They Want to Retire Early. Their Lifestyle Says Otherwise.

21:24Brian Preston:We did the math. You guys are saving 15 % right now based on what you kind of laid out for us. If the goal was to save 25%, because you know that's a round number, that'd be 10 % more, 10 % more on a$400 ,000 income is about 40 grand. If I told you guys, hey, with the$13 ,000 a month spend that you guys have right now, we need to find somewhere between$2 ,000 to$3 ,000 additional to save on a monthly basis. Does that make you freak out? Or do you think, okay, no, we could find that? Oh, no, we can find it. It's like, I mean, you can look at restaurants. I mean, we definitely like going out to eat.

21:59Brian Preston:I mean, the daycare and the loan repayment is$3 ,000. We have to have a... What we'd rather do is wait until those things. Yeah. They'll find us. Yes, I mean, shop, you know,$1 ,100 on shopping,$2 ,600 on travel. Yeah. And so you make a great point. Hey, we'd rather wait for these things to fall off. And likely there is nothing wrong with that. But anytime we make a financial decision, there's an opportunity cost associated with that. Meaning we know that daycare is going to be at least a year before it falls off just because of aging. And then with the HELOC where it is at$1 ,400 a month,$6.75, we can amortize that out and see how quickly we get that paid off.

22:33Brian Preston:But is waiting for those to be gone, what if what that requires is, okay, well, our retirement timeline might not be 10 years. It might be 12 years. Is that an acceptable trade-off? Because that's really the world in which you're living now. If this were, hey, we're going to work until age 65 and normal retirement, then yeah, it's not that dicey. But when you have an aggressive goal, like retiring at 50 or at 55 or going into pseudo-retirement, the gravity of the decisions you make and the timeline on which you make those decisions carry a lot more weight. And so is just waiting to get the savings right where it is to be worth pushing back that goal or is that goal of retiring top priority?

23:15Brian Preston:It depends on the day. It depends on the trip. I just, I feel like she constantly asks, should I get this? Like it's, or like a$50 shirt. Should I get this? And my answer is always that yeah because i just see how hard she's working all the time like you can see that our net worth is a lot a lot of it's driven by her not really mine's more the steady kind of baseline so she's she's got three jobs currently and a lot of on-call stuff so there's a lot of stuff in the middle of the night so it's like not sacrificing for the kids so she's still there for the kids but then on call from midnight to 6 a.m and so i see how hard she works so it just seems so like weird to me to just like just get a shirt like if it makes you if that's going to make you happy but then she buys the shirt and it doesn't make her happy and so I think I think cutting down the savings in restaurants is we've already talked about is just an easy fix not savings but restaurant oh sorry sorry the the rest the spending on the restaurant and shopping is a pretty easy like it because when you put it in on paper like I didn't like two thousand dollars a month that's like yeah we should be able to easily that seems absurd and we should be able to easily cut that down of course then we talk about like how everything's just so expensive like we like this little coffee shop down the street from us and we go there and it's like 50 to get like lunch lunch a cup coffee yeah then we start doing the math it's like okay it makes sense why we're spending a thousand i downloaded monarch a few months ago yeah there we go and it put it in the things and it was like mortgage travel it was the same and i was like oh should we be spending the same amount on travel as we are on our mortgage.

24:55Brian Preston:What's interesting, even in here, you guys talk, I don't think the decision is as binary as you're making. It's not either we make memories today and we travel and we do these things with our kids or we save for the future. I think that it's probably somewhere in the middle of that. I think there are ways that you can live life today and experience the things you want to do and be able to travel, but it might not be to the same extent and degree that you have over this past year. You may have overcorrected on the today memories or at least the today spending. and I would argue you can still make amazing memories today without having the same price tag.

25:28There's something that's bothering me a little bit in the fact that, and by the way, and I want to talk about y 'all's dynamic of who manages and so forth and find out how that all works. But I see the, I think you gave us a clue when you said we spend$15 ,000 a month, but then when it popped up on the screen and it was$13 ,400, you're like, no, no, no, no, we spent$13 ,400. No, no, it's$13 ,000.

25:49Brian Preston:I told you I had to bet it. But when I was now, I did this. And you guys know this answer, I bet. I bet Gina does. Is for if you take$412 ,000 and just divide it by 12. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that'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.

26:27That comes up to be$34 ,000 a month.

