They Want to Cut Their Income By 50%… Is It Possible?

20:10Brian Preston:How does that employee stock purchase plan at your company work? It's just a discount. I don't know what the discount is. 15 %? Yeah, maybe. I'm not sure. That's around 15%. But I do like 118 paycheck or was doing. And what was your pay cycle? Bi-weekly, yeah. A lot of levers to pull for you guys, which is awesome. You have a lot of different options available to you. And I imagine one of the things you're trying to figure out is, well, how do you know which ones we should be doing and where it should be going? I asked you this question to kind of set us off. What questions do you have for like, what are the things?

20:41Brian Preston:So obviously you said, hey, we got these twins coming in October. We want to make sure we're well positioned for them. We want to make sure that if potentially there's like some sort of gap in employment, it sounds like you want to take six months off, but three of those will be unpaid and likely go back in the workforce. What are the other financial concerns that you guys have? Or what are you nervous about as you shift into this new stage of life? Should we keep investing the way we're doing? Should we pull back? Where should we put our money now that the twins are going to be coming? Should we focus on paying off the car quicker?

21:13Should we increase our emergency fund? What steps should we do first to take some stress, I would say, down the line for us? Yeah, definitely. What's the first thing we should tackle? like these next five months we have left. Well, answer this for me on a month-to-month cycle because life's about to change a little bit with bringing these babies into the world. Does it feel pretty easy? I mean, life feels pretty easy right now? Yeah, I'll see why not, yes. Where's any stress points on the cash flow whatsoever? Because on paper, it looks like y 'all should be swimming in some extra money. But are you feeling like it's because you're allocating to the 401k, you're allocating to the HSA, you're allocating to the Roth.

21:56You have a huge kind of sinking fund for just discretionary spending. Is all that building or are you finding that those cash accounts are kind of overflowing over time? Give me a feel for a month-to-month basis. Yeah, I think it depends for sure on the month, but our guilt-free spending, I feel like, is kind of where we struggle the most with. It's like we kind of just don't really have a plan for it. We just kind of go and, you know, go out to eat or, you know, go on trips, little short trips together. But I really want us to hone in more on like how what we should do with our extra money. Sometimes it does go, you know, just go back into our checking account.

22:41But I feel like most of the time when we see our checking account, like over the like the 5000 mark, we're like, OK, we can get rid of that money.

22:48Brian Preston:We need to find some way to empty that out. Exactly. Exactly. Exactly. So I, yeah, I really want us to be more disciplined with our guilt-free, especially now. I love how you labeled it because ultimately when you have a cashflow management plan in place, you should have guilt-free spending. If you're expecting us to be like, oh, we got to tighten that down. Maybe not. We want to make sure it's the right number. We want to make sure that you're funding the right places. But the idea that you have this bucket that is like guilt-free spending, if we're going to travel or we're going to go out, we're going to do it.

23:17Brian Preston:That's wonderful. That's what we love to see people do. And if you can set up your system to pay yourself first and know the money is going where it's supposed to be going, then you don't have to have any guilt at all. There are some things we're gonna have to tweak though, like, you know, 72 month car payment and that kind of thing. And the, you know, slightly lower merchant reserve. So we might not be able to be completely guilt-free initially, but I definitely think that's something we can work towards so that then you don't have to worry, are we doing what's right? You can know, yeah, we're doing exactly what we're supposed to be doing.

23:45Brian Preston:Our dollars are going where they're supposed to be going. The structure is right, but the fake it till you make it is wrong. And the fact that when you underfund your emergency reserves, you underfund what your car payment is, it can make you feel like you're being responsible when you might be overconsuming. So that's why I love the way Bo put it. If we can make sure your numbers are right, I like you having the comfort to go out there and just make the best of your 20s. And then early 30s as they come, as these babies come with you guys, that's awesome. but we just got to measure twice, cut once and make sure those numbers are right.

24:20Otherwise, you might be shortchanging yourself a little bit in the long term while you have so much time on your side.

24:25Brian Preston:Now, one of the interesting things about financial planning is generally the goals that we have live on different timelines. Like obviously we have a goal that by October, we want to feel pretty good. A giant tornado is going to hit in October and it's the most wonderful, amazing, incredible tornado ever. But life is just going to be different and wonderful and amazing and maybe even messy is what we would call it. But I imagine there are goals that exist even past that point, right? Like financial independence and retirement. Have you guys had conversations even at this stage about like what you, the ultimate financial independence goals you want to work towards are?

