Debt CRISIS Could Ruin This Teacher's Financial Future | Making a Millionaire

Summary

Money Guy Show: Debt CRISIS Could Ruin This Teacher's Financial Future | Making a Millionaire

Release Date: February 17, 2025

Hosts: Brian Preston and Bo Hanson
Guest: Eric Holloway, Director of Bands at Bartlett High School, Bartlett, Illinois

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1. Introduction

In this episode of the Money Guy Show, hosts Brian Preston and Bo Hanson welcome Eric Holloway, a dedicated high school band director striving to achieve financial stability and the ambitious goal of becoming a millionaire. The episode, titled "Debt CRISIS Could Ruin This Teacher's Financial Future | Making a Millionaire," delves deep into Eric's financial challenges, strategies, and the path laid out by the Money Guy team to secure his financial future.

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2. Guest Background

Eric Holloway has been at the helm of the Bartlett High School band program for 17 years. Passionate about music and education, Eric balances his professional responsibilities with financial aspirations. Despite a steady income from his teaching position and substantial stipends from extracurricular band activities, Eric faces significant financial hurdles that threaten his long-term wealth-building goals.

Eric Holloway [01:59]:
"I tried to make sure that I'm on the road to becoming a millionaire or at least be financially stable so it's no longer a worry."

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3. Eric's Financial Situation

Eric shares insights into his upbringing and how his family's financial habits—or lack thereof—influenced his current financial mindset. Growing up in a large family without much financial slack, Eric didn't receive regular allowances or financial education, leading to challenges in managing finances as an adult.

Eric Holloway [02:02]:
"We never really talked about money too much. But as I got older... I realized, hey, my parents have got to be sacrificing for us."

As an adult, Eric has recognized gaps in his financial knowledge and has been actively seeking ways to bridge them, especially after discovering the Money Guy Show on YouTube a year and a half ago.

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4. The Debt Crisis

A significant portion of the discussion centers around Eric's debt situation. After purchasing a townhouse, unexpected home repairs—such as sump pump failures, water heater issues, and a major toilet leak—sapped his finances, leading to substantial credit card debt. Although he attempted to manage this by securing a private loan with a lower interest rate, Eric still grapples with high-interest debt.

Debt Breakdown:

• Car Loan:

  • Amount: $16,000
  • Interest Rate: 4.99%
  • Term: 66 months

• Private Loan:

  • Amount: $26,000
  • Interest Rate: 13.09%

Brian Preston [07:03]:
"The private loan has 26,000 on it."

Eric emphasizes that his debt isn't a result of frivolous spending but rather unforeseen circumstances stemming from responsible homeownership decisions.

Eric Holloway [07:27]:
"It was the bigger purchases... life just threw those curve balls my way."

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5. The Financial Order of Operations

The Money Guy Show operates on a structured financial order of operations, guiding individuals through prioritizing financial tasks to build wealth effectively. Eric identifies himself as currently being on Step Three, which involves eliminating existing debt.

Current Financial Highlights:

• Net Worth:

  • Total Assets: ~$260,000
  • Home Value: $364,000
  • Automobile: $14,000
  • 403B Retirement Account: ~$50,000
  • Health Savings Account (HSA): ~$2,700

• Liabilities:

  • Mortgage: $225,000
  • Auto Loan: $16,000
  • Private Loan: $26,000

Eric's pension is a significant asset, providing him with anticipated benefits of around $150,000 annually upon retirement, which influences his financial planning strategy.

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6. Hosts’ Advice and Plan for Eric

Brian and Bo dissect Eric's financial plan, identifying areas for optimization to expedite debt repayment and enhance savings. They commend Eric for his proactive approach but suggest strategic shifts to accelerate his financial recovery.

Key Recommendations:

1. Aggressive Debt Repayment:

   • Target: Eliminate the 13.09% private loan as it significantly hampers wealth accumulation.
   • Strategy: Redirect stipend income and discretionary funds towards this high-interest debt.

2. Emergency Fund Enhancement:

   • Goal: Build a fully funded emergency fund amounting to three months of living expenses (~$18,000).
   • Current Savings: $6,000
   • Monthly Contribution: $250

3. Reevaluation of Investment Contributions:

   • Temporary Pause: Suspend Roth IRA and HSA contributions to funnel funds into debt repayment and emergency savings.
   • Future Plans: Resume contributions post-debt elimination to capitalize on tax advantages and compound growth.

Bo Hanson [05:56]:
"It really is possible through what we learned through the Money Guy Show."

Brian Preston [13:30]:
"I can do a couple of steps at the same time or really load up the savings so that I can invest on a Roth."

The hosts emphasize the importance of prioritizing debt-free status before reinvesting into retirement accounts to avoid the drag of high-interest payments.

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7. Financial Projections and Goals

By implementing the Money Guy Show's tailored plan, Eric can project substantial progress within the next two years:

• Debt Elimination:

  • Personal Loan: Paid off by August 2026.
  • Car Loan: Focus on repairing the lien between the car's value and the loan amount.

• Emergency Fund:

  • Target: $18,000 by December 2025.

• Investment Growth:

  • Potential 403B Growth: Projected to reach ~$80,000.
  • Post-Debt Investments: Allocating up to 25% of gross income (~$38,000 annually) towards wealth-building instruments like Roth IRAs, given an 8% average return on investment.

Brian Preston [41:17]:
"If you do that between ages 41 and ages 55, your investment portfolio could be worth over $1.2 million."

Eric's ultimate aspiration is to retire early at age 55 with a comfortable lifestyle bolstered by both his pension and investment portfolio.

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8. Final Remarks and Conclusion

The episode culminates with Eric expressing optimism and commitment to the outlined plan. Brian and Bo reinforce the importance of disciplined financial strategies, encouraging Eric to remain focused and adjust his approach as necessary to achieve his financial goals.

Eric Holloway [50:40]:
"I'm really excited for it. Especially seeing that number on that screen really just put a smile on my face and I'm excited to get to work."

The hosts conclude by providing Eric with actionable homework:

1. Cut Back on Investments: Temporarily halt Roth IRA and HSA contributions.
2. Aggressively Pay Down High-Interest Debt: Focus stipend funds on eliminating the 13.09% private loan.
3. Build Emergency Fund: Continue monthly savings until the target is achieved.
4. Evaluate Asset-Liability Balance: Assess the car's value versus the remaining loan to prevent being underwater.
5. Resume Investments Post-Debt Clearance: Reinvest into Roth IRA and HSA once high-interest debts are settled and emergency funds are in place.

Throughout the conversation, the Money Guy Show underscores the significance of prioritizing high-interest debt elimination as a foundation for sustained wealth-building, ensuring that individuals like Eric can realize their financial dreams without the shackles of debilitating debt.

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Notable Quotes:

• Eric Holloway [02:36]:
  "Money, we never really talked about it too much. But as I got older... now that I'm an adult, I'm starting to see my shortcomings in finance education."

• Brian Preston [34:49]:
  "If you didn't have debt payments, does that sound feasible and reasonable? Yeah, $38,000 a year."

• Bo Hanson [43:40]:
  "Sometimes I go back and forth with my buddies. I don't know if it's better to be lucky or better to be good."

• Eric Holloway [37:24]:
  "I haven't really run the numbers, because I think I've fallen into the trap that a lot of teachers have. The pension is going to be enough."