26:31Brian Preston:Yeah, where's the rest, right? So yeah, this is an exercise. I love math because math kind of, it cuts through all the noise of the world and you get real quick to answers. So I just did, you know, because y 'all probably in like the 24 % bracket, but you have to run through all the different tax tables. So I just said, hey, what if they're just taking home, you know, so are you taking home 80 % or are you taking home 70 %? They're not taking home 80%. I can tell you what we take home. Yeah, that's what I want to know. What's the take-homes every day? Not always, but somewhere between, I would say, 16 and 20, depending on the month.

27:09Brian Preston:My greatest month's 20, maybe average 16. It just totally depends. $17 after all the savings that's kind of going out for retirement and so forth. You've just answered the question. You know this. So if all the savings goals, we have a hole of about$3 ,500 that's unaccounted for. Yeah. And that's big. I know. And I think that's probably, that's the part that, because when we do this plan for you, I really do want you to have peace of mind. Yeah. But it's going to be worthless if you tell us you're spending$11 ,000 to$12 ,000 or$13 ,000 a month. And then the real number is you're consistently spending$16 ,000.

27:49Because that gap – because we're going to – by the way, when you quit work and when you cross that threshold, that's the scariest thing in the world is when you walk away from gainful employment and now you're counting on the money to work for you. It works great as long as the numbers are good. But if you're having to pull at a faster pace than what you're supposed to be, it blows up really quick. And then the market gets, I know you love volatility now, but it's going to, you're going to hate it when you're in the retirement phase. Yeah.

28:16Brian Preston:I do think it's just so hard to tease it out. I do think there's a lot of stuff missing, but I think a lot of it was probably the bathroom because honestly, we wrote a lot of checks because I didn't want to use the HELOC. So we paid a ton of cash. And is that really fresh? Hold on. So it was not a 65. That was not a bathroom. No, this bathroom or 85 easy. I don't know. I don't even know what this is. This is the problem with construction projects. I know. Because everything's possible. It used to be$200 a time. Now it's like$1 ,000 a time. My contractor told me the same thing. We can do anything you want.

28:46Brian Preston:Yeah. How big is your budget? So there was probably, I think the painters was like two grand. I just wrote a check in cash. So there's, yeah, I mean, the money just. So did they just leave last week? I mean, how fresh is this bathroom? Within the year, yeah. Yeah. Okay. But that's what I say to him all the time. The bulk of it was like the fall, like six months ago. Yeah. But I say that to him all the time. I see what we take home, and I'm like, how do we not have more money? Where is it? Because we blow it. Yeah. This is fixable. Yeah. I know. I feel so good about this. That's why I said we need these guys.

29:18We're going to be able to, behind the scenes, take all of your – as long as the variables are good. That's why it's imperative, and that's why I think it's on the homework list. Go back through these. Use Monarch to give us real concrete numbers. So we just have to balance that. But if we get the numbers right, then it just becomes a math equation to figure out what we have to make automatic, both the good habits and the bad habits, and what we can budget and then what we can save. And then you can sleep well, and everything starts working out perfectly at that point.

29:49Brian Preston:Well, that's what's beautiful. Once you have a plan in place, it does relieve some of the guilt. You're not like, oh, am I doing all that? No, no. I know a plan. I know where the finish line is. I know where I'm at today. I know the steps I'm taking towards that finish line. if there's anything left over, it's okay if I go buy the$50 shirt or if we go on the trip or we go out to eat or whatever that thing may be, because you know, you've already taken care of the main things first. You've taken care of the most important things. When you guys like sit down to have these conversations, like when you talk about budgeting or looking at where the money is, how do those go?

30:19Brian Preston:Do y 'all have like a weekly, monthly? Do you do network statements? We don't have conversations. I just do it all. Yeah. It's, uh, I've got enough meetings. So having another meeting at home wouldn't be everything she's uh like i was a person of very simple means i would say um and like everything she's done for me or like pushed i don't want to say push because it sounds aggressive like coerced me into doing has always been like in the long run for my benefit doing something like this for example like you 15 years ago not a chance i roll along because she's just our life is so good now like with the kids and like financially where we are, like from where it was even before I met her and then even where we got started and like all because of her work ethic.

