The Truth About Starting Over in Your 40s | Making a Millionaire

26:13I just want to be prepared in case that is the case. Then we have about$16 ,000 earmarked for Mason's college. My goal or my thinking on that Tennessee, Tennessee promise, amazing. Wish Texas had that. My thinking is that we have$50 ,000 saved for him. He has to take advantage of the Tennessee promise, do community college, do community service, all of that. and then we would have$50 ,000 for his junior and senior year at a local, in-state, non-private university. We're not going crazy here. I think that that should be plenty. I mean, you can go to TSU for less than that. But that's where I'm coming up with that number,$50 ,000.

26:53So$50 ,000 college goal. Right, but we have$16 ,000. Already built towards that. Right. Great. Just for the audience, because they might need the context, if you live in Tennessee, and I have a daughter who's now a senior in college. Your first two years of community college are completely free in the state of Tennessee. That's the Tennessee Promise. And it's legit. She has a lot of friends that have taken advantage of it. We have employees that have children taking advantage of it. So that's a brilliant education hack if you live in the state of Tennessee. We're from the state of Georgia, which we had the Hope Scholarship, which helped both of us make it through.

27:29So I love it when these states get very creative to pay it forward for the next generation. Absolutely. And we have Motlow just down the road, so we're going to be good. That's awesome. All right, so 42 emergency fund, 40 ,000 new car, 16 ,000 college. What else you got? And then we have$8 ,500 in a home maintenance fund. And I'm kind of on the fence about this. My aunt is a financial planner and advisor. So I actually talked before I'd heard back from you guys. I talked to her a little bit, like two hours. And she was kind of saying, like, you have$42 ,000 in emergency fund. You don't really need to have$8 ,500 also earmarked for home maintenance.

28:06And our homes are only a year old. And it's also a brand new house. It was a new construction. I like it. But I have also been in a position where I had to replace an AC unit in a house. I had to do a bunch of crawl space work and stuff. Like, I've been there. But I kind of am under the thought now. I bet your insurance. I mean, I bet your AC is covered for the first five years. Oh, yeah. For sure. And then if your builder put a nice enough, paid the$500 extra, this might have a 10-year warranty on it. Found that out the hard way that my builder unfortunately put the five-year unit in there, not the 10-year unit.

28:35So when we submitted all of this to you, that was$8 ,500 flagged for that. However, I'm more inclined to say we don't need to have that. We have thoughts. Perfect. Great. I love it. We have what's remaining of a honeymoon fund, which is... That's definitely going. Yeah. It's$3 ,773. to be specific. Basically, it's down to $2 ,000. We booked our last few excursions and stuff for our honeymoon. We're going on our one-year anniversary. So there's$2 ,000 that's actually now available for something. That's great. We have thoughts on that too. I made$217 ,000 off my house. So it's like we can have a honeymoon.

29:17We're going to put a lot of money towards a lot of really important, responsible things. But making memories is a really important, responsible thing to put money towards. And we're never going to fight folks on that. And then SEP IRA, we have, okay, so he has a SEP there. That was just open this year, thanks to you two, because I heard you mention it. I was like, I came home, Dustin, you need a SEP IRA. Why don't you have this? Oh, my mom, who's a CPA? She had brought this up years ago. And I spoke, I was with an Edward Jones guy. And he's like, you don't make enough money to do that right now.

29:48Because I was at the time, it was just me on my own. And so I just kind of put that on the back burner. And now that we're in this position where we have a dual income and, you know, if you do real estate right, it just keeps on escalating. So that's where I'm at now. So we are earmarking 20 what percent? 25. So right now there's 16. He just had a deal this week. So this number has changed slightly. But according to these numbers,$16 ,631 is set aside in that SEP. So basically 25 % of every check that he gets, every commission check, we put into a vault in our SoFi. So we don't overpay, but we're keeping it back.

30:25Right, because my understanding with the SEP is that you have to be very specific about what you, like you can only put up to 25 % of your net. That's right. Gross. Well, there's an additional complication since he's a sole proprietor that there'll be a self-employment offset. So it might be only you get to do somewhere between 18 % to 20%. But, wait, there's more, is that one of the things we've been sharing, because we've been doing content since 2006. So, yes, we love the SEP IRA because that was in the past. The only way you could go back in time to take a deduction for a prior tax year. But the government has actually changed the rules here in the last two years to now where solo 401ks can actually go back in time as well.

31:10That's a new provision within the last few years. And so we're probably going to talk about why you might want to consider taking the SEP into a solo 401k, because then you get to do all the benefits of the SEP with the profit sharing from the company, that 18 to 20 percent. But then you also get to do the salary deferral, just like you do as a traditional employee. So you could save more with the same amount of income, which is exactly what for Dustin specifically. If you're allocating 25%, we could do the 18 % to 20 % that's the profit sharing and then backfill through salary deferrals the other side of it.

