We Catch MAJOR Pitfalls in This Doctor's DIY Portfolio | Making a Millionaire

Summary

Money Guy Show: Episode Summary – "We Catch MAJOR Pitfalls in This Doctor's DIY Portfolio"

Release Date: April 14, 2025

Hosts: Brian Preston and Bo Hanson
Guests: Chuck (Anesthesiologist) and Margo (Psychologist)

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1. Introduction of Guests

In this episode of the Money Guy Show, hosts Brian Preston and Bo Hanson welcome Chuck and Margo, a dynamic couple in their early 30s. Chuck is an anesthesiologist, while Margo is a psychologist. Together, they navigate the complexities of building wealth while managing their professional careers and family life.

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2. Financial Background and Upbringing

Chuck's Financial Childhood: Chuck shares his upbringing, highlighting his father's influence and financial principles.

• Quote [03:50]: Chuck states, "One of the principles he always taught me was, like, when you go to work someday, or when you wake up in the morning, you want to be happy."
  Despite growing up in a low-middle-class environment, Chuck faced financial insecurities from an early age, relying heavily on loans during his extensive education.

Margo's Financial Childhood: Margo contrasts Chuck's experience with her more privileged background.

• Quote [07:04]: Margo explains, "I was extremely fortunate. From an upper middle class family, had grandparents who had done very well and were able to finance all of their grandchildren's education."
  This financial support alleviated the burden of student loans, allowing Margo to value work ethic without the stress of debt.

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3. Current Financial Situation

Net Worth and Assets: Chuck and Margo have built a commendable net worth of over $550,000 in their early 30s, comprising cash reserves, savings accounts, I bonds, retirement accounts, and investments.

• Quote [13:37]: Bo Hanson remarks, "So you do have an emergency fund for your child that has, like, $1300 in there."

Debt Management: Chuck has significantly reduced his student loan debt from an initial $307,000 to $54,000, benefiting from federal policies that currently offer zero percent interest. Additionally, they hold a mortgage with a favorable 3.88% interest rate.

• Quote [19:07]: Chuck mentions, "It was nothing." regarding the interest rate on his student loans.

Investments: They utilize a mix of Roth IRAs, 401(k)s, solo 401(k)s, and brokerage accounts. An angel investment in a family business has already yielded substantial returns, demonstrating effective financial decision-making.

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4. Financial Goals and Priorities

Primary Objectives:

• Work-Life Balance: Striving to enjoy life without being overwhelmed by financial stress.

• Financial Independence: Aiming for financial independence within 15 years, targeting an annual income of approximately $200,000.

• Education Savings: Planning for their child's future education through a 529 plan.

• Generosity: Intent on gifting and charitable contributions.

• Quote [28:33]: Chuck articulates, "Break it down into things. Like, really, it's like, we just want to enjoy life."

Lifestyle Aspirations: They plan to travel extensively, with upcoming trips to Europe, and envision a comfortable retirement where they can continue to enjoy life without financial constraints.

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5. Hosts' Analysis and Recommendations

Optimizing Savings and Investments: Brian and Bo commend Chuck and Margo on their disciplined saving habits but identify areas for optimization to accelerate wealth accumulation.

• Quote [43:30]: Brian Preston uses a barbecue analogy, "You have to keep the temperature low. And then you have to give them enough time that they break down the fat and turn it into this awesome piece of meat."
  This analogy underscores the importance of allowing investments to grow over time rather than aggressively paying down debt, which may hinder long-term growth.

Emergency Fund Enhancement: The hosts suggest increasing their cash reserves from $40,000 to $60,000 to cover six months of living expenses, providing a buffer against unforeseen financial setbacks.

• Quote [42:02]: "Your emergency fund should probably be higher than it is now."

Mega Backdoor Roth Contributions: They advise maximizing after-tax 401(k) contributions and converting them to Roth IRAs to capitalize on tax-free growth, emphasizing the substantial long-term benefits of such strategies.

• Quote [44:54]: Bo Hanson explains, "If you were to contribute to that, that then gives you an opportunity to convert those dollars or do an in-service rollover of 19,000 into a Roth IRA."

Asset Allocation Adjustments: The hosts recommend reallocating investment assets, particularly proposing that Chuck and Margo should place higher-growth assets in their Roth accounts to maximize tax-advantaged growth, rather than holding lower-yield fixed income assets there.

• Quote [60:07]: Brian Preston points out, "So these are all holdings that you hold inside your portfolio. And we're not suggesting that you should not hold any one of these holdings. What we are suggesting is that if you're thinking about optimization, distributed where you put them matters."

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6. Psychological Aspects and Managing Financial Anxiety

Chuck's Financial Insecurities: Chuck expresses ongoing anxiety related to financial security, a residual effect of his upbringing and extensive student debt.

• Quote [04:49]: Chuck confides, "I always had this, like, I really need to figure out what I want to do. I want to figure out what I want to do, but I also want to make good money."

Margo's Observations: Margo observes Chuck's internal conflict between debt repayment and investment growth, noting his tendency to agonize over even minor financial decisions.

• Quote [37:12]: Margo describes Chuck's behavior, "He agonizes over every purchase. So like at the end of the day he will buy the thing or get the thing."

Hosts' Recommendations for Emotional Balance: Brian and Bo emphasize the importance of aligning financial strategies with personal well-being to prevent burnout and regret. They suggest annual net worth reviews and reaffirming long-term life goals to mitigate anxiety.

• Quote [81:46]: Bo Hanson advises, "Review a net worth statement every single year together...and clearly articulating what your short-term goals are."
• Quote [85:14]: Brian Preston highlights, "Jump into your future self to make sure that you don't have regrets because money's just a tool."

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7. Conclusion and Final Advice

Strategic Homework Assignments: Brian and Bo assign actionable steps for Chuck and Margo to enhance their financial strategy, including increasing their emergency fund, reassessing asset locations, optimizing their savings plan, and defining both short-term and long-term goals.

• Quote [92:28]: Bo Hanson summarizes the homework, "Increase your emergency fund, revisit asset location, rework your savings strategy..."

Encouragement and Positive Outlook: The hosts commend the couple's current financial standing and encourage them to continue optimizing their strategies to ensure a prosperous and fulfilling future.

• Quote [94:05]: Brian Preston concludes, "Chuck, Margo, y'all have been awesome. This has been a blast...can't wait to hear the updates as y'all reach more and more success."

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Key Takeaways

• Balance Debt Repayment with Investments: While eliminating debt is crucial, allowing investments to grow can significantly enhance long-term wealth.

• Optimize Tax-Advantaged Accounts: Utilize strategies like mega backdoor Roth contributions to maximize tax-free growth in retirement accounts.

• Enhance Emergency Funds: Maintaining a robust cash reserve provides financial security and peace of mind.

• Align Financial Goals with Personal Well-Being: Regularly assess and align financial strategies with life goals to prevent anxiety and ensure a fulfilling life.

• Annual Financial Reviews: Conduct yearly net worth assessments and goal-setting sessions to stay on track and adapt to changing circumstances.

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Final Note: This episode serves as an insightful guide for professionals like Chuck and Margo, highlighting the importance of strategic financial planning, emotional balance, and continual optimization to navigate the path to financial independence and a fulfilling life.

Transcript

[Brian Preston]

This episode is brought to you by Lifelock. It's tax season and we're all a bit tired of numbers, but here's one.

[Bo Hanson]

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[Brian Preston]

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[Chuck]

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[Brian Preston]

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[Margo]

This episode is brought to you by principles. Are there limits to the US Government's debt growth? What will happen if the debts are not curtailed?

[Chuck]

What should policymakers or investors do? Those are urgent questions that legendary investor and New York Times best selling author Ray Dalio addresses in his new book.

[Margo]

How Countries Go the Big Cycle. The book comes out in June and.

[Chuck]

Is available for pre order today wherever books are sold.

[Bo Hanson]

Chuck and Margo have a big shovel. So you've paid down from 307,000 down to 74,000 by your early 30s.

[Chuck]

And we're at 54 now because I paid off another 20 the last. Oh my.

[Bo Hanson]

But getting through medical school gave Chuck some big blind spots. What's the interest rate on the student loans presently?

[Chuck]

Well, that's the issue. It's nothing.

[Bo Hanson]

Oh, it's zero percent. We want to show them a better way to do money and set them up for a life of abundance.

[Brian Preston]

Welcome to to Making a Millionaire where we help millionaires and millionaires in the making build their great big beautiful tomorrow. I'm your host, Brian Preston, joined by Mr. Bo Hanson.

[Bo Hanson]

That's right. We are so excited that we get to do a deep dive into the financial lives of listeners just like you. And today we have Chuck and Margot joining us. Thanks so much for hanging out with us, guys.

[Margo]

Thanks for having me.

[Chuck]

Of course we're excited.

[Bo Hanson]

Awesome. So for those of the folks out there watching who don't know you guys, give us a rundown. Who are you? What's your family situation? What do you do? Give us like the quick bio.

[Margo]

So we are. Do you want us, do you want me to talk professionally, personally? Kind of all of the.

[Bo Hanson]

How old are you? Got any kids?

[Margo]

All right.

[Bo Hanson]

What do you do for a living?

[Margo]

We are in our 30s, in our early 30s. We have a little one two and a half years old, just one kid. Yes. We live on the east coast, sort of mid Atlantic area, both of us. Chuck is a doctor, I'm a psychologist. So both did quite a bit of training in our 20s. Yes. And we were out in the Midwest for all of that and then moved back East. That's where I'm from originally. And it was in the marriage contract.

[Bo Hanson]

I love it.

[Chuck]

But no, it's been great. I mean, we have a big family out in the east coast that has been very supportive and been great to have around now that we're back on the school.

[Bo Hanson]

So y'all were both in school for, like, a million years. Is that where y'all met? Is that how y'all came together?

[Margo]

We actually met. We were both living in the D.C. area right after undergrad. So, like, I had just graduated. He was one year out. And we were both doing. It was very, very nerdy. Both doing. You're on the great place for doing research fellowships. And we were in different labs, totally different areas, but we met through friends.

[Bo Hanson]

Loving the lab. I love it.

[Brian Preston]

That's awesome.