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Contact and Further Resources

For listeners inspired by Eric's journey or seeking personalized financial advice, the Money Guy Show encourages visiting moneyguy.com to apply for feature episodes like "Making a Millionaire" or to explore a wealth of free financial resources available on their website.

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Disclaimer: The Money Guy Show and its hosts, Brian Preston and Bo Hanson, provide general financial advice and do not offer personalized investment or tax counsel. Listeners should consult with a certified financial advisor for individual financial planning.

Transcript

[Brian Preston]

Wait a second.

[Eric Holloway]

Uh oh.

[Bo Hanson]

Wait a second.

[Eric Holloway]

Uh oh.

[Bo Hanson]

Eric is at a crossroads. He wants to build wealth, but big debt is holding him back. Can he right the ship before it sinks?

[Brian Preston]

You said you're. I thought you said you're on step three.

[Eric Holloway]

I am.

[Brian Preston]

But you said you're doing your hsa.

[Eric Holloway]

Yeah.

[Brian Preston]

Okay. All right. All right.

[Bo Hanson]

Welcome, money guy family. It's Brian. It's Beau. We're here with another episode of Making a Millionaire. Remember, this is where we take financial mutants that are either millionaires or millionaires in the making and help them find their great, big, beautiful tomorrow.

[Brian Preston]

We are so excited that we get to sit down with Eric today and walk through his financial life. Eric, thanks so much for hanging out with us.

[Eric Holloway]

Well, thanks for having me here. And I'm so excited to be here with you guys. Right?

[Brian Preston]

Awesome, man. Well, for the folks who don't know, will you give them a little bit of background? Who are you? Where'd you come from? What's your story?

[Eric Holloway]

So I'm Eric Holloway. I'm the director of bands at Bartlett High School in Bartlett, Illinois. My students wanted me to say, go, Hawks. I was about to say, what are you guys? So I've been a band director for 17 years, and I've tried to make sure that I'm on the road to becoming a millionaire or at least be financially stable to where it's no longer a worry.

[Brian Preston]

I love it.

[Bo Hanson]

What's your instrument of choice?

[Eric Holloway]

So I started off on trombone, and now if I could go back and do it again, I do French horn.

[Brian Preston]

I'm a French horn kind of guy.

[Bo Hanson]

I am curious because, you know, Megan here, who's on staff, she comes from kind of a similar background. She plays a bunch of instruments. So you proficient with a bunch of stuff?

[Eric Holloway]

All the band instruments, yeah. So all the brass is really my main component. But woodwinds, I could play those. Clarinet is probably my worst. Everything else good?

[Bo Hanson]

No oboe in there?

[Eric Holloway]

No, no. Bobo's tough, too.

[Brian Preston]

So obviously, you know, we're here talking about personal finances. Tell us about your history with money. What was personal finance or what was money like growing up for you? And then how has that changed into adulthood and sort of, where are you right now?

[Eric Holloway]

So, growing up, I'm one of six kids, so I come from a large family. We weren't poor by any means, but we come from humble beginnings, right? And we lived in a great neighborhood. And we would always see all the neighborhood kids with their families go on vacations. And we never really went on vacation, but we Always played baseball, we always played basketball, and our dad was our coach. We didn't really talk about money too much, right? We never got allowance like some of the other neighborhood kids did. As you can imagine, being a, you know, one of six kids, there was not much margin laying around. No.

[Brian Preston]

Yeah.

[Eric Holloway]

So money, we never really talked about it. But as I got older, like in high school, I realized, hey, you know, my parents have got to be sacrificing for us, right? And that stuck with me going through college. And now that I'm an adult, I'm starting to see my shortcomings in finance education and saying, okay, how can I get better? Now? That didn't really happen until about the last year and a half ago when I stumbled across this show on YouTube. When I took a close look at my financials and actually wrote stuff down and looked at it was like, wow, I've got some work to do, right? Because I don't want to be in a situation where I can't afford the things I want to do or so that I, you know, can't do a great big beautiful tomorrow, like you said. So I want to make sure I can do the steps to get me to that point.

[Brian Preston]

I love it. So you started taking it seriously, like, a year and a half ago. And when you think about, like, financial goals that you have, like, obviously something, you know, some light went off in your mind that said, hey, I want to. Whatever I've been doing, I want to change that. For what outcome? Like, what's the goal? Or what are the goals you're working towards?

[Eric Holloway]

So I would love to have a great retirement where maybe have a lake house. I love being on a boat, right? So I, coming from family, didn't vacation a lot. I like to be the place where every goes to vacation, right? So I'm a single guy without any kids, but I have eight nieces and nephews, and I'm the fun uncle that they all want to hang out with. So I want to have a spot where we can go every summer or, you know, go on trips and do stuff like that. And I'm looking at it going, I don't want to sacrifice retirement for that, right? I want to be able to, I guess, retire early. I'm going to do 33 years of public education and two years of sick leave to get me full pension benefits. And I'll be 55, turning 56 at the end of that school year. But if I want to do that, I want to make sure I have the appropriate funds to live the Lifestyle I want.

[Brian Preston]

So, you know, obviously being an educator, having access to a pension, has that impacted or changed the way you've thought about and approached building towards financial independence?

[Eric Holloway]

Yeah. So I hear from tons of teachers like, oh, your pension is going to be fine. You're going to have just enough on your pension, enough on your pension. And that may be true for some people if they're married and their spouse has, you know, other investments. I do think my pension will be enough, but I don't want to have to just rely on it. I want to make sure that I'm taking care of myself, too. So when I'm trying to think of my retirement plan, I'm. The pension for me is kind of on the back burner. Although it is a pretty nice pension.

[Bo Hanson]

Well, it is one of those things. I think a pension is great for covering the basics or the retirement needs. But you just laid out some pretty cool goals like the lake house. And then I know when we were doing some show prep for today, you even had some numbers that kind of popped up. Is there a dollar amount that you're kind of hoping that will fulfill that house and other things?

[Eric Holloway]

Yeah, I think everybody growing up wants to be a millionaire. Right. We all grew up watching Regis.

[Brian Preston]

Phil Regis, the one who told us. Right.

[Eric Holloway]

And I think when I was telling Megan in our interview, like, man, the two commas, you know, the two comma club, that'd be cool to have that. And I think there's a notion of, like, public school teachers can't do that, or maybe they're, you know, they don't get paid enough to do that. And I want to show all the viewers that, yeah, it is possible through what we learned through the money Guy show.

[Bo Hanson]

Yeah. And it really is. Those small decisions can add on top of themselves and build, build and compound, and it really creates some amazing things. Well, Eric, that's awesome. Now, I do have a big question for you. You know, I've got two things here. We've got the financial order of operations, my book, Millionaire Mission. Where do you think you are in the financial order of operations?

[Eric Holloway]

So right now I'm on step three, so I'm getting rid of some debt. Like I said, I stumbled across this show a year and a half ago and I had some. I don't know if they were bad decisions. It was just what life kind of dealt my way, and I had to deal with those payments. So right now I have a car loan that I'm working on. I have about $16,000 left on that. And I have a private loan that I took out to pay off credit cards. So now I'm no longer using a credit card. Or if I am, I'm paying it off each month.

[Brian Preston]

Sure.