25:00Yeah. Yeah.

25:01Brian Preston:I mean, I really want to, he goes, we've done that,

25:07She's doing the homework. She's doing the homework. I really wanted to pursue like Coast Fire for a while. Why? And what's the vision for there? That was just so like, I mean, I really want us to focus on investing while we're, you know, in our 20s. And then like 30s, we can like, I wouldn't want to do like just completely stop investing. I would want to still invest. But I would like want to take a little bit of more of a backseat on it and, you know, really focus on traveling and enjoying our free time and having flexibility with our lives. And so I think my goal was for us to, you know, retire with like two to three million was always like I felt like a comfortable range for me in retirement.

25:54And yeah.

25:55Brian Preston:Why two to three million? I think for what we spent, what I think we'll be spending when we retire, like somewhere around like$80 ,000 a year, I felt like would be comfortable retirement. $100 ,000 would be$80 ,000. And when? I call it age. I think probably like 60. I wouldn't want to retire like super early. Okay. But yeah, 60s, yeah, would be. When you think about Coast Far, the way you described it was not so much like a financial thing. like, hey, we want to save less, we can spend more. You were describing more like time freedom. Am I understanding that correctly? So it's less about like, oh, we're going to save, save, save, save, and then we're going to start spending, spending, spending.

26:36Brian Preston:You're trying to figure out how you structure your life so that you have time to do the things that you want to be able to do. Did either of your jobs allow that? Like on the career trajectories that you guys are on, is there a reality for like backing down the hours you're working when you get into your 30s? Is that like a path that's available in your vocations? Yeah, I think for me specifically, where I'm working now, like we have a couple women on our team that are like part-time or have like flexible schedules. And I'm like, oh, I could see myself doing that. I would say for me, not so much.

27:12Brian Preston:But do you have the same vision? Like would you want to be able to back down your hours and the time? Oh, for sure. Okay. Is it 30s the time to back it down? I just want to make sure we're on a joined vision here. Yeah. Or is that something? You guys said you're 28. We're about to cross that threshold really quick. And that's still in the grand scheme of life, especially with a retirement age of 60. That's pretty early. So I just want to make sure that we've really fine-tuned that before we start throwing spaghetti at the wall to make sure the numbers work. I mean, is that the number? Is that where you're feeling you want to back down your work as well?

27:48Yeah. Yeah, I would like to back it down as well. But if it means I have to work a little bit more, if she can take a back seat, you know, so I can provide more than, you know, I'll be willing to make that sacrifice as well. So like now or even in your 30s, you're willing to work more? Probably early 30s, I would be willing to work more. OK.

28:08Brian Preston:But around about 35, he's thinking, I want to back down. OK. Well, we had we had plans to wait to have kids till we were like 30s. We wanted to wait to like mid-30s. Well, as the old guy at the table who just, my oldest just graduated college, I think you're going to be happy. Look, I'm going to tell you, the next few years, you're going to be in the weeds. It's going to be rough, especially with two, because that's what I have. I have a niece and a nephew, twins, and we kept them for a few weekends. Now, they're all like 24 years old, so they're all like full grown. I get the good part of hanging out.

28:44But they're tough. I only had them for a weekend or two. So, I mean, it's going to be in the weeds for you guys, but I think you'll look back and be like, man, this is all right. Even if you want to pull the lever again and see if we have, you know, another set of twins, you know, because as you get to be my age, you kind of get sad that they start leaving the house. And you'll be very happy that you started this family because then you even get to build more memories on it. The thing I'm trying to figure out, though, is because I always want everybody to live their best life. And if you're already trying to figure out how you can get out the escape hatch in your 20s, I just want to confirm.

29:18Now, I kind of understand on your side, it's more of a family planning type thing. But I want to make sure. Do you love your job? I like it. I don't love it. Okay. If another company calls and it's a better opportunity, I would definitely, you know, seek it. Okay.

29:39Brian Preston:What would define a better opportunity? Like if you're like, hey, I could, this is what a better opportunity means in my mind. I would say more money the same hours I'm working currently. Okay, so it's not that you dislike your job. You dislike how much money you make. Yes. Okay, so you like the work that you do. There's a lot of opportunity for me to move around and kind of do different jobs within the company. So currently, I wouldn't say I absolutely love what I'm doing. But the paths to other areas, I have worked previously, yeah. Do you know either a department or a job that you would love doing?