[Bo Hanson]

Oh, that's so fun. And so you're a doctor. What kind of medicine. What kind of doctor are you?

[Chuck]

See, I'm an anesthesiologist.

[Bo Hanson]

Anesthesiologist.

[Brian Preston]

Awesome.

[Margo]

Cool, cool, cool.

[Bo Hanson]

Now, as you guys were great. You filled out a form kind of telling us a little bit about who you are and your background. It sounds like growing up as it relates to, like, money and finances, y'all had two very different backgrounds. Can you kind of walk us through what was your financial childhood like? And, like, how did that form your view of money today?

[Brian Preston]

And how does that impact yalls relationship, too?

[Chuck]

So I would say I'm the anxious out of the two of us, to say the least. And it's from my background. I mean, I grew up mostly with my father after, like, second grade and on. And we, you know, we had a great growing up. We had everything we ever really needed. But I would say, like, low middle class, but he always had a great job. And I think, you know, as soon as we were getting older, like, you know, he definitely advanced in the financial world and started doing really well. One of the principles he always taught me was, like, when you go to work someday, or when you wake up in the morning, you want to be happy.

[Bo Hanson]

Yeah.

[Chuck]

And so, like, I always had this kind of pounded. He was never, like, the happiest guy in the world to go to work.

[Bo Hanson]

And he's saying, not as I do. Right.

[Chuck]

Yeah. And so, like, I always had this, like, I really need to figure out what I want to do. I want to figure out what I want to do, but I also want to make good money.

[Bo Hanson]

Yeah.

[Chuck]

And that's not why I ended up in medicine. Like, I never went to medicine to make money. I just am a nerd. So that's how I ended up in medicine.

[Bo Hanson]

She laughed a little too hard.

[Chuck]

Yeah, but. Yeah, I. I don't know why, but my childhood created a lot of insecurities, and I still have a ton of insecurities.

[Bo Hanson]

Were there traumatic events that you went through as a kid or. It just is.

[Brian Preston]

It was just scarcity and doing without.

[Bo Hanson]

I don't know.

[Chuck]

I mean, because I. To me, it wasn't like, I didn't feel like we had scare. Like a scarcity mindset, but I. For some reason, I just always had this, like, insecurity, and I don't. I don't know why, to be honest.

[Brian Preston]

Like, what do you mean when you say insecurity? I'm trying to figure out, is this, like, fear of. Like you're too conservative with things or fear that there's not gonna be enough money or fear what? What? Lean didn't tell me what the. The fear is.

[Chuck]

Yeah, like, fear of not having enough money.

[Brian Preston]

Okay.

[Chuck]

And so I think. And I mean, it probably started, you know, I always got a few handshakes here and there for my parents in regards to, like, a couple hundred dollars when I was in college. But I pretty much went through college by all private loans or private or federal loans. I worked in the summer and, like, to go into medicine, you had to do research, so therefore you made no money in the summer. But I would survive on, like, $3,000 for the whole year of college.

[Brian Preston]

Wow.

[Chuck]

You know what I mean? And so I was always, like, great.

[Bo Hanson]

When you could actually do that.

[Brian Preston]

I think it's incredible to say. I mean, it was not only driven by fear, but it was necessity to get you through that period. Because when I was reading your notes, you pretty much were on your own post high school, and you've been to school forever. We all know school's not cheap. So, I mean, I can understand some of the mental things that we're going to hopefully help you unpack, but there was a time and a place that. That probably offered a lot of value, and you reaching the goal that you've accomplished, it's pretty cool in some ways. I know adversity, you know, is not desired, but there are times, you know, I've shared that I started my first business after my father passed away, and that was a horrible thing, but I got this clarity of trauma. Growing up with scarcity sometimes can create a superpower. Now we got to unpack it because it's not healthy. If it stays that way forever. But I love that you shared.

[Bo Hanson]

Licks his eyebrows smiling okay, so what about your background? What was your financial background with money like?

[Margo]

Yeah, so we had pretty different upbringings when it comes to finances. I would say I was extremely fortunate. Not that you weren't, but from an upper middle class family, had grandparents who had done very well and were able to finance all of their grandchildren's education.

[Bo Hanson]

Oh wow, that's.

[Margo]

Yeah. Which like took just a huge burden off of my parents generation. Not to say that I wouldn't have been able to go to the schools that I went to, but you know, didn't have that same burden of loans and things like that. Because my education was paid for, I always had a job. Like in starting in high school, I was a lifeguard. Like you know, I always worked, but I. But it was more working because that was a value in my family rather than necessarily like a necessity.

[Bo Hanson]

Trying to have money to pay bills.

[Margo]

Yeah, exactly. And so when I worked, that money was all for me. Like I got to use that money how I wanted to. I would say we talked very little about money growing up. To this day, I have no idea what my dad made or makes my dad in a lot of ways, interestingly, even though he came also from a very comfortable background, has much more of a similar mindset to Chuck. Sometimes in my family there's like a little inside joke about their similar tendencies on some of these things.

[Brian Preston]

I know your parents didn't talk to you about money, but did you feel like your parents talked to each other? Was there good communication between your parents on what they had and did not? Or did you feel like money wasn't even shared that much there either?

[Margo]

Yeah, it wasn't really shared that much either, I think. I mean my mom tells this story and if she watches this, if my parents watch this, they might get us.

[Brian Preston]

Well clean it up to where you don't. We don't mess up Thanksgiving. I still think the share could be very beneficial because this stuff in relationships.

[Margo]

Love you guys, but my mom like tells this story that she, she one time opened up a bank account because I forget why. Oh, because she felt like my dad was like micromanaging her. My dad was like, he's very. He gets very anxious about finances and she always felt like he made her feel like we didn't like she would spend and there wasn't enough. Even though that absolutely was not pain.

[Bo Hanson]

There was plenty of pace.

[Margo]

It was, yeah, we were fine. And she was like, okay, well I'm just Gonna open my own account so that, like, I don't have you micromanaging me. And apparently that went over quite poorly. And so she closed the account. But yeah, it's interesting. My dad, like, even though we've, thank God, like, always been very comfortable like, there, I grew up with him having that anxiety. But it. And I think as an adult, I've not, like, completely boomeranged the other way.

[Bo Hanson]

But, like, you don't have that same level of anxiety. So as you guys got married and started a relationship together, was there friction there that you came from different backgrounds? Or even when you think about, like, the childhood you're trying to create for your two and a half year old, like, which childhood do you want to emulate? Do you want more of your childhood or more of your childhood?

[Margo]

I mean, I think that, like, our core values align really well, so. So we really haven't had friction around it. We've been able to kind of navigate it together. And I think we have pretty good communication about finances. I think we also just balance each other pretty well. And it's kind of. Yeah, like, he has some really strong strengths and some not as strong areas of growth we'll call them. And I have some really strong strengths and some significant areas of growth for growth. Yes. But they happen to fit really well together.

[Chuck]

We, like, literally mesh about everything in life very easily. In finances, even though, like, I'm very anxious, like, expensive purchases, for instance, she knows I'm not going to pull the trigger, right. And she'll just literally sit there and tell me to buy it.

[Bo Hanson]

I love it because she knows you probably need that. Like, you need someone to kind of coach you along in that.

[Brian Preston]

I want to. I want to get a pull out a little bit more because you said you do y'all communicate well about finances. Give it. Tell us a little bit about that because we talk about all the time. Going over annual net worth statements and other things. What tools do y'all use to communicate money back and forth to each other.

[Margo]

Every, like, six months or so? He's like, so I think we should do like, a little finance date night.

[Chuck]

I love it.

[Brian Preston]

I love it.

[Bo Hanson]

It's a favorite kind of date night.

[Margo]

I would say it happens 50% of the time, so probably we're talking once a year. But I don't know. You've made me do, like, kinder questions before and not made me.

[Chuck]

I think we've also had, like, so like, when I came across the kinder questions, it was like one of those, like, aha. Things to Me where it was like, how do we want to live life? And we've had a couple hiccups along the way and every time we have a hiccup, we go back to the kinder questions and like, create a goal or. Our goals for the year are short term, long term.

[Brian Preston]

And how do you feel after those meetings?

[Margo]

Good. I'm always glad when, when we've done them. I mean, the other thing is like, like he said before we started, he's been really interested in finance. And so, like, we talk about it casually a lot. Like, he'll share with me what he's learning about different things. He'll like, take courses. And then like almost every night when we're just like hanging out and watching tv, like I'm watching some trash reality show on Netflix. And he's like doing our finances, dropping information. So we're communicating about it frequently on a less formal basis too. That's great.

[Brian Preston]

That's great.

[Bo Hanson]

Well, it sounds like you guys do mesh really well. And obviously thus far in life you've been able to do pretty solid. I mean, you said you're in your early 30s, you both have fantastic jobs, but you've done a great job of building and accumulating assets. You guys were kind enough to share with us a net worth statement. We thought it'd be valuable just kind of look at, okay, where are you guys today to sort of level set for the audience. And what you can see is right now your total net worth is a little over $550,000, which is amazing for a couple in their early 30s. You currently have in cash about $60,000 or so, about 37,000 in savings accounts and another 21, $22,000 in I bonds. What made you do I bonds? Where'd that come from?

[Chuck]

So this is my first year out of residency and I. And I had like really a surplus of cash. And I bonds were like, this is.

[Brian Preston]

Back when that whole arbitrage, everybody was trying to get the 9 to 10% of the I bonds.

[Chuck]

It was kind of my emergent two year investment to where I knew it'd be good for at least two years. And if I needed it in two years, I'd pull it out. So that's where that came from. So it's actually part of, it's mine, part of it's our son's, you know.

[Bo Hanson]

Okay, okay. How much of it is like earmarked for your son?

[Chuck]

Just half and half.

[Brian Preston]

Okay.

[Chuck]

I mean, like, I mean it's liquid.

[Brian Preston]

I'm always the old man on the front porch that picks on things. And Bo and I had a little debate on this because he was generous and let you put that under cash. I don't. Yeah, I don't really consider that cash. I think that savings. And that's why it did surprise me because Yalls income is very strong. Now to your defense. And I even made Megan, one of our producers, go behind the scenes and do the math to check it because I was like, there's no way they're living off of that. But you are very. That is three months bare bones of expenses. Right. The savings account.