[Bo Hanson]

And how much is on that private loan?

[Eric Holloway]

That private loan has 26,000 on it.

[Bo Hanson]

And what's the interest rate on those two loans?

[Eric Holloway]

So the car is 4.99 and the private loan is 13.09.

[Bo Hanson]

Yeah.

[Brian Preston]

I think what's. What stinks is we get that reaction. That's probably. I'm guessing that's less than what it was.

[Eric Holloway]

Less than what, the credit card.

[Brian Preston]

Right. And yet still 13.9%. That's pretty. That's pretty hefty. Right? Walk us through. Because obviously you said you had some credit card debt. What. What got you there? Like, was there something that took place or was it spending out of control? Like, how did you get to the place where you are right now?

[Eric Holloway]

So when I purchased my townhouse, everything looked great. And then you lived there for a year and a half. And then, oh, no, the sump pump goes out, there's 2,500. The water heater goes out, there's 2,000. And then I had the big one was I had. My second floor toilet was leaking, and I thought, oh, I just got to replace the toilet. Well, no, I had everything underneath. And then it leaked to the downstairs laundry room. So I had to redo the laundry room floor and the bathroom. So that was about 18,000 in home repair. And then the washer and dryer broke. New refrigerator. I mean, it just kept coming and coming. And if I was at step four, where I had that emergency fund, I don't think I'd be in the situation I'm at now. Now, I'm not going to say that there wasn't any lifestyle stuff I love. You know, I like going out with my friends once or twice a month.

[Brian Preston]

Sure.

[Eric Holloway]

But I don't think that was the main cause. Right. It's not the latte effect. Right. It was the bigger purchases. And it's. I think life just threw those curve balls my way. And I'm just dealing with them best I can right now.

[Brian Preston]

So when you think through, like you said you bought this condo, did you have an emergency fund in place? And, like, because what I didn't hear you say is, oh, I bought this crazy expensive car, and I went on all these trips and I sort of lost my mind. It sounds like you made what sounds like a responsible decision to buy a home. And then even making a good decision landed you maybe in not a fantastic financial spot.

[Eric Holloway]

Right, Right. So I. So I had about 30,000 saved up in the bank before purchasing the home. A lot of that went towards down payment, and I probably put too much down on a down payment. Right. You know, listening to some other people say, hey, you got to put down close to 20%.

[Brian Preston]

Sure.

[Eric Holloway]

You know, if I would have backed that off closer to, you know, 5%, I don't know if I'd be in this situation.

[Brian Preston]

You have a little bit more margin for the emergency fund, but you cut.

[Bo Hanson]

It too close to the bone, right?

[Eric Holloway]

Absolutely.

[Bo Hanson]

Yeah. Because you threw everything at the. At the mortgage. And then when all the. Because that's the thing about homeownership. We love homeownership, but it is amazing how all of a sudden, hot water heater, sump pump, as you said, and the worst thing that can happen. In college, I did plumbing, and one of the worst things you have on a leak is if it's just a subtle leak. Because if you don't know that the subtle leak is happening, that's where the black mold and all this stuff, it's much better if it just floods your bathroom. You repair it, you dry it up, you put some fans on it, dehumidify it, you're okay.

[Brian Preston]

You've done this before.

[Bo Hanson]

I just feel for Eric, because you can just sense that you didn't know. And some little leak that probably just seems so innocent turned into this catastrophic. Because that's where. When you were going through 2,000 here. 2,500, 18,000. One of these is not like the other. And it's probably the thing. If you looked at them, you said, yeah, that little leak from the commode is not that big of a deal. But that's truthfully where the big problems can occur, those little things.

[Brian Preston]

So for folks out there that maybe don't know you as well as we know you now, we thought it'd be interesting, kind of just walk through a net worth statement for you, kind of look at where you are presently, and what you can see is right now where we have your total net worth. That is, we have your cash, your liquid savings just over about $6,000. Just. First, very first question is that six months of living, at three to six months of living expenses.

[Eric Holloway]

No, it is not.

[Brian Preston]

No, it's not.

[Bo Hanson]

Okay, so we're still lean even after all this.

[Brian Preston]

Obviously, some investment accounts, you have about $50,000 in your 403. That's great. You have about $2,700 in an HSA. And then you are going to have access to a pension. But it sounds like even if you were to leave, you have some value to that pension if you were to roll it over. Present.

[Eric Holloway]

Right. So if I exited the education field now, I think I would get back the percentage of my contributions, which is about $90,000. Got it. But the pension is pretty nice. So I'm tier one. So in Illinois, we've done, we have two tiers. So tier one is anyone who started teaching before 2011 and what they do is they take your four highest grossing years out of your last 10, they add that together, they average them, and then you get 75% of that.

[Brian Preston]

Oh, wow.

[Eric Holloway]

So it is nice.

[Bo Hanson]

Frothy.

[Eric Holloway]

It is. It's very nice. Now that's why we have, we went to a two tier system. Yeah.

[Brian Preston]

Right.

[Eric Holloway]

And you know, I work in a nice school district. I work in the second largest school district in Illinois behind Chicago public Schools. And I've taken, you know, I got my master's, I took extra classes that also I put on the credit card so I can move over on that pay scale. But I maxed out the pay scale when I was 37. And in most teaching or most schools, you can't do that until you get all the way over. And then every year you slowly go down, we put it into where if you took more classes, you could move down quicker. Okay, so I have a max contract and our union bargained for. If you're on that max contract for a year, we'll get 403B matching up to 5%.

[Bo Hanson]

Oh, that was my next question. You didn't even get matching on the 403B.

[Eric Holloway]

Now that, now that's not pretty. That's pretty uncommon for, for school teachers across the board. So I am getting my employer match. So I do meet step two, which is great.

[Brian Preston]

Sure. So you're at max salary. There are other things because you said the way they look at it is the highest four years over the last 10. Are there things that you can do to impact your pay, like being band director? Are there other ways your compensation comes in besides just salary?

[Eric Holloway]

So I do a bunch of extra curricular band stuff after school. So, you know, whether it's marching band, pep band, jazz band, all these things. And I get stipends for those. And my yearly stipends for all those this year I believe is about $23,000.

[Brian Preston]

Oh, wow.

[Eric Holloway]

In addition to the mass contract with, with TRS, which is a teacher retirement system, it's. It's 117. And then they take out the 9% from that for the contributions.

[Brian Preston]

So you're at like, almost 150,000. Right around $150,000 of comp as, Right. All right. Okay. So you got a big shovel. That means we should be able to get into a good spot.

[Eric Holloway]

And that's why I do feel, you know, yes, I do got to, you know, focus on what I have, the debts I have, and I am keeping pretty tight margins because I do want to get rid of this debt. Because I do think once I get out of step three, step four and five are going to fly. Because like you said, I got the big shovel.

[Bo Hanson]

Right.

[Eric Holloway]

I can. I can do a couple of steps at the same time or really load up the savings so that I can invest on a Roth. And then I already got the HSA for open enrollment. Now I'm doing $50 per paycheck starting in January.

[Brian Preston]

Wait a second, wait a second.

[Bo Hanson]

Uh.

[Brian Preston]

Oh, you said you're. I thought you said you're on step three. I am, but you said you're doing your hsa.

[Eric Holloway]

Yeah.