31:48So lots of opportunities. And how neat, like right now you're putting this in your vault in order to be able to do this next year. When you do the salary deferrals through a solo 401k, what if you could have that money working for you every single month? We're just going to take 23, 5, divide it by 12, and every month just put that in, get those dollars working, you'll have your 401k now. You have your own 401k. You do have a 401k. Yeah, I've finally grown up. 44. So that's what we're doing right now with the set. But this sounds like really exciting news. So we might be changing that. But just knowing that we don't want to put too much in and then have to pull it out.

32:24We basically talked to his mom who does our taxes and said, hey, you know, if we could basically before we officially file, tell us exactly what that number is so we can put in exactly that dollar amount. And then we won't overpay. And so then if there's any, you know, if it is in fact only 20 % and we've been setting aside 25, then that extra money is reallocated to something else. And then I don't know all the numbers. I mean, you're those are the main ones. We also have an account that has anywhere from two to fifteen thousand dollars in his tax account. Because, again, self-employed. So 25 % goes into that SEP every paycheck and 30 % goes into a tax vault every paycheck.

33:03I love this. You got the way that you do your household accounting is so good. Thank you. It's so good. It's a forced scarcity plan. Yes. I love that. I like it. Quarterly, he just paid his tax for last quarter. So now that accounts down to like$2 ,000. But we have that money. So we're not having to worry about each quarter. We almost always have an overage there. Yeah. We always do have a little bit of it. Of course. Not a ton, but a little bit. That's good. A little cushion. Then anything above and beyond that up until a week ago was kind of, okay, that's what we're saving for the student loan payoff.

33:34because it was interest-free. Our understanding was it was going to be interest-free until basically January, 2027. So we had 18 months on that. So it was like, all right, any extra that we're saving and then we're setting aside, we're just bulking up that account for the student loan payoff to pay the, yeah, 57 ,000. Love that. Well, you guys were great in terms of like laying out your goals for us. She said, hey, we really want to knock out student loans, right? At the time, we thought we had a window in which we could do that. Hey, we really want to save for College for Mason. And oh, by the way, we want to be able to retire one day.

34:04Yes. And so we thought one of the things that might be kind of helpful is if we took each one of these three goals and talk about, OK, where are you guys at currently in terms of progressing towards that goal? What is your current plan that you've laid out for us in terms of how you want to attack that goal? And if you do it that way, where does that put you? And then what we said is, hey, I wonder, might there be some ways we could optimize? Might there be some ways that we could allow your money to just work a little bit harder for you maybe than it is presently? And so that's what we want to kind of lay out for you.

34:31How does that, does that sound reasonable? Wonderful. Awesome. All right. So let's look at the student loans first, because this is one that's kind of like top of mind, high priority, right? So we think about where your student loans are currently. Here are the facts. We know that right now you have about$57 ,000 in student loans, both federal loans. They both were in deferment. And we thought that we were going to have until January of 2027 to be able to build up cash to pay those off. So we got to get to 57 ,000. And right now, as of when you said the numbers, you guys were right at about 12 ,000.

35:01So when we think about the progress that we're making towards that goal, we're about 22 % of the way there already, right? And you said, okay, we want to take any excess capital that we have coming. And you said it was about$1 ,500 a month that was left over, right? We had about$15 a month of free cashflow on average. We kind of pulled this out of your budget on average that we could deploy towards this goal. So if we just start right now at the 12 ,000 and we saved$1 ,500 a month, every single month from now until December of 2026, we'd get to about$39 ,000. So we'd have 39 ,000 of the 57. So we'd be like 68 % of our way to our goal, but things changed.

35:43We thought that that was going to be a viable strategy, right? Share with the audience what the big update was. And you've already alluded to it a little bit. Yeah, this is, okay, problems that hang around your neck from when you were too young to know any better is really what this is. And a whole generation, I could get all into that. People who are enslaved financially. And you're not alone in this. This is a big issue for a lot of Americans right now. Yeah, and it was a time in the late 90s when you get a degree, it doesn't matter how you get it, you just get it. So with that told, I got$57 ,000 left on my student loans.

36:17that due to changes, I was in the save program and due to changes in that very recently, we are now supposed to begin payments on those as of August 1st, two weeks from now. Well, hang on. The government was really kind and said, you don't actually have to start making payments again. We're just going to start charging you interest again. So you still have the deferment. It just means... Thanks so much. So kind of you. Yeah, they had their little thing they were reading off of for sure, but it's a 7 % flat. And we have what it takes to get rid of it. We just want to know exactly what the, and because of our aversion to debt, we're just like, well, let's get this out of our lives finally.

36:55Well, and you know, we think. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome?

37:32That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18 plus. When it comes to making financial decisions, there's a process through which you can work to figure out what's the best way for me to utilize my next dollar. We call it the financial order of operations. Zero percent student loans in our mind would fall into the low interest camp.

