Will Their Unique Financial Structure Hold Up? | Making a Millionaire

17:50I want you to pursue this. I know you'll be great at it. And if we hadn't had that conversation and if there hadn't have been maybe the push of like, you do need to replace your income, you can be a travel agent all you want, but you, you have to replace your income. Um, because you know, it's something that I want to be able to continue living the lifestyle that we had previously. Um, and I've not only replaced it, but now surpassed it considerably. It was a potential for grievance, but it turned into a motivation. Check an account. Is that joint or is that in somebody's name? They're separate.

18:17So there's actually two, two cash accounts. Correct. How are those broken out currently of that$64 ,000? I believe$15 ,000 is yours. Yeah. $15 ,000 is yours. So about$50 ,000 is mine. Okay. The other question, if we could flip over to your monthly expenses, I just think it'd be an interesting exercise just to walk through each of these main categories and you'll just kind of, I don't want to spend a ton of time. Sure. But I do just kind of want to understand mortgage. You've already, Nathan, you've already let us know. That's you. Yep. Utilities, is that also you just because the house is in your name?

18:45So it's probably structured that way? Nope. You got water and electric is me. So that's called 350, we'll say. And the gas kind of goes up and down depending on the season. So that's built in there. Gas is sometimes$400 a month by itself in the winter, but other months it's only$20.

19:03Brian Preston:Groceries? That's me. Food? Dining out's also. Mostly me. Mostly. Yeah, mostly Nathan. I do special treats, but usually dining out is him. Insurance? Me. Okay. Internet phone? Me. No, we split it. I pay my own phone now. Oh, well, it's$25 a month. Okay. That's right. So I've been my owner. That's true. I was thinking internet. Yeah. Yeah. Travel? Me. Okay. Subscriptions? It's both. That's both. Okay. Online shopping? That's both. But I think Nathan didn't ask me what my online shopping was. Maybe that was on purpose. But I definitely don't. We have our own online shopping. Yeah, we have our own.

19:39So you buy whatever you want. That's the part of having separate accounts that's really wonderful is he doesn't necessarily know how much I spend on clothes and I don't necessarily know what he spends on technology. Keep a pin in that because I'm going to come back with, I said two, I'm actually going to have three questions because I want to go over one other thing that we don't actually know the answer to yet that will tie into that. So keep going though. Children? That's me. Yeah. Okay. And then health? That's me. That's like their, our insurance pays for most everything, but they have a few things like their chiropractor and stuff that I pay for separately.

20:09Have y 'all balanced to see, because since y 'all make them about the same amount of money, have y 'all actually laid these side by side to see how close you guys are? Nope. Okay. Just out of curiosity. And then the other thing, and Bo, I'll let you jump back in after this, is I don't know y 'all's savings behavior because of something you just shared is that in a minute, we're going to talk about that the goal is for you. Y 'all have done a great job. You have a million dollars, but I know half of that or close to half of that is this legacy that's been paid forward. At some point, we might want to have a conversation is, hey, y 'all need to load up the Roth IRAs for both of you.

20:41So we need to make sure we're maximizing. Somebody might have a great retirement plan, or you have a solo. If you start making enough money, we're going to tell you, hey, there's some great planning opportunities with solo 401ks. I'll be curious to see if the savings behaviors also impact this desire, because I'll ask a question, but then also just give you this clarification. We wanted you to have your personal finances, very personal. So we want you to do what works for your household. I will tell you, I have my own bias. Talk to us about savings behaviors and investment behaviors? What are y 'all currently doing?

21:13So I will also say that I've always known and my dad has been very verbal that this was his plan and that he passed earlier than he would have liked. And he had this dream of leaving each of his children a million dollars. And he's always been very vocal about that. And anytime we would be like talking about saving for, he'd be like, why, why? And so, you know, and that's not, you know, it's not good to be reliant on that. But so, you know, my inheritance was not a mystery or a secret or a surprise, I should say. So it was part of my retirement planning with the caveat that like, you know, his health could go at any time or things could change.

21:47So I can't rely on it, but I do know that or he could just change his mind. I'm thankful that he didn't, but he could have. Right. So it was part of my saving strategy and my previous, you know, before the twins came along, before I got pregnant and expenses changed, I was saving over half my paycheck almost every month. Just whatever was left over from that. My commission that month would go into my Robin Hood's personal investments. Um, and that's, most of it is in Royal Caribbean stock because that's just my choice, but that's what I was doing. And it was simple and easy for me. And it's turned out to be very profitable because this was during COVID.

22:23Put a note on there for that. We'll have to talk about that. We can talk about that later. I'm sure it's not necessarily. Let's work in the travel industry and then let's invest in the travel industry. Keep going. You believe in what you're doing, right? Keep in what you're doing. So, you know, some months I have a lot in commission, some months I don't. But I was always very diligent to never tap into a previous month if this was a low month, and that was my strategy that worked for me. His strategy is kind of the opposite. He has accounts that are linked to his job that are pre-funded before he even gets paid.

22:50I didn't have that option as an independent contractor. Now I'm able to kind of look at what options I can create for myself moving forward. But previously as a 1099, whatever I had left, I would put into savings. And then I also had that sitting there come tax time so that I wasn't ever a burden on our family, and I always had the money to pay taxes on it when I needed to.

23:07Brian Preston:Do you guys file jointly or file separate? Yeah, jointly. But we always run the calculation. So you calculate each of your all. Much to Chrissy's chagrin. Oh my gosh, filing our taxes takes like a year. We've completed it separately. I guess we usually start with joining us. Like, okay, we've done our taxes jointly. Now let's erase everything. Now let's break it down and see if it's better for both of us to do. And like a tax return, we would just split that. There were like two. There was one year where we did file separately and I filed as self-employed. And that made a big difference. But I think it was the first year that I started when we kind of took a loss on my travel agency for the first year.