[Brian Preston]

Okay. All right, all right, all right. Let's finish going through your net worth statement, because I want you to just put a pin in there because that's an interesting thing right there. Hey, I'm in step three, but I'm kind of doing a step five sort of thing.

[Bo Hanson]

I think we're gonna find there's even more.

[Brian Preston]

Yeah, there might be some stuff there so we can see.

[Bo Hanson]

I have a feeling.

[Brian Preston]

You have your primary home valued at $364,000, and you have your automobile valued at 14,000. That's the asset side of the equation. When we think about the debts, your liabilities, you do have the personal loan, which it looks like it's about 27,000. When you send us over the records on that car loan at 16,000. Now, immediately my spidey sense goes off a little bit. You got a car worth 14 that you owe 16 on. So that's a problem that we might need to think about.

[Bo Hanson]

You're like everybody else in America except for the financial mutants. We gotta get you on the right side of that.

[Brian Preston]

And then you have a mortgage, and your mortgage. Currently you owe $225,000. But it's a great rate. It's three and a quarter percent. There's a lot of people out there listening to this that are probably very, very jealous of that. Right. So we look at it at. You said you're in your late 30s, right? Right. You have a total net worth of about $260,000, which is fantastic. But I do think there are some things there that I think we can improve upon. Now, you said you found us and you kind of got serious about this a year and a half ago. So walk us through kind of what has your plan been? You said, I've got these debts. I've got this stuff that I want to take care of and knock out. How have you been approaching that? And you said you're putting money in an hsa. Walk us through your financial plan currently.

[Bo Hanson]

So.

[Eric Holloway]

Right. And this is a perfect time that I'm here with you guys, because between now and May is when I get all my stipend checks. Oh, great. I'll get about. Between now and May, I clear about 16,000 from there. So my biggest thing is taking all that, the stipend money, and lowering the debt as much as I can. Right. Every paycheck, I put $250 into my savings account. Direct deposit.

[Brian Preston]

Yeah, I'm sorry. I want to make sure I understand this. Now, when I asked you where you were in the foot, you said, I'm in step three.

[Eric Holloway]

Right.

[Brian Preston]

But you have $250 going to a savings account.

[Bo Hanson]

And what is that savings account paying.

[Eric Holloway]

You while I'm in a brick and mortar? Because it's saving for a new AC and heating, so it's probably, like, less.

[Brian Preston]

Than 1% less than. I mean, it. Remind me again the interest rate on the personal loan.

[Eric Holloway]

13.9.

[Brian Preston]

Okay. So make sure I'm understanding. Okay. Just make sure I've got. All right, so, all right, I've got 250 going into a savings account. All right, keep going.

[Eric Holloway]

And then I get my 403 match. So that's. I'm doing 275 per paycheck.

[Brian Preston]

Awesome.

[Eric Holloway]

And then starting in January, I'll do $50 per paycheck into the HSA. So right now it's $25. The reason why I bumped it up is because we did get. We get raises in September when the school year starts. So I was like. I felt with the margins I had, I could bump that side up because I do feel I'm behind on the investment part. And I feel that no matter what time I use, I think I can get rid of this debt within probably the calendar year. Well, not this calendar year, but 2025. And then if I'm really tight with it, and I just want to be able to take off after that in 2026. So.

[Bo Hanson]

I'm glad Bo asked you what your plan was. I know that, like I said, we have producers behind the scenes that are kind of going through and doing some pre planning. So we kind of know a lay of the land before you come on the show. And we actually have what we wrote down from those phone calls on what your current plan is. And as you can see, we currently have that. You are doing the 5% for the 403B employer match.

[Brian Preston]

That's a step two. Love it.

[Bo Hanson]

Yeah. That's great. And then we. This is. You're kind of echoing what we had already heard. Number two is you're building an emergency fund. You're adding to it at 250amonth.

[Brian Preston]

Sounds like step four to me. Just throwing that out there.

[Bo Hanson]

Let's come into it. We'll get. We'll clarify this even more. And then number three is you're investing in a health savings account. Doing $100.

[Brian Preston]

Sounds like a step five to me.

[Bo Hanson]

Now, you said that's a little different because you said it's 50. But I think in our pre planning, it somehow it was understood it's 50 per paych. Okay.

[Eric Holloway]

So it is 100amonth.

[Bo Hanson]

Okay, I just want to clarify. And then here's one. We hadn't even uncovered this when we were talking about, but supposedly number four is you're also doing $100 a month into your Roth IRA.

[Eric Holloway]

So the plan was to start that in January.

[Bo Hanson]

Okay.

[Brian Preston]

So before you get the debt paid off, before you get out of step.

[Bo Hanson]

Three, what step is the Roth ira?

[Eric Holloway]

That's fine.

[Bo Hanson]

That's the number five.

[Brian Preston]

Okay, we'll come back.

[Bo Hanson]

We'll come back. I'm just putting a little bookmark there. Number five. We're going. You're going to continue to make minimum debt payments. So you're paying just what they. Whatever the amortization is. And by the way, how long is that car loan that you have when you bought it? I know. I want to hear. Because I know what they're selling out there. So I want to hear what you got sold.

[Eric Holloway]

So it was 66 months.

[Bo Hanson]

66 months. That's not the worst. 84 are the ones that really make my hair stand up for my arm.

[Eric Holloway]

I bought it at the beginning of 2022, where there was still, like, the chain supply issue. And, you know, I bought the used car, and it was a 2019, and it cost more than what I could buy a new car for almost now. But the car I had was an O8, and it was just on his last leg. And it was.

[Bo Hanson]

And for our audience, I don't mind. Everybody knows if you listen to our content long enough. We're big fans of 23. 8. Put down 20%. Don't finance longer than three years, not 66 months, 36 months. And then try to make sure that your payments don't exceed 8% of your income. That's you're thinking Corolla, definitely not Land Cruiser. Now, your unique situation is because we have to come to you where you are, we're triaging your personal situation right now and time. And so even though you've broken our 23 8, that doesn't mean we just immediately go, oh my gosh, we have to just throw everything at that. We have to kind of take you where you are when you came to us. And we'll get into that in a little more detail and explain how we're going to get you back onto the right path of being a financial mutant. And then number six is you're putting your stipends towards the car loan. Now explain what, you know, when we were talking about that, does that mean you're just thinking about if you have extra after all these things that you might throw a little bit towards.

[Eric Holloway]

So when I think about my salary, I don't even think include my stipend.

[Brian Preston]

So it's like gravy money coming in.

[Eric Holloway]

It's like getting a bonus check. Right. So when I get. I got paid today, so my next paycheck in two weeks will have my March man stipend on it.

[Brian Preston]

Okay.

[Bo Hanson]

Okay.

[Eric Holloway]

Now that one, I do some Christmas gifts for nieces and nephews from it.

[Bo Hanson]

Sure.

[Eric Holloway]

But then, you know, I'll have about 3,500, $4,000 to. Then I could put onto either the private loan or the car.

[Brian Preston]

Well, how would you walk me through the idea of putting on the car loan as opposed to the personal loan? Because you said the car loan, if I have this right, is 4.9% private loan, 13.09%.

[Eric Holloway]

So I was thinking about the car loan because I could have it paid off in that three years of the 23. And I was like, okay, I could at least have it done in three years.

