Her Coast FIRE Plan Has Some MAJOR Holes | Making a Millionaire

Summary

Money Guy Show – "Her Coast FIRE Plan Has Some MAJOR Holes | Making a Millionaire"

Hosts: Brian Preston & Bo Hanson
Guest: Danielle, age 33
Date: January 5, 2026

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Episode Overview

This episode features Danielle, a 33-year-old self-employed sign language interpreter earning over $100,000 annually, who wants to pursue a “Coast FIRE” plan—a financial independence strategy where she works hard now, amasses enough assets early, and then “coasts” with minimal further savings while working less. Danielle seeks input from Brian and Bo on whether her current “take the foot off the gas” approach is sustainable, and how she might optimize her path to financial independence. The conversation dives deep into her income, spending, savings rates through different stages, life goals, and the crucial question: is it too early for her to coast?

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Key Discussion Points and Insights

1. Danielle's Career and Earning Power

• Career: Self-employed sign language interpreter in the DC-Maryland-Virginia (DMV) area, working mainly for federal agencies due to high demand.
• Income Details:
  • Earns $105k–$120k/year—higher in this field due to her location.
  • She receives “200 emails a day” for available jobs, reflecting strong demand for her niche skills (01:27).
• Unique Dynamics:
  • Demand outstrips supply; highly niche field; work can be tailored (e.g., science, legal, medical).
  • Danielle: “I don’t think you can make this kind of money anywhere else in the country.” (05:47)

2. Financial Snapshot and Mindset

• Age: 33
• Net Worth: ~$181,000 (majority in investments—$165,000 saved since 2021)
• Spending:
  • Spends ~$4,000/month (though barebones, excluding optional expenses, would be $3,000).
  • Sets aside 36% of income for taxes due to self-employment (08:27, 35:05).
  • Budget includes reserves for taxes, health expenses, car savings, and travel.
• Savings Journey:
  • Dramatic increase in savings after 2021, driven by COVID-19 lockdown (invested $30k/year at her peak).
  • "I was putting aside like over $30,000 a year. And then I think the stock market probably helped a little bit..." (07:29)

3. Coast FIRE Plan and Life Philosophy

• Goals:
  • Pursue Coast FIRE: Save aggressively now to reach a threshold, then work less while only minimally adding to savings.
  • Inspired by “Die with Zero” philosophy—prefers enjoying wealth earlier since she doesn’t plan to have children.
• Target:
  • By 37, shift from 5 to 4 workdays/week and gradually work less over time.
  • Full retirement goal at 60, but flexible on when to scale down work.
  • "I'd say by 37 to 40, I would like to do [coast fire]." (14:57)
  • “I just want to do more of my living when I’m younger...” (14:15)
• Current Savings Rate:
  • Dramatic drop from saving 60% (peak) to 8%–15% now (including cash savings).
  • “I think I just got a little tired and I developed a lot of anxiety around it. Am I not going to have enough? But am I also just not doing anything in my life but hyper focus?” (32:23)

4. Holes in the Current Plan: Critical Analysis

• Too Early to Coast?
  • Brian & Bo challenge Danielle's assumptions:
    • Her projection of having ~$1.7M by 60 may be overestimated due to inflation and market uncertainties.
    • Using 7% returns without adjusting for inflation may distort future purchasing power—$1.7M could mean $757k in today’s dollars, which at a 4% withdrawal looks like just $2,500/month.
    • Her anticipated living expenses (~$4,000/month) could far outpace this.
      • “You're setting yourself up to basically live off of, in today's dollars, $2,500 a month... it was closer to $4,000.” (19:37)
  • Die with Zero critique:
    • Danielle’s assumption of being able to precisely “spend down to zero” is risky since no one can predict longevity or expenses.
    • “Dying at zero is a wonderful concept if you know when your exit is... The unfortunate part is none of us really know.” (18:09)
• Risk of Burnout and Gaps in Asset Growth:
  • Early burnout from “sprinting” with high savings, then slamming brakes to minimal savings.
  • Brian: “If you sprinted on a 26.2 marathon and you sprinted like it was 100 yard dash, it makes sense that you burned out.” (41:07)
  • Missing out on the power of compounding if she reduces savings too soon.
• Tax Optimization Missed:
  • Currently putting Solo 401k savings into Roth, but possibly better off (given current high effective tax rate) prioritizing pre-tax 401k for tax savings.
  • “With you being in that tax situation, it might be an interesting thing...to pre-tax. And in doing that, does that actually create a mechanism for me to save more money?” (37:16)
  • Danielle: “...I just have to click a different button...”

5. Customized Homework and Recommendations

Save More, But Find Balance:

• Do not drop to 8% savings yet:
  • Instead, target 15%–25% until assets reach the “tipping point” (~age 40).
  • Brian: “You leave knowing...there needs to be a base level. It’s more than 8%, but doesn’t have to be hog wild 60% either.” (33:03)
• Adjust for tax efficiency:
  • Max out pre-tax Solo 401k contributions (reduces marginal tax rate ~30%); use savings to still fund Roth IRA.
• Emergency Fund:
  • Beef up from $10k to $18k–$24k, matching 6 months’ real living expenses (12:09, 54:31).
• Healthy margin/flexibility:
  • Stick to 25% savings of gross income until age 40; then can confidently drop savings to “coast” at ~5%.

Future Projections:

• If she saves 15% to 37, then 12.5% after, she’ll reach FI but with little margin (~$4M target, 50:15).
• If she saves 25% of gross income through 40, then less than 5% after, she’ll build substantial assets and true flexibility ($624k at 40, leads to $4M+ at 60).
  • “She could reduce her savings rate to 4.6%. That is coast fire.” (51:42)
• Using the Financial Order of Operations and creating three tax buckets (pre-tax, Roth, taxable) gives control, tax flexibility, and resilience against life changes.

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Notable Quotes & Memorable Moments

• On choosing her path:
  • Danielle: “I think I would just rather spend more time when I’m younger just not having to work as much.” (14:15)
• On burnout and balance:
  • Danielle: “I just got a little bit burnt out... I think that’s why I just kind of...was just a little tired.” (34:39)
• On the illusion of early coasting:
  • Brian: “The most powerful thing I have, which is compounding growth and the wealth multiplier, I was wrong. I wish I would have...taken a little bit of deferred gratification...” (24:00)
• On setting targets:
  • Brian: “If your monthly burn rate’s 3,000, you’re a single individual, single income coming in, I would think it’d be somewhere around that $18,000.” (11:55)
• On investing personality:
  • Brian: “Are you just hot or cold?”
  • Danielle: “Maybe a little bit. Like I said, I think I just got a little tired and I developed a lot of anxiety around it.” (32:19)
• On savings rates and compromise:
  • Brian: “What I would love is at the end of the day today is that you leave knowing you know what? There needs to be a base level. It’s more than 8%, but it doesn’t have to be hog wild 60% either.” (33:03)
• On the risk of over-optimism:
  • Brian: "Die with zero is a wonderful concept if you know when your exit is... None of us really know." (18:09)
• On powerful financial flexibility:
  • Bo: "If she can do that, just save 25% from now until 40...she could reduce her savings rate to 4.6%. That is coast fire." (51:28)

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Timestamps for Key Segments

• [02:41] – Education and certification for sign language interpreting
• [05:47] – Earnings potential unique to DMV area
• [06:09] – Detailed net worth, income, and background
• [07:29] – Investment growth during COVID years
• [09:04 & 10:53] – Monthly savings goals and building emergency fund
• [13:02] – What are Danielle’s true long-term goals?
• [14:15 & 14:57] – Coast FIRE ambition and timing
• [18:09] – Uncertainty of DIE with Zero; withdrawal rate risks
• [19:37] – Future value of assets: inflation & purchasing power math
• [25:11] – Comparing Die with Zero and traditional FI projections
• [35:05] & [36:21] – Tax burden and implications of self-employment
• [37:16] – Roth vs Traditional contributions and tax optimization
• [41:07] – Sprinter’s burnout analogy
• [51:28] – The ideal savings pathway: 25% to 40, then coast

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Final Action Steps & Takeaways

For Danielle (and listeners with similar aspirations):

• Don’t “coast” too early—reach the asset tipping point before scaling back savings.
• Keep savings rate higher (ideally 25%) through the “make wealth” years, then reduce to a true coast level (~5%) only when securely established.
• Max out pre-tax 401k versus Roth while in a high tax bracket.
• Build a robust emergency fund to bridge self-employment unpredictability.
• Continue scenario-testing and revisit targets as life circumstances change.