38:08But now for a 43 year old, if you have seven percent student loans, all of a sudden that gets kind of fast tracked. In our mind, that goes all the way to step three. That now becomes high interest debt. So in our opinion, it should be a high priority to get that thing knocked out pretty quickly. So this is what we said. If we want to think about how to extinguish that student loan debt, we know that right now we have the$12 ,000 currently saved up. We know that we have this home maintenance fund that's kind of like doubling up. We did not know how comfortable you were going to be playing with it.

38:36So we said, what if we just take a little bit. We said, what if we take$2 ,500 from that home maintenance fund? We took 40 ,000 from the car fund. Cause at the time we thought we had, you know, maybe 18 and we were hoping more, we actually have some time on that. And then if we could find another 2350, either from possibly college savings, it sounds more like maybe the home maintenance fund. If we were to combine those together today, you'd be able to write a check and pay off the student loans. Yeah. And that's kind of what my plan. Once I heard that, I was like, all right, well, we're just paying it off and basically everything that's in the fidelity account with a little extra on top is just going to that and now our car fund is depleted and we you know have a little bit so this is pretty much on track with what i had already talked about like i'm not going to make any moves until we actually talk yeah i wanted to hear somebody who doesn't have the emotional connection to this a better idea well you've heard us talk about on the show that the financial order operations everybody think it's just a essentially walking up steps as you know there's life changes happen where you all of a sudden find out that no this thing is due in two weeks or we're gonna pay seven percent where you guys are very fortunate kudos to you as you have this pot of money that y 'all earmarked yes it it apple carts turn it turns over the apple cart on the priority of where you're sending it but you're gonna be able to extinguish this and still be able to hit the ground running and accomplish a lot of goals i'm extremely grateful like this is upsetting to hear this, but they, we could be in a much more difficult position.

40:07So I am, don't get me wrong. I am extremely like, okay, we'll rebuild up a car fund. And if we need to get a car loan at a low interest rate, like it is what it is in 18 months, two, three years, whatever. 36 months. We got time. And because you have$1 ,500 a month that you were putting on the student loan, that is now free and clear to be used however you see fit. I am curious though, for you, Dustin, you've had this, I mean, this thing's been part of the family. I mean, cause you've had student loans since you're in your twenties. So now extinguishing this at 43, how's that feel? No, this will be completely again.

40:39Things I'd been resigned to. It feels like an albatross, but it'd been around my neck that I just got used to the weight, you know, where people have a disability. They just feel like, Oh, my pain level is X. So that feels normal and getting rid of it. Now. I don't even know what that's going to feel like. It's going to be like a weighted vest. It's amazing. And it's almost like I feel a sense of guilt. about it. Like I brought this into, you know, I brought this into our world and it is what it is. And I can't undo choices that I made when I was a child, essentially, even though I was an adult, you know, you make choices and you live with them.

41:12And here we are. I'm glad to get this out of my life because I got way better things I can do if I do$7 ,000. And what a wonderful opportunity you said. Oh, I didn't know what I was doing. I mean, what a great position you are now to tell Mason when he gets, Hey son, here's how, here's how money works. Here's how debt works. Here's the things that I wish someone could have told me at that time, I think that's awesome. So yeah, it stinks that it happened, but you are able to take that and turn it around and use it to be something super powerful. And by the way, you're only 43, which is not that old.

41:40So you've got plenty of opportunity moving forward, which I think is great. Just in the short term time, I've gotten to know you guys. Shelby seems very generous on the fact that like, we'll talk about the college funding in a minute. And then even how that we're paying off this college, I feel like you're carrying some of that guilt that she's not holding on you necessarily. So this is going to be great to have it extinguished and y 'all just, and you're also exceeding like your real estate income. You're way ahead of where you were even last year. And you just said you got another check that y 'all deposited.

42:11And I loved how y 'all do the savings goals is that months that you have big checks coming, because being a real estate agent is not, it's not like you're getting square cubes of perfect income every month. June, July are good. But you, but you've been exceeding it and it's nice. I love how y 'all pay yourself first. So it's kind of pushing even more into the household, which is an awesome thing. Yeah. And we have a buffer built into the way we do our budgets so that whenever those lean months do come and when you're prepared for it, basically after Thanksgiving and I have to wait until January or February to get paid again sometimes.

42:43So y 'all are equipped though, to plan for that. It seems based upon how y 'all are allocating everything. I feel like y 'all have that well underhand. Yeah. And that was the other thing that I forgot in this list, we have like nine,$9 ,000 and$9 ,600 that's in our savings. That's just basically three months of expenses that we need from his paycheck. So even if we get through November, December, January, we can still like, we don't have to touch emergency fund. We don't have to do any of that. We just have it there. So that is always replenished. SEP is done for taxes done first, then SEP, then that little bucket is replenished.