23:39But then after that, once it was profitable, it made more sense for us to file jointly.

23:42Brian Preston:But when you do your tax return, you determine who has the larger tax burden. Do you, like you said, if there's a refund, we just split the refund. But if there's, being self-employed, you're likely going to, equally self-employed, likely going to have a higher tax bill than you as an employee. You guys, you kind of calculate that and then equalize that out. Yeah. You know, it just kind of works itself out. It just kind of works. I can't really explain it too much. Because here's one of the things I'm trying to – But usually we do – if I did owe money, a lot of times we would start to put in Nathan's – what happens is we put in Nathan's first.

24:14We're getting this massive refund. That's right because I'm withholding. Because he withholds, right? Because the state withholds for him. That's right. Okay. And then I do withhold but in my own personal bank account, right, after I get paid commission. So then we put in my numbers and all of a sudden our refund goes like way down. And so then we get a refund still, and Nathan will just keep it to offset my taxes, basically.

24:35Brian Preston:Do you make estimated tax payments based on your income? Not previously. You just get to keep the money. Until it's tax time. So you just get to keep the money if there's any refund. Yeah, but things are changing now. I mean, you see the inefficiency. Oh, yeah, it's inefficient. Nathan, you're just like, it's fine. Because you're not actually sending her an invoice for that outstanding. No, it's not a big deal. I mean, on the percentage of our yearly situation, it's like, whatever. We settle that one thing at the end of the year every year. And now our situation is changing because you're no longer going to be 1099.

25:04Now it's – that's why this is kind of like a whole new chapter for us.

25:08Brian Preston:With your new agency, you said you have a lot of agents underneath you. Are they W-2 employees or are they independent contractors? They're all 1099s. So you don't have any employees. It's just going to be you. So one of the questions you asked us is, hey, we have this inheritance coming in. We're going to figure out where we are in the financial order of operations. And this is going to be a fun little exercise for us to figure out. Just in case you don't remember, we have it right there, but also. It's going to be a fun exercise for us because, you know, if I were to ask you, what does it cost to run the household for six months?

25:37Brian Preston:Is it going to be a pretty accurate estimate for you to look at that$7 ,000 budget and just say 7 ,000 times, you know, six months would be 42 ,000? Right. So I guess what I would say is it's probably not exactly like that. At least when I play that situation in my head, we're not paying for Netflix. but if it was like, okay, we need to double down and just do what it takes to run the house, there'd be a lot of cancellations going on. Sure. But I think if you were to just say, look at the last six months, seven, eight probably is per month. If one or the other of you is carrying a larger load of the expenses, I want to calculate, okay, what's the appropriate emergency fund?

26:15Because we desperately want y 'all

26:18Brian Preston:to work through the financial order of operations together, but what I'm hearing you say is, we're going to kind of do it different, which is totally okay. And so what I want to do is figure out where each one of you is in the financial order of operations and kind of go that way. Because I even imagine when it comes down to saving, that's probably the way we're going to have to tackle it, right? All right, well, you're at this point and now you can fund a Roth IRA or you can fund, okay, well, you're at this point and you're going to max out your 457 or we're going to move in this. And while it's likely going to be a cohesive financial order of operations once we put it together, it's probably going to be two separate foos.

26:51Brian Preston:Am I discerning that correctly? Well, and it's even more complicated because I'm sitting here like, Chrissy, if we find out, like we heard she only had 15 grand of cash. But she also has this inherited brokerage account. If a portion of that, we could always backfill that by looking at the asset allocation and the investment portfolio and backfill the emergency reserves. And then even go to step five, Roth IRAs. If she ain't got enough money to fund her Roth IRA, we can backfill it with the – it's so unique. You guys, and I'm trying to poke holes from a behavioral standpoint, but I mean, I get it.

27:25Like I said, every couple's unique. Personal finance is personal. I see where there's some probably raw spots that could break the barrier, but so far they're holding strong with you guys. So, I mean, there's no reason. That's probably one of those things where if I was your advisor, I'd be like, okay, we're going to circle this in the client file, but let y 'all keep doing it. And then if ever down the road, there was a breakdown and y 'all needed a facilitator of communication, I would probably come back to my notes and be like, yeah, that's where I thought the weakness was going to break down in this.

27:55But at least we have a path out. Because we want y 'all to have the best plan that works for y 'all.

28:01Brian Preston:And so I'm thinking we probably have to construct these two independent financial order operations. And then what I want to have a good idea of is what's the goal that we're ultimately working towards? Are you guys going to retire at the same time? Is that the plan? How are we going to navigate college for the kids and that kind of stuff? If there is a stagger and when one of you leaves the workforce and the other one leaves the workforce, walk us. Because, again, whenever we design a plan, we have to begin with the end in mind. We have to think about what the finish line we're working towards is.

28:32Brian Preston:As you guys have had that conversation, what's that finish line look like? Or is it two different finish lines in two different races? So this is probably one area where we have the same goal of what we want to do in retirement, but we don't know how old we will be when we're there. So I know for myself, based on my age and years of service, I'll probably be able to retire at like 57. So that would be kind of minimum if I want to just do my typical career. But Chrissy, with her new business, it's kind of like, well, depends on how things go. So, and we've talked, we have talked about like, what's our why?

29:08Cause you know, I'm, I'm the money guy person in the family, you know, I'm kind of bringing Chrissy here and she's like, who are these guys? I was like, they're going to ask us what our why is. And I was like, I'm not sure we know the answer to that. And so, yeah, that's, I think that's, I don't know if you have a different perspective on it than me, but. No, I think I'm pretty much in agreement. We both want to be able to set our kids up for success the way that both of our parents have. That is like kind of continue that legacy. We talked about in the car, the two of us, it was like the first time we've had six hours to talk to each other since the kids have been born.