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Money Guy Summary: Danielle is a disciplined, high-earning young professional with ambitious plans to buy herself flexibility and joy through Coast FIRE. But Brian and Bo’s deep dive exposes crucial timing and structural flaws in her plan—especially concerning savings rate, compounding time, tax strategy, and assumptions about future needs. With tailored recommendations, they help her recalibrate for a truly sustainable, flexible, and empowered financial life.

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End of Summary

Transcript

[A]

So so far we've seen you operating in two realms.

[B]

Yeah, 3750 maximum capacity.

[C]

Or now, I mean, if you just.

[A]

Do 9,000 into 110, that's an 8% savings rate. So going from like killing the savings rate like 30, 40% to 8%, it seems just as a casual bystander, there might be some middle ground.

[D]

Yeah, that's so much that might be.

[A]

More sustainable and more fruitful over the long term. What is it you do? Professional?

[D]

I'm a sign language interpreter, so I do a lot of the business. Corporate. It is actually mostly federal government, more than private business because, you know, it's the, the dmv, the dc, Maryland, Virginia area. So all of the federal agencies are right there and they hire a lot of deaf people and they have interpreters all day, every day. I do a lot of work for one agency. It's, you know, eight hours of work. I have an hourly rate, so I do a lot of that. I do some medical and then some other just random.

[A]

Are you employed by the agency? Are you like an independent contract?

[D]

I'm self employed. So when I say agency, I mean like the federal agency. But there are interpreting agencies. When you are an interpreter, you just reach out to them and say, hey, I'm an interpreter. They either just like, yeah, we'll add you to our list to get emails with work, or here's the portal to sign into to look for work. Or they want to screen you and they record you interpreting to make sure you're good enough.

[A]

And there's just a list and you can just like opt it like, hey, I'm available this day.

[D]

I probably get like 200 emails a day of just work. Oh, wow, like available work.

[B]

This is because I realized in my own journey, I was a finance major and I was like, man, after I took my first class and I was like, there's not gonna be a job in this because it's too easy. Everybody can do this. That's why I switched to accounting, because you're pretty much guaranteed a job. Is this just a hack? A job hack? If you have the skill set to do this, there is more demand than there are people who can do this skill.

[D]

I do think it's a very niche field, so not a lot of people get into it compared to your accountants or teachers or nurses. The language, it was only actually recognized as a true language in the 60s, so it's almost still evolving in a sense. So it's not, I think, as easy as like Spanish interpreting because that I Feel like that's pretty. You know, it's not still the word for dog is. Is the word for dog. But in asl, there's so many different ways to sign a sentence and each person might sign it differently. You have sign like one sign can have five different meanings. So like, you have to use context to know you know which meaning you're gonna pick. And you know all that is happening within like seconds of just like pure brain processing.

[A]

Is there a power degree or certification? Like, like how.

[D]

Yeah.

[A]

So you have an accounting degree, right? Did you have to get another degree or a separate certification to be able to do this?

[D]

So I didn't. As far as the degree, they have changed. There's the registry of interpreters for the deaf rid and they hold the. They sponsor the national certification. So they've had a new rule change and I think five years ago where you have to have a bachelor's degree, but it can be in anything that you want. I had the bachelor's in accounting. I actually have an associate's in business administration too, because I did like the community college and then transfer into the.

[A]

Public school financial mutant style. I love that.

[B]

I want to get into the financial stuff because you have some goals and we want to cover that. But I did have one more question. Is there any type of accountability or auditing of interpreters so that they can ensure you're not like doing Run DMC lyrics to tricky instead of actually doing. And obviously when you're working one on one as the interpreter, if the communication doesn't work, but in other things, is there any type of auditing or accountability or is that just because everyone has.

[A]

Their own, like, flavor and flair?

[B]

So there's not a lot of. You said something very interesting there where it's like, you know, there's five different ways to say this. How does that work? And then I promise we'll get right on track.

[D]

But just out of curiosity, a lot of people are. Have a lot of questions when I.

[B]

Mention no, you have a cool unique. And then I assumed when I was doing prep for the show today, I was like, we're gonna find out. There's some intersection point with a family story or a loved one or something. Because it's just, how do you land in this? And then to find out didn't have you going through an accounting program either. So it's just, it's interesting to me. Is there any accountability? How do they make sure that people are doing good work? Like when I'm at TPAC or other things, watching these Interpreters. How do they know if somebody's doing good work?

[D]

Yeah. So the, the deaf people is one. Because there is something. It's called DNS, do not send. So if I interpret for a deaf person and they didn't like me, they didn't like how I signed. I wasn't getting them. There's, you know, deaf people that are engineers, technical. I'm not, I can't, you know, I'm not good enough to do that type of thing. They can tell the agency like, hey, don't send that interpreter. So it's not. Nothing happens to me. I just, I can't work with that person. Yeah, potentially, like, if they're the only deaf person in that business, then I just mean I can't work there anymore. But I mean, deaf people can sue you just, you know, like a doctor or, you know, if you're really that, like, I have liability insurance and I think there's complaints that can be made to rid. I'm sure your certification can get taken away and stuff like that. So we put ourselves in positions that we know will do. Okay. I live right by Johns Hopkins University, so there's a lot of sciencey stuff that goes on over there with work. And it would be great because it's 15 minutes from my house, but I wouldn't touch that.

[A]

Not your jam sciency stuff.

[D]

I just started dipping my toe in legal.

[A]

Okay.

[D]

Because that's a little scary. But I'm just doing like jury duty right now. So it's not. Not too bad.

[A]

It's wild. Even inside this very niche industry, you can even develop niches inside the niche. Right. You can be the science person or the. Or the legal person.

[D]

Yeah. Medical.

[A]

Fascinating.

[D]

Yeah. And the reason, just to point out the money aspect, I don't think you can make this kind of money anywhere else in the country.

[A]

Oh, so this is unique.

[B]

You live in the. You're the unicorn. You live in the right intersection place of where the need is and your skill set matches well.

[A]

And that's. Let's. Let's catch everyone else up. Right. Because you were so kind. You shared a net worth statement and did you say how old you were yet? How old are you?

[D]

I'm 33.

[A]

33 years old. And it's remarkable. As we sit here today, you have a total net worth of about $181,000. And when we look at the shovel, the income that you make doing this very niche position that you said you found. What was the word you used? What was the word she used?

[B]

Oh, no, she Used an SAT word. So there's no way I'm repeating that word.

[C]

Circuously, Circuitous, circuous, whatever.