[Bo Hanson]

And I appreciate the respect. That means that you've listened to us. But this is why finance is personal.

[Eric Holloway]

Absolutely. And then I was like, hey, I can take that car payment each month and just put it on that.

[Brian Preston]

A little bit of debt snowballing going on there.

[Bo Hanson]

Right.

[Brian Preston]

Pick the lowest balance first.

[Eric Holloway]

And then I'm glad I'm meeting now because like I said, I got all these segments coming up. Maybe I switch directions and put them on the private loan and get that paid off and then put that payment on. So that's kind of the crossroads where I'm at right now.

[Brian Preston]

Got it. Well, what I love is that you have a plan, right? Like, some people, they find themselves in this situation, they wake up and they're like, oh man, I don't like my current financial circumstance. Oh, well, you've actually, like, put something in place to move towards a goal. And we actually illustrated if you were to implement this the way that you're going to pay off your debt, you're going to have it all paid off by August of 2006, like based on this.

[Bo Hanson]

26.

[Brian Preston]

August of 2026, that flux capacitor still, by August 2026, you're going to have all of your debt paid off, which is wonderful. That's inside of the next two years. It's a great thing. But one of the things that we do, being able to design the financial order of operations the way we did, is we recognize it is an idea and a strategy that hopefully allows you to optimize your dollars. That's the reason we've designed it the way that we have. How would you feel if we told you that by changing a few little items, instead of having to wait till August of 2026 to have all of your debts paid off, what if you could have them all paid off by September of next year? I mean, we're talking about less than 12 months in the future without having to, like, go get another job or make drastic sell all your stuff decisions. Just changing some of your strategy, I think might be able to allow you to achieve this. Is that something you'd be interested in?

[Eric Holloway]

I would love that. Because what pains me the most is like, those two payments are almost $1,400. And even though I put half of that into investments, what would that look even after a year, those 13 months that I'm short of?

[Bo Hanson]

I feel for you a little bit, Eric, and the fact that I can sense, you know, just instinctually, that lucky number 13% interest that you're paying, that's, that's, that's high, that's a burden on you. But you're in this incremental decision matrix of you're trying to figure out, and you're like, you hear us talk about how powerful Roth IRAs are, how health savings accounts and the triple tax advantage, and you're like, I want to get in there and get that goodness, because I hear these. But yet in the background, you've got this 13% that's just pulling you the other way. And I can understand how. And I see financial mutants do this stuff all the time on their journey where they will get distracted because they feel like they're giving up something over here. Just whereas I want you, I want you to embrace the pain that you're not getting to do the Roth IRA yet, to use that as motivation to make you the better person in the future. Look, if you've read Millionaire Mission, I share. I have regrets that there were a few years I didn't get to max out my Roth ira. And I wear that every year with regret that I'll never fall into that trap again because it's kind of the, the tell you drag around with you of decisions of the past, but how you're going to now be a better person in the future. And so I don't want you, I want you to get serious about this with this plan. That's what this is. This is where we get laser focused on making sure we can get the debt, get that 13% completely extinguishing your past. And then now you'll be on this recovered path to where every month when you are hopefully creating an automated plan to, to walk towards inevitable wealth of funding, the Roth funding, the HSA and even beyond that we're going to get into even loading up more STU in the future, you'll look back and go, man, yeah, that short period of time that I had to be hyper focused on it was worth it versus just trying to do everything all at once because it's just not optimized. And that's not because, you know, that's part of what this book was almost titled, what to do with your next dollar. Now, it doesn't anything half as good as a Millionaire Mission, but from a standpoint of what to do with your next dollar is more appropriate. And that's kind of why you have to be careful when you try to do all the steps instead of really getting laser focused on what to do with your next dollar.

[Brian Preston]

And the beautiful part is that here in your late 30s, you're still young, you still have a lot of time to be able to attack these goals in a very meaningful way. So when we think about the financial order of operations, obviously we have step one deductibles covered. You're there. Your deductible, I'm going to assume is less than 6,000 on your highest deductible that you have. You're also getting your maximum employer match. That's wonderful. You're going out maxing that out you're getting that money. We don't want to change anything there, but we do want to become laser focused on the high interest debt we've already laid out. We have these two debts, the private loan and the auto loan. So this is what we think you ought to do when it comes to prioritizing our plan, the money guy plan versus the plan that you're doing. The very first thing once you get out of step two, we think it will make, we think it would make a ton of sense to pour everything at that personal loan. That 13% is literally working aggressively against you. So all the stipend money that comes in, all the money that you have going to an hsa, maybe not be going to an hsa, all the money going to Roth, maybe not going to a Roth so that we can aggressively and violently attack that personal loan. Then once we get step three done, we have to make sure then you get to the point that you no longer are at risk of getting back in that situation. You've already alluded to the reason that you had to run up credit card debt is that you did not have a fully funded emergency fund. Had that been there, it would have protected you. So once we get out of this high interest debt, let's get you to the place to where the next time an unknown unknown happens, you're okay, you're covered, you're prepared, you're ready for it. And then we want to course correct the car. We're going to talk a little bit about that, what that looks like. But driving a car that is worth less than you owe is a dangerous proposition. If something were to happen today by no fault of your own and a driver hits you and your car is totaled, your insurance check may not cover the note that you have on it. And that is a problematic place to be in. And then we want to start talking about the fun stuff. Then we want to start talking about the exciting stuff. Once I get step forward on, then I can start putting money in my hsa, then I can start putting money in my Roth. And then you get off to the races. Then you get to think about retirement, lake house, fill in the blank. All the fun stuff you want to do for the eight nieces and nephews.

[Bo Hanson]

Well, now you notice that we have there number four is retroactively fund the health savings account, the Roth IRA for 2025. You notice that does not say 2024.

[Brian Preston]

That's right.

[Bo Hanson]

That's on purpose. Is because Roth IRAs and health savings accounts are kind of nice in the Fact that they actually, they're not a time machine, but they do allow you to go fund these accounts up until April of the following year. So when we talk about retroactively funding those accounts, we're really talking about by April of 2026, because, remember, you're going to be so focused in 2025 on this debt and extinguishing that 13%. We're not thinking about Health Savings Account. We're not thinking about Roth IRA. We're thinking about 13% debt being gone. And then we're going to come back later by April of 2026 to get that 2025.

[Eric Holloway]

Nice.

[Brian Preston]

So let's pause for a moment before we dive into some of the more specifics around the money guy plan. How does that make you feel? I mean, we basically just told you, hey, shut down the hsa, shut down the Roth, and do something different than you have been doing.

[Eric Holloway]

I. You guys are professionals, right? And I'm a teacher, and I hope all teachers get treated like professionals. And we, when we teach students, we hope that what we're teaching is taken to help improve them. And that's how I feel like I wouldn't have come on here if I was like, oh, I wouldn't want to listen. I absolutely, I want your advice, right? I want to make sure that I'm learning from two great people on how to maximize or optimize my finances. And yeah, now I'm looking at. I was scattered. I was all over the place, but I didn't know any better. And I'm really excited that, I mean, those 13 months from August of 26 to September 25th, that's going to be huge.

[Brian Preston]

It's going to be exciting, right?

