From $100K in Debt to $550K Net Worth | Making a Millionaire

Summary

Podcast Summary: Money Guy Show – From $100K in Debt to $550K Net Worth | Making a Millionaire

Episode Overview In this compelling episode of the Money Guy Show, hosts Brian Preston and Bo Hanson interview Chelsea and Lucas, a dynamic couple who transformed their financial lives from being $100K in debt to achieving a combined net worth of $550K by the age of 30. The discussion delves deep into their financial struggles, strategies for debt elimination, wealth-building tactics, and the intricacies of merging finances as they prepare for marriage.

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1. Introduction to Chelsea and Lucas's Financial Journey The episode opens with a candid conversation about Chelsea and Lucas's initial financial challenges. Chelsea reveals, “[00:43] When I met Lucas, I was waking up to how bad my financial situation was,” highlighting her early confrontation with substantial debt.

2. The Depth of Their Debt Chelsea elaborates on the severity of her debt, explaining, “[03:20] I had about $100,000 worth of credit card debt and a high-interest car loan,” painting a clear picture of the financial hurdles they faced. Lucas adds, “[07:18] It felt like freedom when I reached a net worth of zero,” emphasizing the relief of escaping the brink of bankruptcy.

3. Turning Point and Debt Repayment Strategies The couple discusses their pivotal decision to address their debt head-on. Chelsea shares, “[15:12] Moving to Seattle and focusing on debt repayment was a game-changer,” illustrating the significant lifestyle adjustment they made to prioritize financial stability.

4. Building Wealth Through Strategic Investments Despite their aggressive debt repayment, Chelsea and Lucas showcased disciplined saving and investing. Bo highlights, “[25:46] Your Roth IRA balances are impressive for your age,” commending their commitment to long-term financial growth through retirement accounts and automated investments.

5. Navigating Backdoor Roth IRA Conversions Lucas brings up a technical aspect of their financial strategy, “[26:13] I’ve done the backdoor Roth three times,” revealing their proactive approach to maximizing tax-advantaged accounts. Bo advises, “[28:32] Ensure you don’t have pre-tax IRA balances to optimize backdoor Roth conversions,” providing actionable insights for listeners.

6. Merging Finances and Planning for Marriage As Chelsea and Lucas prepare for marriage, they emphasize the importance of transparency and joint financial planning. Chelsea states, “[18:07] We're working on a prenup and planning to combine everything once married,” underscoring their deliberate steps towards financial unity.

7. Wedding Budgeting Without Debt The couple details their approach to financing their wedding without incurring additional debt. Lucas mentions, “[62:15] Our wedding costs between $45,000 and $60,000, and we're cash flowing it,” demonstrating their ability to manage significant expenses responsibly.

8. Setting Future Financial Goals Looking ahead, Chelsea and Lucas outline their aspirations for financial freedom, early retirement, and supporting future children’s education. Chelsea articulates, “[40:43] Our long-term goal is freedom to do what we want,” reflecting their overarching aim to leverage money as a tool for life choices rather than mere consumption.

9. Addressing Potential Financial Conflicts The hosts probe into possible financial tensions as the couple integrates their finances. Brian remarks, “[44:59] If I told you that you could save 10% less, how does that make you feel?” prompting Lucas to express, “[45:08] I’d struggle with reducing our savings rate,” highlighting underlying anxieties about spending flexibility.

10. Practical Advice and Homework for Couples Concluding the episode, Brian and Bo provide actionable advice tailored to Chelsea and Lucas’s situation. Key takeaways include:

• Backdoor Roth IRA Setup: Ensure proper execution to avoid tax complications. “[Bo: Step one is to verify your backdoor Roth IRA setup.]”

• Complete Wedding Budget: Finalize all expenses to maintain financial discipline. “[Bo: Finish your wedding budget and plan your cash flows accordingly.]”

• Define Shared Goals: Collaboratively outline measurable and time-bound financial goals. “[Bo: Write down your goals as a couple and align your budget to achieve them.]”

Notable Quotes:

• Chelsea: “[07:34] I feel like money is to buy freedom and options.”

• Lucas: “[45:14] Money spending feels like taking money out of our savings for me.”

• Bo: “[56:29] Create a budget that includes discretionary spending to reduce financial stress.”

Conclusion Chelsea and Lucas’s story serves as an inspiring blueprint for couples navigating debt and aspiring to build substantial wealth together. Their emphasis on transparency, disciplined saving, strategic investing, and proactive financial planning offers valuable lessons for listeners aiming to achieve financial independence and harmony in their personal relationships.

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Key Takeaways:

• Early Financial Wake-Up Call: Recognizing and addressing debt early can prevent long-term financial strain.

• Strategic Lifestyle Adjustments: Making significant changes, such as relocating, can accelerate debt repayment.

• Importance of Transparent Communication: Open discussions about finances are crucial in preventing future conflicts.

• Leveraging Financial Tools: Utilizing mechanisms like backdoor Roth IRAs can optimize tax-advantaged savings.

• Balanced Budgeting: Allocating funds for both savings and discretionary spending ensures financial goals are met without sacrificing personal satisfaction.

Chelsea and Lucas exemplify how dedication, strategic planning, and mutual support can transform financial adversity into a thriving and prosperous future.

Transcript

[Brian]

Chelsea did a good job of doing it, but she didn't say it out loud. She's nervous a little bit. As y' all make this family planning decisions, you're so tight with money to a degree. If there's any relinquishing of the financial that there's going to be some potential conflicts. Is that something that's kind of under the surface a little bit?

[Bo]

If I told you that you could save 10% less, how does that make you feel?

[Chelsea]

He literally just said we need to be on a no spin month. And I'm like, who's on a no spin month?

[Brian]

I do want to make sure I build this bridge back, because money has been the bridge that brought you all together. But I also see that it potentially could be a strife point for you guys.

[Bo]

Is it that you have not yet found the thing that you like spending money on?

[Chelsea]

That's kind of deep.

[Lucas]

We're planning a wedding now.

[Bo]

Ah, planning it must mean you guys are engaged or not engaged yet. We are engaged. Oh, wonderful. Congratulations. Right?

[Chelsea]

Thank you.

[Bo]

Pretty exciting, yeah?

[Chelsea]

Yes. We're very excited. And we just, like, booked our venue, so we're gonna get married in Knoxville, Tennessee. I was like, okay, I know the house buying rule. I know the car buying rule. Is there a wedding?

[Bo]

What's the wedding rule? We get asked that one all the time. And this is. That's one of those things where, like, personal finance is incredibly personal. And you know what? But if that's something you guys want to talk about, we'll dive into that. Because what you did that was awesome, is you sent us sort of, hey, here's where we are right now. And you guys said, At 30 years old, you are engaged, about to get married, about to figure out what that looks like. And so you kind of sent us some net worth statements for each of you. And it is wild to see that right now at age 30, Chelsea, you have a net worth of $125,000, making almost $200,000 a year in income. And then, Lucas, you have a total net worth of almost $420,000, making like $215,000 a year. So for two 30 year olds, that's a tough. You guys are crushing it.

[Brian]

But I think this is so unfair in some ways, because you look at this and it doesn't show the journey of where y' all came from. I mean, because there's a lot of meat. When we were reading the notes, I'd love to know a little bit more about that too. Is this where you guys started From.

[Bo]

Is this how it was on day one?

[Lucas]

Not quite. No. It's. Yeah, it's changed a lot, I think, in the last few years, too. And the number, like. Yeah, you. You look at the number and it, like, I don't know. It doesn't.

[Brian]

Y' all are way ahead of the curve.

[Bo]

What were you about to say? What were you gonna say? It doesn't.

[Lucas]

Oh, like, it doesn't register quite, like.

[Bo]

Like, holy cow, I'm worth almost half a million dollars, right?

[Lucas]

Yeah. It doesn't feel any different.

[Brian]

People are gonna watch this, and I think it's good for aspirational purposes, too. I mean, I'll put Chelsea on the spot first. I mean, I don't see a lot of debt there. I see some student loans. I see a 401k loan that we're gonna completely pick on you about. But that number, based upon your income, having $18,000 debt doesn't seem crazy. But is that where your debt journey started?

[Chelsea]

No, it was way more than that. Like, 10x that. When I met Lucas, I was actually just kind of like waking up to, like, how bad my financial situation was. So I had about, like, six figures worth of bad debt. So I had about.

[Brian]

Credit card or consumer debt?

[Chelsea]

Both. So I had. It was credit card, which was about, almost like $100,000 worth of credit card. And then I had a car loan that was. So at the time, it was like I was leasing a wrangler. And then I ended up buying it out lease so that I could sell it, which ended up working out. But my. I mean, my credit was so bad, so I had, like, a 12%, like, loan on the car. Yeah, I had a bad, like, car loan. So I think, you know, right when I met Lucas, I think that I had, like, a negative hundred thousand dollars net worth.