30:20Brian Preston:Oh, yes. What would that be? I would be like director of planning. Okay. That would be where I would really enjoy. Is that something you could do now? Could you be the director of planning now? What steps can you do at the office right now to let them know this is what you want to do? The office is aware of kind of where I want to head towards. So, you know, and then my next step is go to a different department in June, July. Okay. And then do that for about a year to 18 months. And then, you know, just keep going up that way through planning. So you're already on the path to, I'm going to call this like director of planning role.

30:57Brian Preston:When you land in that role and you're doing work that you love doing and you're making the money that you feel good about making, do you still want to back down your hours and start doing less in your mid-30s? Or if you're doing the job you love and making the money that you love, is that something you'd be comfortable continuing to do or you still want to kind of exit that? I think I would like to exit that. Okay. You want to get there and then get out. Yeah, get there. Yeah, I feel like he's way more – he would be a great stay-at-home dad. He kind of already has those, like, yeah, those, you kind of already do the things that I think would be a good stay-at-home parent.

31:39Like, you cook, you clean, really take care of a lot of the household. And, like, yeah, I feel like he could see himself doing that. Let's play the other side of this. Do you love your job? I do, actually. I do. I think I could see myself, I don't know about like director role, but I think my next step would be like a manager role there. And I mean, in industry, it's a little bit harder to move up in accounting just because you have to wait till someone retires or leaves. So I don't know what the timeline for me would be for that, but that would be my next goal. So like maybe in the next three or four years, be a manager at the company I'm at.

32:22Brian Preston:Is that a path? like is that a path or program that you're already on and in? Yeah, right now, yeah, I'm working with my current senior manager now, and he's like, yeah, I could see you being a manager. If there's like a spot that they can open, if there is like a, yeah, if there's enough work to go around to make that spot warranted to create it. Or right now we don't currently have a manager role in my company for indirect tax. So there could be an opportunity. There's another senior on the team that's probably going to be vying for that spot. And I do get worried now that we're, you know, having I'm having kids.

33:02I don't know what that will be like if I will be able to get that spot before, you know, he the other senior does. But, yeah, I like my job. I think I could see myself working there for 20 years. A lot of people on my team have been there for like 25, 20 years.

33:20Brian Preston:So let's say that, okay, you get through the kids and you kind of get to the point where you're comfortable going back to work and you continue like on this trajectory and you get in the manager role and you're in your early 30s, mid 30s working in that role doing that. And if that's taking place, is that something that you then want to pull back on and want to exit? Or would you be like, no, I'm okay, like continuing on this path, on this trajectory? Yeah. Yeah. I think I'd be okay with continue on the path. Okay. Yeah. So, all right. So y 'all might have a hybrid type approach here where y 'all, you know, because there's nothing wrong with that.

33:54That's why everybody, you have to meet. And that's what I love about family planning, but also couples lean into where the skill sets. Now, y 'all are unique that both of you are analytical and good with money. But if y 'all, if you're the one that's passionate about it, I think that's spectacular. You know, take the time, especially with an employer that has such really good benefits for the family side of things. And I'd be curious, are any of those part-time positions that you were talking about are flexible or there may be even beyond part-time? Are those mothers as well? Yeah. That are in the management position type stuff?

34:27None of them are in management roles. That's the only concern I have about moving up. They're all in my role or below. Okay. So I would have to be in office as well. And right now I'm not in, I'm remote, fully remote. And managers and above, you have to be in office four days a week. Okay, I can kind of understand that. Yeah.

34:46Brian Preston:As I'm hearing you guys talk and communicate to us, it sounds a lot less to me like your goal is coast fire. Right. Like in but more of the goal is, hey, can we get to a position where it could be a one income household where one of us could work and one of us could stay home? And that provides flexibility to still be able to do the things we want to do and have that sort of freedom. Is that more the goal than like actual coast fire? Yeah, I would think, yeah, yeah. Because we're not, yeah, we're really not looking to like really fully slow down, I guess. Yeah, we're just looking for that flexibility for if one of us wants to stay home, then we have that ability to do so, yeah.