43:16Then anything else from there goes into other savings goals. I love it. And so one of the other savings goals that you guys have said now is, okay, we've got your student loans, got your education knocked out. Now let's talk about Mason's education, right? Because that was another goal that we had. Now, here is one thing you guys are going to have to sit down and figure out moving forward is like, we're kind of going through these goals in chronological order. You guys will have to figure out how, how important are the goal? Like how do we, you know, frame the importance of these goals in terms of our long-term strategy that we want to employ.

43:45But here's what we know about college funding right now based on what you told us. Hey, we really want to have$50 ,000 saved up for Mason. We've got about five years to do that, right? You guys currently have been saving$6 ,000 a year towards this goal. Am I understanding that correctly? Yeah. Basically, I started it with$10 ,000 whenever I sold the house. And then we've been putting in$6 ,000 a year with the intention to have$50 ,000. Like I calculated that out specifically, figured$6 ,000 a year, like that should be easy enough to save. And then that would put us to the 50 ,000 in theory in seven years.

44:18Like if we have it a few years, they're really cool. But seven years is after he would finish community college. I love it. So what we did is we said, okay, if we're actually doing this, we're on this trajectory and we have$16 ,000 and we're going to save$6 ,000 a year, it's going to move us to where at age 18, even before the two years of community college, if we're just assuming a 5 % rate of return, right? Like, you know, some part cash, maybe some part growth if you're doing a 529 or something like that, you're going to have about $54 ,000. So before college, before first two years start. Two years ahead.

44:54Yes, you're kind of two years ahead. So what we said is we look at this and you guys have to figure out your comfort level. Even saving$6 ,000 a year might not be the absolute exact number to try to hit that$50 ,000 goal. You may be overfunded on this goal. What we said is if the goal was to have the 50 ,000 by 18, you're already on track to have 109 % of that goal funded, right? So you're a little, I don't want to say over planning, but if the goal is 50, you're well on your way to doing that. So that's one you can kind of like put a check mark on and even think, okay, is there, are there some dollars that we could even maybe take and deploy to another goal elsewhere?

45:30Does that make sense? Absolutely. And what I love is it sounds like you guys have already had this conversation with Mason around, Hey, here's the plan. We're going to do this for the first two years. And then we're going that's fantastic having that conversation five years out. I mean, we, we talked to a lot of folks and we'll talk to their, you know, junior, senior kids and be like, what do you think about college? And there's, Oh, no idea. I haven't really thought about it. I love that you're starting that conversation early. That's amazing. You guys are doing a great job. And it's a huge head start.

45:56As you've already talked about the little amount of debt, if you can lower the, how much debt you come out of college with, it is a huge head start in life. And that's the big thing that you're paying it forward from it by y 'all setting this up for for Mason so that's an incredible opportunity for him in the long term now you've done all kinds of calculations right like you guys have given us all these numbers like I've done this calculation I've done this you did another calculation that you gave to us said hey we want to be able to retire oh yeah and I have this retirement number in my head what what was your retirement number do you remember what it was I think I told Megan three million three million two point five to three but I think three million so I'd just be curious, how'd you guys come up with that?

46:34Where'd that goal come from? How'd you discern that that is the magic number for the household? Again, I'll defer to her. He's like, Shelby told me so. This mysterious 4 % rule. My understanding is you only want to pull out 4 % of whatever you have in retirement per year so that, to keep it really simple, the account basically replenishes itself. It's kind of like living off the interest sort of idea. Right. So 4%, I think some people say three, some people might say a little bit more. I think you guys did a video, Dave Ramsey might say a little bit higher, but I think 4 % is kind of what I've heard was about average.

47:14And so I think if I did$100 ,000 a year at 4%, I think that's what put us at the 2.5 million number. And so I'm like, well, let's bump it up a little bit. Well, it's like, okay, I don't want to have a mortgage at that time. like we should have a paid off house. So, you know, that money that we put to the mortgage, should we be able to live? So, yeah, I think we would be able to live off a hundred thousand, maybe a little bit. Yeah, a little bit more. So I put it up to three. And I have one more clarifier. One hundred and twenty thousand. Is that in today's dollars? Or are you thinking you want one hundred and twenty thousand when you reach retirement?

47:51The idea is whatever that would be with a guest guesstimated inflation or whatever. I think that that might be where I think that might be where I'm a little confused on the 4%. We have thoughts, but it's, it's something just to share you the details. I just want to clarify. It's just a really interesting thing. Cause, uh, so obviously if you had$3 million today and you were doing the 4%, then you live off$120 ,000 in today's dollars. That's$10 ,000 a month, which is great. Do you think you could live the life that you want to live on the way, the way that you want to live it on$10 ,000 a month?

48:23I know I could. Yeah. I think that we could. I mean, we live off$7 ,000 a month now and 2 ,300 of that is our mortgage. So if we nix the mortgage and that's seven plus a little bit more, I think that that would be doable. To me, that number is really high. So that's kind of where I am arriving to is, okay, if 7 ,000 is what we're living on now, and that even includes the mortgage, is our number really 3 million? Because we're going to show you, you gave us the number 3 million and we're going to show you what would be necessary to get to 3 million. But one of the things we want you to take away from this today is, is 3 million really the number?