[Bo Hanson]

And if you wonder how can it be almost a full year faster on the debt, I think that's where we as Americans are way too comfortable with debt. I mean, with how much credit card debt people have. And there's even been some stuff going on in Washington where they're calling in all these banks and they're asking, what's your profit margin? And all these things is because when banks are charging 20, 25, 26, now, I know you got this, you did a consolidation loan, you got it down to 13. But even at 13, I mean, we're getting close to $4,000 a year of interest. And if you think about what that means as your time and the component of giving you access of what you even hope to make off of your army of dollars, we got to extinguish that. Because even though it might feel manageable. And the banks are smart. They make those payments where they're very digestible. So you feel like, hey, I'm not really hurting myself because I can make my monthly payment. Where they're hurting you is that debt is at that interest rate that is just. It's a. If you only Hope to make 8 to 10%, but yet you're paying 13, you're not moving forward, you're moving backwards.

[Brian Preston]

So let's look at a little bit more detail around the plan that we're laying out around the money guy plan. So obviously we're going to tackle the personal loan. Everything that you have coming in. You said that between now and end of May, end of May, you've about $16,000 of stipend money coming in. So we want to see any excess cash flow, what you're putting in the hsa, which you're putting in the Roth, as well as the stipends throws at that personal loan. If you do that, then we believe that you can have that personal loan paid off by September of 2025. So that is $26,000 of debt extinguished inside of 12 months, which is awesome. And then what I want you to do is I want you to build a fully funded emergency fund. And we've done the math, and we know that it costs you about $6,000 a month to live the life that you want to live and cover your baseline living expenses, right?

[Eric Holloway]

Correct.

[Brian Preston]

Well, because you're a single individual, you have a pretty steady job. We think that three months is an appropriate emergency reserve for you. So if we take $6,000 a month times three months, your fully funded emergency fund should be about $18,000. Well, once you have that private loan knocked out and all of that money that was being used in step three now gets shifted to step four, and then you have the additional stipend income coming in, we believe that you could have a full 18,000 emergency fund on top of the 6,000 you have right now by the end of next year, by December of 2025.

[Eric Holloway]

Wow, that'd be crazy.

[Brian Preston]

Think about how different when you do your net worth statement next year versus this year. That looks all of a sudden $26,000 of debt that was there is not there. And $6,000 of cash is now turned into 18,000. It gets pretty, pretty exciting.

[Bo Hanson]

And then you'll easily be able to fund whatever H Vac problem or anything else that's coming your way. And that's what I think is interesting from a behavioral standpoint is this is where it's our human nature where we are trying to be optimizing of everything is that you notice instead of. But you're not really good at anything. If you don't really focus and practice and do something, you don't actually ever become superior at anything. That's why that laser focus is going to tackle the debt. You notice all we did in our plan was we took that laser beam focus off of the debt, the high interest debt, step three, moved it right over to step four, and we attacked that emergency reserve to get you those six months as fast as we could. And then we're going to move on to that number three, which is. BO is exactly right. If you had a car accident today, it would be a problem. So we, even though, like I said, triage, we want you 23.8, but it's 4.99% and you have a lot bigger issues with 13 and other things that when we're trying to figure out a hierarchy of where to focus. That's why we're going to bring that as number three. After the cash reserves, let's just get it back to where you owe what the car is worth and throw just a few thousand dollars at it so you're not underwater.

[Brian Preston]

So here's a little bit of homework you're going to have to do once we get to that step. Once we get to December of next year, you're going to figure out, what's my car actually worth. What is the Kelley Blue Book value or Edmunds or whatever service you want to use to determine what the value of your car is. And you're going to continue paying the monthly payment you've been paying on it. So the loan will be paid down by that point in time. And you're going to have to do some math on your own at that point in time. I owe this much and it is worth this much. How much do I need to then put down on the loan so that I'm at least at a level playing field? And then once you've done that at 4.99%, we're okay if you continue for the remainder term of the loan, because we're inside of, I want to say it was 12 months, 18 months we had left before that loan to be paid off at that time. So get the car, write the ship, and then continue paying the normal monthly payment on the automobile. But you have to have the discipline before you do the roth, before you do the HSA before, because you don't want to be in that spot where you're Driving around, just a giant oh, caution sign, dangerous thing. Get the automobile right that ship and then, then, then we can start talking about.

[Bo Hanson]

Well, here's what I liked about Tom. We got to number four and it was one of those things, kind of like a high five moment. Sometimes I go back and forth with my buddies. I don't know if it's better to be lucky or better to be good. Right. You're fortunately go get to do both at the end when we get to fours because you're gonna be lucky. The timing couldn't be better. Better when you get to step. When we are number four. It's not step four, but it's our number four is because you just shared with us. It's between now and kind of the beginning of the year. You get your biggest stipends come in. So in addition to what we've already covered, you're going to have these cash flows come in. I think they're going to make it. Where by the time you get that, that superpower of funding the previous year up Until April of 2026, we're going to have that money come in when it needs to be there and you're going to be able to catch up on that health savings account, that Roth and really do some cool stuff for your wealth building journey.

[Brian Preston]

Now you said to us earlier, you have this goal, you want to be a millionaire. I want to ask like, where'd you come up? I mean obviously two comma club. Super cool, but does that mean something to you? And like, is a million the right number or what is the number?

[Bo Hanson]

Have you done the math on this?

[Eric Holloway]

So I haven't done the math. I mean I've looked at it and I tried to do, you know, 8% and carried it out. It, I think it's doable to get to that million, but I've got to have to be focused on it. But the reason why I want to do it is, you know, there's always, I guess, sibling rivalry. Right?

[Brian Preston]

Okay. And you got, you got five of them in addition to you.

[Eric Holloway]

There's a lot of rivalry going on and it's nice to, you know, kind of say, I, I think growing up it was like, hey, that's the number that means you're successful. Right. You know, there are a few things where it's like, hey, you make a hundred thousand dollars a year. That would used to be the standard. Like you've made success.

[Brian Preston]

Right?

[Eric Holloway]

Success. And I think same thing with retirement. I feel like, hey, that's a million dollars is I think what people used to think they need. And I don't know if that's the number now.

[Bo Hanson]

Let me ask this a different way, because you paid us a compliment. I don't even know if you meant to, but you were saying that you were throwing a lot of your stipend money into the car loan, even though it was much lower interest rate than that other loan was because you were trying to get on the right side of 23. 8. So I'm going to give you credit that you obviously have been paying attention to our rules. What do you think we tell people their ideal savings and investment rate should be?

[Eric Holloway]

25%.

[Bo Hanson]

25%. Didn't even pause on that. So have you done any math to know what would 25% do for you? I mean, we even have a great resource on our website, if you go to moneyguy.com resources, we always say what 25% can do for you. But really, it is titled. What's the official title? I screw it up every time.

[Brian Preston]

Yeah, it's what, 25% can differ. That's what I call it.

[Bo Hanson]

The Team. I'm surprised we haven't just renamed it. But there is a great resource. And that's where I didn't know if. When you told us you wanted a million dollars, I was like, I wonder if Eric has done any math on this to figure it out if this is 25%. But it sounds like it was just like a millionaire would be cool. So you just plucked it out of the sky and that's where we landed.

[Eric Holloway]

And I think that's part of it. And I think the numbers I try to pick because of the pension, I think by time I retire, my total earnings are going to be about 200,000.

[Brian Preston]

Right.

[Eric Holloway]

So 75% of that.

