter. And like, that is what we need. And I'm like, okay, but also we need things to take care of us, like towels to dry off from the shower. And he's like, well, we don't need that because they still work or they still function. So that's a frustrating, I think, argument that we get in frequently.

22:58It's like, okay, just because you don't consider it a need doesn't mean that we don't actually need it.

23:03Brian Preston:My wife and I, we've been married for a long time now. And that was our struggle early on. The things that were valuable to her were not valuable to me. And the things that I put a lot of value on, she didn't put value on it, but she didn't think about it the same way that I did. And I had a lot of learning to do that just because I thought, you know, just because I was perfectly fine eating this and sleeping on this and wearing this did not mean that it was appropriate for her to be okay with that. And so I had to, there was some tension there that I had to like figure out. But before we get into that, I want to hear your goals.

23:35Brian Preston:So we kind of heard, I really got two from you. Yeah. Experiences and then giving, serving others, then time with friends. And that's what I kind of heard. There was kind of a third is that I think it's just the unspoken one is that to feel heard in the budget of the needs versus wants. I'll talk about the sinking funds on the budget category because that really ties into it. In December, January, we had some of those productive money conversations we've ever had in our marriage where we said, okay, what are our big goals for the next five years? The first one is that we want to be able to either move or build a house in roughly five years.

24:21That's about the time our oldest is going to be that middle school, junior high age. And we really want to have a home that our kids and our kids' friends want to be at. That's something that's important to us. We both experience that as kids. And we just, like, we have a good home right now. It's three bed, two bath, 2 ,000 square feet. We've got three kids. It's like, it's getting full. And so we'd love to have a home that, yeah, accommodates a lifestyle that I think we both would really value as our kids get older.

24:48Brian Preston:Can we assign a number to that? Yeah, we put$100 ,000 for it. But I'm sorry, the price of the home. The price of the home. So you said right now, three, two, where you're at right now. It's getting a little small. What would be the price of a home in your area that would be comfortable? I would say somewhere between$550 and$650. Okay, great. Yeah, we're not looking for anything ginormous, but just bigger gathering spaces so that people can hang out. So that was one of our big goals. And we kind of put down some like, hey, how much cash do we think we need, want to save to move towards those things?

25:22And we put$100 ,000 for that in the next five years.

25:25Brian Preston:Is that what the sinking fund is? That's starting to go towards that. And then there's two others that are more near term. That one's like, hey, five years from now, we want to have that ready to go. We want to be moved or build a house. The most near term one is upgrade her car. Um, and then the, uh, second one in September of 2027, we want to take a trip to Italy for our 10 year anniversary. That's September of 27, 27. Our anniversary is in June, but he does camps in the summer. So we're going to do it in the fall. Can you give me a price tag for like, what will an Italian vacation is? And is this just the two of you or is this whole family?

26:02Just, uh, I want to have 10 grand for it.

26:04Brian Preston:See, I love that. I love that you guys have already talked about this and this is like a thing that you kind have put down to work towards. Now, you said upgrade the car. Were you thinking like an Odyssey or like a CN? No, she said a Nissan. I was making sure that the minivan wasn't back on there. So like a Nissan Armada, something in that realm. We would sell her Highlander and put that towards it. So I think we had put down savings somewhere between 20 and 25. I've got timeline for five years to the new home. Italy is going to be in September of 27th. What's the timeline on the new car? sort of like in sort of, I would love it to be soon, but I don't, I mean, this is what makes personal finance very personal is that it was so interesting as I see the path forward, but I'm trying to figure out if y 'all have the right structure to do what needs to be done.

26:54And let me, let me explain what I mean by this is that you've heard us talk about putting your 3d glasses. You've got some big life decisions is because you're trying to figure out if you're going to go full-time even with your side gig turning it into a full-time gig. And I can tell, I mean, what's interesting is that, Luke, as you're sharing with us, I can see the passion and the excitement about what you do, that there's a chance that this thing could become your main job. But that's why you have to do the 3D glasses plan. And just to bring you up to speed, what this means is you actually write out your life plan or business plan with your dream.

27:32Oh my gosh, this thing hit everything I thought it would do. It's hit financially, fulfillment. We bought the Armada. We've got, you know, that's the dream. You have the down to earth plan of what really will happen because it's not going to be the dream plan. It's probably going to have some hiccups and some other troubles. I think of the doo-doo plan is that you go full time with this, but it goes horribly wrong. So that's, and it's going to take, I'll just go and tell you, because I've gone on this journey of entrepreneurship, it's going to take three years to probably get this thing to where it's back to what you were making beforehand.

28:07So you have to give it enough nutrition through cash and savings to get it through that season. But what's in conflict with this goal will be the house upgrade. Because I mean, when I looked at y 'all's notes, I immediately saw we have a house that's worth close to$400, and y 'all's mortgage rate is what? 3.25. 3.25. Or 3.5, I guess. And I know it's too small of a house for what you need, but man, oh, man, the debt. I mean, because y 'all's monthly payments are like$1 ,500 a month. That actually went down because I got some different homeowners insurance. So that is a blessing while you're starting the entrepreneurship because your footprint on drawdown is so small.

