The $75K Lesson That Changed Their Financial Future | Making a Millionaire

Summary

Podcast Summary: Money Guy Show

Episode: The $75K Lesson That Changed Their Financial Future | Making a Millionaire

Hosts: Brian Preston & Bo Hanson
Date: March 16, 2026
Guests: Jonah and Caroline

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Episode Overview

In this episode of "Making a Millionaire," Brian Preston and Bo Hanson sit down with Jonah (an airline captain) and his wife Caroline (early childhood educator turned stay-at-home mom), both 29, to examine their rapid wealth-building journey and the financial lessons learned along the way—specifically, the costly $75,000 real estate mistake that shaped their outlook. The hosts provide tailored advice on building a disciplined financial plan, maximizing employer benefits, avoiding common pitfalls that high earners face, and setting up for long-term wealth. The tone is friendly, educational, and candid, with moments of humor and tough love.

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Key Discussion Points & Insights

1. Jonah & Caroline’s Backstories

• Jonah’s career progression: Started as a private pilot (01:00-02:50), transitioned quickly to commercial by age 21, became an airline captain much earlier than typical due to pandemic-driven demand (07:55-08:39).
• Caroline’s path: Early childhood educator, now a stay-at-home mom with twin toddlers (04:37-05:11).
• Their financial situation:
  • Net worth close to $300,000 at 29.
  • Household income: $420,000+.
  • Rapid increase in income over the past two years due to Jonah’s promotions.

2. The $75,000 Real Estate Lesson (12:47-19:55)

• Situation: Bought half of a duplex at the peak of the market (interest rate 7.625%), quickly outgrew it with twins, bought a larger home before selling—the old house sat on the market.
• Financed liquidity with a $50,000 401(k) loan, lost money on the sale due to a market downturn, and calculated total loss (including opportunity cost) at ~$75k.
• Key realization:
  • “You know you’ve made it when you buy a house...but [we] threw up when I saw how much we lost on that house.” — Jonah (19:31-19:55)
• Hosts’ reflection:
  • “A lot of people are brainwashed to buy a house ASAP, but that can be an unforced error that sets you back... Maybe renting really is the smarter move sometimes.” — Bo Hanson (18:04-19:19)

3. Digging Into Their Finances & Habits

• Debt Review:
  • Student loans at low interest rates.
  • Some medical debt at 0%.
  • 401k loan now nearly paid off (45:55-46:00).
• Spending habits:
  • Inconsistent budgeting, reliance on apps like Rocket Money, lots of spending on groceries (“the twins eat a lot of berries!”), dining out, books, and personal care.
• Budget blind spot:
  • Hosts note $15,000/mo in stated expenses vs. $20,000/mo in net pay, with missing dollars—Jonah & Caroline unable to precisely track where money goes (24:05-30:25).
  • Quote:
    • “At your income, you’re not budgeting out of scarcity, but now it’s about responsibility... You skipped some steps because of how the career works, but you can’t skip those steps.” — Brian Preston (27:37-29:51)

4. Employer Benefits: An Exceptional 401(k) Plan

• 18% non-elective employer contribution for pilots (21:02-21:20).
• Currently contributing 7% themselves, maximizing HSA, and plan to utilize market-based cash balance once limits are hit (21:35-22:26).
• Discussion of after-tax contributions and mega backdoor Roth strategies specific to airline industry plans (40:45-41:04).

5. Savings Rate & The Path to Wealth

• Current savings rate: Only 8% of gross income (27:40-29:51).
• Hosts challenge them to hit 25%, not counting employer match due to high income and industry risk (48:26-49:19).
• Why not count employer match?
  • “If you make over $200k, you can’t just count on the employer. That’s a responsibility issue.” — Brian Preston (52:31-53:06).
• Illustrative projections:
  • 25% savings puts them on a path to a $4.7M portfolio by age 45, $13.3M by 55, and potentially $34M+ by 65 (49:19-50:23).
  • Factoring employer, portfolio could hit $55M—but must not become complacent.
  • “You’re rich, but you’re not wealthy. There’s a huge difference... and it ought to scare you.” — Brian Preston (32:46-33:22).

6. Actionable Advice & Homework

• Track spending, budget together monthly, and clarify life goals.
• Clean up IRAs to enable backdoor Roth (41:04-41:13, 47:20-47:46).
• Rebuild emergency fund to $66,000 (46:00-46:38).
• Automate savings into brokerage & kids’ accounts after foundations are set (37:57-38:45, 55:07-55:20).
• Life insurance and wills: “He has it through work, but he needs additional term insurance...and a will to designate guardians for their children.” (44:09-44:53).
• Don’t succumb to lifestyle creep—discipline will bring true flexibility and options.

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Notable Quotes & Memorable Moments

• On chasing the American Dream too fast:

  • “We’ve been influenced to say, go buy a house as fast as you can, because that’s what successful people do. But y’all are proof that if you just hadn’t made that error, it doesn’t get into 401k loans...” — Bo Hanson (18:04-19:19).

• On budgeting at high income:

  • “Most people don’t need to be told to budget at half a million dollars a year, but you probably do—because it’s about responsibility, not scarcity.” — Brian Preston (27:37-29:51).

• On risk and taking control:

  • “You have a big income, but not a big net worth... you’re rich, but not wealthy. And it ought to scare you because if the music stops, it could all be gone.” — Brian Preston (32:46-33:22).

• On automating and fixing the plan:

  • “We need to utilize the tools the way that’s going to help us. 2026 is our year to get ourselves right because I feel like we’re playing with dynamite. We have the tools, we need the plan.” — Jonah (38:40).

• Hosts on discipline as the growth catalyst:

  • “They certainly have time, they have margin based on what they earn... what’s missing is discipline.” — Brian Preston (44:09-44:15).

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Timestamps for Important Segments

• [01:00-02:50] Jonah’s early career and meeting Caroline
• [05:00-06:32] Family, income, and net worth snapshot
• [12:47-19:55] The $75k home-buying mistake and lessons learned
• [20:51-23:14] 401k plan overview & HSA strategy
• [24:05-30:25] Budgeting struggles and tracking blindspots
• [32:46-33:22] “Rich, but not wealthy”—the importance of discipline
• [36:37-38:45] Car leases and automating children’s savings
• [40:45-41:13] The homework: planning, budgeting, and tackling account structure
• [44:09-46:38] Insurance, wills, and emergency fund targets
• [48:26-53:06] Projected future net worth, savings targets, and employer contributions
• [54:34-55:20] The next 5 years, 529s, and achieving “do it all” family goals

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Conclusion

Jonah and Caroline are a high-earning young family who made a classic real estate mistake early in their journey but are primed for rapid wealth building—if they shift from a “rich” mindset to a “wealthy,” disciplined one. The Money Guy team provides a clear blueprint: establish a budget, automate savings, maximize unique employer benefits without counting on them, and put structures in place (insurance, wills, backdoor Roths) to protect and multiply their assets. With discipline, their earning power can set up generations, and the next five years will be crucial as they build momentum, flexibility, and true security for a life by design.