31:05Brian Preston:And when she gets into something and just dives into it, like this is what it turns into. So if she like any of those financial drivers, I'm on board. Like I just. Do you love doing it alone? Yeah. Okay. So you're like, you're like, hey, just let me cook. Let me get in the kitchen. Let me cook. Yeah, basically. Because I don't want, I really want a lot of opinions, you know? So when it comes to spending, when you feel like you're, I'm going to use travel as an example. Is there pressure from one or the other of you? Like, hey, let's go on this trip. Let's do this thing. Is it more you? Yeah. Okay.

31:38Brian Preston:So you're the one who's, okay. I'm the spender and the. You're the spender and the saver. He spends no money. Buys nothing. Spends no money. Has a company car. Bites coffee. Yeah, coffee. He buys coffee and a haircut. Five times a week. Coffee and a haircut. Yeah. You know what? He's the greatest husband in the world. That's amazing. Coffee and a haircut. And he can fix everything. And he can fix everything. Do you think, so if we're able to put together a plan, and okay, here's where you are, here's where you guys need to be, here's what that means, do you think you'll actually, one, if we give you a plan, can you take and execute the plan and stick to it?

32:11Brian Preston:Yes. It's like you have the propensity to do that. Yeah, I won't have an issue with it. And I think that's what I was encouraged to do this with her because I know she'll listen if you guys say it. So like if you guys implement it, if you trust your opinion more than anything, so then we'll easily be able to implement it. So when we think about, and this is going to be a hard one, but obviously one of the things we're going to need to figure out, we can talk to you about, okay, what savings will do. And we can talk about, okay, well, if you save at this level over the next 10 years, this is where you'll be.

32:40Brian Preston:Do you have any idea? You know, the way you're living right now, you know, the money you're spending right now, that's somewhere loosely between 13 ,000 and $17 ,000 a month. In retirement, when you get to financial independence, if you had to put a dollar figure in the lifestyle that you want to live, how much do you think you'll spend? Obviously, daycare will be gone. Home equity line of credit will be gone. When you think about, man, if we had this much money every month, we could travel the way we want to and we could eat the way we want to. Have you guys figured out what that number is? 10 ,000 has been my goal, 10 ,000 a month, So 120 a year.

33:14Okay.

33:14Brian Preston:Now come on. I know. I do. I think about it. No daycare. No. What? Because your travel, I bet y 'all are going to spend, because when you have more time, you don't think you'll try to travel more? We're not like, as far as travel, I'm not like a, let's go international. Let's go to Paris. Let's do this. Like we love just going to Florida and like looking at the water. We rent Airbnbs. Okay. Are these like one bedrooms? Y 'all stack them all up? No. These are nice places, aren't they? Yeah. I mean, like, Like$3 ,000 to$5 ,000 a week. Okay. Okay, that's not correct. All right, so hold on. So$17 ,000 spending minus$1 ,400 for the HELOC minus$1 ,200 for daycare.

33:54Brian Preston:Yeah. That's at like$14 ,000, right? And you just said, hey, I think a number that would be great is$10 ,000. So when we get to retirement, we want to spend$4 ,000 less than we're spending today. Yeah. Does that sound right? I mean, I just - You have more time at home. No, I know. but like him, it's the kids. I hate to blame it on the kids, but I'm telling you, we walk into Target for like - It's only going to get worse, by the way. For like toilet paper. And we walk out of there$300 later with every chalk and toy and bubble and shirt under the sun for the kids. Pull up the, let's look at the expenses again.

34:26Brian Preston:Like the shopping is$1 ,100. I bet that's all Target. Okay. And Amazon. We're always getting something for the kids. I like to think that's going to go down. You know, I guess I don't know. I think that might be a little hopeful thinking because they get more expensive the older they get. And mind you, 10 years from now, when you have a 16-year-old and a 14-year-old, your insurance is going to change based on that 16-year-old. You're going to have automobiles. You're going to have two going into college. You've got to figure out, like, are you guys going to pay for college? Are they going to pay for college?

34:53Brian Preston:We've got conversations around that. Hopefully by then it'll be free. Maybe they don't want to get in. That is a plan. Maybe they want to do HVAC. There we go. Yeah, he could want to get in a trade, and I can hire him. I took out loans, paid my own college. I don't feel the need to give them a full ride. It'd be great if the money was in the 529s. I would love to help them. But my hope was that we'd be in a position where we'd have some to give them. And then if they have loans, we could help them if they needed. But I'm hoping to teach them. Like, hey, we're going to save from the 529s and what's there is there.