28:45The paid-for cars, That is a blessing while you're trying to nurture this business as much as possible. But it's completely working against all the things that was on the other side, you know, the all said was happiness. So that's why it's such a conflict in the fact that you almost have to, that's why you have to be a united front is that, oh my gosh, we're going to go all hands on deck for it. Because y 'all don't have debt issues, but you've got life battles that are just as bad as having debt issues is that we've got to kind of come up with a three to five year plan that we're going to be in this thing in the weeds with it together and united.

29:22But if it hits all that, that looking at my neighbors and seeing what they have and I don't have, if it hit, it would be that because it'd be the engine, the economic engine. Because right now, the way you make your money, you know, your job, it's going to have limits. But if you could make this thing passion work, you've now upgraded the engine. Instead of having a four-cylinder, maybe now you have a V8. And that's the thing I always tell people, because realize I was a 16-year-old kid that had the 12-inch woofers and the rims and the louvers. All those accoutrements of life that you're putting on of the nice car and that stuff, that is the hubcaps and that's the accessories of life.

30:06but we got to get the engine right first. And y 'all are so young, but it doesn't, what makes it hard is the kids and all the other stuff. But y 'all, that's why the plan has to be united so that y 'all don't, it doesn't break down and you feel your voice is heard too. Because we live this life, by the way, you're not doing anything wrong. I'll pick on Luke is that we've got to have the plan so that y 'all feel united in this thing. And then that way you don't look at your neighbors. Because by the way, I'll go ahead and insulate you. Most of your neighbors either, what you never know is, you never know who comes from some money who's getting support family-wise, and you never know who's just faking it until they make it with so much debt.

30:47I mean, because that's the thing. All through my life, I've noticed as I'm going through in the same season you're in, we tried to set up parameters of pay ourself first and do these things. You'll get to be in your mid-40s before you really get to see between the seams of who actually has it and who doesn't have it, because you can fake a lot with that. And you'll quickly realize, and that's why I would challenge you to kind of look in your inner self to figure out what is happiness and what is peace because, and then take away, just don't let the noise bother you as long as the plan is letting y 'all feel like y 'all are working through something.

31:25Brian Preston:When he lays out sort of the trade-off and the risk and reward of like going out on your own, doing this camp thing full-time versus not, But give us, how do you hear that? Like, what have you guys been thinking in terms of, like, turning this side gig into the main gig? It's the reason I, like, kind of worked myself to the bone for a couple years. Like, I'll do whatever I have to do to make sure my family's taken care of first. So, like, if I've got to stay in the W-2 for five more years, ten more years, like, okay, I'll do it. It wouldn't be my preference. I'd love, we all want to do work that we love with our time.

32:03and work that turns the economic flywheel. I would love in the next two to three years, which I think is a fairly realistic plan, to be able to take the leap and do the camps full-time.

32:18Brian Preston:Are you saying that you think that in the next two to three years, the camps would be able to replace? I think you'd be able to replace almost all, if not all of it. What it didn't replace, I can make up the rest of it during the school year when I have a lot more time margin in my schedule. And is this a long-term? This isn't something that would go away in five years or six years. This is like, I'm doing this for the next 30 years. Okay, okay. Like, I just, I love it. Is taking the leap, as it relates to the side hustle, right? So you got your W-2 income and you have your side hustle income.

32:48Brian Preston:Are you saying like in two to three years, you think you will have built up the side thing so that when you take the quote unquote leap, you're not having to take a big pay cut? Correct, yeah. Okay, so it's likely that you could just maintain standard of living, even as you make this transition. It's not like you're, you will know in two to three years if it has reached the point to where it could be the main job. It's not like there's a risk where you're, all right, I'm gonna go to my own and hope it works. You will have kind of already built it to that point, right? Yes, exactly. And I would say a couple of things there in addition.

33:17One, as our kids are getting older, we think we're done having kids. She's wanting to work more as well. And so I think the income she's generating is going to continue to increase more than likely. I do work part-time right now. I have a part-time marketing job and then I have a spray tan business that I run out of our house. And then, so I'm doing, I'm doing some like little side, side gig things. And I do enjoy working. With three littles too. Kudos to you. I like being busy. I do it to myself. She works hard. You know, you know that seven life, you got to fill your time, you know? And so like right now, even in just like our monthly budgeting, the owner compensation from the business that's operating the sports camps, like we've never lived off of any of that.

33:59That's gone towards those future goals essentially. And so like after this summer, I'm going to have a really good idea of like, okay, what was I able to compensate myself from that? And then restarting the cycle again for the next year and projecting. I project like very down-to-earth growth, and I'm very conservative with my projections. Yeah, but it sounds like this camp like almost is going to double in a year based upon how well things have gone. Yeah, yeah. So, I mean, that's pretty normal. I would tell you to plan conservatively, but you will be really surprised if things hit. The exponential opportunities can be much bigger.

34:39But go conservative. Yes. I did want to put Anne on the spot because you gave us some goals with the car. I know there's a house sitting out there. If Luke did a better job of saying, look, the next three years are going to be tough, but we're going to prioritize, is Italy? Because I think it is. I think I would put that at the top. I'd put that because that's a life experience. That'll be something that y 'all could go ahead. And if you, I don't know if you, in my book, in 2002, right before we had our first child, my wife and I went to Italy and we did it so cheap though. So now we didn't, we rode, we rode in the back of the plane, you know, and we, but, and we, you know, didn't do all the guided tours that we wanted to, but it still was incredible because you get all the experience, you get all the visuals, you get all the stuff.