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Summary prepared by AI Podcast Summarizer
Episode Length: ~56 min, ALL main content included above (ads, intro/outro skipped)

Transcript

[Brian Preston]

This episode is brought to you by indeed. Stop waiting around for the perfect candidate. Instead, use Indeed sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate. C. According to Indeed data, Sponsored Jobs have four times more applicants than non sponsored jobs. So go build your dream team today with Indeed. Get a $75 sponsored job credit@ Indeed.com podcast. Terms and conditions apply. You have all of the opportunity in the world. You are literally at the front of your journey where what you're going to be able to accomplish financially is going to be amazing if you do the things that you have to do early on to set yourself up for that. You guys have been young, and you've been able to make less than ideal choices with large sums of money. The good news is if you can rein that in and if you can fix that and you can right the ship, then the future looks bright.

[Jonah]

I used to. To fly out of Smyrna.

[Brian Preston]

Okay.

[Jonah]

And so I stayed in the area a little bit, and our. The guy that we flew lives here in Franklin.

[Brian Preston]

Oh, and so you were flying private out of Smyrna?

[Jonah]

Yeah.

[Brian Preston]

Got it, got it, got it.

[Jonah]

And is the guy that you flew

[Brian Preston]

a name that we would know? Yeah. Yeah. That's awesome. Good for you. That's super fun. So you. Did you do that before you went commercial? Before you.

[Jonah]

I did.

[Brian Preston]

Awesome.

[Jonah]

I got crazy lucky in how it worked out. I was kind of like a hanger rat.

[Brian Preston]

Okay.

[Jonah]

So I would go over to the. To the private side of the hangers, and just if there was a door open, I'd go in and start talking. And so a guy that I had met there and a little bit of connection with a guy that I went through flight school with.

[Brian Preston]

Okay.

[Jonah]

And he linked me up with the. The guy that had all these contracts. And so I just. I got so busy, I had to leave school and I went back and finished.

[Bo Hanson]

Finished. Okay.

[Brian Preston]

And so how long did you do that for? And then what was. How did you transition from that to commercial? Like, walk us through the. Walk us through the career history.

[Jonah]

So a year and a half. So I went to flight school for just about 12 months. In that time is when I met Caroline. And at flight school. While I was at flight school.

[Brian Preston]

Were you in flight school too?

[Caroline]

No. So we're originally from Texas.

[Brian Preston]

Okay.

[Caroline]

Jonah went to flight school in Oklahoma. So I flew down.

[Jonah]

Yeah, I flew down to Conroe. Flew down to Conroe for one of my lessons. So Tulsa to Conroe. Is like maybe a three and a half hour flight and a little 172.

[Caroline]

Okay.

[Jonah]

And that's assessing

[Brian Preston]

a little 172, obviously.

[Caroline]

Small ones.

[Jonah]

Okay. Yeah. And so I met up with some. Some old friends, and they brought Caroline along. They asked. They said, can we bring our friend Caroline along? And I was like, yeah, all right.

[Brian Preston]

Sure.

[Bo Hanson]

Cool. Was it a down low? Like they were going to try to set y' all up, or was it.

[Jonah]

No, there's actually a messier side to it that one of her friends was really into me, but I was not into her. And I made it very clear that we never hang out, like, solo because I didn't want to get the wrong ideas. And so they brought Caroline along and we hit it off. And it was long distance.

[Brian Preston]

Great for the whole friend group. Right. Like, that worked out real well.

[Caroline]

What happened? Happened?

[Jonah]

Not really.

[Bo Hanson]

Yeah.

[Caroline]

We actually went to high school. All four years together.

[Jonah]

Yeah.

[Caroline]

Had no clue about when.

[Jonah]

Didn't come on.

[Bo Hanson]

One of y' all knew who the other one was.

[Brian Preston]

You said y' all from Texas, right?

[Caroline]

Yeah.

[Brian Preston]

In Texas, they got them high schools

[Bo Hanson]

that are like, oh, how big are y'? All? How big was your high school?

[Caroline]

My graduating class was like 900.

[Bo Hanson]

Oh, wow.

[Brian Preston]

A little bit different.

[Bo Hanson]

Whoa. I thought I had a big class with like 230, but y' all had 900. One class.

[Caroline]

Who's in one of those big cities?

[Bo Hanson]

Wow.

[Brian Preston]

All right, so. So you meet, you're flying private, and then. Okay, walk us through. So you meet, you guys fall in love. How long before you met, got married? Walk. What was the timeline?

[Jonah]

We met. We met in January of 2016. We got married in November of 2016, moved quick, rock and roll. And she moved up. So it was the. Our whole dating scene was long distance, but I came from an airline family, so I was non revving. Going from Tulsa to. To Houston fairly regularly, at least once a month, if not a couple times a month. Just fly home on the weekend and come hang out.

[Brian Preston]

So obviously, 10 years this year. Happy tenure. What a way to celebrate by coming on, making winner.

[Bo Hanson]

That's awesome. So you were 19 years old when all this went down.

[Brian Preston]

He just did the math. He's like, wait, that's why I'm good at tens.

[Bo Hanson]

I can do tens. Just add a zero.

[Brian Preston]

Okay, so obviously you're a pilot. What about you walk us through, Give us your little. Your career backstory in history.

[Caroline]

So 2017, I started an early child education, stayed with preschool and pre K. And that was pretty much it.

[Brian Preston]

I love it.

[Caroline]

I enjoyed the small ones. I enjoyed teaching them. That's pretty much what I did.

[Bo Hanson]

Well, I think I saw a picture. You all have some small ones?

[Caroline]

We do.

[Brian Preston]

There we go.

[Bo Hanson]

I was like, not only do you like teaching small ones, but don't y'

[Brian Preston]

all have small ones?

[Caroline]

Who do? Maverick and Chloe. They're 18 months old.

[Jonah]

The twins?

[Caroline]

Yeah, the twins. They're crazy. Did I hear.

[Brian Preston]

Did I hear a Maverick in there?

[Jonah]

Maverick, let's go.

[Caroline]

That wasn't. That wasn't what it was.

[Jonah]

No, of course we have it more.

[Bo Hanson]

Fourth one's gonna be Iceman. We got the whole. We'll have the whole group covered.

[Brian Preston]

That's awesome.

[Jonah]

I did not want the name Maverick initially, but Caroline had a little boy in her class that was Maverick.

[Caroline]

Sweetest thing ever. And I just fell in love with the name. He's like, baby, they're gonna be made fun of.

[Jonah]

It's like, we can't.

[Bo Hanson]

No, it's better than Sue. It's much better than Sue. That's the name that gets you made fun of.

[Jonah]

Yeah.

[Brian Preston]

So they're 18 months old. So you stay home with the children right now. Awesome, awesome, awesome. So airline pilot and stay at home right now, 29 years old, two kids, and you guys are doing pretty good, right? You were. You were kind enough to share with us a net worth statement. So to kind of level set right now as it stands at 29 years old, you guys have a total net worth of just under about $300,000. But you got a really big shovel. Right? Right now you guys are making like $420,000.

[Bo Hanson]

You start making that like last month or. How long have you been making this type of money?

[Jonah]

From the beginning. My very first airline job was like 40,000.

[Bo Hanson]

Yeah.

[Jonah]

A year. So. So over the course of starting in 2018. So 2019 was my first full year. It was. I think with everything included was just over 40,000.

[Brian Preston]

Okay.

[Jonah]

Covid. I was. I was hustling. I was working really hard to try to get as many hours as I could because you. There's an hour requirement to upgrade to captain. That's when you can start feeling a little bit comfortable. And spending a hundred thousand dollars on school going to. Making 40,000 is a pain. Rough.

[Brian Preston]

Yeah.

[Jonah]

But when you upgrade to captain, you're looking at. Now at the time was like 90. 90, 90,000 or so.