[Bo]

And how old were you when, like, when you said you woke up to, oh, man, this is a bad situation?

[Chelsea]

I was about 27.

[Bo]

27.

[Brian]

So it's not like you've made a lot of progress.

[Chelsea]

Yeah.

[Bo]

Holy cow. Because I think a lot of people in that situation, they don't start. Like, I'd be curious to know, how did you know a lot about. Fine. Like, did you grow up learning about finance? Did you know that it's bad to have a hundred thousand dollars of credit card debt? Or did you kind of have to learn that the hard way?

[Chelsea]

I had to learn it the hard way. I mean, like, so growing up, I mean, talking about money was, like, very taboo, like, even within, like, my parents relationship. So I Mean, there was no talking about money, but there was always stress about money. Because, you know, I think looking back, I think that because, to be honest, and y' all know Marietta well, like, I grew up thinking I was rich, and we were far from that. Like, it was opposite of that. The way that I learned about money growing up was completely opposite of how I steward my money now. So, I mean, to be honest, yeah, it was just, you know, spend, spend, spend. I mean, that was like, growing up. That's how it was in my household. Like, you spend as soon as you get it, because you never know, you know, if you'll have a chance to spend again or have a chance to get this again. So it was very. Like, our household was very consumer minded.

[Bo]

And so when you graduated and started in your career, did you just carry that? I mean, because it's. I imagine you don't rack up $100,000 of credit card debt overnight. It takes a little bit of time, probably, to do that. Yeah.

[Chelsea]

And with the interest rate, it balloons, as y' all know. So I didn't even know I had spent that. I don't even think I spent that much. It's just the interest. Right. Like balloons. But, yeah, I guess. After college, I started working at the company I'm working at now, and I lived at home for the first four years, so I felt like a little kid with a big girl job. So I was traveling for work, just having fun. I was making good money, and I was just not really that responsible. I will say, though, that my dad was like, you know, make sure you contribute to a 401k. So I feel like that was my, like, saving grace with all of the mess I ended up in. But, yeah, and looking back on it again, living at home, I would have been maxing it out, because I could have, but I just, like, did the match, which was still 6%. So, yeah, by the time I woke up, it was because I think my, like, my minimum debt payments were getting, like, almost, like, just as big as my paychecks. So I'm like. I'm like, oh, we're getting to a point. And I had moved out at that point. So I finally grew up, and I started, like, you know, paying bills and paying, you know, my rent and stuff. And so, yeah, I was like, how. If this. If these payments are larger than my check, like, how am I gonna.

[Bo]

It's not gonna be good.

[Chelsea]

Right?

[Brian]

But you are highlighting. I think so many people in society base it off of what the monthly payments are, and it seems so benign and harmless. It's like, oh, if you, you know, it's just like your car loan that you mentioned. If I can just afford payments, it will be okay. What they don't tell you is this stuff starts stacking, and then before you know it, it consumes you and you never build. You're. You're so fortunate that you figured this out while you were young enough and now you're on the other side of it. I even saw in the notes the day you got and got it close to your net worth went to zero. Felt like a transition point for you. I mean, can you describe that a little bit?

[Chelsea]

Yes. So, I mean, that day it felt like freedom because, like, even though I was at zero, it was like, okay, I don't owe anything crazy. I'm not spiraling to bankruptcy or anything. I'm finally getting to the point where, okay, I'm out of the negative and now I can really build.

[Brian]

And you don't plan on ever going back to that?

[Chelsea]

Never. I mean, it feels amazing. I mean, I think, again, growing up, like, money was seen as to buy things, but, like, now I feel like money is to, like, buy freedom and options.

[Bo]

I love that.

[Chelsea]

Yes. So it just. I can never see myself going back to, you know, being honestly, like, a prisoner. Honestly.

[Bo]

I love that.

[Brian]

And doesn't it surprise you that you look around to your peers and it feels like in America, nobody likes. Feels this pressure. And even though they're living as your word, as prisoners to these dead overlords, I mean, and that's typically what happens.

[Chelsea]

I get in trouble. I mean, like, once I was out of the Matrix, I was trying to.

[Bo]

Teach everybody, trying to tell everybody, Right?

[Lucas]

Yeah, it's hard because it feels like it's like, why does nobody get it?

[Bo]

Yeah. Yeah. You've seen the light now. You've seen the other side. Lucas, what about you? What was your walk us through? Okay, that was her. You know, up until now. What was your up until now story?

[Lucas]

Yeah, my experience with money was kind of the opposite. I have a hard time spending money. I would say that's weird.

[Bo]

I don't know what that's like.

[Brian]

Where do you get that from?

[Lucas]

I definitely get that from growing up. I think there was some stress about money. I didn't know, and we didn't really talk about it much, but I knew that there was some stress. And I grew up in a single parent household and my parents were both around, but I knew that that was a huge problem, financial stress. You know, my mom started working, you Know at that point when it was.

[Chelsea]

Because your mom was a housewife.

[Lucas]

Yeah. She didn't work when my parents were together and then. Or part time and then she, you.

[Bo]

Know, started working back to work.

[Lucas]

Yeah. She started her career after 15 years of.

[Chelsea]

With three kids. I always tell him, I'm like, your mom is like a superwoman. I mean, like, to have done what she did.

[Lucas]

Although we didn't like, it wasn't explicitly talked about much, but you can kind of sense things. And so like, I just sort of picked up on, you know, like buying things at garage sales and you know, not like, not. I mean, I don't remember like sitting down at like dine in restaurants, you know, like stuff we would eat at McDonald's back when McDonald's was cheap.

[Bo]

Yeah. So like a very frugal household is what it was. Is what it sounds like.

[Lucas]

Yeah. I would say for sure.

[Bo]

And you've now carried that into adulthood that now it's even hard for you to spend money now. Is that an accurate.

[Chelsea]

Yeah, he's getting better, but yes.

[Bo]

Well, you're working on him, right? That's what you're working on.

[Lucas]

She's chiseling.

[Brian]

I already see the yin and yang of this thing. I can see how you, and especially now that you've under. Understand the journey. But I do think y' all will be incredibly good for each other because I. I hope by the end of this, we'll be able to convince you that you're so far ahead of the curve it's okay to make sure. Yes. I want your future self to be very happy with the decisions you're making. But I want you to look back that future self, future version of yourself looking back, going, man, I crushed my 30s, my 40s, these kids, this family we're building. It's all worthwhile because right now I can tell you're carrying some weight just from you don't like to spend money. Is that a true statement?

[Lucas]

That's probably a true statement, yeah.

[Brian]

Because I even saw a note in there that said every $50 feels like it's your last $50 to a DE.

[Lucas]

Is it? It's like, I'll say that as a joke, but there's always some. Some truth. Like this is. This is. Check the bank account before, like sitting down to dinner, and it's like, okay, there's. I can afford this.

[Brian]

Does that create any strife or any. Any conflict in the. In the relationship? Or is you. Are you just so thankful that y' all got out of this debt and other things how does that. How does that play out currently?

[Chelsea]

Maybe we start to where. When we met, because I think it will, like, kind of inform. Okay, question. So when I met him, I met him at a wedding, ironically, and in Knoxville. No.

[Bo]

Okay.

[Chelsea]

Just in Michigan at that point. I mean, I was, like, trying to trim my expenses. I was cutting back. Like, I said. Like, I was really, like, just kind of waking up. I didn't know how to manage money. So when I met him, I'm like, hey, like, as soon as, you know, we started, like, talking on the phone and stuff after the wedding, I'm like, I'm broke. I can't focus on dating. Like, I need to, like, get this, like, mess. And he's like, what mess? And I'm like, I have a lot of debt. And he's like, how much? And I was like, this amount? And he's like, oh, that's a lie.

[Lucas]

Her attitude about it was like, really? I really noticed that. Like, I thought I was. I mean, it was really good to see. I think that was one.

[Bo]

Like, she was serious about it.

[Lucas]

Yeah. One of the things that I like the most about her, when we met, as she was, like, so focused on improving, you know, specifically that, like, she was. I mean, she changed her behavior on a dime. As soon as her friend showed her some Dave Ramsey videos, she's like, I can do this.

[Bo]

I love that.

[Chelsea]

I love Dave Ramsey. I love that.

[Brian]

As you said, you used the Matrix term. So you took the pill where you now saw the game of consumption and what you had fallen prey to for sure.

[Chelsea]

And, like. And again, I feel like even that was the tip of the iceberg, because I didn't realize that, like, you know, like, y' all say, like, your money is your biggest, like, tool, you know, So I was just at the tip of it. And so when I, you know, I told him, he's like, well. And I think at the time, he had, like, maybe a. Maybe a $100,000 network in net worth, which is still, like, a lot. Like, I'm like, whoa, how'd you. You know. How do you say.