29:41So we had a lot of discovery in the car on the way here. But we talked about how we want, you know, a lot of inheritances kind of fall apart in one generation and we want to not be that way. We want to be able to have our kids be essentially set up for financial success by the time they're 18 and obviously continue to choose their own path and to grow as individuals, but to always have financial security from day one would be a game changer for them in today's world. That's kind of our why is to, you know, if it takes me longer to retire, but I'm able to have my kids set up financially, I don't know what number that means that they need to have in their name.

30:17But, you know, if I can do that and work till I'm 60 or 65, fine. If I can do that and only work till 55, even better.

30:25Brian Preston:Now, when you say have money in their name, you're talking about like, oh, we want to like save for college. So at 18, that money's there. You're like, no, no, when they're 18, I want them to have a chunk of money that they can operate with moving forward. Yes, we want to start creating accounts for them now and contributing to them now so they can start building wealth now as opposed to when they're 38. Is that a higher priority for you than even like your own financial independence? I wouldn't say they're higher, but I think that it's something that's pretty high up for me in my emotional priorities.

30:54I would say it's like one and two for sure before having us to be able to travel and to live luxuriously. If we can live frugally and be retired and then our kids have financial security, that would be more important to me.

31:09Brian Preston:Is that true for you too? You feel the same way? I think maybe similar, maybe a little different in terms of I don't necessarily need my kid to have a million dollars when they're 18. But I want to make sure Chrissy and I are able to provide whatever they want, whatever they need at any time in their life. So, you know, if we think it'd be beneficial for their development to go to summer camp, you know, I don't want us to be like, well, I'm not sure if we can do that. But we don't need them to pay for it themselves. There's one thing to make sure college is paid for because there's a tool that facilitates that, the 529s.

31:41But then there's another to say, hey, I want to make sure the kids have this amount of money that's working in the background. And in a minute, I'm going to give you the good news is your kids, the twins, fall into these new Trump accounts. So the government's going to go ahead and prime the pump with$1 ,000 for each of them. I'll talk about the tax implications on that. But there might be – definitely get the free money. But these things, they're not – there's potentially a better option for what y 'all could be with your money. Take the government's free money. But then let's talk about what you should do.

32:15But I want to make sure that I'm on the same page with what the – because I'm hearing – because your dad said, hey, I'm going to give you a million dollars. And that was kind of something that rang throughout y 'all's household. That's unusual because most – because from a behavioral standpoint, that's a scary thing to tell kids. Because it's essentially saying – now, it seems like it didn't manifest this way for you, Chrissy, because you seem like you've been very responsible. But you tell the right kid, hey, don't worry. I'm going to give you a million bucks. What do I need to do? I mean, I can go live my best life right now.

32:49And we all know the secret to success that I've told a lot of people, like when I go to talk to high schools, the first thing I say, deferred gratification. Learn what it is. Because if you talk about the formula for wealth, when we talk about discipline, that discipline of living on less than you make so you can generate money, that margin between living on less than you make, You give that enough time to invest and grow. That's the secret sauce. So if you tell your kid, don't worry, it's on me, I'm worried we lose the behavioral side of getting kids motivated to save. So I want to make sure we're on the same page because one thing to do education, another thing to make sure they're millionaires at a certain age.

33:33We need to kind of know the difference so when we create the plan, it reflects both of you.

33:38Brian Preston:If we're going to design a plan, it's going to be well thought out. We kind of have to know what the end goal we're working towards is. So in your mind, Christy, when you say, hey, at 18, I want them to be, I know you said, hey, I want to be able to, we want them to be able to do anything they want to do. That's not what we call a smart goal. It's not specific, measurable. You know what I mean? There's not time. So let's talk about, we get to 18 and the kids are ready to rock and roll out of the house. How much would you like to be available for the kids at age 18? Well, I would like to have their college paid for.

34:07That's something that both of us benefited from in different ways. Very much so. Or a trade or whatever they decide to do after high school. But I'd like to have their continuing education paid for. And then I'd like to have, and I know this is a weird number, but I'd like to have enough for them to be able to, if they so choose, buy their own first house. Which is like what our house is going to cost. Like a down payment or is that paid for the house? No, like a down payment.

34:32Brian Preston:So give me a number. In today's dollars. If they were 18 today, what would you hope they had available? $60 ,000 would be. I think that would be. They don't need to be millionaires at 18, but I would like to have them like. $60 ,000 outside of college. Outside of college, yeah. I'd like them to be able to feel like they have resources and have choices and not feel forced or stuck. Like we did at 22, there was like no option except either living at home or eating ramen. And I want them to be able to feel like they have freedoms. All right. So six. And by the way, do you agree with those? You're cool with those?

35:12Yeah, I guess so. I mean, I don't know that we need to. I guess so. Are you saying like we write them a check? I don't know. We haven't really thought this out and I'm feeling a little pressured. We're not trying to stress you out. But we do. This is important stuff. It's only 17 years and six months away. So we've got plenty of time. But, you know. And goals can change. For how I guess my upbringing went is my parents paid for my college, which is a huge benefit. Otherwise, there's no way I'd be in this financial situation we are now. And that allowed me to – it was some forced scarcity where I got a job.

35:44I had a job when I was 16. So I wasn't paying for the college, but I was paying for all my own – anything I wanted, I had to make up my own. So, of course, we got allowances here and there just so that we had some money when we needed it. You want your kids to have that experience or not have that experience? I think I want them to have that experience. And that's where we are similar, where my schooling was paid for in my housing at school. But anything else, we both bonded on how we had our first job at 15. And anything that we wanted, we paid for. But all of our needs are met by our parents.

36:21And we want to be able to continue to provide that for our twins. Whatever they need, it's always been taken care of. and then they can learn financial responsibility for their wants.