[Chuck]

I consider our. You know, there's different platforms of having emergency cash. And so I look at it as like our taxable account is also.

[Brian Preston]

No. That's an access to cash.

[Chuck]

But I'm saying. I'm just. No, I'm just saying is like, if I really am burning for, like, if. If we came into this crazy emergency, like, that's my. That's my mindset, you know.

[Brian Preston]

Can I be honest? My stomach dropped a little bit.

[Chuck]

I'm sorry.

[Brian Preston]

I don't know. You know, I wrote a book, Millionaire Mission.

[Chuck]

Haven't read it yet.

[Brian Preston]

And in there, financial mutants all make this mistake. I made this mistake. This is why I know it's a trap. And I get worried for everybody out there that thinks if I just have a brokerage account, I can always get access to that. But I always. When it rains, it pours. Meaning bad things happen in groups. Is that now you're a doctor. So hopefully we're always. I don't hope we need doctors, but it's a reality. We'll need doctors. But a lot of times your real estate value will go down, your stock market value will go down, and the job market will get crushed. And it will happen all at the same time. There's not diversification when it comes to crisis cash. I know it's not sexy. I know it's not one of those things that gets people excited that you're having this money sitting over here because you as a mutant, think that I can maximize. But it's just. Don't fall into that trap because when. When you go underwater in the emergency, you're going to crave oxygen. Just. And that's what your cash reserves are. They are the oxygen you breathe. We all take it for granted while we're above water, but as soon as you go under, it is priceless. It really is.

[Chuck]

That's good advice. And we've sadly already had to. Like last year, had a dip into the whole thing. Almost Right.

[Bo Hanson]

So quickly you can. Because, yeah, you can liquidate those assets. And especially if something bad happens and you do see the brokerage account go down. So you have about, depending on how you count it, somewhere between 40 to 60 thousand dollars in cash. And then you both are doing great in terms of how you're accumulating retirement assets. Margo, your Roth has just under about $60,000 in it. Chuck, yours has at sick. Right. At 60,000. Two, you have a 403B that you're participating in. Chuck, that you have about $10,000 in. I'm assuming. Is that a new account?

[Chuck]

That was just residency.

[Bo Hanson]

That was just residency. That's an old account that's just kind of hanging out. All right, your 401k, Chuck, has about $168,000 in it. Margo, you have a solo 401k with about 56,000. And then you guys do have an after tax brokerage account with about 20 to $222,000 in there. So just one thing about the three tax buckets. You guys are doing a great job. Right. It's almost like you listen to a financial show that really encourages building up tax locations. Right. Ah, it's awesome. So we love seeing that. Obviously that's a great place to be here in your early 30s. And then you do have your primary home valued at $735,000. And then there was an angel investment of $80,000. What's that? Where'd that come from? What are the details on that?

[Chuck]

Kind of keep it superficial. It's brother in law's business.

[Bo Hanson]

Okay, so it's a family. A family business that you've.

[Margo]

Yeah.

[Bo Hanson]

Did you invest in or it's like a family business that you're just participating in or is that a loan?

[Chuck]

It's. No, it's.

[Margo]

Well, we invested, but using money that I inherited.

[Bo Hanson]

Got it.

[Margo]

Yeah.

[Brian Preston]

Awesome.

[Bo Hanson]

So it's a. It's a closely held family thing, not something you did outside. So it's kind of part of more estate planning deal going on with the family.

[Chuck]

Well, I mean, it's a big. It's a big company or business now and it pretty.

[Brian Preston]

It's growing. It's gonna pay off at some point, it sounds like.

[Chuck]

Well, it started. I mean, there's only probably. It's already paid at least likely fourfold. Likely.

[Bo Hanson]

Oh, wow.

[Margo]

Because what did we invest in?

[Chuck]

Like a little over 20.

[Margo]

Yeah.

[Brian Preston]

Oh, wow. So that's actually the value of it.

[Bo Hanson]

This is the other side of the angel investment.

[Brian Preston]

Good.

[Bo Hanson]

Good for you guys.

[Brian Preston]

Y'all are the opposite side of most, you know, family stories about loaning money or investing. It turns into a woeful tale. Yours is actually angel investment's the right.

[Bo Hanson]

Name, so we'll leave it at that.

[Brian Preston]

Yeah.

[Chuck]

Yeah.

[Bo Hanson]

All right. And then now you also have. I'm going to go through the debts first. You have a mortgage, about $670,000 owed on that, and the interest rate is 3.88, which is wonderful. That's like, a super low mortgage rate. There's a lot of people in the country right now that wishes that that was their mortgage rate. You do have student loans. Currently about $74,000 of student loans remaining.

[Brian Preston]

But. But put a pin in that. How big was that student loan? Because you were in school forever, you didn't really get financial help after high school. I can't imagine you came out of medical school with $100,000 of debt.

[Chuck]

No, it was 307.

[Bo Hanson]

Wow. So you've paid down from 307,000 down to 74,000 by your early 30s.

[Chuck]

And we're at 54 now because I paid off another 20 in the last. Oh, my.

[Bo Hanson]

All right, noted. This is meat on the bone for.

[Brian Preston]

Me, because I have some. I mean, try to. I'm going to try to encourage you on it. You're over here just going to town.

[Bo Hanson]

I mean, remind me again, crusading against.

[Brian Preston]

That debt, obviously, because I want to.

[Bo Hanson]

I want to know about that. What's the interest rate on the student loans presently?

[Chuck]

Well, that's the issue is nothing.

[Bo Hanson]

Oh, it's zero percent.

[Chuck]

So it's a federal. This is all federal. And the federal government's been in shambles for.

[Bo Hanson]

So you're paying. I just make sure. I'm going to say you're paying down zero percent interest.

[Chuck]

100%.

[Margo]

Okay.

[Bo Hanson]

Just want to make sure, like, there's zero percent interest.

[Margo]

I know. Zero.

[Bo Hanson]

Okay. Just making sure I'm getting that. Okay.

[Chuck]

And the loan. So the loan that you see there, too, like, that went towards that initial. Like, part of it went towards that in our home purchase.

[Bo Hanson]

Okay.

[Chuck]

And so, like, that's a yes.

[Brian Preston]

Okay. So I can just sense it in your face, Chuck. You know, I'm gonna pick on you about this in a little bit. Yeah, it's kind of like, you know, when I got married, I bought a set of golf clubs because I knew my wife probably wasn't gonna let me make those type of purchases. I feel like you paid down that additional 20,000 on that. That student loan because you knew I was gonna have questions, so.

[Chuck]

And Like, I don't know if you follow, but like so like three months ago, Right. They were accruing interest and so now they're not like average like a little over 5.

[Brian Preston]

Right.

[Bo Hanson]

Around 5%.

[Chuck]

So you're in the early 30s.

[Brian Preston]

And do you consider 5% high interest or low interest?

[Chuck]

No, but it's a low interest in it. Big mental burden.

[Brian Preston]

We're going to talk about that.

[Bo Hanson]

Yeah, I love it. Mental burden sometimes can be incredibly expensive. Right. And we're going to dive into that. And then also, so you said you have $150,000 outstanding loan at a 3.18% interest rate. So there's another piece of debt sitting out there.

[Brian Preston]

But that's kind of unique, isn't it?

[Chuck]

Super unique. So it's, it was really like a sign on bonus that's, it's forgivable.

[Bo Hanson]

Oh, okay.

[Chuck]

After seven years and so. And the interest rate's actually covered from the company. But I have to pay taxes on that 3.8.

[Bo Hanson]

Oh, so it's imputed.

[Brian Preston]

It's more like a golden handcuff to keep you, keep you there.

[Chuck]

It's like you're right about where I work.

[Brian Preston]

Is that taxable? Is that 150?

[Chuck]

It's taxable. 50,000 aliquot. So after five years, 56 years, another 50, then the seventh year is the five.

[Brian Preston]

But that's what's also in that taxable account. Is you just been keeping it in?

[Chuck]

No. So that's, that went right to my loans, except for like, like 115 of it went to my loans and then we used some of it for the house.

[Bo Hanson]

Okay, awesome.

[Brian Preston]

Cool. Yeah.

[Bo Hanson]

So pretty decent debt situation in terms of like what's manageable right now. When you look at the total amount of debt, you have relative total amount of assets and you do have some funds for the kids. You have about $75,000 and 529. That seems like a pretty substantial amount. How, where'd that come from?

[Margo]

So that was a gift from my parents, from my grandparents. Like it's sort of doing the same.

[Brian Preston]

Thing that was done for you. That's great.

[Bo Hanson]

Wonderful.

[Brian Preston]

And we often say, you know, from a legacy building standpoint, I always say memories over stuff. And also I think education is another thing. If you're a person that is blessed and has good resources, those are great things to kind of invest in the next generation for.

[Margo]

Yeah.

[Bo Hanson]

And so when it comes to 529s and saving for college, are you thinking that, okay, one day we'll want to be able to Pay for full education for our child. What are your thoughts on that?

[Chuck]

I think we're gonna have to. Sadly, just cause of our income limit.

[Bo Hanson]

You'Re gonna have to pay. But, like, you did not. You said you had to go out and get loans to pay for your education. Your education was paid for. You guys talked about as it relates to your kids. How do you want to navigate that?

[Margo]

We haven't totally crossed that bridge because our child is too nice. Right, right, right. I do think this is an area that, like, we've shared our preferences with each other, and it's my strong preference that we pay that. I felt like it was the biggest gift of my life that I didn't have loans around my education and that that was provided to me. And I still had a job. I still had, like, important values in terms of working hard instilled in me and, you know, still behaved in a way that was in line with those values. Like, and I think there's ways to instill those values without creating stress around debt. And correct me if I'm wrong, but my perspective is that he's more like, oh, well, like, you want him to not, like, earn his education, but want him to be the one investing in his education.

[Bo Hanson]

In the game, when it comes to education.

[Margo]

Yeah, yeah. And sort of be able to, like, teach the values of hard work with the financial piece tied to those values. Whereas, like, to me, they can be more independent.