[Brian Preston]

Okay.

[Jonah]

So I was working really hard to get my thousand hours of flight time that was required to upgrade to captain. And in that process, Covid happened. And so we actually moved back to Texas we were living in Washington. We moved back to Texas because we just weren't sure with what the industry was doing. And when we moved back, I was thinking, like, maybe move jobs, which in airlines, when you move jobs, you reset. Start back at the beginning, Start back at the beginning. It doesn't matter your experience. When you get hired, you start from ground zero. When Covid happened, I thought I had the whole goal starting flight school, that at 25 years old, I wanted to be at a major. It was a goal because it was supposed to be a little bit far fetched.

[Brian Preston]

Yeah.

[Jonah]

And. And at 25, coming into Covid and whatnot, I was like, if I make it to a major by the time I'm 30, that'll be good.

[Bo Hanson]

Yeah.

[Jonah]

Well, after Covid, they did a whole bunch of early retirements. So then the airlines needed people really, really bad.

[Brian Preston]

So you make captain in December 21st, that's like comp around 90,000. So start at 40, get to captain comp at 90. Okay, get us from 90 now to over 400.

[Jonah]

Yeah. So again, they needed people really bad. So they were hiring, hiring, hiring. I got hired by my current airline June of 22, and I only spent a year and a half as a first officer before I was able to upgrade to captain. Wow, that's nearly unheard of. It just happened. I just put my. My bid in to upgrade to captain in Seattle, where we live.

[Caroline]

Yeah.

[Jonah]

I didn't want to take any. Any other base because I didn't want to commute and I didn't want to be stuck in a position where I'm commuting for a long time when the music stops. And I was surprised. I'll be honest with you. I was surprised when it happened. It just, it got down to my seniority and they said, you're going to class. And here I was.

[Caroline]

Yeah, it was back to back. It was so. And then we found out we were pregnant, which was like huge because it's like, that's a lot, you know, and it's just like all these things just started falling into place.

[Bo Hanson]

Yeah. So how long have you been over 250,000? Was it really the last two and a half years, three years?

[Jonah]

Pretty much 24. 24. January of 24.

[Bo Hanson]

So 18. 18. We're in the. We're still within the first two years of making over. Yeah. That's incredible.

[Brian Preston]

So as we sit here today, obviously 29 years old, you guys are in a great spot. What are the questions you have or what are the things that you're trying to Think through as you navigate path forward. What brought you on making money today?

[Caroline]

Like, mainly having a plan.

[Jonah]

Yeah.

[Brian Preston]

So do you feel like you have a plan currently? What is your plan currently?

[Caroline]

Yeah, that's where we have like an action. Like we were talking about it earlier. It's like we're putting money in places, but it's like, what are we.

[Jonah]

I used the analogy this morning while we were at breakfast that I feel like if we were to set out of Franklin and fly or start walking west, we're eventually going to get to California. But there's maybe not. That's not the most efficient way to get. The most efficient way to get there. And we're really fortunate. Our 401k contribution is insane, but I

[Bo Hanson]

feel like, oh, we're familiar. I feel like we have quite a few clients that work for this airline too.

[Jonah]

Yeah. And we feel so fortunate. And I'm told nearly daily when I'm flying with guys I've flown in my career, I've flown with two people younger than me in the entire time that I've been doing it. And so every guy that I'm flying with, usually, not always, but 40% of the times, military guys, and they're like, man, you're set up like you're going to be so good in retirement. And going back to the analogy of going west, eventually we'll make it to, to California, but there's, there's got to be planning along the way. And, and I feel like we don't have a plan really. And so we have these automated functions of the, of the retirement. And then I put in some. And, and everybody says, you're going to be good, you're going to be good. And I just, and I, I feel that I see that and I do the numbers and whatnot. It's like, yeah, that looks good, but I still don't, I don't, I don't know. I don't have a plan.

[Brian Preston]

So I want to hear a little bit about. Because you said, hey, we're, we're putting money in places in a moment. I want to know about the, the places that you are putting your money currently. But I do have some questions on the net worth because there are some things that we saw in there that were a little unique to us. You know, obviously you bought a home and like a lot of homeowners, interest rates are not the same now that they were a number of years ago. So your mortgage is at 7.125%, which historically fairly high. Right. Like, it's not Ideal. But then I see some other stuff on here, and I see a line on here that I can't make make sense with what I know about you so far.

[Bo Hanson]

Well, it's almost like you're like, okay, let's just go on a tour of debt and let's. Let's just. You know, I want to make sure that we turn over every rock that we possibly can. The student loans. Okay, I can get that. I understand where that came from.

[Brian Preston]

And 4.2 to 4.8 at 29 does not frighten me. Does not concern me.

[Bo Hanson]

Medical. I mean, we're going to get to the bottom of that. And I'd at least like. I don't know why y' all didn't pay it off, but I see it 0%. So. Okay, there's probably some financial mutant, bad fooish type mentality that, hey, we should just keep this because it's 0%. But then the 1. It's almost like you're walking down the street on this journey. You said if you walk west. So on your journey, there was a hole and it was titled 401k loan, and you happened to step into it and you're like, oh, my gosh, I fell into a 401k loan.

[Jonah]

Yeah.

[Bo Hanson]

Seriously, how did you end up with a 401k loan?

[Jonah]

In 23, we bought our first house.

[Bo Hanson]

Okay.

[Jonah]

And we bought this house in a beautiful neighborhood. It was just over 1500 square feet. It was our half of the duplex and little house.

[Bo Hanson]

Hacking real estate.

[Jonah]

Well, I wish, but we only bought our side of the.

[Brian Preston]

You bought half of a duplex?

[Jonah]

Correct.

[Brian Preston]

Most. Most people who buy duplexes buy the whole thing. I just want to make sure that.

[Jonah]

Okay, I think they called them.

[Brian Preston]

He heard us say house hack. Buy a duplex. He was like, I did. I bought.

[Bo Hanson]

I bought mine.

[Brian Preston]

I bought my.

[Jonah]

Okay, we closed on that house. September of 23, found out that I got the upgrade to Captain November of 23. This house was. Was a good house within our. Within our means then. And I always go back to. It's like, I know people have done more kids in smaller places, but we were feeling. When the kids start crawling and whatnot, we were like, man, we feel really cramped here. And I mean, it was.

[Bo Hanson]

You said it was 1500 square feet.

[Jonah]

1500 square feet. And there was no yard. So we were in the process of. Okay, we need to. We need to list this house. Problem is, we bought it in 23 with a 7.625 interest rate and probably more than what it was worth. So when we went to sell it, it just sat there.

[Caroline]

Yeah.

[Jonah]

And sat there. We had.

[Bo Hanson]

Some people typically want to buy the whole duplex. They don't want to buy half of the duplex.

[Jonah]

Right. So we started. We shouldn't have. But we started looking at other houses. And of course, we'd go from our 1500 square foot and we go look at these other houses and we're like, we can stretch our elbows and there's a backyard. There's swing sets for the kids. There's. There's a yard. Right. And I know they say that, like, just wait longer and there's gonna be another perfect fit. But this house just spoke to us. So we bought that one without selling the. The old one. And I didn't know how long that was gonna take to sell the old one. So the 401k loan came out back because my mentality was cash was king at the time. So just liquid cash to be able to weather the storm between buying this new house and selling the old one in case we had to go rent it, which would not have worked out because our mortgage was like 4600 with all things included. And comps for 4600.