35:27So you don't have to, 10 ,000 didn't sound crazy to me because I mean, I fast forward and take through inflation, what we spent. That's not that bad. She studied abroad there in college. And so we were, yeah, I really want to go back. I said 10 and she was like, that seems high. And I was like, I'm not going to go unless I know I have the money to make it a really awesome experience for it. Like that sounds not enjoyable to me. If you and Luke came up with a plan that he was going to really go for it to try to create a better engine, an economic engine for the family. But you'll prioritize this 10-year goal.

36:00Could you find yourself deferring on the car and the house stuff just a little bit longer if you knew that there was a time certain that this thing was coming to a maturity? What do you mean? I'll tell you. Maybe it's easier if I just do an experience here. I told my wife that if she could go on this journey, that we were going to live really tight through our 30s. But we would go prioritize some key things that she had. But in the 40s, if we did this today, did some deferred gratification, in our 40s, we'd go wide open on the life stuff. And it worked out. I mean, because now I had to officially, like I was on a trip this weekend with some high school friends.

36:38And they're like, are you still a tightwad? You know, because I was the kid with the coupons and everything. And I was like, no, they came and ripped the type one card out of my back pocket because of how lifestyle has expanded. And that's what, but you don't have to, it's not faking it. It's actually you're now living your best life because of some of the fruits from the early. And that's why I just want to make sure, because what I worry is you guys have some cracks in the foundation. If we don't nurture this now, it could get ugly later. but and I want to make sure you feel heard but also on board with with the game plan I think I just feel a little pigeonholed sometimes about we're just gonna have to keep saving forever like there's just never an end date of like now we can spend what we've saved you know it just feels very like it's always serious and it's never fun and those things really really like wear down on me you know because I'm I like to have fun and I like to have good experiences and so when it's met with that, I think I'm kind of just like, I feel a little exhausted.

37:37I'm like, okay, all right. I guess we'll just keep doing this. And so it probably would be helpful to have an end date in mind. I, I would really like a new car soon. I don't need it, especially in, you know, definition with Luke's need definition. But I think there's a lot of, you know, just in our world right now, like there's a lot of narratives about, yeah, you, once you have a second kid, you need a ginormous car or once you have this you need this thing and i'm not i'm not functioning out of that necessarily but i think these updates just feel like okay like we we will someday get to have newer nicer things and and sometimes i just feel defeated because i think it feels like okay we're never we're never gonna get to that spot you know and i can tell you're getting i mean and i love it because i feel like we're getting somewhere i we keep talking about the big stuff you know the cars the house.

38:35But it sounds like there's probably a bunch of, because we've already talked about the towels. There's some little things it sounds like if, and Luke, I'm going to put it on you. We could create some wins for Anna in a little way. Because y 'all have thrown out a lot whether it's eating out. We just need to put a dollar amount on it and figure out that way that we know we can put a number around what Anna needs to fill loved, heard, and appreciated and then still have the plan to build in the background. Because that is the hard part is the financial mutant is you're trying to do this, but you're going to lose the other side of it if we can't make sure that you're feeling heard through this journey.

39:23Because both of y 'all are noble in what you're trying to do. It's just, this is what makes it hard in a relationship is navigate because money is tight.

39:31Brian Preston:Can you walk me through your current savings, right? Like when you think about these buckets, not the budget necessarily, but like what's the money that right now you're putting in the different savings buckets for the future? Yeah, my W-2, I put 6 % into a Roth 401k and they match 4%. That's great. And then maxing out our HSA. We've been maxing out our HSA for like the last seven years, but we've been having kids. And so - You've been using it. We've been using it. That's great. This is the last 12 months, again, is the first time where we've gotten ahead with HSA. And now like roughly 10 ,000 of that is invested.

40:07Brian Preston:Awesome. And then there's 100 bucks a month just going into that emergency fund. Into the sinking fund? No, into the emergency fund account. Yeah. How about the Roth IRAs? Because I noticed Anna's, by the way, was bigger, which I was like, man, so you're obviously prioritizing her. And this is her parents were really generous. They had a custodial Roth for her that they passed. I love hearing that. That's great. Yeah. They passed that on to her a handful of years ago. And then my Roth and her Roth also. So when we left teaching, I took our teacher retirements and rolled them into Roths. I just bit the bullet and paid the taxes on them and rolled them into those Roth accounts.

40:47So that's where those dollars have come from. We just like if I might go back to teaching coaching someday, but if I do, it won't be because that's. So there's no automatic funding in the Roths currently.

40:57Brian Preston:There is in the Roth 401k. Okay. Yeah, coming from my paycheck. Yeah, correct. Awesome. So 10 % of the 401k and we're maxing out the HSA and have a hundred bucks a month going into the emergency fund. Perfect. On a month over month basis, is there money left over? Like, is there any like sort of like slush money left over? Is it like, no, we are dead at zero. Not really a lot left over. I mean, what we're budgeting is usually going out every month. Occasionally there might be a little bit and we decide, hey, you know, we have some extra here. Where do we want to put it? But yeah, most of the time it's going on.

41:30How much of that Roth IRA was y 'all's contributions versus the custodial portion? It's about$52 ,000 right now. I have to look back. I want to say her teacher retirement was roughly like$20 ,000 that got rolled into there. And then I think when they gave it to her, we're like, hey, this has been set aside for you and transferred it into her name. I want to say there was maybe like$16 ,000 in there. The reason, because when I did the math on you guys, you know, we always try to say around 30, we'd love for you to be a one-time income. And y 'all were in the round, a little over 140 ,000, you know, if you take out the house equity.