[Lucas]

Positive?

[Chelsea]

So, like, zero. So I'm like. But I wasn't even looking at it like that. Even then. I think I was just like, yeah, I don't know what's going on, but, you know, I'm really trying to learn. I'm trying to get out of this. And he's like, well, I'm starting to also learn about, like, managing money, too. So, like, I can help you, like, with learning. And that's when he showed me Yalls channel, he told me, caleb Hammer, like.

[Brian]

We'Re part of this data, y'. All.

[Chelsea]

That's really cool. Yeah, y' all are. Which is, like, why we feel so grateful to even, like, be here today. Because, yeah, it's been. Y' all been, like, such a great part of the story. I mean, again, I think prior to meeting him and prior to, like, waking up to my finances, like, I did have friends that knew about money, you know, knew how to manage it. And so they'd be like, oh, Chelsea, like, you know, let's talk about this. I'm like, this is too. No, we don't talk about money.

[Bo]

We don't talk about money.

[Chelsea]

It's cause I knew I was being responsible. Like, deep down, you know, I think it's cause I knew I was being irresponsible. But, you know, they're like, hey, you know, this. This 401k. And it was so technical. So when, you know, he showed me Yalls page, I'm like, y', all, like, literally say it in a way that I feel like anybody can understand. So that was also a big part. So we met, we started dating. My lease was coming up, and I was like, I'm gonna move back home to, like, my mom or my dad, so I can really, like, just crush this debt. And he's like, well, I just moved to Seattle for work. And, I mean, I don't know anybody out here, so if you want to come live with me in Seattle and, you know, we can tackle it together, you know, you don't really have to pay rent. You can just focus on your debt then, you know, then come out. And I'm like, I've never left Atlanta before, and Seattle's so far away. I think, again, we were trying to start and develop a relationship, too. It didn't make sense to be long distance and then also be dealing with that. So moving to Seattle and, you know, working on that together again, I mean, it was all my checks just went to my debt. And then he was just mainly kind of paying the bills. And I, like, support with, like, you know, some of the rent. And then I think it was, like, maybe $500. I would give him a month maybe, which was way doable. But it really helped me just, like, chow down, like, all my debt. So I. After living with him, I moved with him in March of 2023. And then by September or October, I was gone. The credit card debt was gone.

[Bo]

Wild.

[Brian]

So what I think is interesting, because you. You lived with your parents but that's racking up this debt. So they weren't charging you a rent, were they?

[Chelsea]

No, they weren't even. They didn't ask us for money.

[Brian]

That thing shifted on you.

[Chelsea]

Yeah, well, so it was. So by the time I woke up, I was. I was out and living in an apartment by myself. But when I racked it up, it was like, right when Covet happened and I was like, spending like crazy. It was like, kind of like doom spending, I would say.

[Bo]

Yeah.

[Chelsea]

And. Yeah. And then the next year, like, it's like, it felt like a double the credit card debt. So I. To that 401k loan.

[Bo]

We'll talk about that in a minute.

[Chelsea]

Okay. Yeah, so I used that option and didn't use it correctly. But, yeah, I would say around then, it really felt like it was only like a year and a half when my debt really blew. Ballooned from like maybe a couple thousand to that large amount.

[Bo]

Well. And it just happened overnight.

[Brian]

Well, negative side of compounding interest, I mean, instead of it ballooning for your benefit, it ballooned the opposite. It's on it.

[Chelsea]

Yes.

[Brian]

It went upside down for sure.

[Lucas]

That's what makes her, like, understand the investing stuff so well. She's like, well, I've seen the numbers.

[Brian]

I want to be the bank instead of paying the bank.

[Chelsea]

Yes, yes, yes.

[Bo]

I love it. So you guys have been, like, working together for a number of years now, as you think about now getting married and joining finances and joining together and not just working towards one singular goal of you getting out of debt, but now working towards future goals. How have those conversations been? Like, how are you guys, as a couple approaching moving into marriage? And then what changes? Like, what changes financially as you guys think through that?

[Lucas]

I mean, I feel like the conversations are really just starting. Like, they're very focused on the wedding right now. And occasionally we'll talk about maybe buying a house, but then we'll say, well, I mean, we have this big. I mean, we have the wedding coming up. I don't know.

[Chelsea]

Okay. But before that, we look at our finances frequently. Both of us sitting down together every month. We track our net worth. We. We see it separately, and then we see it combined. And I mean, we are, you know, technically, like, completely split right now, but we're currently working through a prenup. And then we are also, when we get married, we are planning on combining pretty much everything. Yeah, pretty much everything. So.

[Bo]

So it's not going to be your stuff and your stuff. It'll be y' all stuff. Working towards. Towards common goals, whatever those goals are.

[Chelsea]

And it feels like that's how we are. I mean, it just. I do feel like it makes it easier and then also just more powerful.

[Brian]

I think there's nothing wrong with, because that's why I'm glad y' all jumped right to it was as you combine. How did you look at this? Is that retirement accounts are already going to be kind of set up. I mean, they're going to be independent the way they are already and having the prenup just to clarify those type of things. But then I would encourage, once the two become one, I love the thought of you guys having a joint account and really being in this thing together with your monthly paychecks, going in and working through that. I think that would be really powerful because that's the other thing is that the big thing about money, it is a powerful tool, but it is a tool that can turn into a power structure within a couple. And I always try to be very careful because you don't know. I don't know what decision you will make as you do your family planning, but you want to make sure money doesn't really. Jade conversations in the future on how you're going to raise the kids and so forth. And I've seen that with couples where while you are both making great money, it probably doesn't seem like that big of a deal, but you are going to have to make big decisions with childcare and other things in the future, and you just don't want that being something that becomes a wedge that creates a bigger problem in the dynamic of you guys. Have you all talked about that as well? I mean, I don't know if we wanted to talk about it. It's crazy. Y' all haven't even gotten married, but I know you at least have to be thinking about these.

[Lucas]

Yeah, I mean, we're definitely thinking about kids in the not very distant future and just, I mean, just like, how expensive that can be. But we, you know, like, you don't know until you know how much that costs. But, yeah, I think, like, we've already seen how just how combining things would make things so much simpler. Just with the wedding stuff, it's like we're like, oh, I paid for this? Did you pay for that? Like, and we're like, we're trying to split the wedding stuff, but it's just a ton to keep track of. And there's, you know, everything's in, like, installments. You know, we pay 25% now and then a year out, and then.

[Chelsea]

Which we Are not financing the wedding, y'. All.

[Lucas]

I love it.

[Brian]

I love it. That was one of my questions. Because when I Hear, you know, 140 to 170 people, I know that's not gonna be cheap. I'm sure y' all put together a budget on it. And I know when I looked at that net worth statement, I didn't see that's the one thing I was a little concerned. Y' all don't. Y' all aren't like, rolling in cash. I mean, if y' all are pretty. And that's typical financial mutants. You know, you feel like your money should be working. But I did start wondering, how are we going to pay for all this?

[Bo]

I love how you guys are thinking through things and steps you're thinking through, okay, we got to get through this thing first and that thing first. And you said, hey, it's a lot easier, you know, a lot of times if we have our finances on different pages, it feels like we're moving in different directions. If we can get it on the same page, it's much easier to move in the same direction towards common goals. And so we thought, hey, why don't we do that for you guys? If we took your two individual net worth statements, what's it like? If we just put them together, like, as you guys are starting, what does that look like? So we went ahead and combined, and here you guys are out starting your marriage at a net worth of almost $550,000, which is just absolutely insane. And so as we think through this, I think it would be interesting for us to kind of just chat through your net worth statement. I mean, right now we can see that between the two of you, have about $41,000 in cash. Is the wedding fund money for wedding? Is that outside of that, or is that inclusive of that $41,000?

[Lucas]

We haven't really set aside a fund, so we. It's more like we're prepaying for things.

[Bo]

Where we can just cash flowing it out of paychecks. How you're doing.

[Lucas]

I'm thinking, you know, we both have, like, I'm thinking I'll. I'll set some of the. You know, the next time that I get stock that vests, you know, I'll set some aside into, like, cash instead of. Usually I take that money and move it over into investing VTI or something, but I'll set. Set some aside in cash just so to have it in cash for that.

[Chelsea]

And that's. That's the same thing for me. Like, I just got like, Our espp. I just got like that money. So usually I also put it into my investments, but I have like earmarked some for the wedding and then the my next bonus again. And mind you, like, all of our investments are pretty automated, so it's like our paycheck, right. Like in paying for the wedding. It's like after everything that's left, you've.