[Brian Preston]

For half a duplex.

[Jonah]

For half a. Half a duplex. Wow. And it was. I mean, we bought it for 530. We ended up selling it for 1500 square feet. Yeah.

[Bo Hanson]

Wow.

[Jonah]

We ended up selling it for 497.

[Bo Hanson]

Okay.

[Jonah]

So we took a pretty big hit.

[Brian Preston]

So you didn't actually need the money from the 401k loan. You took it out as a mechanism to have liquidity.

[Jonah]

Yeah.

[Brian Preston]

And this was in 23.

[Jonah]

We bought that. That first house in 23. And we bought our. Our current house in September last year.

[Brian Preston]

Okay. So September of 25. And so that's when you originated this 401k loan.

[Jonah]

Yeah.

[Brian Preston]

It makes sense because I think you probably borrowed $50,000. And yet here we are a number of months past that, and you still owe about 49,000 on this.

[Bo Hanson]

Can we. Because I just. When did you discover our content?

[Jonah]

About that time.

[Bo Hanson]

Okay. Because where I'm looking, I always try to look and figure out where things gonna raw.

[Jonah]

Sure.

[Bo Hanson]

If you go to moneyguy.com resources, we have our home buying checklist. And the first thing. Because, look, housing is a hot mess right now. And you know, that's why one of the first questions is, can you be in this house for the next five to seven years? Because that's going to give you the ability to process if you Overpaid for the house. That's okay. Because time will heal all wounds and make it better. And it doesn't get you in this weird situation where exactly what happened to you guys? Life changes. And you're like, oh, my God, this house doesn't fit our needs. So that's the only thing. And I'm not. We're gonna pick up. Believe me. I told Beau before we came in here, I can't wait to kind of, in a fun way, ask y' all some questions about some stuff I saw. But that's one that I just. I didn't plan on that being something, but it was just like, man, how much heartache would it have saved you if you'd have just not bought that first house? Absolutely. Because you would have thought with a five to seven year mindset and quickly realize, hey, maybe 1500 square feet with two kids, this isn't gonna work for five years. So we better. Maybe we should just rent. It sucks to rent, but let's do it.

[Caroline]

Buying the first house, when we were going into it, that was obviously the first place we ever bought. And so we were renting a house at the time, we were like, okay, should we eat rice and beans and save? Like, you know? But then that convo comes into place where it's like, okay, but can we do this right now? Are we gonna be okay doing this right now? And I think that's where we struggle. It's like, you can have them exactly. To do it. Does that mean we should?

[Bo Hanson]

And achievers. I pick on achievers. My financial mutants are definitely achievers, you guys. I mean, I already can see all the hallmarks of somebody who's trying to just do the things like you've set goals for yourself by this. I want to be 25 and so forth. When you force these decisions, because it's what you perceive what success is asking of you. It creates unit. It's errors. It really is. It's unforced errors that really set you back from your long term of when you discover and get the wisdom from going through life. And that's the thing. I just want to make people. Because I don't want the next person who watches this making a millionaire because we have been brainwashed is too strong of a word, but we've definitely been influenced to say, go buy a house as fast as you possibly can, because that's what successful people do. That's what the American dream is. But y' all are proof that if you just not made that error, it doesn't get into 401k loans. It doesn't. Because you guys are gonna be fine. I'm just picking on you only because I know we'll be able to get you a solution on this. But it is a great educational moment for the next achiever that comes behind you, that doesn't fall into that mental trap of, let me get through all these life things as fast as possible.

[Jonah]

Absolutely. And that's what I thought. I thought, you know, a lot of my friends from flight school moved to other parts of the country and they were buying houses, but they were buying $200,000 houses.

[Bo Hanson]

Right.

[Jonah]

And I was just under the impression. Impression growing up. And like, you know, you've made it when you bought a house.

[Bo Hanson]

Yeah.

[Jonah]

And Caroline and I have talked about that so many times and I did the number one time and about threw up because of how much money we lost on, on that house. And I mean, probably like $75,000 altogether between money that we had to.

[Brian Preston]

In your mid-20s. Right. There's a substantial cost, we think about the long term opportunity cost of that.

[Jonah]

Absolutely.

[Brian Preston]

On your 401k, right now, you have it listed at $192,000. I'm assuming that's inclusive of the 401k loan. So of that 192,000, 49,000 that's represented by the 401k loan.

[Jonah]

No. So it would be up. I think right now it's like 208. And so when I pay back that 401k loan, it'll. It'll push it up to 50,000, essentially.

[Brian Preston]

Got it.

[Jonah]

Okay. It doesn't include.

[Brian Preston]

It's netted out.

[Bo Hanson]

Perfect.

[Brian Preston]

Okay, great. So you said, hey, we're putting our money in some places. Why don't you walk us through. Here's what we're currently putting our money and I want to talk about from a savings standpoint first and then we'll talk about from a spending standpoint.

[Bo Hanson]

Fair.

[Caroline]

Yeah.

[Brian Preston]

Awesome. Walk us through how you're saving presently and then tell us a little bit. You said the company matches or the company contribution. Super, super generous for those that don't know. Kind of walk us through what that looks like.

[Jonah]

So pretty much with all airlines, all major airlines, our contracts are about the same and they put in a non elective 18%.

[Bo Hanson]

Y' all heard that, right? I knew the number already, but I was, I was waiting for 18% non elective, meaning no matter what you do. 18%. Now, you said you've been following our stuff. Your income's over 250,000 are y' all supposed to count that as your part of your savings rate?

[Jonah]

No.

[Bo Hanson]

Okay, we'll get to that in a minute. I just want to put a bookmark though, because. But that's amazing. Nobody. I mean, 18%. And by the way, it's not like they're paying you small wages. I mean, that's pretty powerful stuff.

[Jonah]

Yeah. So 18% of that goes into the 401. Um, and then when it gets maxed out between, I put in 7%. So in total they're 25%. That reaches the 415 limit. The maximum of 70. Well, this year, 72,000. And then recently they started that market based cash balance for us. So once you reach the maximum, then they start contributing the rest of it to the market. Base cash balance.

[Bo Hanson]

Pretty sweet.

[Jonah]

Very much. I didn't even. I didn't know until I was putting together the documents. I never looked at that number and I was surprised that there was already 22,000.

[Bo Hanson]

Oh.

[Brian Preston]

There was even more to it. It's wild, but keep going.

[Jonah]

Yeah. So. So 7% to your 401k, 7% to the 401.

[Brian Preston]

Pre tax contributions, I'm assuming.

[Jonah]

Pre tax. Yeah, pre tax. Then we max out our hsa and then really it's just been putting money into the emergency fund and that has. There's been so much cash movement over the last six months. Right before we bought the second house, there was a little over 80,000 in there.

[Brian Preston]

I'm going to repeat to you what I heard you say. Put 7% in my 401k and I max out my HSA.

[Bo Hanson]

Right.

[Brian Preston]

So I got 24,5 going into my 401k. Another was it 8750. Is that the number this year? Something like that going into the hsa?

[Jonah]

Yeah.

[Brian Preston]

Right. Let me ask you this question. If we were to ask you, where are you in the. Both of y' all listen to the show. Both of y' all familiar with our stuff that we talk about. You're a huge fan is what I'm hearing.

[Caroline]

Big fan.

[Brian Preston]

We have this, we have this framework called the financial order of Operations. It's this idea of where should your next dollar go?