36:31Brian Preston:So we have this goal, have college fully funded and then$60 ,000 for each child, you know, available at age 18. Now talk about financial independence. This is the next part. So when you guys think about, I know the timeline's gonna be a little hard. We got 57 for you, theoretically. But when you get to financial independence and the kids are out of the house, what's that look like for you guys? Like if you were retiring today with no kids, how much would it cost you guys to do the things that you want to do and live the life that you want to live? I don't know. No, more. More? Okay. So I think something we've talked about when retiring is we'd like to do a world cruise.

37:03Okay. You know any good travel agents? I only use a travel agent when I travel. So that's a potentially pretty big expense right at the end of retirement. In today's dollars, it'd probably be$150 ,000. I don't know. Per person or family couple? That'd be total. Total. Yeah, total. It's all year. It's all year. All food, entertainment, everything's paid for it. Potentially, who knows? At that point, you sell the house. Sure. Or after the cruise, you kind of get to start over.

37:28Brian Preston:But even once we get past year one. So let's say we do that. Right now, y 'all live on$7 ,000 roughly. Is the standard of living you have now what you would like to have in retirement and financial independence? Are you on a higher standard of living? And that includes our mortgage too right now. So we could definitely make that work. I think if we didn't have a mortgage at$7 ,000 a month would be. So when I bought the house, I say I, but it was really we. We looked at the house together, right? So when we bought the house, this was on, I was making$50 ,000, right? And I intentionally didn't take out more than I could afford.

38:04I was like, I'm cut off, right? And we're still in that house. But remember, that was two 25-year-olds, right? And we got two kids now. The house feels small. Okay, we're about to make a, we want to do an upgrade. So not necessarily, but we have made that work. We have made that work. and we've accommodated the situation. And there's a potential that when we pay the house off, maybe that can be sold in our down payment or half of something, a new house. Because I think that is a big dream of Chrissy and I to either build a house or find the perfect one.

38:35Brian Preston:A dream for like the near term, like while the kids are in or like a dream for - Yes, yes. Okay, yes. Within the next 10 years. Within the next five to 10 years, yeah. By the way, I love this. This is great. So we have these goals for the kids to be financially set up. Yeah. We have these goals to be able to be financially independent and do the world cruise and be able to live that kind of life. We have this goal for like being a new home. If I asked you to prioritize those goals, hey, this is the number one most important, number two most important, number three most important. How would you guys lay that out for us?

39:01You want to do it on three?

39:02Brian Preston:We'll see if we do the same one. You just do it. So house. Yeah. Okay. Right. What was the other one? House, kids, cruise. House, kids. And I'm going to say financial independence. Cruise was a mechanism of that. Do we understand? You might, because you're a better listener than me. Do we know what they have automatically saving? Like, I don't know what your savings rate is. I can tell you that. Sure. For me anyway. So for my 457, I know you're laughing. I'm just like, ooh, it's a shot in the gun. I try not to make a, I'm like, dadgummit, I'm the worst poker player in the world, but keep going.

39:33So for the 457, I'm putting in about$1 ,300 a month. And that's up as of like December because I paid a car off and I told myself I would put my car payment into my retirement. So when I paid it off.

39:44Brian Preston:Pre-tax Roth? Pre-tax Roth, yeah. 457B. I don't know. keep me honest. You're putting pre-tax contributions. Pre-tax contributions. And then there's also a cash match plan. So you put it$40, they'll give you$20, but that's the max match. So I do that too. Post-tax, I do$1 ,000 a month into a Roth until July, which is when I'd hit the max. And then I also try to put in$1 ,000 into regular investments. Starting in January or at July after the Roth is filled up? after the Roth is filed. Okay, so we've saved$12 ,000. So I'm contributing all year. Perfect. So we're doing$1 ,300 a month,$457 ,000, plus another$12 ,000 on top of that.

40:23Brian Preston:Yeah. What's$1 ,300 times 12? You did that math already? Yeah, I already did that. It was like$15 ,600. So it's$27 ,600 for the year, pretty much. That's like a 27.6 % savings rate. I'm just doing rough math here. Yeah, that's good. But that's awesome. You passed the test. All right. Now we have to flip over to Chrissy. I wouldn't have always passed the test. I'll just say that. Pass three. So previously, Chris, Well, I continue to do, I fully fund my Roth in January every year. And then I - Are you doing that out of savings or is that coming out now, the inherited assets? Well, no, I didn't get the inherited assets.

40:56So he passed in 24, but it wasn't distributed to me until recently. So no, I've always been just out of my commission in January. It's usually pretty high commission. So just out of my checking, I fund my Roth. And then it's not the same every month, but just kind of whatever is left over. and it averages not as high as Nathan, usually around like$700 to$800 a month in savings that I contribute towards. I've just, I've had like a high interest savings account.

41:18Brian Preston:So not like the brokerage, just in cash savings. No, just in cash savings, yeah. So is that getting cleaned out though? Because we heard like your cash reserves. It was all deposited to, it was all put into the brokerage once we opened the brokerage. So it's now there. But now with the twins, I'm not really saving much anymore now that they're here. I'm pretty much paycheck to paycheck with the twins and Nathan's kind of doing our savings for us each month. So something I just heard right there, we kind of gave a huge kudos, right? Like 20, if we're going to think about it separately, 27.6 % savings rate based on his income.

41:48Brian Preston:Right. But if we think about a household and we look at total household savings, that number gets cut in half. So that's something we want to, and one of the things that we're uncovering, and again, this is me just kind of getting a feel for how we're going to go back in the lab and start twiddling the knobs. You're going to have a lot of really exciting opportunities for saving in terms of like solo 401k and profits. Like there's going to be some cool stuff that we're going to be able to do with you. But what I just heard is there's not a lot of margin left over for that, right? Not right now.