35:24Brian Preston:And anything else you need, you got to figure out how to do. Yeah. And we'll help if we can, but you know. All right. So I'm going to write down 10 ,000. I don't think we're going to stay. No, there's no way that's not. That is a pipe dream. That's a great idea. but we might iterate. Well, also in 10 years, I'm assuming everything's going to go down and be cheaper and cheaper. That's the way it works. That's the way it works. Okay. What other questions do you have for us? What are some other things that we can speak to that might be valuable for you guys? Oh, I love it. There's a list. There's a list.

35:53Brian Preston:She came in with a list. Okay. So Jamie has, I don't know in that other slide if it's in there, but Jamie has a rollover IRA from his old job. So I guess my question is, should we be rolling that into a new 401k? Should we leave it there? So let me tell you why you might consider rolling it in. If we were to look at Jamie's 401k, where's your current 401k with your current company at? Like is it Vanguard? Trans-America. Trans-America. How are the investment options inside? They have like low-cost index funds or are all sub-advised insurance products? I think he's in low-cost index funds. So one of the things you want to do is assess that.

36:25Brian Preston:Okay, how good are the investment options inside of this? If there's only four options and they're like super expensive, it may not be compelling to roll that IRA in there, right? That may not make sense. But if there are decent investment options and they're relatively low cost, one of the things that you guys could do is you could roll his old roll of IRA into his 401k. When you do that, it then zeros out his IRA balances. And now it opens you guys up to be able to do backdoor Roth contributions because now you make too much money to be able to put money in a Roth. It's a great way for you guys to build tax-free dollars over this next 10 years just by changing your account structure a touch.

37:01Yeah, I love it as long as you don't skip the due diligence on the investment options on the 401k.

37:09Brian Preston:And you have an$8 ,000 rollover IRA. What's that? That was an old 401k that our advisor just put. You should definitely get rid of that. Same exact idea. You could roll that into your current 401k. Even if your current 401k is expensive, that's so small. Okay. The opportunity cost is nil and much better in the first year for you to be making Roth IRA contributions. And is there a reason you have two 401ks currently? Oh, I have an old one also. Okay, so even that one, again, assuming that your current plan, low-cost options, well-diversified, you could consolidate your IRA rollover and your old 401k into that, and you guys really just collapsed five accounts down into two, which is great.

37:49Brian Preston:It's a lot easier to keep track of your allocation, and it opens up some really great tax planning by being able to do backdoor Roth contributions. Can you access, I don't know, I can't remember this, Roth IRA, prior to 59 and a half? Well, you can access the money that you put in, the contributions you make, not the earnings. Earnings have to be pulled out of, but you really don't want to. Like if you can avoid it. Well, I know, but this is my problem. If we want to retire early, that's why I feel like I don't want to put anything else in retirement because I need that bridge account. Ultimately, we're going to want that probably to come out of a brokerage account.

38:20That's going to be your bridge account.

38:22Brian Preston:Yeah. I mean, we could look. There's all kinds of fire movements and you've probably seen the blog post and we actually have a great show coming out, five ways to get access to your retirement assets early. We're going to share the Roth, after you do the five-year holding periods and so forth, you can get access to Roth. But I'll be honest, it's just because I love the tax-free growth so much. It's usually what I tell people, if you have the ability, I'd much rather you do it out of a taxable brokerage account because it's just the friction costs and the opportunity costs against your future self is just so much lower.

38:56It is a break glass.

38:57Brian Preston:I just have felt like everything should go in the brokerage to get that bridge account. I think what we're going to show is, again, if we're just going to use 25 % as our kind of like mark in the sand right now, if you have to save an extra$40 ,000 a year, well, even if$15 ,000 of that was going into the Roth, it still leaves$25 ,000. Is that right? 40 minus 15, 25,$25 ,000 a year going into the brokerage account. So it's not an either or, it's likely going to be a both and. And one of the things that's great at 46 years old, if retirement for you is 56 and that's when you actually retire, even though you're not 59 and a half yet, so long as you still have that 401k that we've consolidated the assets in and you retire in the year that you turn 55, you can actually draw those assets.