48:57Is it, or if the number is something different than 3 million, does that open up opportunities for us earlier on than maybe we had even thought would be possible? Please. I love that. And maybe it's not 3 million. This is just, this is all based on what I've been able to piece together from YouTube University and my mom and my aunt and Google. So I am in no way, like, this is why I'm so thankful that we're here. I love it. And I was about to share a lot, but I want to set the table. One more thing is just a financial planner's job is we try to be as conservative as possible because it is a hard threshold when you tell a client that they can retire.

49:34So we usually put in, you know, conservative investment assumptions, meaning on rates of return. We put in inflation conservative adjustments. So I think what we're going to show you is falls under the umbrella of conservative, but that's why there's going to be some flexibility on maybe this could adapt and get to Bo's question is, is 3 million the right answer? Because what we said is if right now your goal is for 3 million dollars in today's dollars, by the time that Dustin gets to 60, 65 years old, that would generate about$120 ,000 of income in today's dollars. So based on where you guys currently are right now, you have a little over$200 ,000 currently saved up.

50:12And that's for both of our That's for both of you. So we're just, we're considering it a household. So when we say retirement, we're thinking about when he hits age 65, that's retirement, just to kind of keep it simple. What we know is right now with about$200 ,000 or so currently saved and invested between the two of you, those dollars without saving another dollar right now would likely grow to about$1.34 million. Now we just assumed a 7.7 % rate of return given your age. So already you're on track for like a million dollar plus portfolio just on the hard work you've done thus far. But you guys are still saving.

50:47You've already kind of laid out for us how you save. Matter of fact, let's look at how you're actually saving because right now you're maxing out Roth IRAs, both of you. You said you're doing this compartmentalizing where you have this 25 % of the real estate income that we're putting in the SEPs. That's another 20 ,000. And Shelby, you're putting a ton into your 401k, 21 % deferral plus a 4 % employer contribution. So you guys are saving like$60 ,000 a year. So it's pretty stellar. So we have 200 ,000 saved up. If you just take that 200 ,000, you continue to save just this 60 ,000 between now and the time that you turn 65, the number turns into$4.6 million.

51:25I like overshooting. So let's be clear though, when you're 65, 4.6 million will not be the same as 4.6 million today. We do have to factor in inflation. Because if we apply a 4 % withdrawal rate to 4.6 million, and then we bring it back into present value terms, that amount of money would generate about$97 ,000 a year for you. So we haven't hit our 120 goal. We hit about 100 ,000 based on your current plan. But we wanted to be able to show you, okay, if our goal is 120 ,000 in today's dollars, how much more are we going to save? What's the number actually need to be? And so we figured out that if you saved an extra$1 ,667 a month, right?

52:07That would be the magic number to save. Then by 65, you would likely hit a portfolio of around$5.8 million. And when you turn 65,$5.8 million would generate an income, assuming a 4 % withdrawal rate, of the equivalent of$120 ,000 today. Okay. Okay. So the summary here is if 3 million were the magic number, which I'm not convinced that it is, but if it were the magic number, there is probably a shortfall in savings. So some of these other places you have money going, you have to find, okay, how could we save an extra$1 ,500 to$1 ,700 a month in order to move in that direction? When I tell you guys that, give me some feedback.

52:46If I said, hey, you got to save an extra, because it comes up to about 20 grand a year. If you had to save an extra 20 grand a year on top of what you're doing. Well, it all comes down to me, essentially, because her salary is set. She has some bonuses and things like that. But for me, real estate is where the swings can get high or low. Sure. So, I mean, as I'm, I've been in real estate for six years, but I've only really been licensed for three. So like I'm still getting that traction underneath, even though I hit the ground running pretty well. So the idea is if I'm making 100K on average or what my goal is annually, that that is going to incrementally step up, however that can happen.

53:26That is the only way I can see where I can, where that money could come from essentially is basically another deal every month okay which is i mean i'm happy with that anyway right but that's my initial thought but it's doable i'm hearing you say this is it's it's this is doable right i gotta i mean i'm working as hard as i can yeah that's that's all i can say about that so the question that i would then ask is is this what's necessary? So you gave us the number of$3 million. The question I'd say is, okay, well, do we really, if we, again, I'm just doing very simple math here. Right now, you guys live off of$7 ,000 a month.

54:06We know that$2 ,300 of that's a mortgage. So if you take that out, you're really living on about$5 ,000 a month. In order for you guys to be able to retire, do you need to have twice as much of a lifestyle as you currently have? I don't think so. Go from$5 ,000 in spending to$10 ,000 in spending? No, especially when we were talking about we won't have a mortgage at whatever point we get there. We won't have a mortgage and then Mason will be out of the house too. So, you know, monthly grocery bill alone. Teenage boys. A lot lower. So, no, I think it is realistic that less than$10 ,000 a year. Yeah.