[Bo Hanson]

There's literally a book that details that really walks through it.

[Brian Preston]

If we were to ask you where you think you are in the financial order of operations, what would your answer be?

[Jonah]

High interest debt.

[Brian Preston]

Three. Okay, awesome. You're in step three. Because one of the things I think is interesting, you have a bunch of cash sitting on the sidelines right now. I'm assuming you said that's the nomenclature uses. I'm putting that towards the emergency fund.

[Caroline]

Yeah.

[Brian Preston]

Walk us through from the four of you guys. What does it cost to keep the household running every month? Like, what's your month over month burn rate?

[Jonah]

We have not been good about budgeting.

[Caroline]

Yeah, we're not. I mean, like, I feel embarrassed. Say, like, even you asked me that. It's like crickets. Because I don't. I know it's not a good thing, but I truly don't. But it's like, I know we're in a good spot, but it's. I know enough to recognize, like, what we spend over time.

[Bo Hanson]

When I saw this, I felt like these numbers that showed up on this budget, I was like, it's this. This felt like somebody was asked, like, the IRS audited you, and you're quickly trying to backdate receipts and try to figure out how you can make the numbers show up. Because it was just. It didn't look like somebody who's actually tracking expenses. So how did. How did these numbers come to be.

[Jonah]

So I use rocket money.

[Bo Hanson]

Okay.

[Jonah]

While I'm going through there, I. It fluctuates so drastically through the months. And so I went through and I looked at, like, for example, groceries, and I saw $1,800 a month for groceries. And then other months, it's $1,000.

[Bo Hanson]

Right.

[Jonah]

And so I went to the higher end because I like that as far as groceries go, like, our babies eat just loads of berries, and berries get expensive. But, you know, it's.

[Bo Hanson]

It's.

[Jonah]

It's. So I'm looking at the.

[Bo Hanson]

I mean, when I looked at that

[Brian Preston]

groceries is a lot of berries.

[Bo Hanson]

1800 of berries. I was like, when I was talking

[Brian Preston]

about 1800 of berries is a lot of berries.

[Bo Hanson]

A lot of berries. Talk. Talk to me about. Because there's a few things on here that stood out. I mean, the. The dining out to what. What. Give me how that number came to be. Is that also just rocket money?

[Jonah]

A lot of that has. Yeah, it's rocket money. A lot of that has to do with when I'm out on trips. I don't. I don't package my meals to go with me. And then we kind of get on to the. The Uber eats realm.

[Brian Preston]

And so doordash and Uber Eats, huh?

[Jonah]

Yeah.

[Bo Hanson]

And how about the personal care and entertainment?

[Jonah]

Personal care. A lot of. Well, not a lot of. But therapies. Counseling. Yeah.

[Bo Hanson]

Okay.

[Jonah]

For Caroline. And then I kind of just mixed together that with, like, getting Caroline's hair done or my hair is pretty cheap. But that, and then I think also Caroline likes to use like, books or buy books on her phone. So we budgeted, I think 300 or 400, 450amonth on buying books online.

[Bo Hanson]

Are you reading all these books?

[Caroline]

Yeah.

[Bo Hanson]

Okay.

[Brian Preston]

You just buying them?

[Bo Hanson]

Well, no, I mean, but I just think of all the.

[Caroline]

I've got some new things now. Being a stay at home mom, I'm like, what other things do I have that I can do?

[Bo Hanson]

It's a lot of books.

[Jonah]

Yeah.

[Brian Preston]

Here's the cold water. There's nothing wrong with spending money the way that you. I think a lot of people expect when they sit down with financial advisors, it's going to be, don't spend, don't spend, don't spend, don't spend. Our goal is never to tell someone, hey, don't spend money. If you want to spend eighteen hundred dollars a month on berries, that's totally fine. If you want to spend money on books or hair care, we're never going to fight someone on what they spend money on or even how much they spend. I mean, a lot of people are going to watch like, oh my gosh, they spend $15,000 a month. That's okay. So long is you're not doing that first and not taking care of the stuff that you should be taking care of first.

[Bo Hanson]

Exactly. You gotta pay yourself first because right

[Brian Preston]

now you guys are at an 8% savings rate. Right? That's the math. I did 24, 5 plus HSA. Based on your income, you have all of the opportunity in the world. Right. Like, you were literally at the front of your journey where what you're going to be able to accomplish financially is going to be amazing. If you do the things that you have to do early on to set yourself up for that. You guys have been in the unique position. You have a huge shovel. You make substantially more than the median income here in America. And what that affords you is the ability to be a little bit sloppy with how you make your decisions. What happens, though? And we see this time and time again. We'll see someone who comes in and their potential client, and they reach out and they say, hey, I'm thinking about retirement. I'm ready to retire. And we'll look at their account statement. Okay, man, you've got a million dollars saved up. That's great. A million dollars. How much do you spend a month? And, oh, well, we spend 15,000amonth, 20,000. Well, how much do you make? Oh, we make 400, 500. Wait, wait, you've been making that much money for that long and all you have to show for it is this. That's getting the priorities way out of whack. And so when I see two young people sitting here with all the opportunity in the world, but a little sloppy, it makes me think, okay, it's time to recalibrate. A lot of times we tell people, hey, you got a budget? A lot of folks have to budget out of scarcity. There's just not enough money to be able to do the things that I need to be able to do. So I got to create a budget to stay inside that. At your income level, you guys are no longer operating from a scarcity perspective, but now you have to operate from a responsibility perspective. We have this big income and it's going to be crazy because most of the times you don't have to tell someone who makes almost half a million dollars a year, hey, you got a budget. But you guys probably do need to put some of that work in to figure out where is my money going and how much of my money should be going there. Because it doesn't sound to me that in the last 10 years you guys have developed that muscle memory to be able to move into the place where you can be on a cash management plan. You guys, you were afforded the opportunity to skip some steps because of how the career works, but that doesn't mean that you can skip those steps. Does that make sense?

[Caroline]

Yeah.

[Bo Hanson]

Well, I think this is an incomplete is. What if I was grading your budget because $15,000 times 12, that's 180 grand a year. You're basically saving 30 grand if you didn't, if you took out the employer side. So you add those two, that's $210,000. Your income's 420. What's your net per month after all this? What is your pay stub that comes in per month?

[Brian Preston]

On average?

[Jonah]

Yeah, on average I budget off 20,000. It's oftentimes.

[Bo Hanson]

But is that what hits in your, your, your account?

[Jonah]

Yeah.