35:24Brian Preston:Let's say that you get into the manager role and you're kind of rocking and rolling in that. From a household income standpoint, what kind of income do you think that position would be able to generate for the household? I think at least another 20, because then I'll be eligible for the bonus. So what would the total comp be there? Maybe about$125 ,000. Okay,$125 ,000. Realistically, we could be in a position where if you decided to stop working or to really back down, you could make$125 ,000. And if we're planning, we'd be planning towards a goal of, can we make the household operate and work on that income?

35:57Brian Preston:Is that fair? Yeah. For the immediate future. So what we're going to do is we're probably going to plan this in stages. Okay, what are we going to do immediately between now and October? Between October and early to mid-30s? and then what's early to mid-30s all the way out to 60 look like. Does it seem likely both of your incomes are going to kind of stay where they are right now for the next four or five years? Or are the income trajectories significantly different than they are right now? I think for me it will significantly change. Okay. Yeah. So being in the company, I usually got in a 10 to 12K raise every year.

36:32Just switching positions and seeking promotional opportunities. So that's something I would like to keep pursuing.

36:37Brian Preston:So if we're at a household income of$200 ,000 now, it seems feasible that by the time we get to our early 30s, we'd be at a$250 ,000 household income, which is some simple math there. But that seems like a reasonable trajectory that we're moving towards. Yes. It does feel that y 'all have got a moment in time here to where it might time out in the perfect way in the fact that when you have the littles, for the first two years, you're kind of trapped at the house anyway. I mean, that's what it is. Very gloriously trapped. But you are trapped. I mean, because it's just hard. And kids are not as expensive as everybody scares you that they are.

37:14So I would, what I'm seeing develop based upon y 'all's conversation, y 'all need to hit this big life change, especially with some velocity. Meaning that while y 'all are stuck at the house and while y 'all want to have this big change sometime in your 30s, we ought to really boost up that savings rate substantially so that you get. Because what that does is saving early and often is going to give you maximum flexibility in the future. Where it's not full coast fire, but it at least allows you to know where your options are and have the tolerance while you're making big changes financially that it doesn't feel stressful.

37:53Because what you don't want to do is run it so lean that then you'll choose, make these choices for happiness and fulfillment's sake. but you feel like you're shortchanging yourself because there's lots of conflict and there's stress that comes from it. There's a better way for us to do this, but we have to really maximize these next few years and try to save at a hyper pace so that you feel really good about the future. I mean, do y 'all feel that a little bit? Does that scare you? Oh, yeah. Yeah, it's a little scary. Because I know one of the things when I was reading kind of the planning files, y 'all want to be, y 'all like this.

38:28I mean, you can see it's spontaneity through non-spontaneity. I mean, you have a sinking fund for spontaneity. And I think that's very noble and it's good. But it is one of those things where I'm just saying embrace the hardness of the next few years of the messy middle to maybe build you some spontaneity a few years in the future, if that makes sense. That's right. Yeah.

38:54Brian Preston:Because when I think about this, I think we're going to be able to put together a plan. And the plan is going to be how do we get from now until October? And then how do we get from October back to two incomes? And then how do we work at two incomes to get down to one income? And then once we're down to one income, how do we get one income back to financial independence? And that's going to be the stages we're going to build to. Does that sound kind of like what you guys are looking for? It definitely does. That's awesome. Yeah. Awesome. Yeah. I do want to add, we've talked about it. We do have a house.

39:23And we like, we love our house. I think it's like perfect for the family size that we're going to have very soon.

39:31Brian Preston:But... Yeah, I can see you. The but was coming, right? What's the but here? We don't live like in a great like school district area. When did y 'all buy this house? We bought it three years. We bought it a year after we got married. We did not plan for it very well. We kind of figured out the numbers afterwards and like started living near that area after we signed on the house. But we bought it three years ago. We signed for it three years ago. It was built two years ago. Yeah, we've been there for about two years. So you know, did y 'all even did you use our homeowner's checklist when you bought the house?

40:09We did not. I swear, after we signed for it, we're like okay, we need to figure out how we're going to make this happen. Begin with the end in mind. I mean, this is one of those things. Look, y 'all are, without a doubt, very analytical in your skill set, but you also have some impulsive tendencies on big purchases. And I'm just going to go ahead and tell you, that's not a success recipe. They get more expensive as you go. I mean, because it also plays on the psychology that salesmen can recognize when they have somebody who falls into that trap of, I feel the scarcity of the moment to make a decision.