[A]

It was wild. And here you are, you make over $100,000, 105,000 to $120,000 a year doing this at age 33. That is awesome. For what we know so far, it looks like you're in a fantastic financial position. Would you agree with that assessment? Do you feel like you're in a wonderful spot?

[D]

I do. Sometimes I don't though. I feel like even making that, I mean 120 is definitely. I have to work a lot, like weekends, overnights to make that much. So if it's a little closer to like the 110 area, I do feel a little bit of the financial squeeze these days with just high cost of living going up. Yeah, I'm glad I started investing because I had a lot of. I really didn't start until 2021. Like I had maybe $5,000. Wow.

[B]

So you did all this.

[A]

You've built $165,000 of investments since 2021.

[D]

Yeah.

[B]

That's awesome.

[D]

Because it was, it was. I mean, Covid obviously was terrible, but Covid, you know, I was working from home. You can you do video interpreting just like on teams or zoom. And I couldn't really spend my money on anything because nothing was happening. Yeah, I like to go out to restaurants and travel, you know, big things that I spend my money on. But nothing was happening. So I was putting aside like over investing over like 30,000 a year. And then I think the stock market probably helped a little bit just with.

[B]

Yeah, I was trying to figure out this morning when I was looking at this, you already seem pretty disciplined. I know you said you spend going out, but when we looked at the budget numbers, you're not, you're not crazy. I mean, to making nine to $10,000 a month gross, you spend less than $4,000 a month.

[D]

Yeah, most of the time.

[B]

What's your take home? Because I mean, I'm sure since you're self employed, you have to reserve some money for taxes and other things. So what do you typically think our budget is coming in each month?

[D]

I set aside a lot in taxes, so it's usually like 36% is put aside for taxes.

[A]

For taxes.

[B]

Because you have fica, our Social Security and Medicare. And then you've also got the income tax. That's actually reasonable.

[D]

The self employment tax.

[B]

Yeah, that's the employee side.

[D]

Okay.

[B]

Because you pay the employer and the employee side.

[D]

Yeah, yeah. So yeah. It's a lot because I'm just a sole proprietorship.

[A]

And so what's your savings look like as you. I mean, obviously if you're. You've spent four years saving and you have 165,000. Walk us through how you think about saving on a monthly basis. Like, where's your money going that you're not spending or not putting into taxes?

[D]

So I usually have goals for the month. I think I set it, like, look at the beginning of the year. Like in January, I'll be like, okay, what's going on this year? You know, what do I think I could reasonably do? So I kind of set a goal with investments and cash as well, like how much I want to set aside in cash and how much to invest. So during COVID it was a lot more.

[A]

Let's talk about now. What are your goals right now in terms of saving?

[D]

I've backed down a lot just because I think I've gotten past that point of where you're doing a lot of cash and not getting a lot of the. The interest yet. So right now it's like 750 to investing. It used to be 3,000amonth I was doing, and then about 600 to cash. I'm not doing that right now. I had my first year of like, all the adult things happening to you, you know, like I needed new tires in my car. I did that. And then a week later or something seemed skid it out, you know, the city skid it out on the road and just destroy two of my tires again. And then there's like, you know, health stuff insurance wouldn't cover. That was, you know, like a few thousand dollars. And then my dog is really old, so there's vet stuff. It all just happened this year. So I needed to build back my emergency fund. And then I will need a new car probably soon. My car is like 10 years old and has like 160,000 miles on it. I think I really want to have a good. I think you guys say 20%. I think I'm shooting for maybe 30%.

[A]

How many miles does it have?

[D]

116.

[A]

When you buy new cars, what kind of cars do you buy? Like what?

[B]

Give me a.

[A]

Like, what's the price point?

[D]

Used car.

[A]

So what price point that you're going to spend on a car, you think?

[D]

I've just been looking. I think I'm just going to get the same car I have now, just newer because not really into cars. And it's reliable. So used ones that are like 2 years old. With like 30,000 miles so I can.

[B]

Have it for a long time.

[D]

It looks like 28,000. Yeah. So I'm aiming for 10,000 saved, which is a little closer to 30%. I think 9,000, I guess is 30%.

[B]

What's your emergency reserve would you like to have. I know you said you're a little short right now. What do you think your emergency reserves need to be?

[D]

They're actually back up to what I had them at. I was usually 10,000, but then I was watching your show a lot more.

[A]

I was going to say, how'd you.

[C]

Come up with 10,000?

[D]

Seem like maybe that's enough. I actually used to be more cash heavy and my dad was like, you shouldn't be that cash heavy. Like you're single, you're young, you don't have anything to worry about. Listening to your shows. Like maybe I should have closer to like the 15 mark.

[A]

And what's your from a spending standpoint to pay rent, utility, gas, all that kind of stuff. How much do you spend a month?

[D]

You mean without like the optional stuff like if I lost my job and I'm not going to go out to eat?

[A]

That's right. What would that burn rate be?

[D]

Probably closer to the 3,000.

[A]

3,000?

[D]

Yeah, 28 to 3,000. I have a lot of insurance stuff that, you know, being self employed I have to pay for.

[A]

Well, so if we're thinking through okay, if your monthly burn rate's 3,000, you're a single individual, single income coming in, I would say that six months of living expenses is probably appropriate. So for you, I would think it'd be somewhere around that $18,000 would be like a goal that I would shoot for.

[B]

But I'm going to pick on Danielle a little bit and the fact that you did what people always do to me when I say what is your spend rate? They always give me the bare bones. And you said three. But we know when you know what you submitted to kind of the producers and we have this up on the screen. If you really are taking into account because we all have subscriptions now. Yeah, you could gut it. We all eat out a little bit. We all have miscellaneous stuff. You're actually closer to 4,000 probably. So that's why I think Bo, you're spot on and I'm not picking on you too hard because 18 to 24,000 is probably your sweet spot. And we'll probably go in a minute we'll talk about because you have goals of this car that will kind of need to be like a Sinking fund thing that will kind of expand out this emergency reserves a little bit. We just had to figure out how we integrate that with other goals that you have because. Yeah, we haven't gotten into the. What are you saving for? Yeah, what are.

[C]

That's a great question.

[A]

What are your goals? Like what, what, what's the reason? What's the purpose for us sitting down here today?

[D]

So I think I am trying to do a not very traditional route, you know, where you work for 40 years and then you retire and whatnot.

[A]

I mean, you don't want to do that route.

[D]

No. Okay, I guess.

[B]

What do you want to do?

[D]

I want to do kind of like you guys are. I'm sure you're familiar with like Coast Fire, but it's.

[C]

Sorry, I never heard of that.

[B]

What's that?

[D]

But it's not exactly Coast Fire either one. Because I do think I want to invest throughout the life of the market instead of just stopping at, you know, I could maybe stop at 40 or something and then just never invest again. I would like to keep investing just to get the full market. But I also, I don't. I don't plan on having kids. And I think that makes a little bit of a difference. So I've kind of added in. There's a book called Die with Zero. And it's this concept of a lot of times when people die, they're actually left with more money than what they started with. And I just don't feel the need to do that if I don't have. If I had kids, it'd be a very different story. But I don't plan it. I have some nieces and nephew, my brother has three. But they're both engineers. You know, they'll be set up.

[B]

Sure.

[D]

So yeah, I think I would just rather spend more time when I'm younger just not having to work as much.

[B]

I want to because I want to come back to a few things you just said, but I do need to know some basics because you've given us a lot there. When do you think you want to kind of. You still want to keep saving, investing, but when do you think you want to at least have the option of that you don't have to work anymore. What's the age on that?