[Chuck]

So I'm like, yeah, we haven't, like, broken it down. I know there's a couple different approaches. Like, some parents, like, say, here's a loan and, you know, make their kid feel like they're paying for it, but in the end, it's going to be forgiven, right? Yeah. For me, though, like, I would like to cover it. I mean, like, we have one child. Like, we have income where. And honestly, ideally, not to, like, rush ahead of this conversation, but, like, by the time the little guy is ready for college, I think I could be retired.

[Bo Hanson]

Yeah, you might be so independent at that point.

[Chuck]

And so, like, I could work for another couple of years to help the little guy through school or something. You know what I mean? Like, so, yeah. And who knows where our situation is going to be in a few years.

[Bo Hanson]

I love it.

[Brian Preston]

And there's still. There's a lot of Runway on that for y'all to have more communication. Figure it out. I think just naturally having that gift of paying it forward is going to do some pretty amazing things. Just because we do have a big Runway, compounding interest is going to Carry a lot of that. But we'll see if there's some way we can at least kind of find the intersection of both of Yalls desires. I did have one more question because this is a great to go over all this, but how do you all handle your money? Are y'all joint? Are y'all separate accounts? How do you. How do y'all handle that part of it? Because I didn't see. When I was looking at savings accounts, I didn't see separate savings accounts. You know, most of these retirement accounts, your government forces you to make those separate. I'm getting the feeling that you'll do everything joint.

[Chuck]

Everything's joint. And also just for protection wise, like tenants by entirety for as much as we can.

[Brian Preston]

Okay. Was there any discussion or any struggle on that? Or was that just always from the get go you knew everything was going to be joint?

[Margo]

No, we kind of always knew from the get go. I think it's been interesting because when we first met, also for my graduate training, I was paid to go to graduate school. So I have a PhD, so they paid me rather than getting them the doctors. But. And so it was interesting because when we first got together, I was like the money maker. Which is like laughable now because my income was not very high. But with that, like there was probably like for the first, you know, six years of our relationship or so. Or four. Four years of our relationship. Yeah. Like I was the one who was like financially bringing more in and then it switched. But for some reason I think that like sequence of events, it was just like, it makes financial sense for both.

[Bo Hanson]

Of us level stuff, right?

[Margo]

Yeah. To just come together.

[Brian Preston]

And by the way, for young marriages, first marriages, y'all didn't have a lot of assets coming into the marriage. I love the merging everything together because it takes the power out of the money as well. Now look, we deal with. We've been doing this long enough. We have some complex situations which sometimes facilitate and require that we legally do some separate things. But I love it when couples get to kind of look at the assets together. Because it does is you shared. You know, Margo, you made the most money in the beginning. Now we have Chuck making the most. It's nice that you are separating. I mean, everything, sharing everything. So nobody can say, say who makes the money here It's. It's looked at as joint resources for both of you. And that's. That's very healthy.

[Bo Hanson]

I did have one other question on the net worth day, but there's an emergency fund for your child that has, like, $1300 in there.

[Chuck]

Oh, no, that's not an emergency fund. That's just, like, me. Like, I just put 100 bucks a month away for the little guy.

[Bo Hanson]

Oh, for, like. Is it, like, first car? I don't even know.

[Chuck]

I just, like, just.

[Bo Hanson]

I don't know. A hundred bucks.

[Margo]

Just investing in that kid.

[Bo Hanson]

Yeah. Just pouring it out.

[Brian Preston]

I don't know.

[Chuck]

It's like when he leaves the car.

[Bo Hanson]

I don't know.

[Brian Preston]

Chuck, I've done the same thing with both my kids. Now I have two daughters. And I was always thinking this was to ward off a fight with my wife about weddings in the future.

[Chuck]

Yeah.

[Brian Preston]

Was that a hundred dollars a month didn't mean much, but it was going to turn into a large sum, and it has worked out. By the way, those accounts are big. So, you know, maybe this is what's going to help your child get their first house or. Yeah, I think it's a. That's not a bad thing.

[Chuck]

And I've also thought, like, when we're talking about, like, how do you want to set your kid up for the future?

[Bo Hanson]

Right.

[Chuck]

Like, the way she was raised or the way I was raised. I keep thinking about this, like, UGMA account or something of that sort, and that's kind of my, like, temporary. I don't know what I'm gonna do.

[Bo Hanson]

Like, you're doing that trying to figure out what you're gonna do. You're doing something until they figure out the plan.

[Brian Preston]

If that's not structured as one of those custodial accounts, you might want to consider so you can take advantage of at least the tax benefits of the. The child's lower tax rate. Because uncles go like you a lot. You have a really good income. So you and the uncle, y'all are tight. So we ought to get some separation there on those assets.

[Chuck]

Yeah.

[Bo Hanson]

All right, so we know kind of your backstory, and we did. You did a great job of kind of laying us out, laying for us out. Where you guys are today? What are your financial goals? We know where we are today. What's the ultimate thing that you guys want to work towards? Like, what are the goals that you guys sit down and discuss when you do have these super awesome financial days?

[Chuck]

Break it down into things. Like, really, it's like, we just want to enjoy life.

[Bo Hanson]

Okay.

[Chuck]

And so work, life balance is honestly, like, number one for us.

[Bo Hanson]

And so how's that now? Are you working all the time? Are you never working? How do you all balance that?

[Margo]

Presently, we're getting there. I Think we, you know, didn't finish up our training that long ago. Started in to a job. I started into a job that work life balance was not workable for me at all with a newborn. Ended up leaving that job and like pivoting into more of the private sector. And then we got just like slammed in 2024 by like a bunch of health things and like it was just a really, really tough year for us. And so I've kind of been like really up and down in terms of like what I've been able to do in terms of work, managing the baby, managing like my own self. So I definitely feel like there's room for growth for me in terms of work life balance that I feel like right now. We were just talking about this this morning actually that like the content of what I'm doing I love and also like, I don't know, I feel like maybe there's like more earning potential for me on the one hand. On the other hand, it's extremely important to me that what matters to me on a day to day basis has become very clear to me this year. And it's extremely important to me that I tick those boxes each day. And that includes things like spending time with Chuck and our son and moving my body and doing like a leisure activity and doing meaningful work. So like I'm trying to balance.

[Bo Hanson]

How do you balance all that together.

[Margo]

Figuring all of that with also like earning an income that I feel like is representative of like my education and what I have to offer. He can speak to his, but like briefly. I'll speak to his before I let him speak to his. But he found a job that has amazing work life balance and that like really like it really is. And like his hours are amazing. He is compensated really well. The one thing is that there's not that much like intellectual flexibility in the job, which gets to him because he's like the type of person whose brain is always like we have invention books in our house, like all the things.

[Bo Hanson]

Meaning it's not like it's not challenging for you. It's kind of like a clock in, clock out type thing. I'm not trying anesthesiology.

[Chuck]

I do outpatient anesthesiology. So like things happen. Like I'm not trying to like down talk being an anesthesiologist. It's a, you know, very like mind.

[Bo Hanson]

Yeah.

[Chuck]

Requires a lot of brain power throughout the day. But I like am always trying to improve things. I'm always trying to like change things, optimize. And so for me like sitting in the. Or does not allow that pathway. You know what I mean? So like I'm, that's like the one thing that I'm, I'm. I'm currently in some really cool opportunities to like, you know, with leadership and like trying to create different projects. But it's just, it's just a long process with the group I work for.

[Bo Hanson]

Yeah.

[Chuck]

Which is, I think that's part of the case everywhere. So like, yeah, the mental stimulation, I'm. That's what I'm hoping for for work. But honestly, like at this point in life, like, I'll be honest, I love work. I love my job. I could see myself working forever, but I also love so much more than work.

[Bo Hanson]

Yeah, yeah, yeah.

[Margo]

And so hobby guy.

[Chuck]

Yeah, I'm a hobby guy and my work allows that. Like I get out most days by 3:30. And so like you're up there at 7 or 6:30, but like I'm out at 3:30. I can go take care of myself or go take care of the kid or hang out with the wife. Like, I mean there's so many things that I can do and I have no call or no weekend. And so like I literally am.

[Brian Preston]

You're like, you break through all the things you hear bad about.

[Chuck]

I mean, this is insane. A doctor, I have an insane job.

[Bo Hanson]

So how do you, how do you tie a financial goal to enjoy life, have more work life balance? Is that just a matter of getting lifestyle as down as low as possible? If we can live off of $2,000 a month, then we can have all the work life balance we want. Or what's the financial connection there to being able to do that?

[Chuck]

I think it's a good question. Right? Because I think it brings up like what is your. Yeah, like down the road, like where do you want to be?

[Brian Preston]

Yeah. What's your why?

[Chuck]

Yeah, and so for me, like at this point I want to save so I can actually have financial independence. Like, I don't care about the retire early part. I just want financial independence like within 15 years. But at the same time I want to have the opportunity to guarantee setting aside this amount of money aside, but then spend freely, do things freely. Meaning, you know, we're trying to plan a trip to Europe this year for three weeks, which I already have the vacation set. So now we're just really just figuring out what we want to do.

[Bo Hanson]

Yeah.

[Chuck]

And so like that's like really step two for us is like family time, work life balance and then like really traveling. They want to start traveling.

[Bo Hanson]

Love It.

[Chuck]

And so I think creating the avenues to do that. And like, that's, and that's what. We haven't done this before. So, like, I, this is a new thing for us is like, how, how do we create, like, securement with finances from what I'm making to put it towards trips, to put it towards our goals.

[Bo Hanson]

Do you have a number, like you said, financial independence in 15 years. Have you defined what that is? Like, what is financial independence for you guys? Do you know the answer?

[Chuck]

I mean, I, I'm like, roughly shooting for like 200,000 of income annually. 200,000 of income, so roughly 5 million.

[Bo Hanson]

Got it.

[Chuck]

That's that. Yeah. But, like, obviously I'm open to be educated. That's like, that's pretty standard.