42:19Hopefully once the twins are off of formula, things will change. But right now that is where the money is going. We should have bought stock at Enfamil instead of Royal Caribbean.

42:27Brian Preston:And one of the questions that I have is if we continue on this path, right? And we design this plan and let's say that we don't even adjust the savings at all, but we have all of the retirement savings accumulating in Nathan's bucket, is that an acceptable outcome to you guys? Because what that means is when we do get out here to financial independence and that sort of thing, it's going to be a lot in his name and not necessarily a lot in your name, right? Even in terms of how we're thinking about if we're going to save for the kids for these big goals, you just said right now, again, based solely on your name, it's so tight, there's not a ton left over, but we're gonna have to figure out how to allocate both towards college saving, this$60 ,000 for each kid goal, and then also like this new home thing.

43:14Brian Preston:So here's what I don't wanna do. I don't want us to go back and put together a plan. We're like, hey, let's throw all this in the pot and figure out the best way to chunk it out if you guys say, hey, that's not the way it's gonna work with us. I wanna make sure that we're meeting you guys where you are and we design a plan that works for the way that you guys operate from a personal finance standpoint. What I am seeing in terms of just a plan building where we're going to have a little bit of friction. Give me some feedback when you hear me say that. Well, I guess for me, it's probably realizing that we need to reallocate some or recognizing that our savings rate is going to change over time, right?

43:55Because Chrissy is starting a new business. So essentially, we're hoping that income comes up. Sure. And she can get back to normal savings. On the other hand, maybe I should start giving Chrissy some money every month. But that's just not how it's. I have some ideas. Let me ask you this question. This is just more of a fact-finding for me. You've done a great job of building up all these assets, but now life is starting to get messy. I mean, you've got kids. You've got big goals. This is the rubber meets the road. You can do a lot of stuff when your life is simple, but just success and life creates complexity.

44:29What is wrong with y 'all keeping a lot of the stuff that you already have separated separate? But then y 'all go open up a joint checking account, and then your commission checks go into that joint checking account. Your payroll goes into that checking account, and then you'll also set up a joint brokerage account. And y 'all start thinking about from this point forward how we plan life together out of these accounts. And that way you still get the dividends of the life you've lived in the past and how well it worked. but now we've kind of restructured for this new path forward. You guys are in a much better situation than the typical couple because you've got 10 years of experience.

45:07Would that be catastrophic or does that seem like maybe there is a new way here? I think we could definitely do that. I guess it's, to me, feels risky to upend how we've been doing things because there is no friction currently, right? Whereas if then we change what we're doing like that. But does that still stand after you? I mean, is there no friction? Because we're just telling you some planning things. And then I immediately saw, oh, man, we just gave a gold star to Nathan. Chrissy's over here feeling like we're picking on her because she's not saving her. Meanwhile, she's got a new business.

45:39She's got babies at the house. She's talking about baby formula. And I'm like, man, this doesn't seem like there's not friction anymore. It feels like, hey, there's something here. Yeah. Well, maybe that's what we need to do. I don't know. But I don't want to put words in y 'all's mouth. I don't have to go home and do this six-hour ride with you guys. No, I don't know. No, it's, I don't, I'm not worried about that. I mean, it's clear to me that Chrissy and I's bond is, you know, not solely reliant on our financials. You know what I mean? Thankfully, that's not the case. I'm sure we could make some adjustments in this next phase, which is basically why we're here.

46:14Sure. To figure out what we need to do next. Because until now, it's worked fine, right? You know, we've each kind of, you know, created our own success and reap what we sow, essentially. But, you know, now that we have something together, like kids, I guess, we've always had our marriage. But now that we have this, I mean, it's a crazy different kind of expense, right? We just, maybe we do need to just align our goals.

46:38Brian Preston:One more question for you, Christy. Ken, this business is so new. When it starts really taking off, right? Because it sounds like you've done it for so long. You're obviously very good at it. Do you have like some income expectations of where you think it'll, before it's like a fledgling business. Like what's the goal you're working towards? Because I think maybe that might help even in terms of how we're planning some of this. Currently, you know, so I mean, we've already hit 100 ,000 in sales in one week of being officially registered with different suppliers. So that's revenue. What will. So that brings in about right now we're at 12 and a half thousand in commission in one week.

47:09And then most of that currently is mine. My new agents are just starting out. But that's in just one week, which is just wild.

47:17Brian Preston:It's awesome. So I'm really and with just myself and currently two agents selling and I have five more in the pipeline, but I plan to grow very quickly. So my goals, I want to be selling$100 million a year, which is what only some of the top agencies are doing right now within five years. And that will be bringing in about$10 million in commission and leaving me with$1.5 to$2 million a year left over in the company. That's the goal within five years. And I know I can do it. $1.5 to$2 million net for you or after you have to pay your agents out of that? No, net for the company. Okay. That is the plan.

47:49And I will grow over the next five years to get to that point. by hiring agents that are dedicated professionals.

47:58Brian Preston:So we have the, I'm going to call the do-do plan is where you are, like right now nothing changes, right? It doesn't improve. I love the idea of the dream plan being, hey, I'm making a million and a half, two million bucks a year. Is there a middle ground plan? Is there something in there like, hey, maybe it's not quite that, but something that lives in that middle space? So kind of. I think my plan is to get there eventually. My targeted growth is to get there in five years. It could take 10 or it could take 15. So with building a business, that's all based on relationships. You have one client that continues to travel year after year, and then they refer you.

48:37So generally, most travel agents, if they are professional and they are applying themselves, their sales double each year. So if I were to hire more agents, I could grow faster. or if I were to hire maybe a couple agents that are really, really strong, I could grow even faster. So my plan on growth is five years, and that's average based on the number of agents that I want to hire. But maybe not all of them are as successful as I am. Maybe not all of them are applying. So it could take 10. It could take longer. So the same numbers generally would be as far as the middle-of-the-road plan, but it would just take longer.