54:41I also don't want, I'm like torn. Do I think that less than$10 ,000, like as we talk through this, do I think that less than$10 ,000 could be doable? Yes. I also don't want to look at that number and say, oh, that's too much. It has to, you know, less than$10 ,000 has to be like, I don't want to short myself. You know what I mean? Like if we need to do that, maybe we find something in between. Like, I don't think that this is maybe quite it, but I think that less than$10 ,000 is probably reasonable. Well, I think one of the concerns that we had as we were talking is that it seemed like, hey, there were, there's some, we're concerned.

55:12We don't know if we're going to do all these goals. We feel like we might be behind the eight ball. We feel like maybe we haven't done the things. And so we have to catch up, have to catch up, have to catch up. What we actually recognize is that you guys are doing a lot of stuff really, really right. And you're moving in a really, really good direction. I hope that that's fuel to keep you moving in the right direction, less so than this burdensome thing of, oh my gosh, it's not going to work out because for all intents and purposes, you guys, yeah, maybe the beginning wasn't exactly the way you would have drawn it up.

55:41But at this point, you guys have a great plan in place. And that's what I needed to hear. really i needed someone to look at everything and say okay all good like everything will be fine because i i don't know i just get into a tizzy of it's not enough and it's not enough and it's not enough and we're behind and i don't know if we're ever going to be able to catch up and all of that and i heard you echo some of that that concern as you feel in behind and i know you're in you know kind of carrying the weight of this organizing it i would encourage y 'all to think about it in bands of where you could go on you could have a minimum amount that needs to be refunded every year and then you could have the aspirational amount because you already practice a forced scarcity type structure where this thing is an automated process to where if you have extra money coming in, you're pulling it in.

56:27It's not just going out the door into extra consumption naturally. So as long as you're hitting those minimum numbers, kind of where you already were, that was already going to take you over$4 million. But then in the good years, as you get more and more traction in the real estate industry, yeah, why not see if we can hit some of the stretch goals because then it allows you to maybe even reevaluate your goals, reevaluate what you, you know, are the trips bigger? Is lifestyle a little bit better? Is it okay that we're replacing the cars a little bit sooner? All these things kind of come into play after you make it past the minimum and you start hitting more of those aspirational goals.

57:02I think the other part of the question that I have talking about the retirement as a household, it's great. I don't know if it takes into consideration the fact that we're 10 years apart in age. So I want to make sure that he there's enough money in his name. Sure. That whenever we get to that point, if I want to retire a little bit early or that there is just enough for both of us to live off of until my retirement accounts hit the age where I can start actually pulling money out. Yeah, exactly. So I think that's the other part that I'm kind of like, it's a concern a little bit, but I don't know exactly how to like verbalize that and how to look at it.

57:38So I don't know if you have any insight on that. For sure. Well, one of the things that we did is we put together a little bit. It's sort of like like a pseudo foo for you in terms of how you guys think about your retirement savings. Because right now we know that you're going to max out the Roth IRAs. You're going to do that 7 ,000, 7 ,000. We also know that we're going to do retirement contributions for both of you. So we're going to do 401k for Shelby. You're already doing that, the 21 plus the four. And we're going to do some sort of retirement contributions for Dustin. So it's going to be either the SEP IRA, which is a great solution.

58:08We would probably say a solo 401k might be a better solution because then you can also do salary deferrals throughout the year and it's going to help for budgeting. Like, Hey, I know you're maxing out your 401k and I'm maxing out my 401k. And then whatever you have left over, then you can do the profit sharing type stuff similar to the way that you do the SEP, but you've already kind of, instead of mentally accounting and having to put in a bucket to the side, you can just fund it in real time. Every time a check comes in. And then you have this other additional investing. And this is the part where I think this is what she's getting at where you're the question you're asking is, Hey, I want to make sure that our gap fund, the fund that's going to cover between whenever I retire, he retires, and I'm able to actually access my assets, you guys are going to have to prioritize how you fund those buckets.

58:51It's why we talk about inside of step seven, step seven becomes once you're at that 25 % savings rate, you really got to think about how you're going to use the money. And you guys may arrive at the conclusion to, okay, yeah, we could do profit sharing into Dustin's solo 401k, but that doesn't make as much sense because we ought to be putting this in the after-tax brokerage account and we ought to be building a gap fund. And that might be where that extra$20 ,000, $20 ,000 a year goes into. And you can imagine if you put$20 ,000 into that gap fund over the next 20 years, you're talking about probably approaching seven figures just in that singular fund to be able to bridge that gap until you get to 59 and a half.