[Brian Preston]

I think most people, because you hear all the time, you know, a million is not what it used to be. Well, I'll say, well, what do you think if I ask, if I push people on, what are you really looking for? It usually falls into that 3 to 5 million. So I think you're, you're, you're in solid ground there of what people consider financially comfortable. Also, Margo, you said something, you talked about that you had some health struggles yourself. And in my brain, I immediately always like to share with people, money's just a tool. And it sounds like, you know, you had some clarity from trauma yourself. So. And that's what I always tell people. Health is wealth, too. And it's better to kind of get that education, especially with a life education, especially with your son, you get this clarity. So I just can sense that you have some peace about the fact that the money doesn't matter as much now that you get to spend the time and do these things.

[Margo]

Yeah, yeah. And I'm lucky. I enjoy the work I do. So I don't, like, I'm happy to keep working. I want to be able to. For me, I think there's a balance between setting us up for financial independence, which I know is really important to him, but also living our lives now in a way that, like, is comfortable and is in line. Like, I am not on board. I'm not on the, like, live $2,000 a month or whatever it is.

[Bo Hanson]

Like, you know, that's not the idea of financial independence. Getting that.

[Brian Preston]

No.

[Margo]

Like, we're not, like, sacrifice everything now so that, you know, we can live it up later. We're like, how can we live it up now and, and later be comfortable.

[Bo Hanson]

I love it.

[Brian Preston]

How do you feel about that, though? Because, I mean, you. I get the feeling that you're more of a scarcity embracer.

[Chuck]

Yeah.

[Brian Preston]

And it sounds like y'all live around family and you're, you're, you know, you're doing things. Do you feel like sometimes that y'all are doing too much or trying to keep up with the Joneses? How do you. Where is where? How do you feel about all this?

[Chuck]

So I think when we initially moved to the East Coast. Yes. Keep up. The jones is like real, like, and for sure. And we've, we've definitely caught up with parts of the Joneses.

[Margo]

But also when you move somewhere. Right. There are tons of costs. Sure. Like, it's just an expensive time. And we moved from a place that was less expensive to a place that's more expensive, so that doesn't help.

[Chuck]

But I mean, overall, I've kind of loosened the purse strings as long as I meet in that, like, you know, 30% gross income investment is like what our, our goal is. And so if I, if we meet that, I don't care. Like, I'll be honest. Like, I don't care where the money goes. And if it just like all of a sudden disappears, like, I.

[Bo Hanson]

That's the beautiful part about pay yourself first is you give yourself the freedom to spend after you deny your saving. I think that sounds.

[Brian Preston]

Are you a pain spender? I mean, maybe I'll ask this a Margot. Do you find that he's tight? Do you feel like he's tight or is he really letting go of the purse strings like he just said? I think don't worry. I mean, we can tell he's a great guy.

[Margo]

Yeah, no, no, I'm not worried about it, but.

[Brian Preston]

But we're trying to help him.

[Margo]

Yeah, yeah. I'm not worried about him offending him. I'm trying to think of like, how to capture him in words. He agonizes over every purchase. So like at the end of the day he will buy the thing or get the thing. And usually it's like what he said, I'll be like, buy it, buy it. But he. The like, inner turmoil that he experiences for every decision. And it can be something that's like, you know, not that 150 bucks is trivial, but like, it's not like a major. Major. Yeah. It's not a life changing amount and he just agonizes. I don't know if that answers your question.

[Brian Preston]

We talk about majoring in the miners sometimes as you and we were. Look, forever. I said I was a tight wad, but I got to a point in my life where I was like, this isn't healthy, you know? And also, I started feeling guilty that I was. This was my part of my Persona. And then once I started loosening up because the money was starting to work longer. Now, look, we're gonna get in a minute that you already said the beginning, so I don't want you to feel, like, loosen this too much.

[Chuck]

Yeah, yeah.

[Brian Preston]

But I do want to give y'all permission, is that once you do the things that are on the financial priority checklist, it should also give you permission to enjoy your money, because it's back to money's only a tool. And that's why I love creating a financial plan or a system that lets you know you're checking the box, but then you can free your mind to say, look, I'm doing everything to reach these goals, but I also know that there's going to reach a point where I can't take it with me. So we've got a balance. So we don't have regrets about that. Did we leave our. You know, did we live our 20s, our 30s, the best possible way? So we don't have regrets when we're in our 50s and 60s and we can't even do as much as we thought?

[Bo Hanson]

Yeah. So, okay, so I'm hearing these goals. Enjoy life, work, life balance, financial independence in 15 years, want to travel. What else? What other financial goals do you guys have again?

[Margo]

For me, like, education.

[Chuck]

For.

[Bo Hanson]

Education for your son.

[Margo]

Yeah.

[Chuck]

And like, down. I mean, if the opportunity arose, like, for future generations, too.

[Margo]

Yeah.

[Bo Hanson]

Okay. Potentially larger family type stuff. Right.

[Chuck]

Awesome. And I think gifting to us is important. I think I find that we spend freely. If friends are in need, if anyone's in need, we just kind of throw.

[Bo Hanson]

Money towards being able to help other people out.

[Chuck]

Yeah.

[Brian Preston]

So I think generous.

[Chuck]

Generous.

[Margo]

And I think down the line, like, more substantially, like, giving to organizations and stuff like that will be important. I love it.

[Bo Hanson]

It's interesting. I did not hear, here we go. Be debt free. Like, I didn't hear, like, hey, I'll get my student loans paid off. Hey, get out of the. Knock this stuff out. That won't.

[Brian Preston]

I love that Chuck. Chuck looks like he's. He's being held under. Whenever we talk about this stuff. Do you see his eyes cut over? Well, so.

[Chuck]

Because before today, like, I have, like, I had that planned already. Like, I guess, like, it's a four guy until I meet you guys. And then I'm like, what do I do now? So for me, it's like, I already have the year planned out. Finances. And so, like, I mean, I'm obviously, I'm open to suggestions of improvement. And to me, though, it's like, by the end of the year, my debt's gonna be gone except for the house, which to me, I'm not too worried about the house.

[Bo Hanson]

Okay.

[Brian Preston]

Can I ask you one question, though? Is opportunity cost? You know, because everything in life is an incremental decision. Do you go left? Do you go right? And, you know, and those small, small, little decisions that you don't feel like really mean much sometimes can have huge impacts. And so do you think about that at all, or is that just get the debt paid off and that's it?

[Chuck]

I mean, I do. I do. But, like, I guess if I look down the long run, if I'm saving 30% or whatever, I mean, you know, like. And I guess that's the issue, too, that I'm looking into is I. My 30 savings also included all that debt payoff. Yeah. For the year. And so I know in the long run, yes, it's gonna hurt a little bit, But I guess the question is, how much? If I'm paying off my debt in two and a half, three years.

[Bo Hanson]

What a great question. What a wonderful question. How significant? Because you were so kind. You said, I've kind of got my whole year planned out. And you kind of prepared for us, like, hey, here's my financial order of operations that I'm working through, and it was great. So we were able to look at it. Okay. Hey, I've currently got my cash covered. My emergency fund is good. I've got my three months of expenses. We're at the income level. We can't contribute to Roth directly, but we have an account structure that allows us to do backdoor Roth. So we're each doing that 7,000 and 7,000, and we're maxing out our retirements between the 401k, between the two 401ks, we have 23,500 each going into the 401k. So we're saving 47,000. There's. So that's great. Well, in addition to that, I've got this hundred bucks a month that's going. That's going into my son's account. We call it emergency fund because we didn't know what it was. But going into my son's account, and then we're gonna pay off the student loans. So $76,000 of our dollars are gonna flow into the student loans to knock them out this year. And you asked the perfect question. Well, why doesn't that make sense? Isn't getting out of debt a good thing? Isn't that noble? Is it significant? Well, we kind of in everything that we do, we like to think about optimization. How are we making the absolute best financial decisions that we can make that align with the long term goals that we have? And when I read your goals again, I hear enjoy life, have work life, balance, have financial independence. I did not hear be debt free as soon as possible, get out of these student loans. And yet you are prioritizing that as though it is like a super high goal of yours. So we thought, okay, well what if we laid out sort of what you're currently doing to build towards your goals with what we would probably recommend you change or some things that you think about that might have some impact on your financial life. So we want to lay it next to our foo, our recommended financial order of operations. And the first thing that we think is that immediately we think your cash reserve should probably be higher than it is now. Right now you have about 30, $40,000 in cash. We would like to see you add another $34,000 to that take to about $60,000. So that way you have liquid cash, five or six month of current of current living expenses in a high yield money market that you get to tomorrow. In the event that something happened that you got to it off the. Is it, is it going to drive you crazy to take $34,000 and put in a high yield account instead of put it on those student loans?

[Chuck]

No, no, no. I'll just say no.

[Brian Preston]

He hasn't seen the rest of it though. I mean there's gonna be more here.

[Bo Hanson]

All right, so let's keep going. So then next after you do that, we love you doing the backdoor Ross. We want to see you guys continue to do that. If you guys especially income can take advantage of tax free opportunities, you ought to do that. We still want you to max out Your retirement accounts 23,5 for each of you. But there is one thing that is incredibly interesting and intriguing about specifically your retirement plan. Inside of your retirement plan, you probably noticed there are three different ways you can contribute. You can do traditional pre tax contribution, you can do a Roth contribution. And yours has that unique magical after tax contribution. And whenever your plan allows for an after tax 401k contribution, there's some really exciting savings opportunities there. Again, you were kind enough to share with us that hey, based on the way that my plan is tested every year, I have the ability I can do in addition to the $23,500. I can do another $19,000 into the after tax contribution portion of my 401k. Well, if you were to contribute to that, that then gives you an opportunity to convert those dollars or do an in service rollover of 19,000 into a Roth IRA. So instead of just being able to put $7,000 a year in your Roth, you could do 7,000 plus another 19,000. Yeah, that sounds pretty.

[Chuck]

Yeah.

[Bo Hanson]

Which significant. Right.

[Chuck]

She has that opportunity too. And like when she starts making enough Money, her solo 401k has that built into it too. And we need to.