[D]

Well, I guess full retirement is about 60. It's not. What I want to do is work less because I'm self employed.

[B]

Yeah. But with coast, you want to be able to kind of control how you're using your time to a degree. So there's an age that you like behind you to be big enough that you get options.

[D]

I would say by 37 to 40, I would like to do.

[B]

Which is it, 37 or 40 people? When people. Because look, this is important stuff because there's a big difference between a 35 year old and a 40 year old. That's true when you're doing far slash fun type things.

[D]

I, I'll say 37 to at least be able to have one day like every single week. I'm only working a four day week and then maybe 10 years later I can just do three days a week and ride that out until I fully.

[A]

Retire because I want to understand the language you talking about like coast fire. And then you would like to work. You said you're 33 right now, you'd like to work at your current pace and capacity for the next four years and then have the freedom, freedom and ability to back down a day. Basically cut down your workload. Four days down to three days.

[D]

Well, five days down to four.

[A]

I'm sorry, five days down to four days and, but still going to save and like build. So it's not like at 37 you want to be financially independent. You want to put your gas, put the foot on the gas as much as you can between now and 37. So that 37, you could potentially take the foot off the gas a little bit.

[D]

Yeah.

[A]

Am I describing that correctly?

[B]

But you still want to save. So maybe Instead of saving 20, 25%, you'd like to save like 10 or something like that.

[D]

Yeah. So this was the first year I kind of implemented that. I'm investing $750 a month, which is, you know, 9,000 a year. And that's way less than what I had been doing. So I kind of want to do that for the rest of my time, is just add $9,000 a year until I fully retire and then.

[A]

Okay, so walk me through the. I want to understand the mindset there. Right. I have this desire that four years from now I want to be able to take my foot off the gas. But it sounds like what you just said is you've already taken your foot off the gas. You went from investing like $3,000 a month to 750amonth.

[C]

And yeah, it sounds like you're already.

[A]

I'm using, I'm going to use the word coast. But we're going to call this financial mutant. Fine, you're already financial mutant, fining. But that's not like a future date. You've already made the decision to do that today. Walk Us through that. Normally people say, hey, I need to get to this threshold first and then I can back down. But you've already backed down.

[D]

I think the, the biggest thing is I'm probably going to need to reduce my living expenses a little bit in order to do it. I'd say the reason I backed down one, I was a little burned out, if I'm being totally honest. And if I kind of look at my numbers, I think I sent you guys a spreadsheet I was kind of using to figure all this out. And when I plug in like $9,000 starting this year at 7% and doing 9,000 until I'm 60, I think it put me at 1.7 and that's at the 7%. And then because it's that die with zero mentality, I'm definitely going to be withdrawing more than 4%. So I will be technically losing money every year. And then I think it, I had it out to age 90 and I would still have like 300 to $400,000 left. But in those last few years my withdrawal rate is like 20%, you know, because my nest egg has decreased.

[A]

And so you're going to die at 90. I just want to make sure that's.

[D]

Yep, that's it.

[A]

Because dying at zeros is a, is a wonderful concept if you know when your exit is.

[D]

Yeah, right.

[A]

The unfortunate part is none of us really know a lot about when our exit is. And we don't know exactly all the variables between now and whenever that exit does exist and what lifestyle and expenses would. And so one of the things that I'm just gonna be honest, that makes me a little bit nervous is you're young, which is a wonderful, wonderful thing, but you are making some decisions. Hey, I projected this out and if I do this and everything works this way, then this is what the outcome is going to be. But that's pretty early on. And this is the analogy. I always said I'm not a big runner, but I have some friends that are runners when they set out to go run a half marathon or a marathon, it's a very, very long race.

[D]

Yeah.

[A]

If you come out of the gate and you say, man, I'm running a six minute mile pace like I'm blazing, that does not mean that when you finish that race that your pace will have been six minutes. You know what I mean? Just because you start that way, just.

[C]

Because you say, oh, well, I've done.

[A]

This for the last mile, surely the next 25 miles I'm going to be able to you know, match that exactly. That's one of the reasons why we understand, because of the wealth multiplier, because of the way compounding interest works. The more that you can get in early, the more powerful it can be. We love the idea of, like, taking your foot off the gas and backing down and doing that. But once you've reached the threshold that makes sense to do that, what I'm curious about is have you actually reached the threshold where it makes sense to do that just yet?

[B]

Can I give some color to this? Because you gave me a very valuable piece of nugget of information that I don't know if it works for your situation, but at least lets me make an example or give you some perspective or context. You said that you've done some quick math and projections and 1.7 million when you're 60, right? So I said, well, okay, 1.7 million. Let's bring that back to today's dollars. The purchasing power of today. And I just used 3%. Who knows what inflation's going to be? We've had some years where it stretches, where it's 2%. We just came through a stretch where it was as high as 7%, but I use 3%. That 1.7 million brought back into today's dollars is $757,000. So then I applied the 4% withdrawal rate to that. That's $30,000 a year. You divide that by 12. You are setting yourself up to basically live off of, in today's dollars, $2,500 a month. Now, you said you only spend 3,000, so maybe that's okay. But I know when we actually looked at your real budget, where you actually get to go eat out, you know, have subscriptions so you can watch stuff and other things, it was closer to $4,000. There's a thing I have learned as I've gotten older, and I'm going to give you Some thoughts on Dawood0. I actually like the book and the concept, but there's some assumptions that go into it. And that's what Bo was alluding to, because you have three phases of your life. There's the make wealth phase, there's the maintain wealth phase, and then there's the multiply, where you get to say, hey, money's not a thing. I want to go enrich people. I want to go share all these resources. I have the author who wrote dial with 0. If you go look at his trajectory, he was like an investment broker. He made gazillions of dollars whenever he started working. And I Think some people, Bo, and I probably could do that too, because, I mean, I'm in a high income type situation. I don't know that everybody can replicate that. And that's the thing I have is because when I created as a content creator, I'm always like, I want to make sure when I'm giving guidance to people that I'm spreading the net out so far that I don't give people false hope, but also to give them enough optimism that this can be replicated thousands, if not millions of times over and nobody's disappointed. I worry this unicorn situation you've set yourself up with is that there's way more Demand. You get 200 emails, you say a day of people saying, hey, can you come do this interpretive signing here and there. And you're like, this is so great. I've got all this opportunity coming in. But you know what, Even though I'm 33, Bo, if you think you're burned out at 33, wait until you get to be 52. I mean, because I just had this conversation with one of my old business guys that we're in the same field. He makes a great living. He's like, I just don't want to do this anymore. And all my CPA buddies, yeah, my bill rate is 500, $600 hour. I don't care, I don't want to do it. So if you think at 33 you're burned out, this is going to get worse. I'm just going to go and tell you it's just the reality of life.

[D]

It's a. I think it's a temporary burnout.

[B]

Okay.

[D]

I think I need, like, I needed this year to recover a little bit because I was doing so much work and saving so much from, you know, late 2020, all the way up until the end of 2024. So I think that's what I feel like I just got a little bit burnt out.

[A]

So you were, you were at redline, you were operating at maximum.

[D]

Yeah, I'm not saying that's going to continue, just that I needed a little break.

[A]

Okay, so there's so, so far we've seen you operating in two realms.

[B]

Yeah. 3,000.

[A]

Yeah.

[B]

Seven.

[A]

Maximum capacity.

[C]

Or now, I mean, if you do.

[A]

9,000 into 110, that's an 8% savings rate. So going from like killing the savings rate like 30, 40%.

[D]

Right.

[A]

To 8%, it seems just as a casual bystander, there might be some middle ground.