[Brian Preston]

I'm going to get clean living.

[Eric Holloway]

Right? 150,000.

[Bo Hanson]

Yeah.

[Eric Holloway]

And that, you know, by the way.

[Bo Hanson]

That will be worth seven figures itself. I mean, having a pension that can pay that for the rest of your life is worth multiple seven figures.

[Eric Holloway]

And there's. So I have to wait, I think, till I'm 65, but then I'll get a 16% increase on that and then 3% annually on that pension. So it will. You know, my plan is to. In case the pension is not there, I still want to be safe with my investment. Sure. But also, if I have the pension, maybe I don't have to touch investments until the government tells me I have to.

[Bo Hanson]

Sure.

[Brian Preston]

Yeah.

[Eric Holloway]

So those are kind. That's kind of where I'm at. So I haven't really run the numbers, because I think I've fallen into the trap that a lot of teachers have. The pension is going to be enough. The pension is going to be enough. And I do think with that amount of money coming in from a pension.

[Brian Preston]

You should probably be okay, well, you know, who does like to run the numbers?

[Bo Hanson]

We're kind of nerdy, right?

[Brian Preston]

We love doing the numbers. We said, okay, well, what if Eric does this and what if he decides to take some of these suggestions and he gets all this debt paid off and he gets step four knocked out, and then he gets to the point where he can actually start building for the future? And we said, let's make some assumptions here. What would it look like if at that point in time, he got really serious about building up towards financial independence? What would he be able to do? And so this is what we said, okay, we're going to assume that in the interim between now and debt payoff, you're only going to do step two and get the employer match. And then we said that once you get through step four, once you have that fully funded emergency fund, what's it look like if you begin saving 25% of your gross income for you, that's going to be about $38,000 a year. Let me pause there for a moment. Does that sound. If you didn't have debt payments, didn't have this stuff flowing out, does that sound feasible and reasonable? Yeah, $38,000 a year.

[Eric Holloway]

I think I could do that. Now, does that. So the way our salaries or the. My compensation set up that 117 or over my salary is they take 9% out of that. Is this in addition to the 9% or the 9%?

[Brian Preston]

What are you. Can he use it?

[Bo Hanson]

You. Well, here's the thing. You're a single individual and you make over $100,000. I would tell you, I would prefer for you because you're well above the social safety net of Social Security, that I don't want you counting that 9%. And truthfully, I mean, that's the rule. Fortunately, we've already set up. But you're also gonna see if you want to have the dream that you're dreaming of having this lake house that the nieces and nephews are all coming and good time, rock and roll, Uncle Eric is there for them. We gotta do things differently. We gotta live like financial mutants. And actually, so we're go. And I think with your shovel, you've done very well. And I think there's probably even a future for you at the central office at some point. So we can even push.

[Brian Preston]

Well, if it's last four, we gotta get that.

[Bo Hanson]

We all know that if people don't know in education, you gotta get in the central office for a few of those years of the last four, I don't know to really push that thing on my job.

[Eric Holloway]

So great. I don't deal with any of the meetings or any of the problems. I just deal with the best kids.

[Bo Hanson]

Here's what we'll do. Since your stipends do count towards the pension, we're going to have you. You know, if they say, hey, we need somebody that's going to help out with, you know, the janitorial staff, somebody who's going to help out with the football team this year. I don't care if it's whatever program, you're probably going to be volunteering for a few years just to get that stipend up a little bit more for the pension.

[Brian Preston]

But again, we wanted to show you a conservative but realistic example. Said you're going to save 25% of your gross income, $38,000 a year, and we assume no income increases. We already said it seems likely that your income will increase between now and the time you retire. But if all you did was save $38,000 per year from the time you get step four done all the way until you retire, and we said you could earn an 8% rate of return on average over the long term over that working time period, we said, what could that turn into? Well, we know that by the time you start, you're going to be around $80,000. Your 403B is around 50 or so right now. And you're going to have the employer match money going in and your money to get that going in. So by the time you start your journey, you're going to be at about $80,000. But then once you're able to attack building wealth with laser focus and extreme intensity, if you do that between ages 41 and ages 55, your investment portfolio could be worth over $1.2 million. Wow, that's two comma club plus.

[Eric Holloway]

I love it.

[Brian Preston]

Right?

[Eric Holloway]

Yeah.

[Brian Preston]

Now we're start talking about stuff. Oh, man. If I'm gonna have a pension coming in, it's gonna be $150,000. And I want to do something like buy a lake house. Love on my nieces and nephews, Live the life that I want to live the way that I want to live on my terms. There is no reason you should not be able to make that a reality.

[Eric Holloway]

Absolutely. That's great. And just seeing that number put a smile on my face. I mean, that was great. I was like, okay, that's fantastic. And that's at 55, not at 65.

[Brian Preston]

That's right. Madison's at 55 when I'm finally retired.

[Eric Holloway]

That's great.

[Brian Preston]

So if you had another 10 years on top of that, it gets even more exciting. This would suggest that if you just applied a 4% withdrawal rate to that 1.2, that's another $48,000 on top of whatever other income you could have coming in. You're talking about a retirement lifestyle that really allows you to live life on your terms.

[Bo Hanson]

I do think it's interesting because we're so nerdy, we actually ran this multiple ways. And Megan, when Beau and I kind of had the brainstorming and she had come back to us and she goes, you realize there's a path where I think if Eric took that laser focus, it's gonna get him out of debt. And he just continued that behavior. This number actually ballooned well beyond one and a half million dollars. But what I told Megan, I told Beautiful, is that often. One worry, though, is us financial mutants. Discipline is definitely rewarded. However, there's going to come a time you're going to need to buy another car. That life is going to happen. We all need to be realistic. And that's the beauty of the 25%, is because it's hopefully going to free you to be able to live your best life, too. Because you only go have one decade in your 30s, one decade in your 40s, and you don't want to live. There's a fine line between being a miser versus being a financial mutant. And I think this goal is still extremely successful, but it also lets you live life. And that's a key thing that we always are trying to share with people, is don't just make up a number, because we see a lot of financial meetings that say, I want to have $3 million. And I'm like, well, why? What is that money going to do for you? What's the purpose? What brings you happiness? Are you enjoying this moment in time, too? And that's why I love that we get to have this discussion with you, because we want you to have the best of both worlds. You have this great pension. You're gonna be able to save for this big dream goal, but you also are gonna have some margin there to live your best life, too.

[Eric Holloway]

And I think that's. That's kind of the thing I'm missing right now is like, the margins and what I have. Right. And, you know, there are times where it's like, you know, hey, I can't go out, or I can't do that. And, you know, I'm not. It doesn't discourage me because I know I'm on the right path. Like, I know I've got to take care of the things that. My obligations, stuff like that. And it would be nice, though, to have that extra margin and not worry about, like, hey, let's go on a weekend trip somewhere, do that. And right now it's. It's. I'm just not able to.

[Brian Preston]

That's right. If you want something you've never had, you got to be willing to do something you've never done. And if you can live differently today, it allows you to then get to live very differently in the future. That's the goal. What other questions do you have for us?

[Eric Holloway]

So the biggest one I think we tackled was how to. How should I tackle the debt? Right. And I think that was the. The biggest. The biggest thing we covered. I guess I'm not confused. But how do we. How does the retro work for, like, the. The Roth and the hsa? Like, I feel like those are the spots where I might fall in the cracks because I just don't know how to do that type of stuff.