40:48You should go into big decisions scared to death. And that's why I say measure twice, cut once. All things in the future for car purchases, home purchases, anything that really gets into multiple thousands of dollars, take more deep breaths and just slow down the whole process. Because you have the natural skill set, but somehow there's some impulsiveness that is overriding your analytical nature. And it's not for the best for the long term. And you're probably feeling that right now. Now, the good news, you're not going to be able to recover from these missteps, but you got to start course correcting on falling in those behavioral traps.

41:27Yeah.

41:27Brian Preston:Well, and to put your mind at ease, kids don't start school until kindergarten. So you got like six years, right? So we got from now until October, plus about six years to get there. So we have a planning period. There's a lot that can change in real estate, a lot that can change in your personal circumstance with an eye towards, hey, at some point we might need to be in a different home. Well, the great news is six years in the future, five years in the future, who have been in this home for eight to 10 years, right? Which is great. I don't think you have to have that completely figured out, but it is good for us to know that because in terms of the buckets that you'll begin funding as you save, that may change things a little bit.

42:02Brian Preston:If we do begin to think, okay, we're going to need to have some sort of capital to be able to potentially move into our next home. But I wouldn't freak out too much about that. Okay. You've got time to freak out about that. This is the appropriate time to be thinking through it. Yeah. I just wanted to bring it up because I was like, when we got our first house, I was like, we did not plan for this. like we should have. We should have ran the numbers. I'm like, okay, now the planning starts. Well, another thing that just as new parents, right, and we have tons of resources out there on the website at moneyguide.com slash resource.

42:32Brian Preston:We have like a whole new parent guide, what should you be thinking about, what should you be looking at, what should you be considering. Obviously, there are gonna be some things that change in your life, like even your need for life insurance. Like that's gonna be something you're gonna wanna think about and analyze and figure out. Estate documents. You guys currently have estate documents in place? We don't. Once those babies get here, it becomes really difficult. You have to answer the question, hey, if something were to happen to us, who do we want to be the person that would step in to provide for our children?

42:57Do y 'all know the answer to that? No, we don't. So would y 'all fight about that? I mean, is that something y 'all would have two different opinions on who should raise the kids if something should happen to both of you? I don't think so. I mean, it would probably be like your brother. Yeah, probably. You say, yeah, probably. So again, the good news is— Do you have multiple brothers? I do. Is one like really good with kids and the others aren't? or do y 'all know which brother we're talking about? Because it sounds like he has multiple brothers. I want to make sure. We know which brother we're talking about.

43:24You can't raise children by committee. You kind of need to know specifics on where things are going to happen. Yeah, definitely your second oldest brother. Yeah. All right. See, I want to know who to give the compliments to. So Thanksgiving this year, I got you. You wink at them a little bit differently.

43:40Brian Preston:So, again, these are, again, you have time. You have to have this stuff figured out just yet. It's still early. The babies aren't even here yet. But once the babies do show up, you do want to have those conversations around, okay, have we – our risks change when there are other lives that depend on us. So we want to make sure that we've got the appropriate documents in place, got the appropriate life insurance in place, those sorts of things. So it is something you want to be thinking about. That's probably likely not a 2026 item but certainly probably going to be a 2027 item for you guys. Well, it could be 2026.

44:10Like the state documents and stuff? Yeah. I mean I like hitting the ground running on that stuff. That way that just you never know. You can't be assured that tomorrow is coming. So you need to plan accordingly. We've seen enough. And life insurance is dirt cheap. Estate documents are dirt, you know, not that expensive at this age. So I don't disagree with Bo. But it needs to happen. I would put yourself in a homework category of you've got to have it done within the first three to six months that the kids are here. If not done beforehand. Well, you think I'm being too hard? I don't, I mean, because how often is this is a serious issue?

44:49Brian Preston:I'm not fighting. I just made a lot. I'm not fighting you. I'm on the same page. Same page. What other questions do you guys have for us? We were doing an extra payment on the house. So that's something we should continue to be doing. Should we focus on other areas first? When y 'all are talking about staying home with babies and changing jobs? No. Or when you have a 72-month car loan. There's some better uses for that money right now, for sure. To help us understand, when we look at how much you have going to your mortgage right now, in the budget, it says$29.25. Is that the actual mortgage payment or does that include the extra?