[Bo]

Already done all your savings, we've already saved. Freed yourself up for that. That's. That's a beautiful thing.

[Brian]

Okay, so you are cash flowing the wedding, but it sounds like you'll take. It's not taken for granted, but your income is carrying a lot of the load for you because you all both have great jobs, great cash flow, but your emergency reserves. Are you telling me if we take 41,000 divided by six, is y' all spending about seven grand a month?

[Bo]

What is, what's your burn rate on a monthly basis? Like you say, you look at your net worth every month. What do you guys spend on a month to kind of keep the household running?

[Lucas]

It's probably about that, like including everything. And that could be, you know, if we needed to cut that back, we could cut that back by a thousand, probably.

[Chelsea]

Yeah, maybe a couple. So we have, we have been spending a decent amount like these last couple months, so more than we typically do. But I would say based on Yalls rule about the three month versus six month, we fall more into that three month bucket. And so that number feels very comfortable with for the three months.

[Brian]

I do think you're on to something with that because when we tried to back into what you'll spend and save, it looked like we were coming up with a burn rate closer to $12,000 a month. But I think some of that might be all paying for deposits and other things. That's the cash flow of this wedding that you're talking about. That doesn't panic me to have three months, but it does concern me that, you know, how we talk about is goals will be funded if it's within 12 months, if it's within two or three years, typically you want to have the cash. I just want to make sure y' all don't get caught, you know, trying to cut into the emergency reserves to pay for the wedding. Because some of these expenses are probably going to stack up all at once. Right. Y' all have been able to spread it right now and control, but at some point, all the bills are going to come due at the. At the same time.

[Lucas]

Yeah. And it would be a little bit easier if like My pay came in a little more regularly. Sure.

[Bo]

You know, RSU's make it kind of wonky.

[Lucas]

Yeah. Every six months it's like a chunk. And then I'll, you know, set some of that aside.

[Brian]

Okay.

[Bo]

And so even in terms of like how you guys think about budgeting, that's something you have to talk about most. You see the income that you guys have, and it's huge. Right now, it's like over $400,000 a year. But it's not just $400,000 a year divided by 12. So there is a little bit of like creative budgeting you guys have to think about through that. But obviously you must have. You must have sort of mastered discipline because here you are from 27 to 30, you pay off $100,000 of debt. And still as you guys sit here, you have investable assets of over half a million dollars, $530,000. And it's great. It looks like you're both contributing to 401ks. Lucas, you have a rollover IRA that's about $36,000 in there. Chelsea, you have a Roth IRA that has about 14. Now, Lucas, yours is interesting. Your Roth ira has about $80,000 in there. That's a pretty big number for a high income earner. How are you able to do that?

[Lucas]

A lot of that came from a Roth 401K. So at my previous employ, some money in traditional, some money in Roth, and when I moved that over, the Roth went into an IRA.

[Bo]

Awesome.

[Lucas]

Actually, that was when I learned about Roth IRAs. I only had the 401 until maybe 2022. So I've only contributed to that. I've done the backdoor Roth now three times.

[Bo]

Okay, so that's sort of an interesting thing. So since you have that rollover IRA balance, if you're doing a backdoor Roth, are you paying tax on that conversion every year?

[Lucas]

No. That's why. And it may not be, I guess maybe it's not included or that might be the. I have a. I have a separate traditional IRA with $0 in it.

[Bo]

So one of the things that's interesting is you want to just make sure you're not running afoul of this is if you're going to do an annual Roth conversion, you have to make sure you don't have any other pre tax IRA balances. So like when I see that you have an IRA rollover of like $36,000, what that would tell me is okay if you were to do a backdoor Roth this year of 7000, when you go to file your tax return. Even if you make a $7,000 non deductible traditional IRA contribution, the IRS is going to say, okay, you converted that 7,000 to Roth. But when it looks at your total IRA balance, it's going to add that 7,000 to the 36,000. So you're going to have like $42,000. So there's going to be a prorated calculation where a big chunk of that 7,000 should be taxable. So that's one of the things. If I were you, I'd go look back and make sure. Okay, was I filing those forms correctly? But it's a pretty, it's, it's not a super complicated thing to solve moving forward because you are an active participant in a 401k plan. And it sounds like you have a pretty good 401k plan, right?

[Lucas]

Yeah, I mean, they do the. For a while, I was doing, It's.

[Brian]

A Fortune 500 company. We're pretty familiar. It's a decent 401k.

[Lucas]

Yeah.

[Brian]

You could roll that $36,000 into that 401k and then that would allow you to now not run afoul of the backdoor Roth.

[Lucas]

Okay, so there is a separate. I must. Maybe I didn't include it. There's a separate account.

[Brian]

It doesn't matter if it's separate. They look at all of your accounts. It doesn't matter if it's a separate traditional versus a separate rollover. They want you to take into account that you have pre tax assets and you're supposed to prorate how much was your contribution and how much was already pre tax. And that's why it's a big. I have a neighborhood. He watched it. He's now moved back to Chicago. But he wrote me this is probably a year ago. And he's like, I saw that episode. I did the backdoor Roth. And I was like, wait a minute. Remember on all those conversations we had on the back porch? I said, you had that rollover ira. I was like, you can't do backdoor Roth. And he's like, oh, my gosh, I've screwed this up. And I was like, don't worry, you can fix this.

[Bo]

We can fix that.

[Brian]

But this is something that I always remind people. And that's why it's a measure twice, cut once. When anybody does a backdoor Roth, make sure you've cleaned out. The only IRAs you can still have is like an inherited IRA. But if you have any rollover IRAs, SEP IRAs, it blows this whole thing up to a degree. But you can fix it.

[Lucas]

Yeah. So I just move that into the 401k.

[Bo]

Now, that's one of the things you can. And then it's nice and easy and nice and clean. And the dead giveaway for us, that was happening. When we look at Chelsea's traditional, seeing that $2 in there, I bet that's a conduit account. I bet we fund that and convert it. That's what we would expect to see for backdoor Roth contributors. So there's a great thing that you can clean up right there just to make sure you're not running afoul of anything.

[Brian]

Don't worry, we'll put that on the list.

[Bo]

And then you Both are doing HSAs. It looks like your participants in high deductible health plans align you HSA contributions, and then both of you have really healthy taxable assets. I'm assuming that's because of either ESPP or because of incentives, but that's great. So when I look at this and I think about your three tax buckets, your tax deferred bucket and the 401ks, your tax free bucket and the Roth, and then your after tax in the taxable again, you guys are crushing it, right? I mean, do you. Do you objectively know that for 30 years old, you're absolutely killing it?

[Lucas]

Yeah, we, like, we. We've seen the videos where it's like, you want to have. Yeah, we see 11 times your income at 30 and then, you know, whatever it is at 40 and 50.

[Bo]

But he's like, we're not following. 40. We just got at 30.

[Brian]

Now we're developing, and I'll be honest, those rules are great, but they're benchmarks. Marks only in the fact that if yalls expenses are significantly lower than your actual income, which yalls is, it skews that, you guys, it's actually more conservative because you guys having a net worth at this age of as high as it is is going to, you know, the power of time. You've experienced compounding interest working against you. Now you're about to experience just the blessing of this thing building upon itself. It's going to be.

[Chelsea]

It's exciting. It's exciting.

[Lucas]

Yeah. Like, Chelsea loves running the numbers on, like, just what this money will be when we retire. Not the money. Not even like.

[Bo]

Yeah, well, it sounds like you go to moneyguy.com resources and you play with our wealth multiplier. You drop it in to see what it can turn into.

[Chelsea]

All the time I've gone on there I've downloaded your, like, deliverables. I love. I'm a consultant. I love that term. So I download those, I send it to everybody. I send the links, I go through the financial order operations. When someone finally gives me the time of day to tell them about this stuff. Like, Lucas just mentioned me running the numbers. Like, it is when he feels really anxious about money. I'm like, if we didn't even spend another dollar on our retirement, on our, you know, anything or any of our investments, like, by the time we're 65 or 50, this is what it would look like, you know, with that, like, 7, 8% annual, like, return.

[Bo]

So number gets pretty big even without having to save, save a whole lot more. Because it's a testament the hard work that you guys have done. And we want to talk a little bit more about that because one of the things that's going to do is give you guys some freedom around the choices that you make. But before we can talk about that, we talked about the asset side of the network. Now we got to talk about the debt side. Both of you still have some student loans, but it sounds like those student loans are pretty low interest. Is that an accurate assessment?

[Lucas]

Yeah, yeah.

[Bo]

They're not super high interest. And you guys understand that your dollars can be more powerful working for you. So you're just not in a huge. It's not like credit cards. It's not like consumer debt. It's okay for those to sit out there. But then I see this other guy. I see this third one right there, Chelsea, that says 401k loan. And it sounds like I'm using my content.