42:07So I was like, wow, they're actually ahead of the curve. I just wanted to know how much of that was behavior versus what was brought into the marriage, because then that could work against, but, because I know it's just tight right now. And that's why I'm just trying to figure out where the margin in y 'all's life is.

42:19Brian Preston:And so on these budgeting categories you have, you've got$250 for entertainment and then$650 for miscellaneous. Is this where the birthday presents come out of? I just want to – like I'm trying to understand like categorically. Yeah. How do you guys decide what the categories are together and how much goes into those categories? Or do you decide together? Yeah, I'll say – and I was talking with one of your guys. They were putting this together as a review. That miscellaneous category is like a lot of things that we know we're going to spend, but it fluctuates month to month. So it's like home and auto maintenance.

42:54It's gifts. It's Christmas. It's some home stuff. Which we don't spend out of home and auto maintenance or Christmas until it's like absolutely like. Yeah. It's not like it's there just for us to spend. Any syncing funds where they're going into a separate checking account, and we know actually how many dollars we have for those various things. Was that your question?

43:16Brian Preston:I think so. Yeah. I'm just trying to figure out, like, when— I'm going to use the birthday present example. When there's a kid's birthday present, you've got to go buy a gift. Budgetarily, in your mind, where is that supposed to come out of? There's a checking account that has gifts on it, and, like,$110 goes in there every month. She's got, like, a real-time view into, like, this is how much money we have for gifts in this account. Do you actually, do you use the view or is it just set up there? I mean, it's just our banking account that I log into. Yeah. And so you actually can see it and that sort of thing.

43:46Brian Preston:Yeah. Do you like that structure? What I'm trying to figure out is, is it the structure that's not good or the amounts that are not good? Yes. It's very rigid, but that is, I mean, I love my husband. I think it's good that he likes systems and he likes to have things in place. I am just not that way. And so I am type b as they come and i'm late to everything and he's 10 minutes early So it's just you know, like we're just opposite So I don't think it's like I have an issue with the system I just kind of have an issue with sometimes how rigid he is with it where it's like there's a hundred dollars in there You already spent seventy dollars on our kids birthdays.

44:22You can't get another gift Like we don't have any other money. We can't flex at all and that just yeah, that's like, okay It just feels exhausting. I'm like, okay why can't we flex you know um and that's what we run into like a lot of months even just with groceries and things like that where it's like yeah maybe I'm making something for a party we're going to and I need to grab a couple extra groceries and it's like well we don't have any extra grocery money so sorry and it's like okay it just feels yeah it feels really rigid and I don't like that but I just don't know I don't know what necessarily could be changed like he said Like I'm not numbers are not my thing.

45:02And I am thankful that he does it. I'm thankful that he is owning it. I think in some ways there's become like this unintentional like power authority because because he owns it. It's like, well, I do this and you don't want to do it. So I'm just going to keep doing it the way that I want to do it. And I wouldn't say that that's like 100%. He wants me to have opinions in it and he wants me to have a voice in it. I know he does. But just because of how systematic he is and how, you know, like we have to have a system for everything, it often feels like it's like, well, his way or we're just not doing it.

45:37I'm sitting here because, you know, there's different systems. You know, Dave Ramsey has like, was it the envelope system? There is. And it sounds like you've kind of just courted off in your accounts now and banks allow you to go and essentially set up funds within the account. You probably call it like a digital envelope system. There's a bunch of different checking accounts and money is going into different accounts. What I'm trying to figure out is what we can do to empower Anna to feel like she's part of this. I didn't know if it was just you give her the spending money in just straight up cash.

46:09And if it's gone, it's gone. There's got to be something we can do to empower you on this. Y 'all are doing a lot of the right things is that y 'all have this joint account. But it sounds like the rigidness of the digital envelope system is. So we've got to figure, and I'm going to put it on you, is that you have to figure out what system will actually make you feel empowered. If it's getting a monthly budget to where you know when he just gives you the money and you're now the CEO of the household money. And if it runs out, it runs out. And there's just nothing we can do. You can then squeeze the balloon however you want.

46:45And I can already tell from Luke, you're not trying to lord over anybody. it's just you're trying to have you see the big picture so that's why we have to create a system to where y 'all both feel once again connected on this and that's honestly like that was kind of my goal and intention of even just kind of like the digital envelope system and various checking accounts like hey you don't have to ask me like go check and see how much money is in that category and if it's there spend it and then we'll check in on a weekly basis but her brain might not work that way because we see categories I know how your brain works because we all see categories is hers.

47:18That's why sometimes giving the whole budget without the line so she can paint outside. Now, you should go get her own lesson when the fact that if the money's out, when it's out. And that's probably where there's been frustration on my side. It's like, hey, we're out of this category or you exceeded what we have for this category there without like a proactive conversation about, hey, we need more for this thing this month. Because when it's proactive and we're communicating well with each other, it's like, okay, we can flex. We can figure it out. We can usually make it work. I think that's where we both feel missed at times.