39:39Brian Preston:Not saying that you should or that's what you ought to do, but you actually have access to that without that 10 % penalty after age 55. So the age difference in timeline kind of works to your advantage. So I still think Roth is likely going to make a lot of sense for you guys. So as far as the HELOC and the brokerage count, should I be pumping the brakes on the brokerage and nailing the HELOC or doing what I'm doing? Let us put together a plan on that. Because what I want to see is you look at two things. Okay, what's the finish line that we want to be able to accomplish? What's the most effective way to get to that finish line?

40:14Brian Preston:There is going to be an opportunity cost if we prioritize paying off the HELOC immediately. You've got competing goals. That's right. Yeah, I know. And so we want to model it both ways and tell you, okay, if you knock out the HELOC, this is how it changes the finish line timeline. If you move towards the finish line, here's how long you have to deal with the HELOC. And we'll kind of lay out both of those scenarios so that you guys can make an informed decision on which one you feel the best about. And there's a third player in the fact that your emergency reserves, I'm going to tell you, we've got to get that up.

40:40Okay, I said they're going to kill us on the cash there.

40:42Brian Preston:Listen, that$20 ,000 has been sitting there for five years. I'm just like, why do I want to keep adding to it when I could make money somewhere? else. You know, I'm with you. I have never, uh, I've never had like a life threatening, uh, car wreck. And so I just don't even wear my seatbelt anymore. I don't put it on. I don't need it. It's not, I've not had to use it thus far. So why would I have it? It's just been there forever. Like I just, why would I put my seatbelt on? Oh, I hate it. I hate cash. That's a bit of a drastic example. I said, they're going to yell at us about this cash. It does become a desperate decision when you're out of cash.

41:19That's why every time that there's a market downturn, it's so interesting to me that people are out of cash, they lose their job, their real estate's getting crushed. And then we're surprised why everybody's watching which planes are flying into Omaha to talk to Warren Buffett is because he's the only guy smart enough to keep some cash around. And I just want to make sure you guys are also on that smart column. So you just don't have to make desperate decisions because there are things outside of your control that can come your way and just devastate you guys. And the closer you get to retirement, the more that that gets scary.

41:53Brian Preston:And one of the questions I'll ask, you guys, one of the things that is probably the most powerful thing that you have right now is this huge shovel. $400 ,000 is a lot of income. When it comes to pain, is your propensity as a couple to concentrate as much pain as possible into a short period of time or to stretch it out? because there's a mechanism of which if we look at your budget and you tell me how lean you guys could go if you wanted to get like militant about it, we could get the home equity line knocked out and the emergency fund funded before the end of this year. Like if you guys were willing to go through the pain of really cutting back.

42:32Brian Preston:We actually just talked about that. I said to him when we looked at all this, I went, oh God. And I said, I think for the next six months, we don't even think about vacation and we just hammer down. I'll be honest. I think that we're not doing you justice by being too, I think we're being too nice to you. What? I just do. I mean, because I was thinking, I think if Dave Ramsey was here, he'd be like, what do you mean? You've got to take the kids on all these vacations and all this stuff. I mean, I do, I should harness my inner Dave a little bit. It's because I'm seeing y 'all's income and then I'm seeing you lament that you want to pay off that debt.

43:04And I'm like, we're way too nice. Because we're telling Gina and Jamie, you know, we'll figure out a plan. It'll be okay. No, we should be popping y 'all around. No, I'm not good at that. I'm not good at that either. Tell them you are a nice guy. I know. That's the problem. I'm sitting there going, we are not doing them well. Because y 'all should. I mean, I see$400 ,000. And then y 'all should be like, we don't know what to do with our money. We're making so much money right now. We know what to do. We just keep going up. We just keep stacking up in the checking account. How in the world? Please help us save or spend this money.

43:35But that's not what's happening. You guys are like, we don't know where the money is. And we're like, how are we going to fix this if y 'all can't even in yourselves? and you're like, I downloaded Monarch. I did. That's where that came from. This thing is magical. No, you need to get serious about paying off all this stuff because it's crazy. You have a lot of money. You're rich. But you're rich only on income. You're not rich on your net worth statement yet. I know. You're kind of behind on that. I mean, I hate to, because other people will go watch this and be like, hey, why is he picking on them?

44:03They're millionaires. You're millionaires because of your house. You're not millionaires because of your investments.