[Brian]

It's not even that big. It's basically an insult every time I have to think. When you look at your statement and you see that 401k loan, it's just like, hey, I'm a reminder of the mistakes of the past.

[Chelsea]

Oh, yeah. And yes. So there is a whole story around that. And then I do have a positive update about it. But yeah, when I look at my statement, like, give us a story.

[Brian]

You can give us the Cliff Notes version.

[Chelsea]

Right around the time I, like, started waking up to my situation, my financial situation, how, like, much trouble I was in. I was like, oh, my gosh, like, what am I going to do? Like, it's, you know, my credit card debt is getting big. And I was. And so someone was like, you know, you. You could take out, you know, your 401k. You could take money out. And I was like, okay. So I go on the website, you Know, on our like employer like website for our 401ks. And I'm like looking at the different options, like you know, an actual withdraw or taking a loan against it. So I was like, okay, the loan against it seems decent. And they don't let you take out the whole thing. Like they. It's like only like half. So I was like, okay, I guess.

[Lucas]

I'll take a.

[Chelsea]

Yeah. So I took out, you know, I was like, okay, I'll do that. So it was about like at that point, it was a 10k loan against my 401k. And it was. The interest rate was like 3 something percent. 3% sent something. It was back when interest rates were really low. I was like, I'm going to use this money to pay off some of my debt. I literally went and spent it on a purse. The whole thing.

[Brian]

All the positive things that have happened to me. Yo. And blow it on a purse.

[Chelsea]

Well, so this is before all of.

[Bo]

The purse early on.

[Chelsea]

This is early.

[Lucas]

This is a different purse.

[Bo]

This is part of the problem. This was part of the man.

[Chelsea]

Yes. So. And yeah.

[Brian]

What purse was it? I have to know now.

[Chelsea]

Oh, I'm embarrassed. I don't even like the brand. I want to hear the brand.

[Brian]

I've been trying to hear the brand. Come on, Chelsea, give me the brand. What was it?

[Chelsea]

Louis Vuitton?

[Bo]

I knew it.

[Brian]

I pretty much could set. I knew what it was going to be.

[Chelsea]

Yes. I won't even touch that thing with a tinpoip.

[Brian]

Do you still love it?

[Lucas]

Is it as a reminder that is. Actually she thought about selling it and then she was like, I need to see this every day.

[Bo]

I love it.

[Chelsea]

Keep me on the straight and narrow. I barely wear it. I don't wear it. Really. I literally been trying to give it away, which I probably shouldn't do that. If I just hold onto it, maybe.

[Bo]

I would not give it away, but.

[Brian]

I would let it be kind of a memento of mistakes that have turned positive. Yeah, I mean, it's essentially that Phoenix experience of it. This thing was bought with the wrong intention and at the wrong time, but you over overcome it and it actually can have a positive for sure to it for sure.

[Chelsea]

And you know, I so and again, when I was introduced to your channel and like your, your, your financial order operations and then seeing like the 3%, I was like, okay, maybe I just like drag my feet paying off the 401k loan. But then I was like, I don't know. It just annoys me every time I see my paycheck So I did pay off the 401k loan.

[Bo]

Nice. 2 weeks ago because that was going.

[Brian]

To be on the homework list. Let's just get rid of this thing that is just sitting there reminding those bad decisions.

[Bo]

Because there's no point in that. You guys have such a healthy net worth. There's no point in that being on there. Which is awesome.

[Chelsea]

When. When this slide came up, I was like, oh, I forgot about that. And that was only two weeks ago. But yeah, so it's. It's paid off. The Louis Vuitton paid off, the loans paid off. So it. It feels nice. And then. Yeah, now my 401k balance has that amount.

[Brian]

And by the way, the reason I wanted you to say the name is because there is going to be somebody who watches this.

[Chelsea]

Oh.

[Brian]

And have done the exact same thing. Because this. This consumer world we live in, where they're constantly just inundating us. They put attractive people on there. They. This is what people who are successful and young are doing. And that's just the opposite. Yes, you can have nice things, but there's a time and a place.

[Chelsea]

You have the.

[Brian]

Not at the beginning. It's after you've built up enough assets that are working. But that's not what society tells you in this consumption world we live in, for sure.

[Chelsea]

And back during all of this, I was living in Atlanta. I love Atlanta. We're trying to move back, but y' all know Atlanta. You know, everybody wears their money, drives their money, lives in their money. It's so flashy.

[Lucas]

So moving from Wisconsin, very different. Because you don't drive a car like that because it's gonna get covered in salt.

[Bo]

Yeah. You just know better.

[Lucas]

It's gonna rust on the bottom. So you go to Atlanta. I'm like, wow, everyone 400 has that.

[Brian]

I think half the videos you see on TikTok where they walk through car dealerships and everybody's telling you about their 12 and 1400 car payments. Typically are. A lot of them are. I've seen them in Atlanta and other places. You're just like, oh, no, this is. But this is the world we live in. They. If everybody faces it, bases it off of your monthly payments instead of $23,800. But I would love to talk about. Because that's a great segue. Y' all want to move to Atlanta. So are we thinking about renting? Are we thinking about buying? What's. What's the plan there?

[Lucas]

We are. Like, we've looked at houses to buy. We would probably rent initially for A while. We're just very comfortable renting right now. It just seems like the, like, it's. I know there's. They talk about like the 5% rule of renting versus buying as opposed to like, what's cheaper. I think the flexibility is definitely super nice. It feels cheaper to rent right now.

[Chelsea]

We're very career focused and so if there's a job opportunity that we could pick up and just run to, you know, we, we do it.

[Bo]

And if you own a home, it makes it a lot harder to make those kind of changes. And we kind of adjust.

[Chelsea]

Like, we have friends again, being in tech and being in like our industries, we have seen people like when Covid happened, they moved to certain place, bought a home, and now they're like, it's like a fire sale for all these homes. Like to get.

[Lucas]

Companies are asking people back.

[Chelsea]

Yeah, yeah. So they're like trying to get out from underneath the home asap. And you know, it just doesn't always.

[Brian]

Happen that easily on a home.

[Lucas]

Yeah. And even people that didn't move away. I know people drive in two, three hours to work because they were working from home for two years and now.

[Bo]

And not have to go back and it's a problem.

[Chelsea]

Yeah. And being in Seattle, like that is where they're one of the cities that they're calling all these people back from. Boulder, Colorado, Austin, Texas, Charlotte, you know, where everybody went to during, you know, the pandemic.

[Lucas]

And even if you were driving to the office, there wasn't any traffic for two years.

[Bo]

It's a whole different thing now. So, okay, so you guys think, okay, we potentially want to move, but we're okay renting. We don't have to buy a house immediately. What are some of the other goals that you guys have? Again? You've got this short term goal of wedding. Once you get past the wedding, as you guys think about building and growing, what are the things that you want your money. What are the things you want your money to allow you to do?

[Lucas]

We definitely know that we want to start early saving for college when we have kids.

[Bo]

Okay, there we go. All right. That's so funny. People always say we want to start saving for college before we even talk about having the kids.

[Chelsea]

Right.

[Bo]

We have people on here all the time that already have a 529 before they're even. And I'm like, we gotta have.

[Lucas]

We talked about doing that. We talked about opening a 520.

[Chelsea]

He's like, what? He's like, it doesn't even exist yet. But yeah, No, I mean, I think some of my longer term goals that Lucas and I have, you know, where's. Okay. And. And I would say that that has been not. It hasn't been like a, A. A point of conflict, but just like, making sure that, like, I'm aware of what his goals are. He's aware what my old goals are. How are, like, they're out, you know, how are they our goals? That has been kind of interesting because it feels like a moving target sometimes. Especially when you think about, like, him being so frugal and then, you know, me being a bit more like. I mean, the money buys us options. So, like, the big thing for me is having the option to have as many children as we want. Having the option to, you know, be able to pay for their, you know, education and having the option to pay. Help with a down payment, having those type of options, but also, like, with our own self. Right. Like having the option to stop working at our jobs and, and possibly do something else. I love fine. I've been telling everybody about Fine at work.

[Brian]

Endeavor.

[Chelsea]

Yeah. Next. Endeavor. Yeah. So, like, that, I would say, like, long term. I just, I think just in general that freedom is our goal, to really do what we want to do.

[Lucas]

I feel like being work optional with, you know, kids, especially as they get a little bit older. I think having time, being able to maybe work part time or work part of the year, like in our 40s and 50s, I think would be really nice. Or she said like. Or then start doing things that are more interesting to us.

[Bo]

Okay, so you said on this one hand, you're like super career motivated.

[Lucas]

Right.