47:54She feels like, this is micromanaging. I feel like, hey, these are kind of the boundaries that we have. And if we need to color outside the lines, I just want to have a conversation about that first so that it's not like, oh, we blew by how much gift money we had significantly. That's kind of where I come at it from. But how does that sound to you? And I want to make sure you feel heard. I think that's valid. I think, yeah, just we have different communication styles too. Like where I think he feels better about something if we talk about it three or four times. And I'm like, I don't even really want to talk about it, but I will talk about it once.

48:25And then if I make a decision after we talk about it once, I think he sometimes feels missed. Like we didn't really decide about that. And I'm like, oh, but we talked about it. You know, so it's just, it's just those kinds of differences too can like rub me the wrong way where it's like, I don't need to talk about it four times to make a decision. Like, I'm just going to go do this. And I think he feels better if we're like, not four, four is probably a little much, but at least two times, like, hey, we're checking in on this again. And to me, that just feels like a lot. I'm like, okay, I already talked to you about it.

48:57And I think that's like the micromanaging piece of it too, is like, I don't want to have to feel like I have to come to you and have a conversation every single time we're going to go over. I don't know. It just feels like just draining. And money, like in general to me, like having these kind of conversations feels like confrontational almost and like a little uncomfortable for me. And so that's where I'm coming from where it's like, oh, this is exhausting to me. Like I don't – and I know they're necessary. I'm not saying like I'm never going to have these conversations. I know they're good and I want to communicate in a healthy way.

49:29But, yeah, it's kind of for me. I feel like – and I'm going to give you – like who knows how this all goes over. But I think you have three years to, you ought to just go for it. And meaning y 'all come up with a game plan of the things that are a priority list of what's important. So Anna feels heard. And then you said it earlier is that I'm willing to do whatever it takes to be successful. But earlier you've already experienced where you got busy doing nothing. Meaning that you were working 50 hours a week doing coaching and other things. and it wasn't until you went and did the project management job switch that you're like, oh my gosh, there's a way to work smarter, not harder.

50:09And I was able to lift up. You need to take the next three years, do the 3D glasses so that you account for the doo-doo plan, and then you've got to go make it happen. We've got to turn this four-cylinder into a V10 so that Anna gets everything she wants, and you've just got to do it. I mean, I know that sounds, but as an entrepreneur and others, I saw you light up when we talked about these fastbooks. This summer, we're going from... So that's what I mean. But you've got to also get Anna excited about these savings goals so that y 'all can be a united front on this. And then we've got to get it cranking.

50:47I mean, that's the way I feel it.

50:50Brian Preston:What's your date night love language? Let me give you an example. My wife, brunch. Like fancy brunch, coffee. That's her middle of the day. that's her jam. What's like your date night love language? Yeah. I love, I love a good brunch. I love honestly just, yeah. Going out margaritas. Okay. Tacos or brunch. I love it. Yeah. So as I'm sitting here, like hearing you guys talk, it sounds like, you know, one of the issues is, Hey, we don't, we don't communicate really, really well because we have different communication styles. And it sounds like perhaps even the frequency around the time that you're like, Hey, every week we're going to check in on this thing, check on this thing.

51:26Brian Preston:Perhaps that's too much. Now we don't know the answer because we don't know your marriage. You guys are going to define that. But I'm wondering if there were something that you both knew was going to happen. Hey, once a month, first Saturday of the month, whatever, we're going to go get tacos and margaritas or we're going to go get whatever. And in this date, Hey, we're just going to touch base on these things. Right. And this will be a little like financial check base. And rather than maybe the spending categories be like, Hey, this month is exactly$101 for birthday gifts. it's like, Hey, all right, we got this.

51:55We're going to spend 800 bucks on kids,

51:59Brian Preston:whatever that is. That's kids' birthday parties. That's kids, whatever that thing is. And you just kind of know broad, because I'm wondering if I were to look at your budget, I'm wondering how many different categorical items I'm seeing. I'm nervous. Like if we're in some people, it's great to budget to the, to the$10,$20,$30. That's great. What I'm hearing you say is that's not working for the marriage right now. And that's a big issue. Cause you know, one of the, But I imagine one of the goals on both of your lists is, hey, the thing I don't want money to do is absolutely rip us apart. You know what I mean?

52:29Brian Preston:I want it to be something that we use as a thing that allows us to do things we want to do and not a thing that creates a rift. So what I'm hearing is the system right now is not working in its current form. So we've got to figure out how do we adjust that system? And just like I'm thinking frequency sounds like an issue and perhaps even categorically there's an issue. But Brian already alluded to this. there's some accountability here. If we go from all these different categorical things, like, hey, we're gonna put 800 bucks in this bucket and this is for the kids and all things kids. If it's a bigger category with a bigger number, then we do have to kind of honor that.

53:04Brian Preston:It doesn't matter if, okay, well, this was a birthday party and this was a school clothes thing, right? Those can all be in the same place, but you do have to like kind of honor. That's where the, that's where the, it's that way you both kind of get a little bit something. It's way more macro, but it still fits inside the lines. I think one of the things you guys are going to have to do is sit down and figure out, okay, what actually works for us? Like, and this is a fun exercise to play, and it might end in a fight, so I apologize for this. But I got a dear friend who did this, him and his wife.

53:31Brian Preston:They were fighting over finances. They were going back and forth. And he finally, now, he did this from like a bad spot, but it ended up good. He was like, that's it. You do it. And he's like, you handle the finances. Can't tell you how many times he's said that. But I think it's an interesting thought exercise where if you not actually take it over, but hey, if it was your job to be the financial CFO, how would you structure it? Like, how would you do it? Right. And I don't know what the answer to that question is, but you guys should spend some time just talking about it. And there's no wrong answers to this.