[D]

Yeah.

[A]

That might be more sustainable and more fruitful over the long term. That Might give you more options and flexibility.

[B]

And I want to bring them because I like us to be. We're nerds. We do the analytical stuff too, but I also try to do the die with zero stuff where I'm trying to tell you to make sure you maximize your 20s, your 30s. That's what I.

[A]

That part of the book we do love.

[B]

Yeah. I mean, that's why in Millionaire Mission, I talk about bedazzle, your basic life. I don't want people to be misers. I don't want people to. But there is a balance. And sometimes I worry, did we pull the needle too far the other way? When it's kind of that epicurean type like, go seize the day. But more likely you're going to live to be a ripe old age. So you got to put a little ounce, spoonful of sugar of deferred gratification to make sure that we're going to have a life well lived. And you can do that when you're 33. What I worry is somebody reads die with zero and just assume forever, they can do some extrapolating like you did, then they get to be 46 or 43 anytimes, and they realize, oh my gosh, the most powerful thing I have, which is compounding growth and the wealth multiplier. I was wrong. I wish I would have kind of. Yeah, I went too far into the epicurean side of trying to maximize versus taking a spoonful or a little bit of deferred gratification to ensure that it was a life well lived all the way through. Now if you can tell me you're going to make 400, $500,000 a year in your 40s and 50s, we can go live the hog life. I mean, just go for it. I mean, but I don't know that you can promise me that you can do that.

[D]

No, I definitely can't. I guess my one question, and this was kind of a big push for me to apply on the show because I started watching Making a Millionaire and you would say, okay, you're going to end up with 2 million. That means you have $40,000 to spend. And I was like, oh, that's really different than what I have. But, but I thought the spreadsheet. So I'm using a spreadsheet that's from like a financial influencer, I guess, Money Flamingo. They're like over in Australia, but they read Daiwa 0 and they created this spreadsheet. So I thought that the dollar amounts were inflation adjusted. I think that's what it Says on the spreadsheet so that I'm not actually gonna end up. It's like 1.7 million of whatever that's worth in, well, depends on rate of return assumptions.

[C]

Right.

[A]

So if you're using, if you, if 7% was the rate that they used as that, I would guess most likely that that was a nominal rate of return, you'd have to adjust for inflation. Now if that was an inflation adjusted rate of return, what they're actually saying is that they believe inside your portfolio you can achieve a 10% rate of return. Right. And they're showing you a net of inflation, 7%, I would argue, especially for a young person.

[C]

While I think there is a, there's.

[A]

A real chance that you could earn 10%, I would not base my retirement well being on that. I'd rather be much more conservative in my estimations. Okay, so that's why we were just using the math. If you said 7, we're going to apply a 3% inflation rate to bring it back to today's gotcha. Does that make sense?

[D]

Yeah, that. And that is a rate I picked. Okay, Yeah, I put in that information. I actually had it much more conservative at 5%. But then I was watching your show and you guys use like 7.5 and maybe I misunderstood. Maybe that's not inflation adjusted.

[A]

Well, if you were using 5%, right, then you add a 3% inflation, that'll be like an 8% rate of. Now we are kind of aligned. Right. Like that is more in the ballpark. The fact of the matter is we also, we just don't know what the market's going to do. I mean, we, we have the historical of what the market's done, but there are seasons where the market does not perform as well as other seasons and you don't get to control that necessarily. Now, fortunately, you are young, so you have a long enough timeline. Odds are the market's going to do pretty good for you. But in the die with zero vein, if we told you, hey, in our opinion, 8% is not, is not the savings rate you ought to be shooting for now. It ought to be something higher. Are there life sacrifices that you would be making? Are there things that you would not be able to do that you're able to do now, that that would cause some friction because I want to make sure we're being like sensitive to that.

[D]

Right?

[A]

Like, are you able to still enjoy your 30s and do the things you want to do even if you had maybe not the 40% savings rate, but some savings rate higher than 8%, I think so.

[D]

I mean, I might have to, I don't not eat out as much or I don't, you know, whatever the case may be, maybe I can't get that nice Airbnb as you know, I have to do a little bit less, but I don't think it, I don't think it would too much. I would rather play it safe. Like I'm a relatively risk averse person. But yeah, I was just kind of going by that spreadsheet. So at 1.7, I was withdrawing 132,000 a year. And that got me to like the 300, $400,000.

[B]

And that's what if I had that data, because I'm curious to know if that was already inflation adjusted or if that's just in nominal dollars, what it was at that point in time. Because then that brings it back because $132,000 brought back to inflation is a much less because things are just going to cost a lot more than they do today.

[D]

Definitely.

[A]

And help me understand the mathematics here. Right. So let's say you make $110,000. Right. And you said you have a 36% hold back for taxes. So 110,000, we're gonna hold back 36. That means we're gonna net about $70,000. So then you have a burn rate of 4,000. Right? That's what you showed us on your budget, 4,000amonth. So 70,000 minus a $4,000 monthly burn rate. So it's gonna be what, $48,000. We're gonna have $22,000 left over. It's my math, my math maths on that.

[D]

Right? Yeah.

[A]

In theory, that 22,000, this is after your living expenses and after your taxes. That would be what I would assume goes to savings. But you said you're saving 9,000, so we have like pretty big deal.

[D]

Yeah, that's the.

[B]

You're thinking it's gonna go to cars, it might go to other goals. So that's what you're thinking.

[D]

Yeah, I also have like 600 for cash to save every month as well. Okay, so like my total savings.

[A]

But that's for like the sinking fund for the car and for the house, right?

[D]

Yes. Yeah, they're pretty much all, I mean, except, well, an emergency fund, I guess a little bit of a sinking fund. But yeah, I'd like to buy a house at some point and I have like a travel fund because when I don't work, I don't get paid. So if I, this year I went to Croatia which is really fun for like 9 or 10 days. I usually do like a big trip like that every year. And so I don't get paid for a third of the month. So I do have a travel sinking fund to just help out during that time. So I can kind of use that as income a little bit.

[A]

This is one of the reasons why I love the financial order of operations. Right. Because it's this, it's this nine step process we put together to help us kind of figure out where to put our dollars.

[D]

Yeah.

[A]

When you think about this saving, you already said you got 600 going to cash. So let's move away from that for a moment. The 750 that you're investing on a monthly basis. So now walk us through how you're doing that because we saw you have a Roth IRA, we saw you have a solo 401k. How are you divvying out your dollars? Because I'm wondering if what I don't know is what's the appropriate savings rate for you. Well, I wonder if just doing some of the financial order of operations stuff would begin to answer that question for us. So walk us through on that 750. Where does it go every month?

[D]

Well, now that it's down to 750, most of it goes just into the Roth IRA to max that out. And then the rest of it goes into the Roth portion of my solo 401k. And I will admit I feel like I kind of dance around the financial order of operations. I think I go through them, you know, where I was probably at 5, I was maxing out both of those. I mean, not fully because solo 4.1k, you can set aside like 60 something thousand. I don't.

[A]

72 in 2026.

[D]

That's true. I can't do that. But you know, now I'm kind of back to like, oh my emergency reserves. I have to go back to, you know, to number four and go back to that. And so I feel like I kind of dance around to the different steps. And I don't know if that's the best.

[B]

No, but that is the way it works.

[A]

You wish. If you wish.

[D]

Yeah.

[A]

Okay, so you max out your Roth IRA, that's 7,000. So then you have about $2,000 roughly going into your solo 401k going into the Roth portion of your solo 401.