49:13So in five years, I would be looking at 500 ,000 instead of a million.

49:17Brian Preston:So right now, based on the intake, you have your income at like about$100 ,000 a year. But realistically, you think the next year will probably be$200 ,000 a year. I mean, I'm already on track to be just by myself at$200 ,000 for 2026. Okay, got it. How are you structured? Because you said something that gave me a clue. You said I could hold off not paying myself. So how are you? It's an LLC, and then I've been told to file as an S-Corp, but we haven't filed taxes. So you haven't done an S-Corp election yet? Not yet, no. Okay. Right. There is nothing. Are you just a single member LLC? Single member, yes.

49:48The IRS, because they probably watch our show too. I'm just assuming. Because we have a lot of really smart people, and there's smart people with the IRS too, is that they probably cringe a little bit when they hear, I'm just not going to pay myself, and I'll let that. Now, the thing is with an LLC, all the incomes go flow through to you automatically, and it's going to be subject to not only income taxes, but it's going to be subject to what's called self-employment tax. And self-employment tax is for Medicare and Social Security. It's about 15.3 % plus your income tax. A lot of people, and this is the part where it's a planning opportunity, but this is where the IRS leans in and go, oh, here we go.

50:24Let's see what he says. If you pay yourself a reasonable salary, what you'd have to pay, because as a business owner, you're in this weird situation. You have two things going on. You work in the business, but then you own the business. And they have two different pay structures. Any business you do working in the business is something you'd have to go hire an employee to do. There should be wages for that. Now, if you own a company, there can be essentially your investment and the capital investment into this business and the flow through that comes out just because you now opened up this endeavor.

50:55That can be separate. And that doesn't necessarily – that's not a wage because you didn't work in the business. That's more of an investment, so it doesn't need the Social Security and Medicare on it. And the way you do that is you pay yourself a salary for what the work in the business is, and then you collect the money. They still pay income tax on all of this, but you just avoid paying the Social Security and Medicare or the self-employment tax on that. But you have to be honest with yourself as to what you're worth to the company. Now, in the first two or three years that you start a company, I think the IRS even gives you some grace because they realize, holy cow, you're doing this.

51:30You're bootstrapping it. you probably don't you couldn't afford to pay anybody to do this job see but but i always tell people as you start getting traction be honest and because i've sat in audits and i always tell people you want to be on really solid ground with the government when you sit in those audits um because they do pay attention to this stuff and that's why i always it makes me cringe a little bit when somebody says well just it doesn't matter if you make 300 000 400 000 just pay yourself 25 30 000 a year the irs will love you and i'm like no not quite be careful because i've even i've seen the IRS go after, we've had some professional clients that were even paying themselves over a hundred grand and the IRS came and go, uh-uh, that's not enough for the specialization that you're actually making this money off of.

52:12So I always tell people to be careful because everything's deductible until you get caught. And I'm here to tell you, I've worked on taxes, doing taxes for 16 years, representing clients before the IRS. You want to be on good ground with. That's why we say do everything is legal. You want to be legal. Tax evasion is illegal. We want to do, but we want to help you do tax planning to make sure you're maximizing the moment, but also sitting across from the IRS with a smile on your face because you have your ducks in a row and you're not scared that they have anything that you don't know, you know, that's going to bite you in the butt on.

52:49Brian Preston:All right. Before we go to work, what questions do you guys have? What things have we not spoken to that you're curious about? Bring up the inherited IRA one more time in terms of what's the, that's kind of looming over me of like, how are we going to avoid not just getting wrecked by that one year? You know, maybe that comes in the plan, but is there anything that either I can do or the business can do or Chris can do that we can help offset that? There's not necessarily any things that you can do to get rid of the income, but what you can do is think through, okay, if we're in this situation right now, We know we make$200 ,000 a year.

53:24Brian Preston:But there's a likelihood that in the future, we're going to make substantially more than this and be in a much higher tax bracket. It's arguable that, man, right now we're in a lower tax bracket. Rather than letting this money continue to grow tax-deferred all the way until the end of this 10-year period, and then we get this big tax thing happen, unless we know that we're just not going to work in that year, perhaps we start taking some out strategically now. Looking at tax rates. We look at our tax return this year, and we estimate where our taxable income is. And hey, we're in the 22 % marginal tax bracket and that's acceptable to us.

53:56Brian Preston:Maybe we're going to take out a fifth of this this year and we'll take out a fifth next year. And you can kind of game based on where you think your income is going to go and take advantage of being, because what you don't want to do is let's say that you do hit the$100 million commission, right? And you're making a couple million bucks a year and you guys are in the highest marginal tax brackets. And that's in the year that this RMD is required to pay out. Well, then you're paying, you'd have been better served taking it out sooner, not spending the money, but just redeploying those dollars elsewhere to get away from that structure.

54:28Brian Preston:So that's likely what you guys should be thinking through realistically. What's our tax situation look like this year? How much wiggle room do we have? If we do take a distribution, are there things that we're going to miss out on? Will we lose child tax credit? Will we lose other types of deductions that income may push us over? and you play a little bit of that tax game to figure out maybe it does make sense to take more out sooner rather than later. Outside of that, there's not really a whole lot you can do with inherited IRAs because the government kind of makes you take that money, right?

54:57Brian Preston:There's no clever way to hide it, QCD type. That's just not an option for you guys based on your age right now. So you're going to have to take that income. It's just a matter of when you want to take that income. All right, I got a few homework items for you guys in the Rod Home. You ready? Yeah. I think it'd be helpful. You guys ought to have a conversation just defining the end goals, right? You're not gonna have to necessarily have it all figured out yet, but hey, what do we want financial independence to look like for us? Hey, when we think about buying this next home, when do we want that to happen?