[Bo Hanson]

So choice. So you got 240. So there's still, even off that math there's a, there's 30 grand that, that's just missing from, from these numbers. And we're trying to get you to somewhere around $100,000 a year. That which by the way, that, let's just absorb that. 29 year olds that can save 100 grand a year. And a lot of people like, wow, why put such a high goal on there? The thing I worry about for you guys, I'm old enough that I've Seen where airlines get themselves in some troubles and, you know, things are good as long as they're good. But there can we can. The economy can be cruel and all of a sudden what seems like can go on forever, the music stops. And that's what worries me at Yalls age is that you're basing your entire success off of a promise for these contributions from an employer in the future. And that's great. What I would prefer we all ought to have our Dave Grohl moment. If you're wondering what I'm talking about is Dave Grohl was in not only Nirvana, but he was also Foo Fighters. And him and his father had a weird relationship. But he said the best thing his dad ever told him was when you get that first paycheck, you treat it like this is the. It's never. It's not going to keep going like this. And I wish when I worked with all these professional athletes and others who had huge money coming in while they were very young, I needed somebody to give them that moment too, is because you have a responsibility to get it right in the beginning. So then, you know, if you do this long enough, 5 years, 7 years, 10 years, you reach a critical mass where your assets get big. You can kind of then take a breathe in deep and go, you know what? I guess this system that is so lucrative and pay is going to stay together longer than I thought. But you can then do it out of a place of abundance and flexibility versus, you know, because nobody knows how long their career is going to be. And I think you have to have a scarcity mindset until it actually lasts. Because in a lot of ways, your income coming in this big, this young and so lucrative, you need to be a little nervous of it because you have a big income, you don't have a big net worth. So you're rich, but you're not wealthy. And there's a huge difference. And it ought to scare you because there's one thing to come from not having money then becoming rich, meaning you have a big strong income. But if all of a sudden the music stopped and now you have. It's worse because now you have a wife, you have two children, you know, are counting on this, and you go back to being poor because you didn't make good, you know, decisions with it. There's a weight that should be with that. And I worry because, I mean, you're not the first person I've seen this. I remember back where my hometown was. I remember I got a prospect and he was A very prominent attorney in the community. I was so excited. This guy wanted to be a prospect

[Brian Preston]

because he was a. He was a known entity.

[Bo Hanson]

Known entity making really good money. Really good money. And then I remember when he sent me his, you know, and by the way, he came to me, he wasn't a young person at this point. And I was like, oh, how do

[Brian Preston]

you not have more say?

[Bo Hanson]

Yeah. I mean, it makes me sad for people when I see them come to me in their 40s when they've made 400 plus thousand dollars for decades and then they don't even have a million bucks saved up. You're like, what are you doing? Now, I know you would have, assuming this employer keeps dumping money in there, but that's a big assumption. And I just. And that's why I took away everybody. I went in the comments section. Why does this guy not let people count the employer match? And I was like, well, because when you make over 200 grand a year, you're counting on somebody else when you shouldn't have to. And you ought to carry that responsibility because it's exactly what Bo said earlier is that what stinks is if you don't pay attention to this margin, you're going to wake up one day and you're going to be like, where's our money going? We're supposed to. Because you're going to hire a financial planner and they're going to say the same, what do you spend a month? And you're going to say, I spend 15 grand. Malarkey. You don't spend 15 grand. We can show you definitively based upon just backing into what you pay in taxes and what's coming out net. There's more coming out and you just don't have a grasp on it right now. And I'm not trying to be harsh, it's just. But I just get so excited for somebody in yalls age and yalls income. Do something because y' all can. You get. You get it all. You get to do memories, you get to do awesome things with the kids, and you get to, at the end of the rainbow, get this pot of gold. That's not something that's given. Believe me. Your comment section's gonna be like, these people got everything. And I know that y' all have your own struggle too, but I'm just telling you that I want you to be energized when you leave here to actually save and build this wealth.

[Caroline]

Yeah, it's really nice to have you guys say something and to, like, help us be aware you know, because we only talk to each other about it, you know. So thank you.

[Bo Hanson]

Now, now, Bo, by the way, I talked to Bo this morning. He goes, oh no, Brian, you've over prepared, you've got mindsets. He goes, give these people a break because they're 29 years old.

[Brian Preston]

They're 29. And that's why a lot of us, again, a lot of people are afforded the opportunity that we're young and they make bad choices. They make bad choices with small sums of money. You guys have been young and you've been able to make less than ideal choices with large sums of money. The good news is if you can rein that in and if you can fix that and you can right the ship, then the future looks bright. I mean I'm, I think mandatory retirement age for most airlines is age 65. Do you see yourself likely flying all the way out until age 65?

[Jonah]

I do.

[Brian Preston]

You do? Okay. Because a lot of folks say, hey, if I'm really doing this well at 29, there's a good chance that by the time I get to 40s, 50s, I might decide I want to do something else. Well, those sorts, that sort of flexibility and those sort of options are only available if you make the decisions now. And right now, you guys riding the ship will not require a lot of hard decisions. It'll require a lot of discipline but easy decisions. The longer you wait to fix that, the more difficult the decisions become to get the ship righted. Does that make sense?

[Jonah]

Yeah, absolutely.

[Brian Preston]

Walk me through just one last question I had. As we're looking at your expenses, you have a Telluride lease and a Tesla lease. Those are actual leases, not auto payments.

[Jonah]

They're leases, okay? So I thought, well, instead of these negative equities and whatnot, which we haven't ever rolled in any negative, instead of

[Brian Preston]

having any equity at all, let's

[Bo Hanson]

negative equity, but we'll just pay rent for forever.

[Jonah]

At the time I thought it was a good idea. Since listening to Yalls content, I have realized very quickly that that's not a good idea. The Tesla, I enjoy it, but I don't think I'll keep it at the end of the lease. The Telluride, we will. So the plan is to pay cash for it at the end of the lease.

[Bo Hanson]

I would be curious because this does bring back to the goal number one of having a plan. If we could go back and look at the net worth statement. Because I want to give you guys an opportunity. Because when I was looking at this it caught me off guard. A little bit. I see a brokerage account with $3,900 in it, because I was like, man, at this level of income, there probably should be setting up automatic savings not only into the retirement accounts, but probably into that after tax brokerage account. But then I see the kids savings accounts also. They're right at 1,000 bucks.

[Jonah]

Yeah. So the child's savings accounts, that's something that just auto pulls 100 bucks a month.

[Brian Preston]

I like that.

[Jonah]

And then the brokerage was also. I was doing $500 a paycheck into the brokerage until the whole house situation. So to go back to the audit, I really want to automate because I think that's going to take the process of moving out of it. And it just. It happens. That was a. That's a big goal for us for 2026. We said 2026 is our year to get ourselves right. Because I feel like we're playing with. With dynamite because it's. We have the tools.

[Bo Hanson]

Sure.

[Jonah]

We need to utilize the tools the way that it's going to help us.

[Brian Preston]

I love it. All right, I've got some homework for you guys. You ready? Obviously, we're going to go back to the drawing board, and we're going to put together a plan. And I'm already so excited because we know enough because we are familiar with your employer and we know how the benefits work. And so I'm super excited. But I do think there's some work that you guys ought to do. Number one together, collectively. Because when I ask you, hey, what do you spend a month? You're like, it's crickets. I'm like, ah, it's totally okay if one of you is the finance person and the other one is not the finance person. But in these early stages, it does matter that you're on the same page. While you may not be in the app and you may not be coding transactions, you guys should have a monthly come together where you're like, hey, how'd last month look? And y' all should be on the same page about that. So I think you should both get on the same page about budgeting. Both get on the same page about tracking, figuring out where your money's going. One of the things that we're going to do for you and you guys can go and start this work is we're going to re triage the financial order of operations. If the goal for our next dollar is to figure out where we are in the food. Okay, if I'm in this step, what do I need to do today to move through this step and then onto the next one and then onto the next one and then onto the next one. So we're going to do some of that work for you and we're going to put a timeline based on what we know to be true for you guys. There are also some opportunities you're missing out on that we didn't even really get a chance to talk about. But we'll put in the plan. You have a rollover IRA with $1400 and all that thing is doing there is just being real annoying and preventing you from doing backdoor Roth contributions. So we're going to talk about opportunity that might exist there. Your employer also has a really unique thing where not only can you do pre tax contributions or Roth contributions, you can also do after tax contributions. And there's a really unique thing about your employer where if you do those after tax contributions and you fill up your 415 limit, you don't crowd out the employer. So the homework I want you to do is read a little bit on the pilot forum around the strategies that are involved there because there's some really exciting stuff that you can be doing. And the big thing is I think you guys should sit down and talk about, okay, what do we want our future to look like? Right now we're making decisions that make today look good and enjoy today, but we want to make sure we're sacrificing all of tomorrow for enjoying today. How do we strike that balance and carry the responsibility of this big shovel really, really well so that we can give ourselves future flexibility and options?