44:09Brian Preston:But I also feel like we have not been making, It's not even been a year yet that we've made this. But you're coping with that. You're saying that. And that's, once again, if we did this in the right way, as soon as you got that pay raise, holy cow, we're rich. Money's just stacking and it's not. You spend it. That's a great point. Up until a year ago, you guys knew how to live off of a$250 ,000 income. And I bet if your kids were here and we asked them, hey, how was life the last two? You said they're already remembering some of the trips we've gone. So life probably felt pretty good at a$250 ,000 income.

44:41Brian Preston:income. You guys know what it's like to live at that level. Where you are right now, if you could go back to that temporarily for a season, do you realize how impactful that could be to your financial life? If you just gave yourself six months, eight months, 12 months living like you made 250, but actually making 400 and knocking out some of these other goals, then you don't wake up in the middle of the night thinking, holy cow, am I doing the right thing? You wake up and say, man, I got the HELOC knocked out. Let's take control. I've got my emergency fund covered. We're saving 25%. We feel great.

45:15Brian Preston:All right. I feel like, I feel good. I feel like we, I feel like we can put together a plan. We get the easy job. The easy job for us is putting together the plan. Hard job for you guys will be actually like taking it and doing it and putting it into practice. This is, but y 'all are, y 'all are a couple. Like if you were clients of mine, I'd also want to kind of start massaging to turn y 'all into creating checkpoints as a couple, two to two, like the angle net worth statement. So even though Jamie is like super husband who is handy and makes a good haircut, doesn't spend – And handsome. Pull him out of the closet.

45:46You pull him out of the closet for when he needs to play dad and husband, but then put him back in the closet because he doesn't spend any money or anything else. I would still like y 'all to take a more active position together because, look, if we had reversed gender roles on this, I would worry about the power structure of keeping your spouse in the dark on everything. I think Jamie is just so, he doesn't care. He doesn't care. Things are better because I'm in the water. I would totally spend some time talking about the power dynamics of that and why good communication is important for couples.

46:19It's just that right now I think y 'all got bigger fish to fry.

46:22Brian Preston:Yeah. But that is, if y 'all were ongoing clients of mine, that's something I would want to be working out to empower both of you. I honestly think it's like coming from you guys, it'll be any plan. It'll be easy for her to implement and obviously easy for me to follow along. You guys will just have to explain to the kids why Disney's canceled this year. Sorry, everybody. Mr. Brian ruined our memories. Yeah. No bippity-boppity boutique for you, Stevie. No, y 'all heard us do. Let me scare you the other side. If you do too much for your kids, they don't come out always perfect on the other side.

46:53That's what I worry because we both grew up with scarcity. It sounds like y 'all grew up with scarcity. Raising kids with abundance is its own problem. So that's why you need to be mindful of that because I think there's a tendency, especially if you grew up in scarcity, when you start coming into money, let's give them more. But if your kid's best life is while they're under your roof, what type of adults are they going to be? You have to be just as deliberate with wealth as you do when you grow up in scarcity is because there's unintended consequences. So this is not necessarily a bad thing for the kids, for y 'all to be super focused on getting these goals paid off.

47:29And it also lets you model how to be good and disciplined with your money.

47:32Brian Preston:Yeah. All right. Our homework is we are going to put together a plan. You've laid out for us what your goals are. We're going to say, okay, well, here's what would be necessary in order to accomplish those goals. Your homework in the interim while we're building out this plan is to figure out, okay, how aggressively do we want to attack this? Well, I'm going to steal a line from Uncle Dave since you said he was the beginning of your journey. You have to live like no one else. I know. So you can live like no one else. You know what? This is basic. We can pull this stuff back out. You know, after you graduate from Dave, we'll eventually get you to the new one.

48:05Brian Preston:I read it. I already signed up for the preorder for the new one. So y 'all rock. This was a lot of fun. Thank you for – I feel like we were the tough love but like soft addition. Yeah. I needed it. You know. But y 'all have been great. You really have. Thank you. Thank you for having us. Yes. Brian, what a great conversation we had with Gina and Jamie. I actually love this couple. They're wonderful. But I will say they have fallen in the trap that we see so many people make, especially high-income-earning Americans. That's right. They've made more and more money. I mean, huge numbers. Their lifestyle somehow was keeping pace, if not even exceeding these big jumps.