55:30Brian Preston:Is this something in the next year? What size home? Are we gonna pay off this house, sell it and use that as a 50 % down payment on the next home or use that as a 20 % down payment on the next home and figure out what that looks like? and then put timelines of these. Hey, when will be the next home? Buy this. We know that our kids are going to be 18. We want this goal. Buy this. When do we want to actually be financially independent together as a couple? And then I do think it would be helpful for you guys to talk through the RMD strategy. Hey, we know that we got this 10-year window. We can wait 10 years, but maybe we want to accelerate that.

56:02Brian Preston:And some of that will be the planning we do. If we do accelerate it, here's what that could look like. Here's the tax implications of doing that. And this is where those dollars could go to fund some other goals. Does that make sense? Awesome. I'm excited. This is a new one for us. This is going to be a fun one to kind of crank through. You guys have been awesome. Thanks so much for coming to hang out with us today. Thank you. Thank you. Brian, what a great conversation we had with Nathan and Chrissy. Very unique in the way that they were set up. Yeah, I thought it was interesting. I mean, on paper, they are millionaires.

56:33But there's kind of an asterisk to it because a lot of this money came from legacy money or inheritances that Chrissy received from her father. Right. And that's going to play into some of these financial planning issues, but it's still kind of created something that we've got to kind of address from a behavioral standpoint. And then the other thing that made them unique, not really a traditional financial structure. They want to kind of keep things separate.

56:54Brian Preston:Yeah, it was really interesting. I think we kept waiting for there to be some shoe to drop that made, oh, whoa, here's this money. But they're actually kind of doing it separately. So in terms of honoring making personal finance personal, as we did our designing, we kind of designed, okay, here's what it looks like separately, individually. and then this is what it looks like as we bring these together. And so they were kind of sharing with us, they have some big goals, right? Some of those goals, shorter term in nature, some intermediate and some long. And obviously they said that one of their goals is they want to be in a new house.

57:24Brian Preston:Like that's a thing that they want to do. They have huge goals for their kids, you know, in terms, obviously, Chrissy's father cared about leaving a legacy and providing opportunity for her and they want to pass that on to their kids. But then they also have this goal of financial independence. And so it's kind of figuring out how do you squeeze the balloon to be able to do all of it? So we'll let them kind of drive the ship on this. Their biggest goal was the new house. That's right. So let's kind of, let's jump into that and look at the numbers. Is this a goal they're going to be able to accomplish?

57:52Brian Preston:Yeah, I think so. One of the things that we saw is because Nathan was so aggressive in like paying down the mortgage, he has a ton of equity inside of their current home. So if they were to sell the current home, they would walk away with about$271 ,000 of equity. We also know that we wanted their mortgage payment to stay about the same. So we recalculated based on today's interest rates. If we know we want their mortgage payment to be about$2 ,000 a month, how much could they borrow? What would the mortgage amount be to generate a$2 ,000 a month monthly payment? And that'd be about$249 ,000. So if you take 270 worth of equity versus a mortgage of 249, they could realistically look to go afford a home somewhere around$520 ,000.

58:33And that's a pretty nice upgrade because I think they're in the low 300s currently to go up to 520. That's going to obviously get them more square footage, nicer house. And I love that their mortgage payments go stay the exact same.

58:43Brian Preston:Yeah, there's no additional cash outflow here. So in terms of like achieving goals, that one seemed like a check. Well, then we have the second level of goals and that was the kids. And this is one that was, I don't want to say aggressive, it's too bold of a word, but man, they have some big things they want to be able to do for the 20s. Well, let's see if we look, because what I recalled was want to pay for college, but then also wanted to even go beyond, just like Chrissy's father had done more for them. Because remember he had this goal of he wanted to give a million dollars to each kid. That's right.

59:14Unfortunately, he didn't live long enough to fulfill that, but he still left quite a nice legacy. But they wanted to go beyond college funding. They wanted to, and I think we kind of, we had to figure out how do we honor this and we couldn't come up with a million dollars, but we said, hey, how about a house down payment? Isn't that where we settled?

59:29Brian Preston:That's right. That's exactly right. And so I think what we said is, okay, if the idea of if they want to build legacy for their kids, maybe one of the things that we could do is we could use the legacy coming from her father to be the thing that kind of sees that. And we know that in the next year and a half, two years, she's going to have another part of the inheritance coming. It's going to be about$80 ,000. And we said, okay, if we just thought about isolating the$80 ,000 and if that money were to sort of just, we took that and said, okay, this is going to be for the kids. We're going to put this as an aside and an account.

59:59Brian Preston:And if over the next 18 years or 16 years, that$80 ,000 could grow at about 7 % per year, it would have the ability to turn into almost a quarter of a million dollars,$244 ,000. So we said, okay, well, if that's what that chunk of money grows into, will it be enough to satisfy these two goals? Will it be enough to satisfy college for both kids, but also have some seed money left over for them? So we had to make some assumptions. We said, okay, what if for college, not knowing scholarships and where they're going to go in cost of college. If we say, hey, we want to pay$20 ,000 for each kid each year of college, what does that look like in terms of a drawdown?

1:00:38Brian Preston:So if we did that over four years from age 18 to 22, you can see that that$244 ,000 pot of money turns into$132 ,000 pot of money. I mean, I got to tell you, it's pretty, from a legacy standpoint, kudos to the deceased grandfathers because this$80 ,000 gift is going to come in, has the opportunity to grow to close to right under a quarter of a million dollars, looks like it's going to potentially be enough to pay for a lot of college, if not all of it, and then leave$132 ,000. If you divide that by two, I mean, that's a pretty good house down payment. A little over 65. I didn't have that much for my first house down payment.