45:26Brian Preston:Includes the extra. Okay. What's your required mortgage payment? $26. Is it$25? $25.49? So there's about$300 or$400 extra that's going in towards a mortgage every month. Yeah, I think$26, yeah,$26,$25. So that gives us$300. We could do something. You realize if all we did was take that$300 and put it with the car payment, we've kind of started riding that ship, and we haven't really changed cash flow a ton. So that's great. I do not believe at your age, even though your mortgage rate's not like super low, I don't know that'd be in a huge hurry to really prepay that mortgage interest. Same thing with your student loans.

46:10Brian Preston:Your student loans are not at a crazy interest rate. And I just think there are other areas where your dollars can likely be better used, like knocking out that car payment, getting the emergency fund fully funded. But don't you worry. We'll put together a plan and give you some step-by-steps, which will be awesome. Okay. Yeah, that would be really great. And I think the only other thing is like travel. We know we're probably going to have to take a backseat on, but Luis's family and he's from Mexico. So we go to Mexico like at least once a year. Love that. And yeah, his grandparents are definitely getting older.

46:46So we definitely want to make plans to be able to visit them.

46:49Brian Preston:But that's normally encompassed inside the guilt-free spending bucket, right? Yeah, for sure. I imagine so long as there's still some – you guys have a small enough footprint and a large enough income that all of these things should be possible. It's going to require a little bit more discipline for you guys. But nothing you're saying is freaking us out. It's not like this is like a dumpster fire. This is all tweaking around the edges to make sure that starting at this early phase, you don't get yourselves out ahead of your skis and find yourselves in a bad spot in your early 30s. You know, all the research on happiness and fulfillment.

47:24After you get through basic kind of pay the bills, that's one element. But when you get into really more of the fulfillment side of things, It's kind of your spiritual faith as well as the friends that you keep, the family that's in your life. So traveling to go visit family to make the memories that you're going to get to keep forever, I think is pretty foundational. So it's okay to build that into the budget and say, hey, every year we're going to go back to Mexico so we can make memories with especially some parents that are getting older or grandparents. but just build it in and then be disciplined that you actually don't have to feel like you're cutting away from something else.

48:05Bo laid it out perfectly and you guys have the income. So don't feel like that's where you're shortchanging yourself. It's some of these other things. It's the more of the compulsion on some of these big purchases that's squeezing you. It's not going to go make memories with family members.

48:20Brian Preston:I'm excited. We're going to be able to put something together. Pretty exciting. You guys are going to be awesome. You guys are going to be in a great spot. What a great conversation we had with Lloris and Corey and how exciting that here they are with twins on the way. Yeah, they're, look, overachievers in a lot of ways. I think that they're going to get a lot of dividends off of how much they've done at such an early age. But life's about to change. But let's face it, it is about to get really messy for them because, you know, just having a baby in general makes things hard. But throwing in twins is going to definitely, you know, rock the boat.

48:52Brian Preston:And so what we wanted them to recognize is that as they make a plan and put it together, you don't have to have a plan in place today that's the exact same plan you have in place 20 years from now, 30 years from now. It's okay to think about in stages. And I think for them, that's exactly how we ought to approach it. We ought to think about, okay, there's this timeline between now and the time when the twins arrive in October. There's going to be this time when they're a single income very briefly. And then Corey's going to go back to work and there'll be a dual income. And then it sounds like in the future, they even want to go down to one income where one spouse stays home and one works.

49:26Brian Preston:And then ultimately, hopefully this can still work towards financial independence. So I think they ought to think about it in those sort of compartmentalized buckets as they think about planning. Well, I know that we've even put together these numbers. And what was really fascinating to me is as we got to talk to them as the couple and seeing the dynamics of it all, Corey is the one that really, you can tell, she loves her job. Oh, yeah, for sure. It was kind of fun to walk them through to figure out what does that plan go look like. So, but what happens when we actually put numbers to the plan?

49:57Brian Preston:Yeah, so we said, okay, if we're going to plan these sort of these different phases, let's think about what that means for income for the household. And what you can see is obviously right now they're going to have a dual income. And then Corey's going to have the babies go on a brief maternity leave. So there'll be a small period where they're down to one income or 60 % of her income and then three months without any income. But then they're going to go back to two incomes. And the idea is, for planning purposes, we said, what does it look like if they have a dual income household out until the age of about 35?