[Bo]

And if a great opportunity presents itself, you want to go that way. And then you're also talking about, though, being like work optional or maybe doing something different. But you said like in your 40s and 50s, so this is not something like, hey, we want to start a family and be work optional. We want to. We're going to both be career motivated even as we have the family. And that sort of walk us through. How have those conversations gone?

[Lucas]

Yeah, I like it feels like there will be a transition period, but that's a little muddy thinking about that because.

[Brian]

Messy middle details because y' all have gone. So Bo did a good job of explaining. Y' all have given us such far spectrums at career. And then you got family. How big of a family?

[Lucas]

We both. We're both come from like three kids. We're both middle kids. So like, three is a number. We keep coming back.

[Chelsea]

We're both middle children sort of buried.

[Bo]

That lead at the very beginning, too. How wonderful that you guys found each other.

[Chelsea]

Yeah, we get each other.

[Bo]

For sure.

[Chelsea]

For sure. Yeah. Like three or four. It's hard to say because we haven't had one yet. So, you know. Yeah.

[Lucas]

I keep saying, like, you know, I feel like, like, when we have two kids, you know, we'll decide if we want a third. Like, saying a number right now just feels like saying a number.

[Brian]

And then I want to put you on the spot, Lucas, with. Because Chelsea did a good job of doing it, but she didn't say it out loud. And I want to say out loud what I think I heard her. She's nervous a little bit. As y' all make this family planning decisions, you're so tight with money to a degree that if there's any relinquishing of the financial, that there's going to be some potential conflicts. Is that something that's kind of under the surface a little bit?

[Chelsea]

Yeah. I mean, because even now, right. Like, I feel like there's things. So, for example, like, coming. Going with me on a work trip, like, I'm like, hey, like, it's in New Orleans, so you need some, like, clothes that are, like, light, you know, like, really airy. It's super hot right now. And we get there, and he's, like, having all this anxiety about a shirt he can clearly afford. And I'm like, all right, I'm not doing this today.

[Lucas]

I'm on the Target app while we're walking around the mall.

[Chelsea]

He actually ordered it from some nice ones, but. But you. It's. Yeah, I really. I'm. I'm nervous that when the time comes and we have to pull back on how aggressive. I mean, our savings rate is super aggressive, and we have to pull back on it because we have children or we have, you know, these other priorities. I feel like he's going to not be like, I think it's going to stress him a lot.

[Lucas]

It probably will be something that I have to, you know, work through. But I. I do think part of the reason we're so aggressive now is because it's going to be harder to save. The next 10 years are probably going to be harder to keep the savings rate we currently have.

[Bo]

Well, let's look. That's a great. Let's look at your savings rate, because, again, you guys are so kind in terms of, like, sending us this. When we look at how you guys are saving, you presently have a savings rate over 35% now because you're high income. This doesn't include your employer matches. So when you factor in the employer matches, you've got like, 40% of your compensation going towards your future well being. You're doing 401k contributions. You're doing Roth IRA contributions, HSA contributions. You're doing the ESPP. Chelsea, Lucas, you're saving all of your net RSU. I mean, outside the wedding, you're just banking all that money. So when we look at this, the amount you guys are saving is remarkable, and it's incredible. It's the thing that's allowed you to have this huge head start that you have. But you've heard us say, you know, one of the things that we shoot for is when people ask us, hey, how much should you be saving? We say 25%. And here you guys are at 35%. If I told you that you could save 10% less, Lucas, how does that make you feel? Like, when I say that out loud, what's the immediate emotion that comes your way?

[Chelsea]

I felt his heart drop.

[Lucas]

I don't know if it's necessarily anxiety. It's sort of like, what would I spend that on? But, yeah, a little bit of his life.

[Chelsea]

Like, where is it going?

[Lucas]

Like, if I wasn't invest.

[Bo]

Is it that you have not yet found the thing that you like spending.

[Chelsea]

Money on that's kind of deep?

[Lucas]

It's probably that a little bit, yeah.

[Bo]

Because it's one of those things, like, I get going to New Orleans, wanting the light, airy shirt. If you don't place a lot of value on clothing, I get why that'd be a thing function. Here's where I'm going at. What happens is you guys start thinking about a family and having kids. Let me go and tell you, you're gonna love spending money on those kids, right? Do you think that once it's that sort of thing, once it's those sort of life decisions and you begin to maybe out of necessity back down that savings rate. Is that something that you think you're gonna have more comfort with, or do you still think that's gonna. That's really gonna create some tension for you?

[Lucas]

I think I'll have more comfort with that than spending on things like. Like clothes. For sure. I. We have a couple of cats, and I. I will spend money on stuff for them, but. So I. It probably extends.

[Chelsea]

Probably.

[Lucas]

Probably. Yeah. But I mean, part of it is because such a big chunk of that savings rate is the RSUs. What feels a little unnatural is like selling some of that and taking it out, you know, because I could if it was like an. If it was like a deduction from my paycheck, I would be like, okay, I can reduce that a little bit. So just sort of logistically, it's like actually selling the stock and keeping the cash feels like a decision right now.

[Bo]

With your RSU's, are you just allowing those to vest and you're holding on to the company stock, or didn't you say you're selling it?

[Lucas]

Well, I do sell it and put it into index funds.

[Bo]

Got it.

[Lucas]

But cashing it out feels like, I don't know, like I'm just like, I don't cash it out. I keep. You know, it's in an investment.

[Chelsea]

Right.

[Brian]

It keeps getting diversified into the index funds. There is something. I mean, we've been doing this making a millionaire for a while now, and something that I see with a lot of our guests is what happened in your household growing up has a long tail to it. And it's even to the point that, I mean, we've had super successful families who are actually at that threshold of retirement. But the father would say something like, you'll never amount to, or the system's rigged against you and all these things. And. And it breaks my heart to see very successful people never get out from the shadow of that. And I worry. And that's why I love that you are here, because you can talk about this now is so that when you all have the growing family, you don't keep pushing this forward to where this legacy builds and you don't see the blessing of what money is nothing but a tool. And I wish you could sit in my seat when. Because I was very much what I consider a tightwad for decades of my life. And a lot of it has turned out to be great because I have all this additional flexibility. But at some point, I had to give the tightwad card up because I realized you can't take it with you. This money is only a tool, nothing more. And you will need to get sentimental about building the memories and the blossoming and doing stuff as best as you can. The thing I worry, and this is why we tell everybody the 25%. Y' all are so ahead of the curve. If you did the 25%, you could just spend the rest with really reckless abandonment on whatever, and it wouldn't matter because. And I know that probably seems crazy because you're thinking about the financial independence next endeavor and all these other things, but at some point, I'd tell you while you're dealing with anxiety about spending, it's okay. To kind of address it. It and try to get on the front end. And I think a good way you all need to talk about this is you're also thinking about all these life changes. I would never want one of you to make a decision, because if y' all start having three kids, four kids like y' all were talking about, you're gonna find that that messy middle creates some weird pulls and pushes on your careers.

[Bo]

It's kind of messy.

[Brian]

And y' all gonna have to have some heavy conversations about what do we change on our work life balance so that we can actually have these. These three or four kids. And what I don't want is money to create this weird power structure to where y' all can't make the best decisions for your family.

[Lucas]

Yeah. One thing Chelsea has kind of been pushing on me, that is sinking in slowly. Even if she thinks it's not sinking in, it is sinking in, which is like. She'll say. Because we'll be talking about things we spend money on. She's like, I've hit my savings goal for the month. The rest of this. The rest of this money is to.

[Chelsea]

Do what I want.

[Lucas]

That is because. That is because part of is like, when I feel. When I spend money, it feels like I'm taking money out of. But it's like, you. This is like. And that's what. Like having the savings goal, because I. I probably didn't know it was 35, even though it says in our spreadsheet, but it.

[Chelsea]

It's that. Yeah. I mean, he literally is like, chelsea, we need to be on it. He literally just said, we need to be on a no spin month. And I'm like, who's on a no spin month? I'm like, you go with yourself on a no spin.

[Lucas]

We had just put a couple of deposits down on things for the wedding, and I don't know, I was feeling like it was starting. Things were starting to add up.

[Chelsea]

He feels like the walls are closing.

[Lucas]

I don't know, but I calmed down from that. That was after that trip to the.

[Chelsea]

Mall that was tripped today.

[Lucas]

No, that was after. Well, that was. I was joking about having said that earlier, but, like, that was after that trip to the mall where we were shopping. Shopping for clothes. And I was like, for work. Yeah.

[Chelsea]

Where I make money.

[Lucas]

She's. Yeah, they're paying her to go there. You know, sometimes I just need to, like, the moment passes, I calm down a little bit, and I'm like, she was right.