[Bo Hanson]

So then the question becomes, okay, how powerful is that? How much does that matter? How significant is that? So we said, okay, well, let's just take this one single year, this one single year, if I just do a $19,000 contribution into a mega backdoor Roth, how impactful if I'm 34, how impactful can that be over the remainder of my life? And you can see that if we assume an 8.6% rate of return, and that's just assuming again, mid-30s, 8 and a half percent seems reasonable. Just that singular contribution by the time you're 50, could be worth $75,000. By the time that you're 55, it could be worth 115,000. By the time you're 60, be worth $176,000. So every year that you are able to do that could be almost another $200,000 in that financial independence bucket. And so when we look at opportunities you have available to you, paying off the debt sounds great, but if you pay off a 0% interest debt, do you know how much interest you save?

[Brian Preston]

Yeah, yeah, a lot.

[Bo Hanson]

Like, that's the. So, okay, let me pause there for a moment. Give me some thoughts, feedback. Oh, I already know this guy. Oh, this is silly. Oh, that's insignificant. Well, tell me, tell me what you're thinking.

[Chuck]

I am just. I mean, it makes, I understand. Like, it makes 100% sense. Because like last year I didn't. The first year I started working at the job, I did do the back door.

[Bo Hanson]

Right.

[Chuck]

Mega backdoor. And then I started, the debt started or the interest rate started coming again. So I was like, I want to pay this off.

[Bo Hanson]

Sure. Is there any chance. And obviously if your employer is watching, you want to work there forever. Obviously. But there's a chance that your job could change, you could move somewhere else. How about weighing in the opportunity cost of, oh, yeah, I can just do the mega backdoor. What if you change jobs? Or maybe the plan changes and all of A sudden that opportunity is not there anymore. Yeah, that's real now you've missed out on $19,000 of tax free money that. Bryan, have you ever in your life not put money in tax free that you regret it?

[Brian Preston]

That's what I'm sitting over here. Because by the way, we did you a favor by only cutting it off at 60. I guarantee if we added another five years because you know how compounding growth works is the longer you add compounding growth and I'll go ahead and just ruin it for you. Your favorite investment basket is going to be Roth. You know why we love Roth assets? They're completely tax free. They grow tax free. The government doesn't get the to put that horrible tax rate that they're hitting all of your income at on those Roth assets. So is this if you took this out to 65, because you would still own it at 65. It's going to be closer to 300,000. What I'm worried about for you though, Chuck, is that you're so close to leaving the school and the pain of having that $300,000 of debt that that's all you see. You have some recency bias towards the debt. I think you're going to fast forward and you're going to resemble me a little bit more and have some regrets from, you know, missing out on some of this tax free stuff. And that's why I came up with an analogy. Now. I don't know if this is going to hit perfect. I even told Bo I'm scared. I came up with something I love in my spare time. I have a hobby where I love to smoke meat.

[Chuck]

Okay.

[Brian Preston]

You know, if you barbecue and do you know what the secret to barbecue? Because you know, barbecue is really taking subpar meat and turning it into something that there's a reason there's so many barbecue restaurants in the South. Do you know what the secret to cooking these subpar meats is?

[Chuck]

Teach me.

[Brian Preston]

Low and slow. You have to keep the temperature low. And then you have to give them enough time that they break down the fat and turn it into this awesome piece of meat that people pay extra for and wait hours in line to get the best briskets and the pork butts and all the other stuff that's out there. But there's a mistake that early barbecue people make that I'm worried you're doing as a deck crusader is a lot of times when people get their brisket or their butts, they. They immediately start trimming the fat, as much fat as they can. Because, you know, we've all been served a steak or something with a lot of gristle, and we know we don't want that, so we think it's good to cut off as much fat as possible. And I think you were suffering from that with your debt. You're like, hey, yeah, I came out of school with $300,000 of debt that felt suffocating. But now you've got this thing paid down to. At the time we got the notes, it was 74. Now you still are out there just trimming away at that fat as fast as you can. And I'm over here as the senior barbecue pit master, and I'm like, quit cutting the fat off of this thing. Because you realize part of what you need is because. Low and slow. Now, did you guys graduate from medical school like Doogie Howser in your early 20s?

[Chuck]

No.

[Margo]

No.

[Bo Hanson]

No.

[Brian Preston]

You graduate. So do you think you're ahead or behind on time for investing? You're behind.

[Bo Hanson]

Yeah.

[Chuck]

Yeah.

[Brian Preston]

And that's what we even have a slide on. We took your income and we built in. Look, and this is not to say you're doing anything wrong, but it is one of those things where, because you are older, because you've been in school for a million years, getting all these doctorates and everything, which is good. It's very good. Don't hear me. But it's just you need to have this pressure of not only getting out of debt, but also making sure your money works for you. Because without a doubt, you have the income, your shovel, both of y'all. Your income is going to accomplish a lot of goals if you give it enough, Tom. But you're still at the beginning of this. So you're acting like you can maintain wealth that you don't even have. You've got to make the wealth before you can maintain the wealth. And especially when you find out the interest rate is somewhere between 0% and 5%, and then you see that you're. You're not even an average accumulator of wealth. Based upon where your income is and the amount of time, you should feel a little pressure. It's kind of like you're starting your own barbecue, but you already started this three hour, four hours later than you should have put the meat on the low and slow flame. So we already have to kick up the temperature to just try to speed this thing along. You've cut all the fat off of this thing, so it's gonna be the most unflavorful brisket you've ever tasted in Your life. And I just worry that you're going to when we pull this thing out of the oven because you didn't give it enough time that you're gonna have some regrets. And that's why, look, I detailed this in Millionaire Mission. Not the barbecue part, but just you.

[Margo]

Should have put that in there.

[Brian Preston]

It's amazing regrets. But it is something that I worry about for you is that right now you are just. You think you're doing the right thing by paying off this debt. And it is noble to pay off the debt. But I'm like, leave a little fat on there so that we can focus on the time component and let your money get in there and do the heavy lift for you as fast as possible. And that's why when we were doing show prep or planning for today's show in our content meetings, I was like, I see so much opportunity. But it's. The Jedi Master in me is just like, gosh, I just need him to, to use all that energy you're doing. The hard work, the discipline, the saving and investing, or the idea of having enough margin of 30% in your life where you didn't build up your living expenses is like an incredible superpower that's just not being unleashed. Because you're sending. If you go back to that list of their funding objectives, their food, I mean, look at the biggest number on there was student loans, 76,000 of the 138. You're not really investing 30% of your income. You're investing like 13, 14%. And then the rest is going towards 0% debt. And look, I'm trying to be as debt free as fast as possible, but I'm in the maintain wealth, which I think is the right time to do it. Don't do this before you get to the made it through the make wealth phase and you are still in the make wealth.

[Bo Hanson]

Okay, now I do want to, I want to go back to the last illustration to make sure we understand how this is calculated. Because essentially what we do is we take your age times your income and divide that by 10 plus the number of years and hit 40. That's how we determine like where you should be from an accumulation standpoint. So if you're going to be an average accumulator based on Yalls income, you should have about $977,000 invested presently. But the income is a relatively new thing. And you guys are in school for a long time. We actually want you to be a prodigious accumulator, which would be double the average so our goal for where you should be based on your income would be around $2 million invested. So that's the point that he's making with the amazing barbecue analogy, by the way, well done. Is that you do have to make up for a bit of lost time. And when we think about making up for lost time, optimization becomes incredibly important. So that's why when we think about our financial order of operations, we would love for you to then do the mega backdoor conversion and then begin contributing to the after tax account. Because after we get through this year, you won't have to fill up your emergency fund anymore. So you're have a lot of money. You're able to plow into after tax 401k contribution or after tax 401k as well as after tax brokerage accounts. And then once you've done those things, then we think we can hit some of the other goals that you may have, like funding a529 we estimated and we'll show you kind of how we thought through this, Maybe doing like $5,000 a year to the 529s based on some of the goals you laid out between like private K through 12 as well as paying for college one day so that if you can replicate this, you'll actually end up with the same cash outflow, right you, right now you're already planning on $140,000 flowing out. If you were just going to match and replicate that, this is the way that we would suggest you approach that.

[Brian Preston]

Okay, can I make one more point and I promise I won't belabor this.

[Bo Hanson]

I hope this has to do with barbecue.

[Brian Preston]

No, no, it doesn't, it doesn't.

[Margo]

Hungry?

[Brian Preston]

Because I'll just make me hungry. But you see that six months in cash to catch you up to your six months, you know, it's 34. That's, that's a one off thing.

[Bo Hanson]

So.

[Brian Preston]

Meaning that for next year, so next year, the following year, if we Fast forward to 2026, that 34,000 is now going to be kind of part of your discretionary pot, you know. To do what? Do what you will with do you know what is not something that you have discretion on those mega backdoor Roth conversions, the government's only lets you, you can't go back in time. You just can't. So I mean, I'm not even telling you not to pay off your debt. I'm just saying in due time, you know, just don't look back and go, remember I could have put 19. And then maybe this year it's 19. But then next year you do another 19. You know that. I mean, this is the magical part of compounding you, if you, if you see the power of this, so much to give a hundred dollars a month to your, to your son. Yeah, but you're not gonna put 19,000 into a Roth account that can turn into millions. It's just like, oh, I got. Take it from the old guy who's been there and has his regrets. Please, please do this because you will, you will, you will thank yourself. Your 50 year old version is going to have these sloppy wet tears because they're so happy you did this for the Roth assets. They really will.

[Chuck]

I appreciate it.

[Bo Hanson]

But then there's the. Okay, there's a. So what? Like, that's all the theory. Let's talk about the actual numbers of this because we wanted to define for you, okay, if I do this, if we actually were to save in this way and build in this way, what does our portfolio path look like? Like, what are we ultimately building towards when we do this? And we said, what if you guys just earned a very conservative rate of return, 6% per year, and we looked at your portfolio, you have a relatively aggressive portfolio. It's making better than an annualized rate of return of 6%. But if we just went really conservative and you guys saved at this threshold, starting at age 34 with $575,000, saving $140,000 a year in the way that we described, without pay raises, without bonuses, without saving more than that, by the time you get to 50, we have you right at that $5 million number that you threw out. If you decide to work until 55, you can see it's seven and a half million. If you go all the way till 60, you can see that now you're DECA millionaires based on. And by the way, when you get to that level, if we were to back down in today's dollars, assuming a 3% inflation rate, we believe that a $10 million portfolio when you guys turn 60 would be the equivalent of a little over $200,000 a year in today's income.