50:31Brian Preston:So we're going to do this for the next six, seven years. And then at 35, let's get them to the place where they make the decision to go down to one income, live at the same standard of living, same lifestyle, but hopefully they can do enough work up to that point that they can still save appropriately to be able to reach their long-term financial goals as well. This was powerful for kind of setting up the long-term. But I know before we get too far out over our skis on this, there's some current things they need to do. I mean, I remember when we were talking with them, it seems like with all these big life changes, we had to at least look at, is the emergency fund even going to be where it needs to be?

51:06Brian Preston:Well, it wasn't quite where it needed to be. And they have some other stuff coming down the pipe. They have two babies that are naturally going to show it'd be more expensive and their income's going to go down. So we said that if we expect the medical expenses in the next three months to be around$6 ,000 to$7 ,000, and we're going to have the additional responsibility of children, we ought to think about they should shoot for probably four and a half months of living expenses in liquid cash. So if we assume that they have an$8 ,000 monthly burn rate, four and a half months of that would be a$36 ,000 emergency reserve target.

51:41Brian Preston:And right now they have about$20 ,500. They're going to have to do some work. It's going to be the main work they do between now and October to build up their emergency fund. So you're kind of recommending we shut it all down, like all the funding for everything else. Except for employer match. Employer match. But then focus that on these emergency reserves. And we think that we're going to have them in a pretty good place within that six-month time. Yeah, when we back all of that down, I think they're going to be able to save about$2 ,740 a month towards that emergency fund goal. If they can do that over the next six months, that's going to get them to just a touch under$37 ,000.

52:17Brian Preston:So right about the time the babies are showing up on the scene, boom, they have emergency fund, fully funded, ready to roll. I want to put them on notice, though. They need to take this serious and make this time work because it bothers me. It kind of makes the hair on my arm stand up that they're not going to have Roth IRA going. Sure. The health savings account's not getting heavily funded. And they're only doing the 401k up to the match. So if I was them, yes, do this in this moment in time, but let's not get crazy with it and let's focus on what needs to be done. And I don't disagree with you, but they also had another thing going on that I think requires.

52:50Brian Preston:Because I want them to be building and I want them to be saving, but they have another thing. They bought this new car and it wasn't like it was crazy. It wasn't like they went all out, but they did sort of break the money guy rules. They bought this car. I love how we captured that. It's kind of like we caught them. Yeah. Is it because I was like, the math ain't mathin'. That's right. And we found out that it wasn't, because I think they originally said, no, it was only five years, then it was six. You know, we found out that this thing was definitely extended out to 72 months of a six-year term.

53:17And we got to get it under 23 ,800. That's right. And those who aren't familiar, 23 ,800 means you need to at least put down 20 % down on your car. Don't finance it for longer than three years, and it can't exceed 8 % of your payment. Now, look, obviously, cash is always ideal. But sometimes when you're early in your career or your journey towards building wealth, you don't have the money to pay cash for cars. So that's why we've tried to do 23-8, but they've kind of taken some liberties with that 72 months. That's doubled the length of term.

53:45Brian Preston:So right now, their required car payment is about$549 a month. We did the math to determine, okay, well, what would we need to be able to pay on the car to get it inside a 36-month? 36 months, and it's almost double. It's about$1 ,000 a month, monthly car payment. But there are some places where we're going to be able to pull and squeeze from this. So we know that right now they're paying an extra$300 a month into their mortgage. If they just stopped paying the extra on the mortgage, instead diverted that to the car payment, they go from$549 up to$849. Well, now we only have$150 shortfall. And our recommendation would be figure out, they had this bucket.

54:22Brian Preston:It was like$2 ,400,$2 ,700, somewhere around there. Guilt-free spending. Guilt-free spending. They need to be a little bit guilty, and our recommendation would be to take$150 out of that monthly allocation, add it to the$850 they just found, and then they'll have$1 ,000 a month going towards the car, and they can get this thing paid off inside of 36 months. Okay, so short-term-wise, we have the car. We have boosting up the emergency reserves. Let's get back to what does it look like on the long-term planning with especially the setup you had with the dual income dropping down to one, and then what does this going to look like in the long term?