[Bo Hanson]

I find myself sitting here because I couldn't. I was like, brian, put the calculator down. Is because, I mean, I sit there. What's going to be frustrating for you guys and you have to promise me you'll just finish the drill because we. It's going to take us a few months to get you fixed is because immediately I can go. I'm just going ahead and laying out some, some just call them like shadows of what will be coming or foreshadowing. We're going to be, you have to boost up your emergency reserves. We're going to be able to tackle some of this debt. So it's just going to be frustrating to me because I see such an opportunity with the mega backdoor Roth. I see some opportunities where let's start loading up this Roth accounts. Let's even start doing something for the kids. But we're not gonna be able to do any of that for a number of months, because we're gonna just hold, you know, just hold until you see the whites of their eyes. Because we have to get through unwinding some of these other decisions first. And that's gonna be somewhat frustrating because with your level of income, we're going to want to go rip out of the starting line, and we can't. We have to go back and do remedial stuff to fix the bones of your financial situation. So hang in there with us. We'll have a plan for you. And then what I look forward, though, is that, man, oh, man, we get you on the right path with this thing. It really is going to be automatic for the people at that point, because this thing's just going to start growing, and you're going to wake up one day and be like, how did we get here? And you're gonna have all the flexibility and opportunity of the world.

[Jonah]

Awesome. Very good.

[Brian Preston]

Any final questions for us before we get to work?

[Jonah]

No, the only thing I do, I'm expecting another $20,000 check that I didn't have in the next few days.

[Bo Hanson]

Well, that's why the order of operations is gonna be so helpful for you, because it's things like that.

[Brian Preston]

We can already tell you what we're

[Bo Hanson]

doing this process up. You'll know what to do with your next dollar.

[Jonah]

Yeah.

[Bo Hanson]

So it's not going to be like, well, what are we going to do with that $20,000? It showed. No, we'll. We'll have a place. You're like, oh, yeah, that just cut off. Think of that. Maybe that sped it up two months for us. And that's going to be really cool. From. From the implementation or triaging of your financial life.

[Jonah]

Awesome. Very awesome.

[Brian Preston]

All right, we're going to get to work.

[Caroline]

Awesome, guys.

[Brian Preston]

Brian, what a fantastic conversation with Joan and Caroline.

[Bo Hanson]

Yeah, I loved it. I mean, how often do you have somebody come to you in their late 20s, just crushing it with the income potential? It's not potential. It's what they've actually have making over $400,000 a year. The only thing that kind of. There's a few things that. That I did want to kind of full stop on. First of all, they've only their investment assets are about half of where their income, and they're about to cross into 30. We got to get that up. We'll cover more on that.

[Brian Preston]

The income has come along lately. The income is true the whole time. Because I do want to say that, you know, we talk about wealth creation and the three ingredients. Right. They've Certainly got time on their side at 29. It certainly seems like there should be a lot of margin based on the shovel. So I think the, the one that we need to tweak and the one that we need to sort of maybe double down on is the discipline. That's where I think they need to really focus their attention right now.

[Bo Hanson]

I did we get. We got a few updates that I want to make sure that we bring the audience up on the journey with us. You know, they have twins, baby twins. We found out. You know, look, Jonah has life insurance through work, but we think that he ought to go buy more term life insurance outside of work, and especially while young, healthy. And term insurance is going to be cheap, going to be able to do that. So we can level set and bring that up to a much better way. And then we also found they don't have wills yet, which is a big

[Brian Preston]

thing that needs to change.

[Bo Hanson]

We've got to make sure all parents who watch this content, look, even if you think that the money will take care of itself, whether it's through beneficiary designations or something else like that, if you want to know who's going to take care of your kids, make sure it's stated in a legal document. And that's what a will is going to help cover that.

[Brian Preston]

And the good news is, when you have young kids, it doesn't have to be overly complicated. You just get it in place. You pay whatever the cost is for the documents. You kind of set it and forget it until it's time to revisit. So it's just a box that they ought to check. So once they knock out the life insurance, get the wills in place, then we can start focusing on the fun stuff. And what we really wanted to figure out is, okay, how much margin do they actually have to work with? And so as we kind of went back and forth thinking about their budget, they said that realistically they could live on about $11,000 a month. The income that he has coming in after taxes was $22,000 a month. So we have 22 coming in and 11 crazy. That means that we have $11,000 a month that we get to do something exciting now.

[Bo Hanson]

We immediately were like, good, we're gonna finally be able to get rid of that crazy 401k loan. But once again, we have another update that we found out. We reached out to them after the show recorded. We found out they had a big tax refund as well, as they did take some of our cash reserves. I don't know If I exactly love that, love it.

[Brian Preston]

Get rid of that 401.

[Bo Hanson]

They were able to completely wipe out the 401k loan. It's gone.

[Brian Preston]

So now that that's gone, that would be the high interest debt. It's satisfied. Now we get to continue moving along in the financial order of operations. And one of the things that you just said is they ended up taking some out of their emergency fund in order to be able to satisfy that 401k loan. So in my opinion, I think what they need to do is they got to build back up the emergency fund. They got to get back to a fully funded. Since he is the primary income earner and since it is a large income, I'm going to argue that they need six months of living expenses inside of liquid cash available. So if we know that it cost them $11,000 a month to live, they need at least $66,000 to have a fully funded emergency fund.

[Bo Hanson]

And based upon what's kind of leftover, that's here's the crazy part with the big shovel, probably a little over four months right at it, they're going to knock it out. That's like a hiccup more than anything.

[Brian Preston]

So once they get there, once they knock out the emergency fund, now we get to start saving. Now we get to start building for the future. And just because they're young and just because they have a high income and just because they have a lot of opportunity doesn't mean that the food doesn't apply. I love that even in their situation, we get to begin talking through the financial order of operations and it still applies even to someone in their situation.

[Bo Hanson]

Well, this is the part, you know, where I get excited because I don't want to just have only retirement assets like 401k. How about step number five now let

[Brian Preston]

me tax free accounts.

[Bo Hanson]

And we found out Caroline, you know, we could do a spousal Roth IRA immediately for her if we through doing a backdoor conversion process.

[Brian Preston]

That's right.

[Bo Hanson]

It would be really powerful. And then he, because he has a great 401k, we work with a lot of the pilots that work at the airline he works at. They have a great 401k that's got index funds, low costs. So we could roll his IRA up into that 401k and then he too could do backdoor Roth contributions.

[Brian Preston]

That's exactly right. As soon as he cleans up his account structure, he can put in $7,500 and do a backdoor Roth and then she can put in 7,500. Do a backdoor Roth. They've already noted they're doing the health savings account. So when they're maxing that out, that's another 8,750. Once they've done that, they've checked off step five of the financial order of operations. Now he gets to go to step six, and step six is now maxing out his 401k. Remember, the rules just increased to where now you can do 24,500. What's interesting is even when he maxes out at 24,500 and maxes out his Roth and maxes out her Roth and does the HSA, there's still only an 11 and a half percent savings rate.