48:44Brian Preston:But they're not beyond repair, but it's going to take some hard work. If they really want to change their financial outcome and really their financial future, they're going to have to make some hard decisions. And so we sat down and we said, okay, let's think about how do we prioritize what they're doing right now? Should we prioritize paying off the home equity line of credit, which is at 6.75? Is that high interest? Do we prioritize building up the emergency fund? And there was a little bit of tension as we were kind of navigating that. Well, I mean, look, 6.75 stinks. However, to have this level of income and not be able to cover an emergency for desperate decisions that might come your way from the uncertainty, it gets scary.

49:24So I think we ended up, after talking about we landed on, let's at least get them to a moderate level of emergency reserves.

49:30Brian Preston:That's what we said. We said, okay, based on their current spend, which they told us was right around$13 ,500, they should have about a$40 ,000 emergency fund. And that at least gets them three months. That gets them three months. But what we want to do then is, okay, that's their base level spend. How are we going to make some adjustments? Because they have to find some margin to be able to do this. So we said, okay, there are some spending areas that have gotten a little bit frothy. If we can shrink those down, it'll create some margins. We said, okay, for their dining out, let's drop that from almost$1 ,100 a month down to$750.

50:03Brian Preston:Shopping, let's drop that from almost$1 ,200 down to$500. The loan repayment, we're going to drop that down from the$1 ,865 they're doing down to $500. And this one, I think, is going to feel painful in the moment, but necessary. Their travel budget, which was big, was$2 ,700 a month. We're going to drop that down to$1 ,000 a month. So we go from$1 ,300 in spending down to about$9 ,400. So think about this. We have found for them$4 ,000 a month. I mean, we're talking like 50 grand a year. And what was wild to me is over 2 ,700 of that 4 ,000 plus a month is from just consumption. I mean, with a lion's share of it, probably just on, I mean, well, it is, it's not probably the travel alone.

50:49Yeah. There was a lot of fluff in this system that I'm glad that we're able to kind of, now look, we're not trying to steal all their future happiness, but this is definitely something they need to get serious from a discipline standpoint. So they can actually have the money and be wealthy versus just looking rich.

51:04Brian Preston:And so what we said is based on what we assume they're like net take home to be with this cutting has shaped their total margin to around$6 ,500 a month in total margin they have to deploy towards goals. And right now we want that to go towards the emergency fund. And if they do that after three months, they will get their cash up to almost$45 ,000 just doing it for three months. If they can put their minds to this and make the hard decision, they can start knocking out their goals pretty quickly. Well, I think that, you know, and if you're like, are we being too hard on them? This is a couple that only recently started making an income over 400 ,000.

51:39It doesn't seem unfair or unrealistic to say, no, just go live like you did back when you made a quarter of a million dollars. So I think this is completely reasonable from a planning standpoint.

51:49Brian Preston:And then what we said is, okay, if we can get their emergency fund built up, now we want to increase their savings rate. And even though 25 % is our goal, we said, let's not even try to go all the way to 25%. If we can just go from their current 15 % savings rate up to a 20 % savings rate, it's going to make a really big difference because they said, hey, we really have this goal of retiring on this 10-year timeline. Well, that's sort of fire-ish. And so in order to get there, again, they're going to have to be making some difficult but heavy discipline decisions. They have conflicting goals. I mean, because look, their retirement goal is less than like 10 years.

52:25so to yes let's pay off the debt but somehow we have to be building assets i think that's why it is a nice land in the middle let's get them to 20 that's still a somewhat aggressive savings rate but it allows them to keep nibbling and knocking down that home equity line so if they consolidate

52:40Brian Preston:some of their retirement accounts like we said when we think about their savings priority we think that they should both max out their 401ks that's 24 or 5 each they can now do backdoor Roths, if they, again, clean up their IRA situation, they can max out their HSA, and they're still able to build some dollars in an after-tax account, which is said they want to do that bridge money. That'd be about$800 a month. So even saving 20%, it's not 25, that's still $82 ,000 a year. And that is a lot of money. But at their income, I'd argue that's necessary. That's what they ought to be doing. Well, and it's only for a moment that they get to kind of get this exception to the rule, because look, we're going to pay out this home equity loan.

53:18it's going to knock it out in less than 19 months. I mean, right around the 18-month mark, they're going to be completely out of that home equity line. That's right.