[D]

Yeah. And when I was saving a lot more, it's like a 60%, I think savings rate. It was maxing out the Roth ira, maxing out the employee Roth Portion, salary, deferral. Yeah. Which is the same limit as just a regular 401k and then anything extra, I would either put it into that profit sharing employer.

[B]

So you were doing over $2,500 a month.

[C]

She said she was doing 60%.

[A]

That's what you got to help me understand. We were at 60% savings rate. Now we're at 8%. I guess if we include the 600 to cash, we're at like 15%. I did the math in my head. That could be wrong. 60 down to 15. How'd you just.

[C]

How'd you arrive?

[B]

Is that your personality though? Are you just hot or cold?

[D]

Maybe a little bit. Like I said, I think I just got a little tired and I developed a lot of anxiety around it. Am I not going to have enough? But am I also just not doing anything in my life but hyper focus?

[B]

Is that a thing of yours? I mean, even to do what you do for a living, I gotta think to watch YouTube videos and be like, I could do this. I mean, there's something there with your personality is that you're either in love or hyper into something or you're just not, right?

[D]

Yeah, yeah. I would say that especially like my hobbies. I used to rock climb all the time and then I got introduced to pickleball and like I can't have more than one.

[B]

You told us boxing, I mean I'm seeing a trend here, is that you're kind of. And that's what I would love to to do is because it seems like investing became a hobby and that's why you got up to 60%. But you're like, oh my gosh, it doesn't leave anything for life. And I'm miser. So what I would love is at the end of the day today is that you leave knowing you know what? There needs to be a base level. It's more than 8%, but it doesn't have to be hog wild. 60% either. I want to leave some margin for life and just know that about yourself. I mean, we all have. I was just talking to Carter, who's our third in command here, that one of the things, as I've gotten older, I've realized some of the quirky things about my own personality is my blessing. But it's also a curse. And that thing is if you have hyper focus, it's a blessing. It's because you're in this unique skill set that you wouldn't be able to do if you're just the typical person that walks down the street but it can be the curse in the fact that you get distracted and go in a completely different place. And doing that at 33 with your savings and investing could be bad down the road if we don't get the math right to make sure you're saving to not have regrets later.

[D]

Yeah, yeah, I agree. And I think too, when I was really saving a lot, you know, like, I. I used to be engaged.

[A]

Okay.

[D]

And then I'm not. But so, you know, living together for quite a while, which really brought down living expenses. And I did save up a lot of money to buy a house. Dave Ramsey is going to hate me. Bought a house, you know, a few months before we were supposed to get married. And then, you know, so I lost a lot of money in that. So I think, I think that's a big part of the break too, because that happened in the beginning of 2024.

[B]

Okay.

[D]

Yeah. So I think that's why I just kind of. I was like, just a little tired.

[C]

Well, you try to do a lot.

[A]

You're trying to do a whole lot.

[B]

And there was an achiever mentality, just throwing it all in there.

[D]

And there was a big increase, income disparity. So I had, I was doing a lot of the, A lot of the.

[A]

Heavy lifting, a lot of.

[D]

Yeah, that kind of stuff.

[A]

So on this, you mentioned earlier that you have this 36% hold back for taxes.

[C]

When you actually file your tax return.

[A]

Every year is all that. Are you actually paying 36% effective tax rate?

[D]

This is the first year. So basically, of course, my mom is my accountant in a way. She works under a cpa, so technically he looks over all the taxes stuff before it's submitted. But every year it's basically just been my tax rate has increased. So when I started out, it was like 23% Covid hit. I made like $30,000 that year. It was a bad time to start a new career. And then it went up to 30 and then, you know, so this was the first year it was 36, I think last year was 30. And I did. Oh, more than I had. You know, I pay the quarterly estimated taxes and then usually I have some leftover. So if I owe, I've already got that set aside. So I don't feel like I'm actually spending my money. But last year I actually owed more.

[A]

Than what I had, more than you had set aside.

[B]

And it kind of, I mean, I'm looking at the tax tables right now, and this is 2025's tax tables as a single individual. You cross into the 22% bracket, around $48,000. So that means that's why you can go a little less than that. But a lot of your income is subject to that marginal rate of 22%. What's the state income tax where you live? Is it 5 or 6%?

[D]

I don't know. I'm being.

[B]

That's why I bet when you add a state income tax to your margin, when you bring it back, that's where the 21% and then Social Security and Medicare, the self employment tax is 15.3%. I can see you got good counsel. This is the hard part, I think when people realize what they pay in taxes because most people don't realize when you're a W2 employee, you get wages, your employer is paying 7.65% on your behalf. Yeah, this is this thing that nobody realizes. That's why it doesn't seem like that big of a deal. But your employer is paying.

[D]

Yeah, like insurance and the matching. Yeah, all of that I don't get. You know, I'm paying. It's on you $440 I think starting next year for my health insurance. And yeah, there's no match. So all of that investment is just.

[B]

Now we just boo hooed a little bit. But here's the good news. Even with the boo hooing of the 36% reserve rate, you're going to, we're going to show you, you got, you got this.

[A]

Well, and I was even going to a different place hearing as and this is true for a lot of single filers and especially entrepreneurs, one of the single best way to offer some reprieve on your tax return is to do that via a qualified retirement plan. So I love hearing that you have a solo 401k that you're taking advantage of, but you're doing the Roth portion of the Solo 401K. And we love Roth. Like we think Roth is amazing. But with you being in that tax situation, it might be an interesting thing to ask either your mom or the person overseeing the taxes. Hey, what if I shifted my Roth contribution, my Roth solo to pre tax. And in doing that, does that actually create a mechanism for me to save more money? Yeah, if you just think about 2026, it's going to go to $24,500 that you can salary deferral into a solo 401k. And I'm going to what do we think we're going to call it? 30% is your marginal tax rate. Once you do all in, that would save you like $7,300 in taxes. So walk me through this. If you could just max out your solo, you will save enough in taxes that you could then fund your Roth IRA. Well, in just doing those two things, you just saved $30,000 a year. Now I'm not suggesting that's where it needs to be, but I am wondering, are you even saving in the most efficient way for the.

[D]

Yeah, because that seems more like I don't really even have to do anything except click a different button in order to do that. Because my solo 401k for the salary deferral, I can do both Roth and traditional. I get to pick. And then for the profit sharing there's.

[A]

Always going to be pre tax. But I think that if you're able to fund max out the Roth ira, which you are, you may be reaching that threshold. This is hard for a lot of young people where Roth 401k might not make the most sense. Pre tax may be the one that makes the most sense. And by shifting that, you decrease what you're paying to the taxes. You increase what you're actually saving. You increase what you get to keep in your back pocket.

[D]

Yeah, I thought the financial advice that was common was once you get to the 24% bracket is when you do more traditional and if you're below that then you focus on the Roth. So I was kind of.

[B]

It depends on what you. Because you have. I bet I'm pretty. I need to. I mean I don't have a phone in front. I do that on purpose so I don't get distracted. But I think there's a state income tax in Maryland, isn't it?

[D]

There definitely is.

[B]

And that's what you're already. Your marginal rate. If you add those two, if you add your state and your federal, you're probably getting close to 30% right there. And that's part of the.

[D]

You do pay county tax there too. On top.

[B]

And see there's another. So there's a lot of tax.

[D]

Yeah. And I'm in city limits, so it's probably more than, you know, two minutes down the road is literally the county.

[A]

So you have to make a. Okay. If your goal is, hey, I want to do this coast tax thing, I have these two options. I can either pay myself money and build my coffers or I can pay it to the government through taxes. Yeah, I would imagine you'd rather pay yourself and do that. So that even might be a mechanism.