[Brian Preston]

So one of the great things you can do, Brian mentioned this is that when it comes to funding health savings accounts or funding Roth IRAs, even if you don't get all the money in there by December 31st, you have all the way up until the tax filing deadline the next year. So let's say that you get into 2026 and it's between January and April, and you have some of your stipend money come in, and you have $7,000 come in from your stipends. Well, you could then make the choice to take that $7,000 from the stipends and put it into your Roth IRA for last year. So you're just going to make a contribution. It's going to ask you what year you contributing for 2026 or 2025. And you're going to select 2025 and boom, you funded it for last year. And then once you do that, then you want to set up your automatic monthly contributions to begin building for 2026.

[Bo Hanson]

Most of the portals, I mean, I don't know who you do your investments with, but they make it pretty seamless and easy. I think it's the fear of. We often think this is going to be more Complicated. And then you get in there and you realize, oh, my, that was just a few dropdown screens. And then you just had to toggle it between this and that. And you always. I mean, that's one of the things we're going to. After you leave here. I told you at the beginning of this, and Bo shared it as well. We want you to come out on the other end being better than where you even came in. We're going to give you a homework list so you can tackle these things, and you can always follow up with us. And we've worked with a lot of custodians, so we usually are pretty familiar with a lot of platforms out there, and we can help you work with that, too, Eric.

[Eric Holloway]

And then is it the same with the hsa, even though that's tax for your. Like, is it. So if I'm gonna put the max in for that year, does it. Is that still like the triple tax advantage, or is it because it's already my dollars have been taxed, or how does that work?

[Brian Preston]

I guess it shows up a little bit differently. So the way that you put money in your HSA right now, it comes out of your paycheck. Right. It's a salary deferral in there that actually technically makes it quadruple tax advantage.

[Bo Hanson]

Yeah, because you're saving the Medicare and the Social Security as well.

[Brian Preston]

But one of the things people don't realize is even if I'm not doing a salary deferral into my hsa, I can still write a check to my HSA provider and pay with it with dollars that have already hit my checking account. So let's say that through your salary deferrals, you would only put $3,000 into your HSA. You could elect in the next year to write a check for whatever the max is, minus that 3,000, and put it directly into your HSA, which is a pretty exciting thing that people don't. They think, if I don't get in my paycheck, it's got to be my 401. I just missed out. It's not the case with HSAs, which is pretty stinking exciting.

[Bo Hanson]

And the triple part is you file this on your tax return. That's where the savings on the deduction comes through. Is that true? Up. I mean, we do it for clients all the time when we're reviewing their tax returns before they hit the file button is we always say, because it's not uncommon, people have employer plans. And then we say, you realize you left this amount of the HSA Unfunded. We really ought to pick that up, maximize it. You can make a contribution. And it's a great way to save money on taxes. It's a great way to save for the future, take advantage of all those tax benefits. It's a win.

[Eric Holloway]

Okay. All right.

[Brian Preston]

You ready for your. Oh, you have another question?

[Eric Holloway]

I got one other.

[Brian Preston]

Okay, go ahead.

[Eric Holloway]

So right now I have since I got. Today was payday, so now my Savings account has $7,000 in it. Should I take withdrawal from my lowest or to my deductibles covered and then right away throw it to. On that personal loan debt? So, like, when I. When we're done taping, like, don't do it right now.

[Brian Preston]

What's your highest deductible? When you look at homeowner's deductible, auto and health insurance, what's your highest deductible?

[Eric Holloway]

So it's. Well, it's the wind damage on the house, and that's 2,500.

[Brian Preston]

Okay, so if that is your highest deductible. That would be. That'd be my low point. That would be my. And again, remember, the idea is once we get out of this personal and then we're gonna get that emergency fund built up as quickly as we can once we get out of the high interest debt. So I would make sure that I have that 2,500 in there. And then, you know, if you have the wind damage, you're covered. If you have to hit your health insurance deductible, you're covered. If you have an auto accident, your deductible is covered. That's why we choose the highest deductible first.

[Bo Hanson]

But knock out that 13% because it's working. Like I said, you're going backwards. It might not feel it in the way. Like I said, they get you on, they make the payment very digestible. You don't feel the quicksand as you're slowly going deeper into it. Let's get it extinguished as fast as possible.

[Eric Holloway]

I'm thinking between that and the stipends, I should have it done by the end of the school year.

[Brian Preston]

Well, that's what I was going to say. It's actually going to be even quicker because we didn't even factor you in taking that down. So that's going to be something that allows you again. If you get focused and intense, it's going to be amazing what you can do. All right, Eric, are you ready for the homework?

[Eric Holloway]

Absolutely.

[Brian Preston]

Okay, here's what we're going to do. We're going to shut down the Roth IRA contributions because it's not time for that yet. We're also going to shut down the HSA contributions. We believe that those dollars could be better utilized somewhere else. We're then going to aggressively attack the personal loan. We want that 13% loan to be off of your balance sheet completely. Once we do that, then we're going to start building up the emergency fund. Remember, our goal for you is 18,000 or three months of living expenses. Once you hit that number, then we want you to write the car. You're going to go see what is my car worth and then how much do I owe on the automobile? Make sure those numbers are at least equal. And then at that point, that's when you get to build your great big beautiful tomorrow.

[Eric Holloway]

And that's what we want, right?

[Brian Preston]

That's what we want for sure.

[Bo Hanson]

I mean, I just think you'll have a breath of fresh air when you know, you don't have the pressure of the debt. I mean, because I think like I said, Americans are way too comfortable with debt and that you will once it's just gone. And you're doing the financial mutant way where it's okay to use credit card use is okay. Credit card debt is the no way part. And that's where I just don't want you to have that weight of that interest working against you. We want you to get the full, full weight and power of compounding growth and that you can't do that while you're paying somebody else double digit interest.

[Eric Holloway]

Well, I appreciate you guys inviting me here. I learned a lot and can't wait to tackle this homework.

[Bo Hanson]

We can't wait to see your success. This is going to be outstanding.

[Eric Holloway]

I'm really excited for it. Especially seeing that number on that screen really just put a smile on my face and I'm excited to get to work.

[Bo Hanson]

I think it'll be great you being a teacher. You know, part of this, the whole reason we're all in this room together is I always had this just aspiration of education and I love it when I get to hang out with other educators because this is what I always thought I was going to be a teacher too. And I love that you'll get to pay it forward with your students. You'll get to. Our audience is going to see this. It's just a win win. And education is going to lift everybody up to their better and higher version of themselves.

[Eric Holloway]

It always does.

[Bo Hanson]

Eric, thank you so much for coming on Making a Millionaire.

[Brian Preston]

And if you would like to be on Making a Millionaire, we would encourage you to go to moneyguy.com apply. Or if you just want to figure out how you can do money better, go to moneyguy.com resources and check out all of our free resources out on the web.

[Bo Hanson]

Guys, can you tell we have an absolute blast doing this type of content? I'm your host Brian Preston, joined by Mr. Bo Hanson. Money Guy Team Out Making a Millionaire.

[Brian Preston]

Is hosted by Bryan Preston and Bo Hanson. Brian and Bo are partners at Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, 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. 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.