59:29You, there, a lot of modeling could be done on this, but you're very smart. You have great instincts in the thought that, look, with you, the 10 year age gap, and then Dustin is having to build this up, will it get to a critical mass that it will cover both of you since your assets won't be at the retirement age? You can annuitize a portion of your IRAs, but I love the thought of y 'all building this bridge account with taxable money because that just makes it more flexible for retiring whenever you want. But it's also going to open up other opportunities as y 'all just need more access points to money, whether it's investments or it's cars or it's lifestyle.

1:00:09The taxable account is just so easy to get to, whereas sometimes retirement accounts, we love them. That's why in the financial order of operations, you know, really when you get to five and six, these are very, and even two, these are all very tax favored savings opportunities. It is exactly what Bo said. Seven is where you're thinking about how do we need to use this money? And maybe we back into the math of we make sure the account structure works that way, because it's easy when you're younger. let's, you know, let the government fund this through tax savings. But as you're getting closer and closer, you want to say, wait a minute, let's start thinking about how we can use this money in a tax efficient way as well.

1:00:45That makes a lot more sense. And I think that was kind of the idea with the Fidelity, the money market account before you realize that all that has to be paid sooner rather than later. It's like, okay, well, some of that can be invested in like, we can start that brokerage account. We're just going to be set back a little bit, but we'll still, you know, we'll fund that again and we'll keep it in that brokerage account taxable brokerage account that savings goal could be part of it's not it's not an additional fifteen hundred dollars a month plus whatever we were trying to save anyway like we're already saving the fifteen hundred dollars a month so where you're saving right where are you putting it so that's not as intimidating to me i guess for some reason i'm thinking like we already do the fifteen hundred dollars a month and then we have to double what we're saving every month okay that's a little bit like where are we gonna to where are we going to cut down on things i really like to do pilates and i don't want to make a decent income i want to do some things not extravagant okay so that makes me feel a little bit better now that i'm understanding it a little bit differently do you have questions on it well i need to ingest it really well you would ask a question earlier shelby about when do you know when's cash and when to invest and i just want to give you some general guidelines is that when things are within 18 to 36 months, it's a no-brainer.

1:01:56Keep that in cash. So if you have any goals, and your instincts were already telling you about that, and that's why even when we talk about the college savings, that's about five to six years. That's the only one that's kind of in that gray zone that you probably want to do a very conservative mix to where maybe a portion of it could be invested, but a large chunk of it is going to stay very liquid. Because when you get into that five years, that's starting to feel kind of mid-level goals that you can start investing in. And then beyond seven years, let it rip that you can actually do diversified equity type investments because you should have enough time there to kind of live out whatever volatility is coming your way.

1:02:36But that's the way you because what you're trying to avoid is having to make a desperate decision of selling something at the world's worst time if there's a volatile period. Right. Which to answer your question from before, why are we so cash heavy? That's kind of that's the answer, because everything that we were looking at, obviously emergency fund, we want to have fairly liquid. Right. And then car fund college, like you said, kind of toes line student loan. like it felt like everything was kind of the next two years ish that we would want to have it available anyway so that's why i was on the fence about you know should we invest this or should we not so i i mean i have it in some cds and high yield savings some different things that are getting a little bit better interest than what just our high yield savings is but still i can pull it if i need to without penalty and we think about the 1500 like that extra savings that you guys might do in that gap account we'd love for that to be invested that would not be like a cash holding.

1:03:26That would be like a true equity type investment. Right. So that it can grow. Because one of the beautiful benefits of being 33 and 43 years old is your wealth multiplier still super, super strong. I mean, cash yields are great, but you got to get the money working if you want to be able to capitalize on the wealth multiplier. Right. Yeah. So that makes sense. And then on goals, because that's the other thing, because I love that you do systems where you kind of like set it and forget it and it's automated. I love how you're doing that. But a lot of times when people set automated systems, they let them on autopilot for too long.

1:03:56You will need to look at goals like the education funding because he's so close that you won't be five years long. It will be three years soon. And then you're like, well, okay, more of this needs to be cash. And then you'll start curtailing or coming out of some of those equity investments at that point. Which leads me into a controversial in my upbringing conversation about 529s. My mom Mom and dad both set aside oodles of money into 529s for my brother, sister and I. I was the only one that went to a traditional college. And even then I did it like later in life. And so my mom has this, to me, it seems very, like when she talks about it, it seems like very stressed of like, there's tens of thousands of dollars stuck in these 529s that I can't pull out because no one's going to school.

1:04:43And so, you know, some of it can be used for Mason. Some of it can be used for my niece and nephew. Like, great, but I don't want to be stuck in that position. Now, since talking to my aunt, my aunt has kind of enlightened me on it. My aunt's like, she can pull it out if she just paid the penalty, like she's being cheap. And it's penalty and taxes only on the earnings, not the money that she put in there. So like there are ways, like yes, you can get that money. And the tax laws have even now changed in the past couple of years where those dollars can even flow into a Roth IRA for the beneficiaries.