54:03Brian Preston:One of the things you can't is, well, this is why that won't work. This is why that won't work. This is why that won't work. Yeah. Say, okay, hey. And you just kind of figure out, right? Like, it's not about you convincing her that your way is right. It's you beginning to understand, okay, what works for her, and you beginning to understand why his way is effective in figuring out where that middle ground is. That's going to be the key to y 'all being able to do whatever the goals are, short-term, long-term, intermediate. Right now, what I'm feeling is more of a communication issue than a dollars and cents issue.

54:33Brian Preston:And that's the part I think that if y 'all can get centered on that, you can do anything. I've got some homework for you guys to do in the meantime. As it relates to stepping out on your own, I do think working through the 3D glasses makes sense. Hey, what's it like if this goes better than we expect? What do I realistically think is going to happen? And then what's the uh-oh plan? Uh-oh, this doesn't pan out. Something changes. Camps change, whatever that thing is. And then I think the big thing you'll have to do, and it's great that you're on a trip right now with no kids because this is like a time to get to do it.

55:01Brian Preston:Have the conversation around what would actually work for both of you in terms of cadence and category. Hey, how often should we be having these conversations? and realistically, categorically, what should we be talking about? It might not make sense to talk about the$9 we spent on Q-tips. That may not be the thing. It may make sense to talk about a bigger category. And you got to figure out what works for each of you. And you both have to have a voice in that. Meaning you have to be willing to share, but you also have to be willing to listen and willing to hear. I think if you guys can do that, you're going to set yourself up to be in a great spot.

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56:58Brian Preston:Go to Shopify.com slash MoneyGuy. That's shopify.com slash money guy. Now at McDonald's, a McDouble is$2.50. So you can get your gym gains on or just get lunch for only$2.50. Get more value on the under$3 menu. Limited time only. Prices and participation may vary. Prices may be higher for delivery. Brian, I loved the conversation that we had with Luke and Anna, but it wasn't perfect. There was some stuff, I think, that just as we had the conversation, it reminded me how valuable and important communication in a marriage is. Yeah. I mean, it's funny because I was sitting here thinking, what do you say, Brian?

57:38I was like, communication. So you saying that word is that I'm worried for them. Sure. I mean, because Luke and Anna, I appreciate them coming on the show. I appreciate them being so transparent. But it was very obvious to me in the beginning part of even the conversation is they're on completely different pages. That's right. And look, and they're both well-intentioned. I mean, you got Luke, who's the financial mutant, who's trying to be so rigid and reach these goals, start a new business. But then you got Anna, who's like, wait a minute, we ought to enjoy some of this money. And then she has some goals, and they're dead in the middle of this messy middle.

58:14If you think about it, they got a two-year-old in the house, they got a seven-year-old in the house. They have three kids right now, and this all happens so fast that I'm just worried that if they don't kind of get on the same page with this, they're going to feel isolated. And it's going to, instead of them working off the same sheet music and using the net worth to kind of help shape it, it's going to feel like, you know, we got Luke with his goals and then we got Anna over here trying to live the best life and it's going to feel very separated. And that troubles me.

58:43Brian Preston:So from a planning standpoint, we're going to lay out a plan. It's going to look a little bit different than what a normal plan might look like. But it needs to be a bridge. At the very center of it has to be open communication, open communication, where both people are heard. So to kind of start out, one of the things we uncovered as we were diving in, and this is sort of a public service announcement. Whenever you have young kids in the household, this didn't get to come up in our conversation, but as we followed up with Luke and Anna, we always want to make sure that when you have young kids, you have wills and estate documents in place explaining what your wishes are for your kids, as well as life insurance to make sure they're provided for.

59:15Brian Preston:So that's kind of like a base level planning thing that they just need to talk through. Hey, what happens if something happens to us? Where do we want our kids to go? Do we want to take care of the money? That sort of baseline, something that they need to work on. So then we said, okay, well, let's think about how the numbers might actually and practically play out for them because they do have big goals. And it became pretty clear that the one thing we know right now is the income that they're operating on right now just isn't working for the household. Well, and I think the big thing, Luke is hoping to go out on his own with these sports camps.

59:50He has a passion for it. His heart is there. But I got to tell you, after looking at the numbers, and we're going to talk about the 3D glasses here, but I think because there's some distress in the household, he doesn't need to leave his day job just yet. He needs to kind of do both. And I know that's probably not what he was hoping to hear. I think he was probably hoping, yeah, let's do the 3D glasses plan. We'll share what that means. but go ahead and plan out a structure to where you can leave your day job. We're like, no, I think you're going to need to keep the W-2 job and put on your 3D glasses to work through these basketball camps.

1:00:25Brian Preston:Yeah, and I think it's okay because he still gets to do the camps, the thing he's passionate about, but I think what their family needs, at least for this season, is the opportunity for that higher income. And so we kind of said, all right, let's put on these 3D glasses and let's say, okay, what's the dream plan? Well, let's say dream plan between the two sources of income, we get household income up to$200 ,000. That sounds amazing. That's really scaling sports camps. And then we said, okay, well, what's the down-to-earth plan? We scale the sports camp some, but we still keep the W-2 income in place.