[D]

Because I just an interest free loan to the government. Right.

[A]

You're at 8% savings, you are one of those people we talk about all the time. If you go to moneyguide.com resources, we have this deliverable said, how much could you save? And we talk about 25%. 25%. You may very well be one of Those cases where 25% may not be the right number for you. Right. That may not be what's required, but it might be 15% or at least to give yourself options so that you can reach that tipping point, so you can reach that boiling point, so you can reach that time where then it actually does make sense to take your foot off the gas. Yeah, I just think you've done it. My opinion, a little prematurely.

[D]

Too early. That's right. Yeah, I would agree with that.

[B]

Well, let me put some color with this. Is that it's back to the whole mindset issue you told us, was it 2021?

[D]

You've done all of this since 20, maybe late 2020.

[B]

So you went pretty crazy. In a good way. In a good way. 60% sucks. In a good way. But now there was probably some scars from that for sure. I mean, because you've already shared with us some of the struggles from that. What I'm just trying to make sure is that we're closing out when we record this. You're only four years into this journey of saving and investing to say, and it's back to Bo's analogy of a marathon runner. If you sprinted on a 26.2 marathon and you sprinted like it was 100 yard dash, it makes sense that you burned out and you're over there holding your side going, maybe I just didn't eat enough bananas. No, you ran. You just ran wide open for the first. You acted like this was 100 yard dash versus 26.2 miles. I still say with you only doing this for four years on a 30 to 40 year journey of building these assets so they can be an army of dollar bills to work for you. You're closer to the front line, to the starting point than you are to midpoint to the ending. That's where I get worried from a mentality standpoint when people tell me they're coasting for your. Because we have financial meetings all the time that are in their twenties making a great living, crushing it because they had a great living and they should be in the make wealth phase. You got to get to exactly what Beau said. We call it the bowling point, the tipping point, whatever you can do. Where now the assets. That's why we have the people say, why did you even come up with this know your number course. We did the know your number course. So you know if you're ahead of the curve, behind the curve or right where you're supposed to be, and you try to do that with this spreadsheet, we'd have to. After the show, we'll take. Figure that out. But it is one of those things where I think you're so close to the starting line. I don't know that I think you're ahead of the curve. Yet you are in this moment in time. Because we want you to have one times your income by age 30. Here you are at 33 with your well beyond one times. But does that mean you get to now take your foot off the. You need to be doing more than 8%?

[D]

Yeah, maybe a little bit. Because I was like, pedal all the way down, nowhere else.

[C]

Right.

[B]

Because you're running the 100 yard dash.

[C]

I do not think it's like.

[D]

And now I'm going like 20 miles an hour.

[A]

Yeah. I don't think you started walking and.

[C]

You'Re at the place where you don't.

[A]

Have to sprint anymore because of the hard work you did for the last.

[C]

Four or five years.

[A]

But also, walking probably would not serve you well. And so what I'm excited is that we're gonna be able to show you, hey, here's what it looks like. If maybe you change that a little bit. Hey, what if instead of doing this, we did this? And what are the outcomes? And what you do is the earlier you make those decisions, especially when you're young, the more flexibility you give yourselves to really get to make fun decisions in the future. Because you may decide at 40, hey, I want to work two days a week, or, hey, I want to take six months off, or I want to whatever that thing is. And we'd rather you have more margin in the system to be able to do that than, oh, I was a little too aggressive in my assumptions.

[B]

What I want to know, Beau, is so we can make sure that we share with Danielle some of our thoughts, because you and I are going to huddle up on this. Do we have enough assumptions about what her dream expenses are for the future, what we currently have, so that we can kind of do some research on our own.

[A]

Yeah, the only thing that's not incredibly clear to me that I'd like to have a better beat on, to be able to really crank through some numbers. You said that right now, hey, my living expenses right now are about four grand. And at four grand, I can do the Things I want the way I want, when I want. But one day I'm not going to be working five days a week. Even when I'm working four days a week, I'm going to have one extra day that I'm able to go do something. And I wonder if that something might actually involve consumption. Right.

[B]

It's like.

[D]

I mean, it's probably pickleball.

[A]

Yeah.

[C]

Right.

[A]

So we got to get the really good paddles, and we got to get the.

[B]

You know.

[A]

So my question for you would be, when we think about the. And this is another really hard thing to project when you're 33 years old, when you think about in that time where I'm either working less or not working at all, what would it cost in today's dollars for me to live the life that I want to live? That means go on travel and be able to replace the car and be able to play pickleball and be able to eat out and be able to all those things donate. Because I guess it would be more than 4,000. But you have to tell me, maybe 4,000 satisfies all that. What is that number for you to be able to really live the life that you want to live?

[D]

I guess I'm assuming this is in today's dollars.

[C]

Yeah, in today's dollars.

[D]

Okay. Because I think I'm of the mindset that I'd rather do a lot of the traveling and stuff now, and I probably won't do that as much in retirement because I already have terrible knees. I can't imagine when I'm 60 what they're gonna be like. So I don't think I'm gonna be doing anything super luxurious. But I don't know. I guess if I didn't have to say, like. Because I guess you get to the point where you're not investing anymore, so when you retire, you stop investing.

[A]

You go from an accumulator to a.

[D]

Decumulator and maybe just cash for, you know, cars and the house, the AC brakes, whatever. So I would probably say, like, my current income right now, like, if I didn't have to set aside as much money for investing, I think, you know, whatever that is in. In Future dollars. Like 110. Yeah.

[C]

So 110 minus your.

[A]

Minus your tax burn.

[C]

Right.

[A]

Because tax will be an issue. So I had you, like, $70,000 would be your net of tax number that's coming in.

[D]

Yeah.

[A]

Is that the magic number? Hey, if I had that coming in, I have to think about saving. Cover the tax. Is $70,000 a year.

[D]

What's that, a month?

[A]

About 5,800.

[D]

Yeah, I definitely think that that would be.

[A]

All right. So now we have a target. Now we have a target to shoot for.

[D]

And I do hope at some point I'll be a. You know, like, I would like to get married at some point.

[A]

Another reason why there are so many variables that can change between now and the time that you get to 37 and between the time you get to 60, and then by the time you've already told us you're gonna die at 90, by the time you die at 90, that could change the circumstances. So all you can control right now is your behavior. And so what we'd rather you do is while you can, whatever cliche you want, strike while the iron is hot or take it, whatever, do that now. So that way, as some of these other variables do change, you'll be in an even better position to make that adjustment and to make that sweet.

[B]

And when we figure out it's not gonna be 60%, it's gonna be more than 8%. But whatever the number percentage we find out what I like and what gets me excited is it leaves enough margin for you still to live a life. Because I think that's the problem. You made this into a all in. You had two speeds, wide open, and then snail's pace. And that's what. There's so much before there that we could get you in this healthy place, but then it gives you the freedom to say unlock and say, I'm gonna automatically make it automatic for the people. Set it, forget it. And then after that, I can go enjoy my life and do the die with zero thing. So I feel like I'm getting the mindset of enjoying the moment without sacrificing what the wealth multiplier and compound growth can do for you.

[D]

Yeah.

[A]

Hey, this has been great. I'm excited. You're going to be in a great spot, and I'm excited we can do a little bit of. A little bit of number crunching and show you how there might be a better way to do money for you.

[D]

Okay.

[C]

Brian, how awesome was Danielle? I think she holds a special place in my heart because I feel like the conversation we had with her is the same conversation I've had with a number of my friends over the years.