53:26Brian Preston:What we said is we're going to cut their spending pretty aggressively. We're going to fund the emergency fund, and then we're going to get their savings rate from 15 % to 20%. And with the additional they had cut, that's going to go towards the home equity line. We're going to pay$500 a month for three months, and then we're going to aggressively knock that down at$4 ,000 a month over the next almost two years. Well, remember the biggest consumption decision we knocked down was their travel. But I really don't think we're traumatizing anybody by taking an 18-month pause to get this thing back in order.

53:57Brian Preston:Not at all. And I think if they can make some of these difficult decisions, what it's going to do is it's going to put them in a position to have a higher probability of success getting to where they want to be. because we said, okay, based on where they are now, if they can just continue saving at that 20%, that$82 ,000 a year, and based on their age, if we just assume an 8 % rate of return on average, by the time Jamie gets to 56 years old, they will build a portfolio of about$2.5 million. Now, Gina said, we really want to spend 10 grand a month. And I don't even know if that number is accurate or not, but even if that were the goal, based on just saving 20%, It does not quite get them there by the time that the 10 years runs out.

54:42But come on. We actually have a get out of jail card here. It's because Gina, her job doesn't have to end. She's already said that she can pretty much work from anywhere. She can work just as much or as little as she wants as a nurse practitioner. So her job is in demand, and she actually likes going to work. So I see that we have an easy button here is that we can allow her to keep working a bit, even if her husband kind of drops out of the workforce.

55:11Brian Preston:Yeah, what we say is if she can just cover the bills, if she can just allow them to meet their living expenses, and they can let that money they build up over the next 10 years coast, this is sort of a version of Coast Fi, coast until Jamie gets to age 66. Well, then that$2.5 million turns into almost 5.7. Well, a$5.7 million portfolio at that time with Jamie being 66 and Gina being 60 would generate the$10 ,000 a month they're looking for. So this is certainly a possibility that they could move towards. That's option one. That's option one. There is another option. If they don't like this and they don't like kind of the coast fire that you just laid out, We could have where they just got really serious about the saving and investing and then allowed that to build up the assets as well.

55:59So lay out that scenario.

56:00Brian Preston:Yeah, once they get the HELOC paid off, instead of leaving their savings rate at 20 % and having some of that excess go to lifestyle, they said, you know what? We've cut down. We want to be really devoted to this. We're going to have all$4 ,000 of that margin go towards our future financial wellbeing. So now instead of saving 20%, we're actually saving almost 32%. That's a big change. Now, in the next 10 years, we get to a portfolio of$3.3 million. And again, if she can just cover the living expenses, let that coast a little bit, they would only have to make it until Jamie hits age 60 and Gina hits age 54.

56:34Brian Preston:So now we've knocked six years off their timeline if they can make the hard decisions now. So that sounds more like a true fire setup at that point. So it's almost a choose your own adventure. How hard do you want to hit the lifestyle adjustments so that they can leave the workforce on their terms. What they have to do is they have to sit down and prioritize their goals. If they want their future to look different than their present, then they're gonna have to make some hard decisions and they get to choose how hard do they wanna make it. If they wanna make it really hard, it'll be a lot shorter.

57:04Brian Preston:If they wanna be not as painful, they have to be commit to it for a little bit longer, but they're in the driver's seat. They have a big shovel. They can change their circumstances, but it's gonna take discipline. Yeah, hopefully some of this, because if you remember, Gina was somewhat stressed out about her finances. Jamie was completely kind of tapped out on any of the decision-making. I'm hoping from us having this discussion, it's at least gonna be a catalyst that brings peace of mind for Gina. And then hopefully Jamie now feels like he's more of an active participant and they get to live their best life.

57:33Brian Preston:That's right. They are a couple that can be successful, but it's gonna require discipline. If you're a couple like Jamie and Gina and you'd like to be a guest on Making a Millionaire, you can go to moneyguide.com slash apply. Or if you wanna check out any of our free tools and calculators, you can go to moneyguy.com slash resources. Gina, Jamie, thank you for coming on. We really had a blast with you. And I think that you are one of those couples that just a little bit of discipline in this moment in time is going to create huge results for your future. And we just wish you the best. I'm your host, Brian, joined by Mr.

58:05Bo, Money Guy team. Out.

58:08Brian Preston: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.

58:39Brian Preston: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.