[Bo Hanson]

Right.

[Brian Preston]

They've not even hit the 25%. So if we want to then kind of fill in the blank, fill in the gap in order to hit a 25% savings rate, we think that in an after tax regular brokerage account, they ought to start saving $4,730 a month. And that would get them to a 25% savings rate.

[Bo Hanson]

And I want them to be at 25% because I know a lot of people think the easy button is take advantage because the employer is loading it up. But we've been around the block for a while, and I think to just assume that you're gonna be able to get 18% from your employer forever is. And maybe it will, maybe it works out. But when you're so young, with such a big income, I think you take that responsibility serious and you front end, load it with your own money, and that way you're pleasantly surprised. You can always. It's easier to come off the gas than it is to try to catch it up later on, just assuming everything's gonna be okay just because of the employer.

[Brian Preston]

What I think is amazing is that if they can begin doing this and they can really exercise this discipline muscle. So starting now at age 29, look at what happens. If they can start. Right now, they have $240,000 saved, but saving 25% of his gross income about $100,000 a year. By the time they get to 45, their portfolio is worth over $4.7 million by 55.13.3. And this is astounding. By the time they get to 65, if nothing else, change. And they just stayed in this current trajectory, assuming that they made a 9% rate of return based on their age, $34 million retirement.

[Bo Hanson]

Now, look, before I start shaking, because that's such a huge sum of money, we do need to kind of ground it in the fact that part of this is because they're so young. I mean, these are people who are in their twenties. Inflation will have an impact. That's why we did bring this back to present value. Of what? The purchasing power. I thought it was interesting. At 45, they're going to have the potential to not even count. The employer portion cost. 120 grand a year.

[Brian Preston]

$10,000 a month.

[Bo Hanson]

$10,000 a month. 55, close to a quarter of a million dollars. Age 65, a little less than half a million dollars in a day's purchasing power. So that's the part that's exciting to me. Yes, there's numbers, but I think it's hard to know when you go in 20, 30 years in the future, we don't know what these numbers really will be. And that's why you have to be careful. But looking at the purchasing power and the cash flow, that's. That's really exciting.

[Brian Preston]

Now, you have already alluded to this. This does ignore. This does not pay attention to the fact that he does work for an incredibly generous employer. That employer is doing a huge match. And so if we look at the numbers and we factor in the employer match, not only is he saving 25%, but then you get the 18% for the employer. Well, now you can see the numbers get even more astronomical. By 45, the portfolio could be worth $7.5 million. By 55, over 21 million. And then by 65, almost $55 million. And so one of the questions that somebody would probably say, well, guys, well, why on earth are you projecting a 50 million? Surely he doesn't need to be saving at this clip. Surely they could back down. And the answer may be that they could, but not yet. Because I want to remind you, even though this projection shows that they are on the path for a $55 million portfolio as it stands right now, right now, today they have 240,000. $240,000 today is not $55 million.

[Bo Hanson]

Tomorrow, even one times income.

[Brian Preston]

That's not. They need to begin progressing on this journey. And then as they do that, they may arrive at a conclusion that, okay, maybe we can do some other stuff. Maybe we can back down our savings rate or maybe we can take advantage of the mega backdoor Roth. We're, we can start really front end loading the Roth dollars. We're building up to the 401k, but I think they have to get a little bit further down the line before they get to start making those kinds of assessments.

[Bo Hanson]

Well, that's what. Because we do work with a lot of pilots from this airline. There's a lot of them. We race to get the money into the 401k. Yep. Because you have found, you know, we've discovered the cash balance plan that they get to. It's amazing.

[Brian Preston]

Even if you crowd out the employer, you still get the money. It's insane.

[Bo Hanson]

But I do think it's. We need to come back and remind everybody because a lot of people watching this might go, well, wait a minute. When do I know if I get to count my employer match or not? Remember, if you, if you're a married couple, it's over $200,000. If you have that type of income, we don't want you counting the employer match. And the reason is, is because with that type of income, there's a great responsibility. It's because you are beyond the social safety net of Social Security and beyond. You're beyond the Pension Benefit Guarantee Corporation and all that it can do for you. Your benefit is so much that we just want to make sure that you're being responsible with that big shovel.

[Brian Preston]

Now, Jonah and Carolina are a prime example of someone who right now I think that they just need sort of a simple plan to move them along the path. But they, they are rapidly going to get to the place to where life becomes more complicated and they might not know what they might not know. And they're going to be prime candidates for folks that potentially should take their relationship to the next level, should figure out how to get a personal plan built for them. But we just said, hey, let's think of an example of something that could likely happen for them. Like maybe they want to do a coast fire thing and he has a high enough income that they could even do like a coast fire that turns into fat fire. So it's like coast fat fine fire. Potentially, if they were to do that, we said, okay, what if they just save aggressively 25% until age 45, and then at age 45, maybe they pull off the savings and they just let the employer match continue to fall into the portfolio. Even at that level, by 45, again, saving that 25%, they get to that $7.5 million. But then if they're able to just coast from that point, that 7.5 turns into 19 million by 55 with the employer match and still has the ability to turn into $48 million by retirement, which if you back it into today's dollars, could create an income of over $600,000 a year. They are Going to be in the driver's seat, where they get to choose what they want their life to look like. Assuming they get further down the path. They're just not quite there yet.

[Bo Hanson]

Yeah, I mean, before we let these, you know, illustrations amp it up too much, I still want to focus. The next five years are important. That's right, man. But here's the good news. They are going to be able to. Because I know they had a big goal of. They wanted to make sure that they could fund the kids, 529s and other things. You know, for a lot of people, that's. That's a. You have to defer it because we have to make sure you put on your oxygen mask before you can start funding. They're going to be able to do it all. And that's. That's a really powerful and exciting, you know, planning thing that we're gonna be able to do for them. We don't have to say, hey, be the bad guys. Don't save for the kids, college. They can actually do it all.

[Brian Preston]

I'm so excited that they came on. Let us take a peek behind their finances, and, man, they have a bright future. I'm so excited to see what they end up doing and where they are 3, 5, 10 years in the future.

[Bo Hanson]

Yeah. And this is. I mean, like I said, they're in their 20s, so when you run illustrations, because there's so much time, they get big. I get excited because people with this type of income, this much potential, you've already alluded to it, but this is what for financial planning clients. I love these annual meetings because instead of this being a projection where we run it for 5, 10, 15 years in the future, we actually get to spot check this every year, reshape the direction. It's powerful and it's fun. This is why it's kind of like every year. My own. Do you know your home renovation tour, Financial edition? That's what we're, you know, we get to do with people like Jonah and Caroline, and I just thank them for coming on. Bo, if others want to come on Making a Millionaire, what do they need to do to check it out?

[Brian Preston]

Yeah. If you'd like to be a guest on Making a Millionaire, you can go to moneyguy.com or if you want to check out any of our free resources, any of our free tools, go to moneyguy.com resources, guys, I'm your host, Brian,

[Bo Hanson]

joined by Mr. Bo Moneyguy team out.

[Brian Preston]

Making a Millionaire is hosted by Brian Preston and Bo Hanson. Brian and BO are partners at Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the Security's 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 or endorsement of Abound Wealth Management.