1:00:53Brian Preston:That'd be a household income of about$160 ,000. And then I think they're—and this is going to sound aggressive, but I think they're kind of living in the doo-doo plan right now. Sort of where they are right now is not the ideal circumstance. They want to have some sort of improvement. And it's always important to run the doo-doo plan so you know where the guardrails are. But I think realistically, based on the way he was describing it, based on what he was laying out, I don't think it's crazy to think, whether it be through scaling the sports camps or keeping the W2 in the sports camps, I don't think getting his income to$160 ,000 a year as a household is out of the realm of possibility.

1:01:31Yeah, definitely. Because, I mean, his day job is already kind of right where the doo-doo plan is. And then we're going to count on some growth from these camps. So definitely$160 ,000 is probably the number. So now let's break that down in. What are the big goals? And there are definitely some goals that we need to kind of address. The first thing, let's get Anna as soon as possible into a car that she actually feels, you know, comfortable and confident in driving the three kids around.

1:01:58Brian Preston:And I want to give her some credit. She was not like, she wasn't crazy in her domain. It wasn't like she was wanting some brand new, you know, water. The biggest thing I heard, Apple CarPlay. She wants Apple CarPlay. That's it. I think they started putting that in majority of vehicles after 2017. I think you're right. So, I mean, this is not the craziest goal out there. So she said, hey, something, you know, maybe a bigger SUV, Nissan Armada, Apple CarPlay. So, okay, let's make that a goal. And let's try to do that by the end of this year, by the end of 2026. They also said they want to go on a big trip to Italy in September of 2027.

1:02:30Brian Preston:And that's probably going to have a price tag around$10 ,000. They need it. I think that getting away from the kids and having some time together as a couple to see, hey, what's keeping us? What's the glue that makes this work? Let's get them a trip to Italy. And then they said, hey, we also, we would like to upgrade our home at some point in the next five years. That's a goal. Now, the good news is they have significant equity in their current home. And so we're going to operate under the assumption that whatever equity they have in the current home, they're just going to roll it into the new home.

1:02:58Brian Preston:And so when we think about like a price for a home that would be appropriate in their area for their size family, we set a home price of$600 ,000. That's going to be kind of the thing that we're going to work towards. So let's think about if we have these three goals, how do we begin to like parse out how we do that? And so, you know, step one, get the household income up to$160 ,000. Keep the W-2 job, scale the income. Well, if they do that, that's going to give them an additional$2 ,300 a month to work with. So we've got to figure out with that additional$2 ,300 margin, where does it go? Well, if goal number one is the car, we said, okay, step number one, let's sell the current car, and we're going to net about$5 ,000 from that, right?

1:03:40Brian Preston:Well, if we could allocate an additional$10 ,000 from the sinking fund right now, that's going to give us$15 ,000 towards a new vehicle. Anna said, okay, I want to be in the Nissan Armada with CarPlay. So if we say it's going to be a$25 ,000 car, we would need about an extra$1 ,250 every month for the next eight months to be able to just pay cash for it. So no car payment, no 23, eight pay cash. Okay. So eight month timeline to get to paid for a car. Goal number one, check. All right. So we still have some extra margin of that$2 ,300. Let's start talking about what does that mean on getting this couple to Italy?

1:04:21Brian Preston:Yep. So we said, all right, we have this, we already have the sinking fund that they've been saving for. So what if we take$5 ,000 of the sinking fund and we know we need to get $10 ,000. So that's just going to require us to save$313 per month for the next 16 months. So if we can do that for a year and four months, that's going to get us to$10 ,000 for the Italy trip, and it's going to get us there by 2027. So boom, check, there's the next one. So that's two goals knocked out without a whole lot of difficulty, right? Like not super crazy. So then we said, okay, how do we get in the new home? Now this is the hard one.

1:04:58Brian Preston:This is going to take some time. Yeah, and it's going to be really difficult to know what their house is going to sell for, where interest rates are going to be. But what we do know is they do have a lot of equity in their current house. They currently have$200 ,000 in equity. And in eight months, once they pay off the car, and in 16 months, once they pay off the Italy vacation, they're going to have additional cash flow they're going to be able to save for the next five years working towards this home. So if we just assume$200 ,000 in equity five years from now, plus the additional savings, very conservatively, I think they could have about$278 ,000 that they could pay as a down payment on this new house.

1:05:41Brian Preston:Now, as a reminder,$600 ,000 home, we're going to put$278 ,000 on it. That's going to keep their monthly payment at about$2340 ,000. Yeah, I mean, they're pretty much putting down almost half of the purchase price down. So that's nice that that's keeping that payment low. And then even if you think about this, we're running the down-to-earth plan at$160 ,000. This is going to keep it right in line with the 25 % of housing costs as well. So they're going to get the lifestyle upgrade in life, but they're also still going to be very respectful of doing the 25 % of household expenses for housing. Now, the thing that you're probably thinking, or I know that they're going to be thinking when they're hearing this is, okay, we're going to have an extra$1 ,500 a month of margin going to new savings.

1:06:27Brian Preston:But I remember the guy said we had 2 ,300 to work with. So, 1 ,500 is what we're using, but we have 2 ,300. There's an extra$700 there. I bet they're going to say, okay, now we got to fund the Roth. Now we got to start saving. Now we got to start building. I actually don't think that's the right move. Well, this is Operation Anna at this point is Because, I mean, look, we love Roth IRAs, but I could sense that Anna needs to be the commissioner of some of this money to where she has complete 100 % control and doesn't have Luke looking over her shoulder saying, how are you spending this? Give me your receipts.