[Bo]

My wife and I, when we first got married, we had this. We had a struggle very similar to this. There were things that she derived value in and got value out of that I could not understand. I make a joke on the show all the time about this, right? I, at that stage in my Life, was buying $7 Suave Shampoo. And that's what. I wash my hair. My wife does not use it.

[Brian]

I think it was $2.

[Bo]

Yeah, maybe it was $2. She did not use that. And when we got married, I'd see these charges and I'd be like, hey, this is irresponsible, and this is grotesque, and why are we doing it? And it created a lot of friction because I didn't understand that that was something she valued. And what I recognized at that time is that it was okay for us to spend that money because we were doing the savings. We were funding the 401ks, we were saving in the Roth, we had the emergency fund. We were following the financial order of operations. None of that consumption was bad consumption. It was just different consumption than what I was used to. And there was a conversation around that. Now, she also had come on board with, hey, here are the goals that we have. We want to be able to retire, and we want to be financially independent. In order to do that, even starting now, now we have to max out our Roth IRAs, and we have to do this. So we do have to pay our. And so what we both had to do was sit down and have a very candid conversation, because I just wanted her to be me, and she just wanted me to be her. And what we had to recognize is that when we got married, we had to come to the middle and actually compromise. You said something so beautiful a second ago. We just haven't really defined what our goals are. Talking to each of you individually, it sounds pretty clear, like, I kind of have a vibe for what your goals are and what makes you feel comfortable and same for you. As you guys get married, then you have to decide, okay, well, what is it for us? What are the things that we're okay not being astringent on, and what are the things we're okay loosening up on and what are the things we're. That's some, like, real. And it doesn't have to be hard stuff, but it's some, like, very important conversation, because in my experience, if you don't address that on the front end, what ends up happening is that voice in your head starts playing really mean tricks on you. This is something Brian taught me. It starts. You build resentment, and you Start creating a narrative in your head that does not exist. So if you can talk about it on the front end and get on the same page, holy cow, does it make the journey so much better. And it makes it so much easier. So take that from us who, like, screwed this up early on in our marriage to figure out, okay, how can we have that conversation around if we spend the RSUs? It's not.

[Lucas]

It's not stealing money.

[Bo]

It's not stealing money. But also, just because we have extra money doesn't mean we have to spend extra money if it's not something that actually generates value for us.

[Lucas]

And I think what helps me sometimes, too, is just knowing what, like, Chelsea has gotten through for the past few years makes me confident that, like, if we needed to buckle down, if one of us lost our jobs, like, certainly.

[Bo]

Seems like you have the discipline coming.

[Brian]

Out of your ears. I mean, without a doubt, for sure.

[Chelsea]

Yeah, yeah, yeah. We can go to rice and beans.

[Lucas]

We can eat rice and beans for a little while if one of us lost our job.

[Bo]

But if you had to.

[Chelsea]

If we had.

[Bo]

You don't have to go to Ryom. And that's the conversation y' all need to have around. What are the things we have to do and what are the things we get to choose to do because of the hard work we've done up to this point? Y' all are in a great spot.

[Chelsea]

You know, earlier when I talked about pulling out the calculator, maybe I don't explain it that well, but that's really my thinking, right? I'm like, this is why. This is why we're doing this, so that we can do what we want to do.

[Bo]

Do.

[Chelsea]

If I want to go and get some nice work clothes for work in the New Orleans heat in the summer, I can without breaking a sweat or without Lucas freaking out about it, you know? And so I feel like that's something that he has gotten better, definitely gotten much better about. But I, you know, it's still. Still those, like, things that come up. And so we're getting married, right? We're combining, like, our bank accounts. We're combining things. So when you see, you know, me spending or. Or you see certain things being spent, I'm nervous that that is going to, you know, cause some heartburn for you. Because right now, again, we still. We operate like a team, and we still see there's a lot of transparency around our finances. But he's not feeling it when I'm spending, right? Because we're not joint. But when we're Joint. You're gonna. You're like, okay, Chelsea did this. But, you know, I'm just nervous that, you know, he's gonna come to me about it. It's gonna be. I'm gonna have a hard day at work, and he's gonna, you know, mention it. I'm just gonna snap, and I don't want to. I don't want to do that.

[Bo]

Well, I think it's wise that you recognize that early on that. That could be some friction. Have you guys sat down and done a budget together? Like an actual. Here's the money coming in, and here's a categorically where it's gonna go out.

[Lucas]

It's sort of retroactive. Yeah.

[Bo]

So you've done a lot of tracking.

[Chelsea]

Yes.

[Bo]

Again, one of the things that I found in my experience can really help is if you can build a budget together. And that budget might look like, okay, here's. We're going to pay for rent, and this is going to be our Roth contribution. This is going to be this, and this is going to be this. And then there's going to be like a, hey, this is Chelsea's miscellaneous budget. It's not separate money, but, hey, she's going to spend this much on whatever the thing is. And, hey, here's Lucas's miscellaneous budget, and he's going to spend on whatever it is. And what you know is that so long as you stay inside whatever that number is, it could be 2000. Whatever it is, you guys have some comfort that, okay, hey, this is part of the plan. It may not be something I'm comfortable with, but it's part of the plan. Or if you get to the point where it's like, hey, okay, I bought all the clothes this month, but I really wanted to do this other thing, but it's not in the budget, you can have the conversation. Hey, I'm going to honor what we agreed on. The front end tracking is fantastic, but all it does is tell you where your money did go, if you can. But. And it seems crazy to tell a couple who makes $400,000 a year that maybe you should budget. But I think it'd be helpful behaviorally for you guys to define where those parameters are so that you both can have.

[Lucas]

Yeah. Kind of like permission.

[Bo]

That's exactly what it is.

[Brian]

Exactly. Because for most people, budgeting is the restrictive side of it because you're trying to create money for savings. You need the budget so that you see the compartmentalization of. Now I can get permission to go do this without feeling stressed. Out about it.

[Lucas]

Yeah, I think figuring out how to handle the chunk income too would make me feel more comfortable because, you know, sometimes I feel like I'm just holding, like, okay, I need to sort of hold over until the next stock comes in. And if it was coming in, you know, every month, it would be a lot easier to be like, okay, it's okay to spend this much of it, but because if it's like, if I don't, if nothing vests for four months and I'm. But it's part of my income to spend that I would have to go sell some, sell some index funds and then transfer the cash, which feels different than like, okay, if I get a payment, I can take some of it as cash and then that's cash that I can spend and the rest of it is invested.

[Bo]

One of the ways that we've seen our clients, because we've had to help a lot of clients navigate this because a lot of our folks are executives or they get paid, you know, incentive compensation and it's chunky, you know, every six months you get a big chunk that makes your income look a lot higher than it feels on a month to month basis. If you guys, again, if you can do that exercise of budgeting and you can figure out how to budget off of the base, right? Because you guys still have a healthy base. It's not like it's, you know, 50% of your compensation if you can budget off of the base. What you allow yourself to do is then when those incentives come in or when that bonus comes in, you say, okay, here's what I'm going to do. I know what it's going to be. And I'm going to do a, I'm making up a number. I'm going to do a 60, 40, 60% of that is immediately going to go straight to savings, straight to whatever. But that 40%, that now becomes discretionary cash flow. We get to figure out what we want to do with that. So is there the upgrade we wanted to do or is there a trip we wanted to take? Or is there. It's not like it all has to be saved because what you're going to do is, again, we've seen people do this. Well, you build your annual budget, hey, this is what we want to happen this year. And then you get down to your monthly budget based on our base, this is the monthly. And when these, these twice a year chunks come in, all right, we're going to 60, 40 those, we're going to 50, 50 again, you're just giving yourself permission. So that way you're not held captive, held ransom by the cash flow.

[Lucas]

Yeah. Because once it's invested, it feels like it's not there anymore. Like, it's like it's in a 401k or it's like it's locked up, but it's in a taxable. So that's not necessarily true.

[Brian]

I do want to make sure I build this bridge back, because money has been the bridge that brought y' all together. But I also see that it potentially could be a strife point for you guys. Just, I don't want y' all leaving the show being like, oh, my gosh, that brought up some things that we haven't really worked through. I do. I do think, Chelsea, that if you look at how Lucas has been with your debt journey, there's a generous guy here. I mean, without a doubt he is. But this is something and you probably even can recognize. You're going to have to just. We're going to have to build some tools and some dynamic things so that you feel comfortable, because I did. But I think this is so important for y' all to tackle before you get married, because I don't want the compromise to be. Because y' all realize this is a battle and it's okay because y' all both make great money right now. Well, we'll just come in the marriage and just treat everything separate, because that way it takes the stress off of Lucas. I could see that. That's why it's important to address this now, so that it takes the power out of the money, because that's what y' all got some really cool life goals, and I just don't want that dynamic to blow anything up for y'.