[Brian Preston]

That's inflation adjusted.

[Bo Hanson]

So that's pretty incredible without ever biting into the principal. So you start retirement with 10 million. You pull that off every year. When you leave this earth, you leave behind $10 million. Pretty exciting, right? But if you're going to compress your timeline, if you said, I want to be financially independent, I want to hit 5 million, I want to do that in 15 years, you got to be serious about what you're doing with your dollars and how you're optimizing the dollars. Now, you're already said to us, optimization is something that. That matters to you. Right. Isn't that. You said that. I'm. Your words.

[Chuck]

Yeah, I know. That's the count.

[Bo Hanson]

And so one of the things you think through is like, hey, every decision I make, I want it to be the best. Would you be okay if we kind of shared with you some things that we noticed when we kind of looked at your portfolio?

[Brian Preston]

I feel mean.

[Bo Hanson]

No, this is a. That's why he signed us up for this look. You were kind enough to share with us your account statements, share with us your investments, and that was wonderful. And so one of the things that we like to do is we like to do an illustration called Jigsaw puzzle, Right. Where we basically look at how is your asset allocation broken down across all of the different accounts that you have. So the way this is laid out is every column is an individual account that you guys own. And rather than showing the individual securities, we just grouped all of your holdings by asset class to show you what types of asset classes you're holding in which types of accounts. So you have fixed income investments, you have some alternative investments like real estate. You have a big blended investment, a target retirement fund. You've got large cap holdings, small cap holdings, international holdings. So not only do we have to think about the asset allocation, how you spread your assets out, which, by the way, doesn't look bad, we analyze that too. And if you look at your pie chart, you can see you have a pretty aggressive portfolio, which would be appropriate and fitting for someone in their early 30s. Now, you do have this big target retirement fund that you're using, and that's fine. We love that. But we would argue, like, part of your portfolio is target retirement, but the other part is sort of specialized. And so you're kind of living in both worlds.

[Chuck]

Yeah.

[Brian Preston]

You're getting to the point of graduating beyond the target retirement. So we can fine tune this.

[Chuck]

And the thing that I had struggled with, though, is that I had to pay like a 0.3% annual fee for that.

[Margo]

That.

[Brian Preston]

Right.

[Chuck]

Oh, which was like.

[Bo Hanson]

Yeah.

[Chuck]

Which was like 0.3%.

[Bo Hanson]

Yeah. All right, fair enough.

[Chuck]

Over time.

[Bo Hanson]

Fair enough. So, But. Okay, we'll put a pin in there anyway.

[Chuck]

I know, I know.

[Brian Preston]

$.

[Chuck]

Okay.

[Brian Preston]

Okay.

[Bo Hanson]

So you have a good asset allocation, but not only do we think about how you allocate your. If you are going to move away from target retirements, which you've done with the majority of your portfolio, not only do you think need to think about how you allocate your assets, you need to think about how you locate them. Like where? What types of investments do I hold in what types of accounts? Now when we saw this, there was some like, there was one like flashing red. Danger, Will Robinson. Frightening thing that we saw. Can you guess what it was? When you look at this, I'm guessing the Roth. It was the Roths. So when we look at both of you, Ross, you both have $60,000 in Ross. And one of the reasons why we love Ross is they have tax free growth. Whatever money grows in there, tax free.

[Brian Preston]

So what do you probably want? If it's tax free, what do you want to happen in that account?

[Chuck]

You want it to grow as much as possible.

[Bo Hanson]

We want as much.

[Brian Preston]

Pour some accelerator on that bad boy, let it grow.

[Bo Hanson]

But when we look at your holdings inside of your Roth, you both have about $20,000 inside of the fixed income piece, like the bond piece.

[Brian Preston]

And by the way, we're not against bonds, but just bonds in a Roth. That's a bold choice.

[Chuck]

I was trying to like tax inefficient funds in a. Anyways, tax inefficient funds.

[Bo Hanson]

Inside of retirement accounts. But if you're going to do that, it really makes a lot of sense to have tax inefficient funds like bonds inside of pre tax retirement accounts like traditional. Because the Roth is tax free forever. You want to have your maximum growth opportunities there. So generally speaking, when you look at Roths, you want to have like your heavy, heavy equity pieces in there. Like the pieces that are going to have the largest amount of growth. Well, you have a lot of equity pieces. But when we look at your next largest allocation and we're just going to use Margo's Roth as an example, you have a big chunk about $22,000 in a REIT fund. And we like real estate. And it seems like you have taken the position. I think real estate is an attractive opportunity. So much so that I told him my Roth. Am I describing that well?

[Brian Preston]

Correct.

[Bo Hanson]

Okay. So when we think about how we allocate Roths and how we locate, we want to do what we call probabilistic allocation. I want to put the thing that has the highest probability of having the best return over the longest amount of time. Right. When I look at your allocation, looks like there's a big probabilistic scenario that you think real estate is going to perform really, really well over the long term. And then the next Highest allocation would be fixed income. So we said, okay, if we were to back test this, how's fixed income done? Those two holdings, the Schwab US Aggregate Bond index and the short term inflation protected Bond Fund, how they done over the recent memory? And so we actually charted that out.

[Brian Preston]

We did. Over 10 years.

[Bo Hanson]

And you can see over the last.

[Brian Preston]

Memory, that's over the last 10 years.

[Bo Hanson]

Over the last 10 years you can see that the annualized return for the inflation protected fund is about 2.3% and the aggregate bond index about 0.8%. So not wonderful inside of a Roth. Right. Like that's again, don't mishear us. We like bonds, we like fixed income. We think they have a place in a portfolio. That place just might not be inside your Roth. Okay, but this wasn't your largest allocation. Your largest allocation was across this REIT etf. And by the way, we love real estate. It's a wonderful diversifier. It helps combat inflation. It's a great holding. But when we pulled your REIT holding to say, okay, well how has it performed over the last 10 years? Annualized, it too has about a 2.8% annualized return over the last 10 years. Again, this is inside of your Roth, inside of like the bucket of assets that you want to be the best performing because you really want to maximize your growth.

[Brian Preston]

Do you want to see the mean part?

[Chuck]

Yeah.

[Brian Preston]

Figure out the mean part is we're going to show you because you actually have it in your account. I mean, if you, because the large cap, which is just basically buying the index of the economy, this ever evolving innovation world that we live in, it would have averaged close to 16% a year.

[Bo Hanson]

So these are all holdings that you hold inside your portfolio. And we're not suggesting that you should not hold any one of these holdings. What we are suggesting is that if you're thinking about optimization, distributed where you put them matters. Because can you imagine if inside of your Roth Instead of annualizing 2.8% across the largest holding, you were annualizing almost 16% across the largest holding over the last 10 years? You can imagine how that compounds from now until you hit age 40, 45, 50, 55, so on and so forth.

[Chuck]

Yeah.

[Bo Hanson]

Have you thought about portfolio construction this way? I mean, walk us through when you go make your portfolio decisions. How do you navigate that?

[Chuck]

So I consider the taxable account like a legacy fund, because we kind of started that when we met, pretty much from an inheritance. And then in regards to allocation was more based on like tax efficient versus inefficient you know, allocation and the fact that I wasn't willing to spend 0.3% on my 401k.

[Brian Preston]

Right.

[Chuck]

And like, honestly, like, you know, we've only been doing this for two and a half years. Sure. So, like, really a lot of this is like a really learning. But like I'm trying to do taxing, efficient, inefficient, like in a good way. But obviously I knew that my Roth was like, there's something special about it.

[Bo Hanson]

But what's special?

[Chuck]

But I mean, I knew, like, I knew, I was like, why can I not. How can I get these tax inefficient funds in a better place in my Roth? But I couldn't like figure out how, like where.

[Brian Preston]

Right.

[Chuck]

And obviously that's like busted into our 401ks.

[Brian Preston]

I'm going to go ahead and play the part of Oracle and tell you what's going to happen in the future too. Even if you'd paid that 0.3% to the advisor to that 401k, what account do you think they're going to look at? Only that 401k. Do you think they're going to look at your taxable account? Do you think they're going to look at.

[Chuck]

No, no, no.

[Brian Preston]

That's the problem because I don't know if we can pull up your tax location. If you look at your three buckets. Yeah. You guys actually have a really nice mix of. And if we played this forward, it's pretty nice. I mean, most people. What's funny is everybody has just like, we all have finger fingerprints. Everybody's allocation is different. When people show up and come through the door as a prospect, we have to take them where they are. And I would be excited when I saw your three buckets because this is kind of what you daydream about is because you have a nice mix of all three and just we didn't share it earlier completely. BO gave you everybody, you know, tips and tricks. But I want to go ahead and cut everybody off of the path so they don't make the mistake. Is that tax deferred, that's your traditional. That's your 401ks, that's your employer match. If you chose the Roth 401ks or Roth 403bs, typically it historically that was your tax deferred. What those things do is they're great as they grow tax deferred, just as the name apply implies. But when you pull the money out, it's all gonna be taxed at ordinary income, just like your wages Are so that's why you got half of it right is we like putting like your bonds and those type of assets that are conservative in these accounts because when you pull out bonds they pay income in ordinary income tax rates. So it doesn't feel like you're giving up anything when you let it grow tax deferred and then pull it out an ordinary income tax rate way. So that's the best use for those type of assets. Now usually those accounts are so big you're going to end up having large Cap International and other things too. But you at least want to make sure you gave a nod towards getting those those inefficient tax items into the tax deferred. You're tax free. That's your Roth. That's your favorite child. Don't tell everybody else, but that is your favorite bucket because not only does it grow tax free, but it is incredibly powerful from a legacy building because you want, your kids are going to want to inherit the Roth assets because they got 10 years to let that money continue to grow even after they inherit it. And if they have like I have a child that has some developmental struggles and things, actually our Roth assets are going to turn out to be great legacy building because they don't even have the 10 year rule if you have some of these unique things. So they're also great from that standpoint as well. So we love tax free because it is growing. Tax free has great legacy opportunities. It's going to be the last bucket you want to touch because it becomes your precious. So you want to be careful of that after tax. Now this one after tax is kind of like your Swiss army knife is because it does have some tax efficiency. Like dividends can be, you know, tax preferred. They give you a lower tax rate on qualified dividends, capital gains, any assets you own for greater than 12 months. They're going to give you preferential tax treatment on lower rates with long term capital gains. But this also could be your not access to cash trap. But it could be money to where you if you had a big investment that was great like in real estate or things I love after tax because you can get access to those accounts a lot easier than like the tax deferred. And it also is a great bridge account. If you retire early before Social Security and before Medicare and all those things kick in or required minimum distributions. You can use this. You have all the components but you're like the. We found out that we had the best athlete on the field sitting in right field instead of at shortstop. And that's, that's really what you've done. You have all the components and everything, but you put them out there. Whereas I'm typically the right fielder. I'm left handed. You know, I'm not. I'm. I'm hoping the ball doesn't come to me. Meanwhile, Bo, who should be playing shortstop, is hoping the balls come to him. Put those assets to work the way they need to be maximized. And that's why, back to what the point I was gonna say, you might still run into trouble even if you hire the advisor for that 401ks. Because you need somebody who's gonna look at all three of these and look, I get it. Nobody wants to spend money on a financial advisor. But there comes a point where your decisions get so big that it's just. You've never done this before.