1:07:03So we think that of this$700, let's give Anna$400 a month of just fun money. That's right. Go out there, have a good time. Luke, you don't get much accountability on this. We're just going to let Anna live her best life for the household, and let's see what she comes back with.

1:07:20Brian Preston:And so what's great is if we rework the budget, assuming this down-to-earth plan, you can see we're able to fund those both short-term and intermediate-term goals through the sinking fund, the$1 ,563, but we're also able to fund the lifestyle,$400 a month, for the other things, the happiness, the decor, the birthday gifts that randomly show up. And I think that way they both feel like they are heard and are living not just a life that's going to look good in the future, but a life that's going to look good today. Now, this is kind of interesting because we love people to save and invest somewhere between 20 % and 25%.

1:07:57Doing the math on this, they're only going to be saving about 14%. And the way that breaks down is if you look at the 401k, they're already putting 6 % and then Luke's Roth 401k. They're getting a 4 % match. That's where we get to 10%. We're going to be boosting this up with the additional savings, 14%. Does this even have a chance?

1:08:19Brian Preston:Yeah, so right now they have about$100 ,000 invested at age 30. If they just can hit that 14 % savings rate that you outlined, it's about$22 ,000 a year total going into their portfolio. They're still in a great path. By the time that they get out to age 60, portfolio is worth almost$5 million. By the time they get to 65, normal retirement age, they can have a portfolio of$8 million. This is in a time when they were able to get in a new car, go to Italy, get in a new home, all inside of five years without sacrificing those long-term goals. Because for them at age 65, an$8 million portfolio was the equivalent of about$113 ,000 of income at a 4 % withdrawal rate in today's dollars.

1:09:03Brian Preston:And there's no social security, no pensions, nothing else on top of that. I think it's possible for them to have a better and more improved current day as well as a great, big, beautiful tomorrow. I don't think it has to be an either or. And it sounds like in their marriage, it's being painted as an either or. Now we backed into these numbers. And when we came up with the 65 number, we have to bring it back to today's purchasing power. And we did figure out, hey, this is gonna be about 71 % replacement ratio. And you're like, at first you might be like, well, wait a minute, how is that gonna work?

1:09:39but realize they're not going to have to save for the future. We're going to have debt under control. There's not going to be debt issues. The taxes will be in a better place. So 71 % could work. I think there's a really good chance, and it's going to let them live a happier life. And I think that this is going to be one of those things where you look back in this conversation is Luke's going to feel like he's getting his opportunity to at least make the jump. Because that's the other thing. We base this off of assuming that it just stayed at$160 ,000. Based upon the passion that Luke was sharing, who's to say that we don't jump into the dream plan very quickly and this gets even boosted up even more?

1:10:19We're just trying to say, hey, no, this is what's going to allow you to at least take some action today.

1:10:24Brian Preston:Now, I want to be clear though, because it's worth noting, you and I are not members of this marriage. And so this is a plan. This is an idea. This is a potential solution. I think what's going to really matter for them is I want them to watch this and I want them to sit down and figure out what the plan for them is that makes the most sense. And I don't want it to be something where they say, hey, Bo and Brian said, we got to do this. We're going to go, or Anna says, no, no, Bo and Brian said, we got, they have to build the plan together. And that's the only way that they're going to be able to get on the same page moving forward.

1:10:58Well, this is why, I mean, looking at, I mean, we don't, we're not too dissimilar to this. No. We are kind of the nerdy financial people. We have wives that we're pretty much pulling them into being active participants in the communication. And that's why annual meetings on the finances, annual updates to the net worth statement, they need to be creating so that way they have a cohesive plan so that Anna does feel like she's part of this. And then Luke has got to understand that the discipline of budgeting and all that is going to be very helpful in the beginning. but at some point you got to loosen up.

1:11:32That's right. And we got to get them on the same page so that two becomes one when it comes to these financial goals.

1:11:40Brian Preston:I'm so thankful that you guys let us be a part of your financial life. I'm excited we get to put this plan together. And frankly, I'm excited to see where it goes for them. Marriage is somebody who's been doing this for close to 30 years now, is there's a lot of patience. There's a lot of, you got to put in the time to the communication, but just remember why you love each other. You'll make it through this messy middle. I really do believe it, Luke and Anna, but y 'all got to listen to each other and you got to respect each other and get on the same page with these financial goals so that y 'all can be united and then look back.

1:12:16And this will be one of those messy middle moments where you say, yeah, the days were long, but man, oh man, we're the years short, but we made it through it.

1:12:24Brian Preston:If you would like to be a guest on Making a Millionaire, You can go to moneyguy.com slash apply. Or if you want to check out any of our resources or tools, you can go to moneyguy.com slash resources. Remember, money is nothing but a tool, but it is definitely something we've got to be, take, bound ourself in reality, but have good communication with our spouse. I'm your host, Brian, joined by Mr. Bo, Money Guy team. Out. The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations.

1:13:04Abound Wealth Management does not render or offer to render personalized investment or tax advice through making a millionaire. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss. The guests featured on Making a Millionaire are not clients of Abound Wealth Management at the time of recording. Their participation should not be considered a testimonial or endorsement of Abound Wealth Management.