54:55Brian Preston:Yeah, so if we assume the babies get here and then she goes back to work and now they're a dual income household. When we think about their financial order of operations, this is what it would look like. We're going to want them both maxing, or not maxing out, but putting 15 % in each of their 401ks. Luis is entitled to a 4 % match. Corey's going to get a 3 % match. We want them both to max out their Roth IRAs at$7 ,500 each. And then they're both on individual high deductible plans. They both have individual HSA maxes they can max. If they do all of that at their level of income, they're going to be saving over$70 ,000 a year, even with having the new babies, even with being able to pay off the car quickly.

55:37Brian Preston:That's pretty amazing. That's a 24.5 % savings rate, which is going to put them exactly where they want to be. But we want them to do that. But they've already shared, hey, once our kids get a little bit older, once they get to school age, we might want to have one of us stay home. And it sounded like it. it may actually be Luis that stays home. So we said, okay, if we go from having a household income for them around 250, which they said was like very reasonable, very practical for them, but then it goes down and we go down to one income, what does it look like if they're only making about$125 ,000 a year?

56:09Brian Preston:Well, obviously they would not be able to save at the same clip that they have been saving. They're going to have to decrease their savings rate from 24.5 % likely to somewhere more like the 10 % range. That's just gonna be what's gonna be necessary based on the living expenses they have. So what's the plan look like? If they start today and they save 25 % until they get to 35 and they drop to 10%, does it actually get them to financial independence? And this is what we found. They have$150 ,000 saved up. If they can follow that trajectory, by the time they get to 55, they will still be able to, even dropping to one income, even dropping their savings from 25 down to 10, build up a portfolio of almost$5.7 million.

56:53Brian Preston:At 60, it could be worth almost$9.2 million. And by the time they get to full retirement age at 65, it could be almost$15 million. And remember, they said their goal, what they needed to be able to live the life they want to live is about 8 ,000 a month or about$100 ,000 a year. They would still be on the path on trajectory to be able to accomplish that standard of living at somewhere between 55 and 60 years old. Yeah, I think a lot of people see these big numbers and they say, wow, that ought to just should have no trouble. But remember, when you bring it back for inflation, these numbers get much more reasonable.

57:26I am happy to see that they're going to have a lot of opportunity, but here's what actually made this all possible. They're in their 20s. That's right. So they started early and they started doing it often with the saving and investing. And that's why that head start of making, having already$151 ,000. And then the fact that we've already got a plan that's going to get them to close to 25 % while they're in peak earning years, it's going to pay huge dividends. So it really is showing that, guys, if you can be a financial mutant and add and save this money early while the money's there, you get flexibility.

58:00You get to make choices that not others are getting to do in your peer group. And this one is going to be them living off of one salary and even dropping the saving investment rate to 10%. Pretty amazing.

58:11Brian Preston:I think what we laid out is that all the things they want to accomplish are possible, but they're possible if they stick to the plan. One of the things I said is they kind of love this spontaneity and, oh, we're going to buy this house and, oh, we're going to buy the car. I do think if they really want to do this, because they have some pretty lofty goals and age and youth is on their side to allow them to accomplish those things, they have to recognize that they need to stick to the plan. They need to have some stick to it. Now, we still left in there this guilt-free spending budget they're going to have available.

58:41Brian Preston:So it's not like they're having to do without, but they're going to have to be careful not to let their lifestyle creep, let their savings fall by the wayside, let themselves get too comfortable too soon. Because even though the path looks great in the long term, they still got to take the next step and the next step and the next step to actually move in that direction. Well, and watch the impulse control. Because think about it. Even like the car purchase, they knew that that was not the right decision. So they have all the factors that should create success. And they've done it. I mean, we're pretty pleased.

59:10I remember right after we finished the recording, I'm like, wow, what a couple. They're in a really good situation. Just do the plan. Let the success of your army of dollar bills and the compounding growth do its magic.

59:21Brian Preston:Louise, Corey, you guys are wonderful. Thank you so much for letting us be a part of your financial journey. Congratulations on growing the family. It's going to be an exciting and maybe messy next chapter. Bo, if others want to come on Making a Millionaire, what's the way you apply? Yeah, if you want to be a guest on Making a Millionaire, you can go to moneyguide.com slash apply. Or if you want to check out any of our free resources and tools, you can go to moneyguide.com slash resources. Guys, we love creating this content because we really do believe that money is nothing but a tool. And we want to help you own your time so you can live your great, big, beautiful tomorrow.

59:57I'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. Abound 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.

1:00:33All 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.