1:01:14I mean, you think about that. You're doing a little over 65 ,000 per child. That's one heck of a legacy. Now, look, we did this in the order that they wanted. You know, they were kind of focusing on the house down payment. They're focusing on the kids. You know, as part of the financial order of operation, we typically don't take care of the kids before we take care of our own retirement. But this was a unique scenario because of the whole legacy thing with the deceased grandfather. What is this going to look like now when we put on our oxygen mask first? What is their financial independence or retirement look like?

1:01:44Brian Preston:Yeah, we want to make sure that funding these other two goals does not prevent them from funding their goals. And so because they keep finances separately, I said, okay, what if we built a financial order of operations for each of them? Because they kind of think about saving and building separately. And so for Nathan, what he was already doing, he's already putting$1 ,300 a month into his 457. He was maxing out his Roth IRA at$1 ,000 a month. And then once he hit that max, then it begins spilling over to a brokerage account. So when you look at the total savings there, between those three different account types, he's saving about$27 ,600 a year.

1:02:17Brian Preston:And based on his income, that's a 26 % savings rate. So for him, we get a big check. He's doing the very thing that he should be doing. It was on her side, because of some job changes and life changes and that sort of thing, where we had to make a few adjustments. Yeah, I mean, good on Nathan in the fact that he's basically, the biggest change I think here was after he finishes funding the Roth is doing that after-tax account. But Chrissy is a little more work here. So we had to kind of make some assumptions for what she's going to do. Now, to add a layer of complexity to this, Beau, she started a brand new venture.

1:02:52That's right. But it does sound like it's going really well. I mean, we had to actually put some governors on where Chrissy's taking this thing because she gave us projections is that she thinks in the next few years, she could be making a million dollars a year. And we hope she knocks it out of the park and does it. But for our planning purposes, we pulled it back to around$200 ,000. So how did we then take that 200 and turn that into savings goals?

1:03:16Brian Preston:Yeah, we said if she could get her income to$200 ,000, perhaps she's gonna pay herself a salary of like 150. And so we'll kind of use 150 as our planning number to plan off of. So when it comes to her financial order of operations, we obviously want to see her max out a Roth IRA. That's$7 ,500 a year. Then she can open up a solo 401k, likely do the Roth there as well at$24 ,500 a year. And then in order to get to the 25 % savings rate, we're going to need a little bit more savings. Well, one of the benefits of being a small business owner that can control your own retirement plan is we can also do profit-sharing contributions in addition to salary deferral.

1:03:53Brian Preston:So if she were to do an extra$18 ,000 profit sharing contribution or about 9 % of her pay, that would have her saving about$50 ,000 a year, which would be a 25 % savings rate on her gross$200 ,000 income. Okay, now this is cool because we've created a financial order of operations for each of them independently because they like keeping their finances separate. But if you consolidate this, because remember Nathan was a little greater than 25%, we got her pretty close to it. But as a consolidated plan, it actually works out to be as a household, they're saving over 25%. Yeah, that's right. That's a foo for you, a foo for me, and a foo for us.

1:04:31Brian Preston:And when you look at the total savings they have building towards the future, it's just a touch under$78 ,000 a year or just a little bit greater than 25%. So if they can save that way and if they can build that way, the future looks pretty bright because where they sit right now, they have about$713 ,000 built up. So if they have that 713 and they're able to save$77 ,000 a year, by the time that they get to age 55, they will have a portfolio of almost$6.3 million. By the time they get to 60, that portfolio could be almost$10 million. Well, and the crazy thing, now look, we had to make a lot of assumptions here.

1:05:10And they're probably, they're undershooting a little bit what they told us because a lot of life is still going to come in the years. But what they had told us on the cuff was assuming we take out all the kids' goals and everything else,$7 ,000 a month. Well, at this level, they're going to blow past that. But I think that this leaves the margin for additional life to happen too. That's exactly right.

1:05:30Brian Preston:We always say that when it comes to planning, we want to build our doo-doo plan, our down-to-earth plan, and our dream plan. And I think in Chrissy's mind, her dream plan was like a million-dollar-a-year income. I think that this may even be what I would call the dream plan, even though perhaps it's more down-to-earth. I hope that's the case. But if I were them, I would think about, okay, if we can just get to this level, we're set up for our financial goals, but what if we don't quite get to this level? What does a more down to earth plan if I only make$100 ,000? What's a do-do plan look like if I don't make a whole lot more than I'm making right now?

1:06:02Brian Preston:I do think that's some additional work that they should work through to figure out where reality actually lies. Look, they've got a lot going for them. I mean, an impressive net worth for their age, But I think that still the big question mark is, is a lot of this is the legacy that their deceased, that Chrissy's father left for them. I'm hoping that our conversation as well as what we're laying out today will catch traction. And we see that this financial order of operations that has this huge legacy element turns into their own story, both separate as well as joint story. It's really exciting.

1:06:38Brian Preston:Yeah, I think that they have a lot of opportunity to get that lined up to build financial independence on their own, but also honor legacy that was given to them and create legacy opportunities for their kids. So, Nathan, Chrissy, thank you for coming on the show. Bo, for anybody else who wants to come on Making a Millionaire, what do they need to do? Yeah, if you'd like 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 tools or calculators, you can go to moneyguide.com slash resources. Nathan, Chrissy, y 'all are crushing it well on your way to building your great, big, beautiful tomorrow.

1:07:12I'm your host, Brian. Joined by Bo, Money Guy. 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. A Bound 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.

1:07:48All investments involve a degree of risk, including the risk of loss. The guests featured on Making a Millionaire are not clients of A Bound Wealth Management at the time of recording. Their participation should not be considered a testimonial or endorsement of A Bound Wealth Management.