[Chelsea]

All.

[Lucas]

Yeah. Well, I feel like this conversation has answered a lot of my questions, for sure.

[Brian]

Look, I work with a lot of couples, and sometimes when I see the separate accounts, I see very successful couples that are both doing well. But you do see some elements of mine. That's always. It makes me cringe a little bit, because my wife is brilliant and she made more money than me when I started the company. But then we made the decision as a couple that she was going to stay home. We had a ground rule that I was never, ever, ever to talk about who made the money. And I've honored that because I know if I ever mention that, it just will create some insecurities and other things that's just very unhealthy. But that's why it's a measure twice on all these dynamics. With a couple is because some of these decisions y' all will have to make with a family you can't get back. I mean, because once you even heard Chelsea talk about how your mom's a super mom because here she was, your parents got divorced with three kids and she would stay at home. That is a hard pill to swallow. And that's why I'd love for y' all to figure it out why you're in these great rosy situation so nobody gets left with these weird under the surface things that boil up to the top and ruin things.

[Lucas]

We definitely have been thinking about it as ours for some time. And the way that we like also just the advice that we see is like combine stuff. Like really, really combine stuff. We know people who do and we know people who don't. And it seems better, but for ways that it's hard to know until you've seen the problems experienced it.

[Bo]

Yeah, we said, we answered a lot of your questions. Were there any questions we didn't an anything you were curious about that you want us to weigh in that might be valuable before I load you guys up with your homework?

[Lucas]

I mean probably. We didn't talk wedding budget. Really.

[Bo]

Okay, how about this? You say what you're thinking and we'll make a facial expression immediately and viscerally that if it seems reasonable or it's insane.

[Lucas]

Okay. I mean, so we. We sort of have like a what it's almost certainly gonna at least cost. And then we have what like the top level hard stuff.

[Bo]

What's the at least cost?

[Lucas]

The at least cost was is like 45,000. Okay.

[Brian]

And then how much have you already paid in deposits and stuff? What's the residual that's left? And by the way, is that a realistic number? It seems low.

[Lucas]

It's probably.

[Chelsea]

Well in Knoxville.

[Lucas]

In Knoxville.

[Bo]

Because let me give you guys some credit for some things you've done, you know you want to have. And it's not a huge wedding, but a larger wedding. 175 person guest list. And you've already defined, hey, we want to have this many people. We are not going to go into debt. Like so whatever this is, we're going to cash flow. That naturally has allowed you to keep some parameters and some reins on this thing because that's where then you get to money is nothing more than a tool that allows you to do the things you want to do. And if one of the goals is you guys want to have an amazing wedding and you want to have it at a great venue and you want to have amazing music and you want to have delicious, delicious food and awesome cake. And the drink, it's okay. Because you guys are not sacrificing, saving for the future to do it and you're not running up debt. So that's why people ask us, hey, what's the rule of thumb when it comes to weddings? There's not one. Because different people value them differently. People say, hey, what's the rule of thumb on vacations? There's not a rule of thumb on that. So long as you're not violating the other rules. Saving for the future, not going to into debt. You guys have already knocked that out of the park. But just, just to be clear, 45 on the low end. What's the hard stop number?

[Chelsea]

60.

[Bo]

Okay. I was nervous. They're going to be like 45 on the low end, 250 on the high end.

[Brian]

No.

[Chelsea]

Oh, no, no, no, no, no. I think it makes us feel better to your point, right. That like, we're cash flowing it. So we really know, like, as soon as we, we, we won't. But if we started violating what we have going on, like, that doesn't feel right. And that doesn't feel like a day we will enjoy. So the fact that we have this freedom and we're doing it in this way and we're being conscious about, you know, okay, I wanted something, you know, big, fun and, you know, really, you know, magical. But it's, you know, it's in Knoxville, Tennessee, which is so beautiful. I mean, I. The people there are so amazing. So nice. The venue that we have is new, so it's. I mean, we're just really excited. So. Yeah. I feel when it comes to the wedding.

[Lucas]

Oh, that's awesome. Yeah. And we're really, like, filling it with the big things that are important.

[Chelsea]

Yes.

[Lucas]

And then we see where that lands us.

[Bo]

I love that.

[Lucas]

And then there are things that we don't care as much about. Other people do. Right. Other people care about flowers, but, like, we don't care.

[Bo]

But the centerpiece just might not be that important.

[Chelsea]

Right.

[Bo]

It just might not be that important to you guys. And I think it's awesome that you're going into it. Eyes wide open on that.

[Chelsea]

I do want to answer Bo's question really quick. You said how much have we put or have we put towards it, like with deposits and stuff? I think right at this very moment, it's about like seven.

[Bo]

Okay, great.

[Brian]

So somewhere between in the high 30s to low 50s is probably the outstanding which have left. So what I would encourage you Guys, because you also have some compensation things coming with the RSUs and so forth. Y' all put together kind of an outline of the timeline of those, when things are going to come due to actually put it to paper. And then overlay that with upcoming income sources and you'll just see how that intersects. And so y' all are in a good place with planning and budgeting, because I just, I don't want all the bills to come due. And then you. The result is you squeeze that emergency fund down to nothing. And then we start the marriage with a limited safety net.

[Lucas]

And I think now that we have, I mean, one thing about the deposits is now we know for there's a handful of the things. These are the payments we have coming up. And so, yeah, like with the future stock, it's like, let me just take all of the money that I'm going to be paying for. Sure. And set that aside.

[Bo]

That's great. That's great. That's beautiful. Cash flow management. For some reason, it sounds like it seems easier to you to set it aside for the wedding than to set it aside for other discretionary spending. That's a muscle. It's just like anything else. You will learn to get more comfortable with that the more you do it. It's not supposed to feel natural. Day one, that's okay. But I got better at it through time now.

[Brian]

It's a great, fun thing for me. Every time they do something, I'm like, it's fun to poke him a little bit.

[Bo]

All right, are you guys ready for your homework that we want you to take away from this? First thing I put, this is just a logistics block in tackling. I want you to go figure out your backdoor Roth IRA setup. Have I been doing that correctly? If not, what do I need to do to correct that that I've done in the past? And then, then should I consider rolling my IRA rollover into my 401k so that I have zero IRA balances so that I can start doing backdoor Roths every year? That's going to be awesome. Number two, I put finish your wedding budget. So I've talked a lot about budgeting. You guys ought to. Same way you're going to do your normal budget. Just figure out, okay, here's what we're going to spend money on. Here's when the timing of those deposits or those payments are going to be due, and here's the cash flow we have coming. So you go and have it all figured out ahead of time. Step number three, I wrote what are our goals? And this doesn't have to be like, you don't have to go into this with, like, oh, this is going to be some friction. Make it a fun thing. Make it a date night, make it a weekend, make it a, you know, make it an event that you guys get to do together where you just write down, hey, here are the things that are important to us. Lucas writes down, hey, here are the five things important to me, and here are the five things that are important to Chelsea. And holy cow, three of them are the same, but two of them weren't. And how do we. And you figure out how as a couple, you're going to move in that direction and attack those goals. And then once you've defined what the goals are, then you get to build a budget. Not a tracking system, but a budget. And here's how we're going to allocate towards the goals that we have. And we're going to agree with each other. These are the parameters we're going to live inside, parameters for saving as well as parameters for spending. And we're both going to agree on the front end that this is the way we want our financial life to look as we're starting on this journey together.

[Brian]

And I want these goals, I would love for you guys to make them measurable and also put a timeline on them, because I think otherwise. If you're just talking and you're dreaming, if you just talk about awesome things that y' all want to do as a couple, no, actually put down, this is what we want to do when we want to do and what we think is going to be required. So that way it has some teeth to it. And you can actually kind of work on the mindset in addition to the analytics of how we're going to get there. Because if you're just dreaming, that stuff's fun, romantic, but we got to put teeth to it. So it's not only romantic now, but it's romantic as you're actually executing it as well.

[Bo]

You guys are awesome.

[Brian]

I'm super excited. I was. When I walked in the room, I was excited to talk to you guys because I loved the story. I loved just seeing the journey for getting out of debt. Also the mindset stuff. Y' all have the world by the tail. You really do. It's just a matter of executing and just living your best life. You're great, big, beautiful tomorrow.

[Bo]

Well, thank y' all so much for hanging out with us. If you would like to be a guest on Making a Millionaire, you can go to moneyguy.com apply or if you want to check out any of our resources, you can go to moneyguy.com resources.

[Brian]

Guys, we covered it so much. Money is only a tool. We want to make sure you're getting the most out of this life you have. I'm your host, Brian Preston. Mr. Bo Hanson. Money Got Team Out Making a Millionaire.

[Bo]

Is hosted by Brian Preston and Bohan. 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.