1:05:15And so now I'm kind of thinking my mom is extremely frugal, which is part of how she has made this amazing life for herself and she's financially secure but she lives as if she's gonna run out tomorrow no she's a financial miser a little bit and she's gonna watch this and i'm sorry mom there's a fine line there i love that you're calling her out on it a little bit and i mean her house is paid off like but she never remarried like she's very independent and so i get a lot of that from her but i have to remind myself like i don't want to be all like I want to take the good qualities of that and still live my life.

1:05:53And so I find this, I try to find this balance. Anyway, the 529, it's like, how much of it should we, behind the scenes, Mason's in the room hearing this conversation. And I mean, we'll put aside$50 ,000, but if he decides not to go to school, I'm not just going to give him$50 ,000. Sure. Right, that's for school. It can be used for trade school. Yeah. It can be used. There's all kinds of opportunities. most improved account structure is 529s because even the most recent tax legislation, if you had K-12 education goals, they went from$10 ,000 a year funding to now$20 ,000. So, you know, and that pertains to if you wanted to pass it down to relatives and others.

1:06:33So there's lots of ways to kind of clean out a 529 without paying taxes. And so that's what I'm thinking of maybe like putting part of it in a 529 and then keeping part of it maybe in more of like a traditional savings or investable, like something like that. Well, your goal is not that crazy. $50 ,000 for education is not the wildest thing. He's not going to run a huge risk of overfunding the cost of college. College, I think, can't keep running at the cost. I mean, going up every year with inflation like it is. But I do think it's going to be expensive for the foreseeable future. I'm not so worried that the$50 ,000 would be more than what he would need for college.

1:07:12my concern is if he chooses not to, or if he chooses to do trade school, I'm a cosmetologist, licensed cosmetologist. We didn't talk about my career, but I went, I did trade school. Like that's my career. And I did university and all of that later. So I am all for trade school. And so if that's what he wants to do, I fully support that. I just don't want to have all this money. The 529 get paid for that. Here's a real good number, right? $35 ,000 is what can be used in a Roth IRA, right? That's what you could do. So if all you did is that, okay, of the 50, we want to target no more than$35 ,000 being in the 529, you at least have an escape hatch that could be rolled into Roth IRA over the next number of years.

1:07:49So that gives you like eight, that's a good, there is no like right or wrong answer there, but you can play some like mental math to prevent yourself from thinking you're going to overfund it if he chooses not to go or does some other, some other type of educational. Okay. And I will say my mom actually, she has gotten very, while she doesn't want to pay the penalty and taxes and all of that, She has gotten very creative. And I went back to school and got grad school and all of that in more recent years. And she paid for all of that. I'm super thankful. But she actually pulled, she was able to pull$10 ,000 out to put towards his student loan.

1:08:19So that$57 ,000 was actually$67 ,000. That's the most approved account. I mean, I love the other thing. Keep changing. Our wedding gift was a$10 ,000 contribution. So she is trying, but she does not want to pay the penalties on it. So Mason and my niece and nephew and all of them will have some extra money for college too. That's awesome. I just don't want to, obviously, we don't want to depend on that. Sure. I don't want to depend on anyone else's money. If it comes, great. If not, we're set. Okay, so that's a good$35 ,000 about, give or take. That's a good number to have in a 529. And then maybe potentially the other 15 have it in a taxable brokerage account.

1:08:55Sure. High yield savings. Or depending on how far it is, more high yield savings. Right. All right, guys. Are you ready for your homework? Yes. You guys are doing great. There's not a lot here. Priority number one, we think you ought to probably go and pay off the student loans. deferment ends and our interest starts in January. So let's go and get that knocked out. The other thing you guys should do is spend some real time figuring out what your number is. Like, okay, 3 million is a number. Realistically, what do we want to spend traveling? What are we going to do when we retire? How are we going to live life to at least give you something to work towards?

1:09:22There's nothing says that that has to stay your number, but at least allows you to know what you're working towards. Now on the retirement side, figure out, is there another type of account I should be using like a solo 401k. We love it. It gives you more options than a SEP IRA. SEP IRAs are great and they're wonderful, but solo 401k just give you a few more options, which is wonderful. And then I said, decide where to save. Okay. For college, are we going to put it in the 529 or are we going to leave it in a high yield account? Are we going to have it in cash? I'm going to do that. For the extra savings we're going to do, we're going to put in a taxable bridge account.

1:09:53Are we going to try to do it inside of some sort of retirement plan, figure out how we're going to use those dollars, and then you reverse engineer where to fund the dollars. Shelby, thank you for coming on. Dustin, thank you. This has been an absolute pleasure, and I love that we actually got to show that you're going to reach your goals and become true financial mutants with all your discipline. Guys, thank you so much for tuning in. I'm your host, Brian Preston, Mr. Bo Hanson. Money Guy team, out. Making a Millionaire is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners at 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.

1:10:33Abound 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. Close your eyes, exhale, feel your body relax, and let go of whatever you're carrying today.

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