[B]

But what's wild about Danielle is that she had. She had, like, two gears. It was like she's like, wide open, saving over 50% of her income to now. She's like, hey, it's gotta be. Do something different to the point, she's bringing it all the way down to 8%. And that breaks my heart because I feel like there has to be an in between is noble what she wants to do, but I'm worried she's gone too far the other way.

[C]

Well, and remember this was her mindset. Hey, I want to do this and I want to. I'm taking my foot off the gas and I want to take my foot even far further off the gas. And so we said, okay, let's figure out what that actually looks like for her. And remember her, she said her goal in financial independence was to be able to spend $6,000 a month in today's dollars. And she wanted to operate under this sort of coast fire mentality. I'm going to save now and then at 37 and back it down. So we said, okay, we need $6,000 a month per, per month in retirement. We're going to assume a 3% annual inflation, 3% annual salary increase, and we're just going to use her current pay of right at about $120,000 a year. And we said, okay, let's assume because she is young, she can earn 8.7% annualized. And we know that she already has 165,000. So we said, all right, let's problem solve for her right now. If she's backing down her savings, what does it need to be from now until 37, from 37 on to be able to reach financial independence?

[B]

I remember, you know, when you and I started brainstorming this on where the solution was, we're like, okay, 8% seems like she's gone way too far with it, but so let's do something. You know, we always talk about 25%. Maybe a good in between starting place was 15%.

[C]

Well, and this is what we found. If she just saves 15% from now until 37, when she gets to 37, she'll have about $326,000 saved up.

[A]

But then if she were to reduce.

[C]

That, she's going to take her foot off the gas. How much would she have to save to still be able to reach financial independence? The number was 12 and a half percent.

[B]

Yeah, see that, that doesn't seem as exciting to me now. Look, we're solving to try to get it because it looks like we need to get her as close to $4 million as possible. And I like where our mindset was with this 15%. But nobody, when we tell her, hey, guess what, Congratulations, you get to lower once you get to this point instead of doing 15%. We're gonna let you do 12 and a half. It's gonna be a wah, wah, wah.

[C]

Rather, what we tell folks, we say this all the time, is, hey, we want you saving 25%. 25%. The reason we tell people that is if you can do it early and often, you give yourself flexibility, you give yourself freedom in the future.

[A]

And Danielle's no different.

[C]

Now she was saving some crazy number, like 60%. We said, look, I don't think that's necessary. But what does it look like if you actually follow the money guy rules? What's it look like if you do save 25% of your gross income just.

[B]

For a little longer?

[C]

Just for a little. And let's not pick 37. Let's say, what does it look like if you can save 25% from right now at age 33 out until 40.

[B]

That doesn't seem that tough. I think we can do it. And it ties into our rules. It's very financial mutant esque.

[C]

And so this is what we found. If she can do that, just save 25% from now until 40, she's able to turn $165,000 into $624,000.

[B]

Okay, now we're getting somewhere.

[C]

Okay, so we're at 624 by 40 and our goal is to get to around 4 million. How much could she then take her foot off the gas? How much could she back off? If she did it then it's wild that she could reduce her savings rate to 4.6%. That is coast fire.

[B]

That's gonna get a reaction.

[C]

It's not exactly coast fire, but it's.

[A]

Close to coast fire.

[C]

I think that's what she's looking for. She was just trying to do it way too early. She was trying to pull her foot off the gas before she had actually reached the critical mass, reached the boiling point, reached the place where her dollars.

[A]

Could actually work out well.

[B]

And I know I envision Danielle seeing this information and saying, okay, I can stretch. Do a stretch goal of 25%. That's half of what I was doing when I was doing crazy beyond 50%. But then we get to tell her she gets to save less than 5% the rest of the way. That seems like coasting to me. And I think that's a win.

[C]

And what's great is we even told her, because she was a self employed individual, said, hey, we even think that there are some ways that you could think about how you're saving. Maybe doing The Roth Solo 401k doesn't make sense. Maybe you should do the Pre tax solo 401k and maybe you should really follow the financial order of operations. What I think is beautiful is if she were to do that and we just assume that she follows the food to a T when she gets to financial independence, when she gets out to age 60 and we actually look at her three tax buckets, you can see that just by doing at that, she'll have about $1.3 million in tax deferred assets, right? 2.3 million in tax free assets and another 340,000 in after tax. She will then at that point be.

[A]

Able to pick and choose what her.

[C]

Tax rate is because she saved and built in a super efficient manner.

[B]

I love how this is all laid out. Now I want to play devil's advocate and try to pick this thing apart a little bit because she talked about die with zero a number of times and so she might be willing to say, hey, this is great but remember, I'm not trying to leave a legacy, I'm not trying to leave a lot of money. What do you say about that?

[C]

Well, what I would tell her is this assumes that you work all the way till 60 or you wait till 60 for financial independence and this is assuming a 4% withdrawal rate. In reality, if she can save at this clip and she can build the assets early on, what's most likely going to happen is she's going to give herself freedom and flexibility to potentially decide on a more quick timeframe. Maybe I want to be financially independent at 58, 55, 53. I don't know what the number is. She'll be able to define that, but only if she does the hard work now to set her future self up to make that decision.

[B]

Well, and I also think, you know the problem with Tell me you don't want to leave a legacy. You have to tell me what day you plan on dying.

[C]

When are you going to check out?

[B]

That's the thing is you still have to get to some level of critical mass so that just in case you live to a ripe old age, that this thing doesn't completely fall apart around you.

[C]

She has all the tools, she has everything necessary to be successful. But I think she does need to adjust the mindset.

[A]

I think she went through some life.

[C]

Stuff, she was a little burnout. But if she can kind of recalibrate recenter, redefine what her goals are, I think she's going to be in a great place to still be able to control her entire financial future.

[B]

So let's go ahead and kind of recapping. What homework would you give to Danielle so she can go ahead and start working on this, this order and this plan tomorrow?

[C]

Number one, I said she needs to beef up her emergency funds. She has $10,000 in reserves right now. But we said based on her living expenses she should probably be closer to $18,000 to $24,000.

[B]

Okay.

[C]

We also said she probably ought to consider increasing her savings rate. Our Recommendation Instead of 8% right now.

[B]

I don't know what she was thinking.

[C]

We would rather her go to 25%. If she can do that, she's going to give her 40 year old self a lot of flexibility, a lot of options. We also said inside of a 401k she may want to shift from doing raw Roth contributions to pre tax contributions because being a self employed individual she does have a more cumbersome tax scenario. So switching to pre tax would likely free up cash flow and allow her to have additional savings.

[B]

So she could do those Roth contributions.

[C]

That's right. If she could do the pre tax solo then she could then fund her Roth. She's going to be able to build her three distinct tax buckets and control her financial.

[B]

Now I know this is going to have her saving a little longer than she initially planned but when we show I wish I could could see her face when we say hey look, you just do this for a little bit longer at this reasonable level and now you can coast only saving less than 5%. I think she's going to be pretty excited.

[C]

I think again she has all the tools, all the ability to do it. I think that she has a beautiful financial future if she can make some of these decisions today.

[B]

Danielle, thank you for coming on the show. We had an absolute blast creating this type of content with you and I see so much opportunity go on this journey. Please 25% just a little bit longer. Hold on just a little bit longer and awesome stuff is coming your way.

[C]

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 free resources go to moneyguy.com resources.

[B]

I'm your host Brian, joined by Mr. Bo. Moneyguy team out.

[C]

Making a Millionaire is hosted by Bryan 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.