[Chuck]

Yeah.

[Brian Preston]

So why would you want to do something on a seven? Because this will turn into multiple seven figures. You're the CEO of a multiple seven figure. But yet you're going to let you know 1% blow up the whole thing. Just be careful that I'm not trying to. I think it is definitely a measure twice. I'm not telling everybody to go hire a financial advisor. Very. But we do think that there does rise to a level that the complexities track you down and you're going to need somebody in your corner that can help you out with those type of things.

[Bo Hanson]

So what we laid out in our financial order of operations is that if you were to accumulate in the way that we're saying to do that when you get to age 60, that's what your three tax buckets will look like. You'll have 37% of your assets in tax deferred, 24% in tax free and 39% in after tax. Well, if you can get to financial independence and have that kind of diversity in your tax buckets, you literally get to live that financially free life where you pick and choose. If you need access to money, it's there. If you want to do gifting, you have things you can gift. If you want to pick and choose what you pay in income tax, you can pull from the unique and distinct tax buckets. You guys are at the very beginning of your journey. You've already acknowledged that. But one of the great things about being at the beginning of the journey is the course that you set out on will have a big impact on where your ultimate destination is. A 1 to 2 degree change in course can have a significant change on where you land. That's why these small, seemingly small decisions, like, oh, I'm just not going to do the mega backdoor this year. I'm going to pay off the student loans can be impactful down the road. And what we want to see for you guys, you have the entire world at your feet. Like, you are right here in a fantastic financial situation. We want to see you maximize. We want to see you optimize. We want to see you leaving opportunities behind, like, allocating your assets just slightly better, like, taking advantage of counts that you do have access to right now, because you guys are in a fantastic spot for a great, big, beautiful tomorrow. All right, what questions? What other questions do you guys have for us? What else can we speak to that might be valuable for y'all?

[Chuck]

I have a couple questions.

[Bo Hanson]

Yeah, absolutely.

[Chuck]

Obviously, like, you've dive down into my insecurities. Right? Like, that is very obvious and I appreciate it. And I like taking a battery when it comes to stuff like this, so thank you.

[Brian Preston]

I wasn't trying.

[Chuck]

No, you were very gentle, actually. You were like, I feel bad about this. It wasn't that bad at all, really. Did good. Residency is a little challenging. So this was actually very gentle. But so I have a pension plan at my job that. I guess that's one question that I have is like, how do I incorporate that thought process into life? You know what I mean? Like, I am privileged where. I mean, I'm not vested yet. It is a substantial amount of money. If I stayed for 20 years, I got.

[Bo Hanson]

I don't.

[Chuck]

Once again, insecurity. I don't feel comfortable banking on that, but, like, if I could bank on it, if I had permission to bank on that at a point, to actually spend more freely than like, if we wanted to go on crazy trips or, like, buy a house somewhere else or. You know what I mean?

[Bo Hanson]

Like, do you feel like at this. At this point of your financial life, with the income that you guys have, saving 30%? Because that's what we've modeled here. If you were to save 30% and we go back to your portfolio path and see the track that you're on, even with a conservative 6% rate of return, by the time that you get to age 50 doing that, you'll be at $5 million.

[Brian Preston]

Yeah.

[Bo Hanson]

That would generate for you about $130,000 in today's dollars. Without ever eating into the principle. Well, when you take that and you add to it the value of a pension, well, now you have an incredibly robust lifestyle. You have tons of options, tons of flexibility. Would the alternative Be, hey, yes, you can count on your pension. So just back down your savings to saving 10%. Would you ever allow yourself to do that?

[Margo]

You would never do that.

[Bo Hanson]

No. Right. So. So it's a great question. Well, how do I factor in the pension?

[Margo]

Yeah.

[Bo Hanson]

What we've already, like, kind of laid out for you is what we would argue is base case. And do. Do you feel like at your income level, saving 30%, there are a lot of things that you're not doing, not taking advantage of, and the trips you aren't going. So, like, we can answer the question for like, oh, well, how do I factor in the pension? But for you guys, it almost seems like that's not an incredibly pertinent question because you're already able to do all this. We're not telling you you got to save 50, 60% to catch up, to make up for lost. We're telling you based on what you're doing, you're doing it. And based on the way that you guys say you spend money and live your lifestyle, you can still do all that other stuff. You already said it. Saving the 30% is the mechanism that frees you. Let's go on the trip, let's buy the car. Let's think about the second home. You're too young for second homes now.

[Chuck]

Don't think about that. You're too early.

[Bo Hanson]

You're not at that stage yet. But at some point you can think about that and can have that. So long as you're moving along this trajectory. To go from 500,000 to 5 million over the course of 15 years is significant. You just have to make sure the lifestyle decisions you make don't pull you off of that line.

[Brian Preston]

I like to think, Chuck, I want to give you the construct so you can think about this in simple terms for the future too, is that, by the way, if your employer was here, whoever structures your benefits and compensation, I would want to shake their hand because they've obviously done a really good job of creating a great benefits plan. Also adding this pension and other things. All these things are set up so that you pretty much can't leave if you wanted to because it's too good. It's really smart, but there's a risk here. They've protected themselves by creating this golden handcuff environment. There's still probably nothing that's in your contract that says if you screw something up or have any mistakes, they can still fire you. And I worry that you're too close to the beginning, that it's once again back to just Put them up to this three. There's make wealth, there's maintain wealth, and then there's multiply wealth. Where are you at? You're definitely in the make wealth phase. You're not in the maintain. Down the road, the aspirational goals. You get to multiply, meaning give it away and be very generous. But you're squarely in the make phase, so don't. Even though these are generous benefits your employer is offered, there's a chance you get laid off next year. You get laid off three years from now, you don't. That stuff doesn't work for you. And so you have to save and invest right now in this moment to kind of protect yourself. So, you know, and that stuff's going to be gravy in the future that if, you know all this is going to line up and you're going to have this wealth, it's going to. Then you're going to get this pension then. By the way, your pension even has a rollover option. So you can even have legacy opportunities. Because sometimes that's the problem with pensions, is it, you know, it's only based on your life or the joint life. You might even get the choice. Don't just assume you're gonna take the rollover or the lump sum, by the way, because there's always a math equation we like to do for clients to. Because sometimes these pensions are so, you know, just frothy that I'm like, no, keep the pension because the cash flow promises are really strong. But you just. I think it's too soon to count on that. So you need to be a little more scared that I've got to build these assets. And it's back to don't. Don't be paying down debt. Don't just be assuming the golden handcuffs so we can go live this crazy life.

[Chuck]

Yeah.

[Brian Preston]

When you, you're just too close to the, to the starting line to have your assets working for your army of dollars. Hasn't built up enough just yet.

[Chuck]

No. Well said. I mean, that's. Yeah, that's how I feel too. But I'm not even banking on the pension, like, future planning. Like, I use Ynab as like a budgeting app.

[Bo Hanson]

It's great.

[Chuck]

And I have, you know, different parts in Ynab for investing in the future.

[Bo Hanson]

I like you both participate in Ynab, or is this exclusively a thing you do?

[Margo]

It's mostly him. He shared it with me and I looked at it for like a week. I was like. And then I actually legitimately forgot about it.

[Bo Hanson]

Sure.

[Chuck]

Yeah.

[Bo Hanson]

Do you find. I didn't mean to interrupt your question, but I'm going to ask because I think it's pertinent. Do you find that using Ynab is valuable in helping you change your behavior? Meaning you already know that you're saving 30%, you already know where the money's going, you're doing it, but you still use Ynab to track. Okay, we went to the grocery store, so there's groceries. We went to go out to eat. Does that change. Does that. By you doing the exercise, is it changing the way you behave?

[Margo]

I also will say sorry not to. Not to cut in, but I will say I don't use it independently. But like I said, like, we sit on the couch and he's doing finances on Ynab. So he's asking me like, oh, what was this? What was this? What was this? So that he can.

[Bo Hanson]

I bet that's a lot of fun.

[Margo]

In all of our categories. I'm like, I don't know. No, but it's good. It's a good check for me because then it does help me, you know, track what we're spending. And then, like, we have different buckets, like, to save for vacation and then to save for, like, we like to do, like, quarterly gifts to friends and like to save for different things. And we can see if we're not, like, meeting those goals. So then we can't. We have rearranged, like, spending.

[Bo Hanson]

Yeah.

[Chuck]

That's what I honestly, I feel like anymore. I. I think it's nice for me, it's like, to really follow the cash flows because I like, for the buckets that I want aliquoted towards, we're meeting that goal. And, like, you know, if I have excess income for the month, I know exactly how much I have and I can divvy it up. So I find. I find it really helpful.

[Bo Hanson]

Sure.

[Chuck]

But I find it now. Now that we're making good money, I find it a pain in the butt to, like, go through every single little.

[Bo Hanson]

It's very cumbersome.

[Chuck]

Yeah. Which. But to me, it provides still a good value, but I just don't feel like I'm using it efficiently.

[Brian Preston]

Let me. Let me try to give you, once again, a mindset structure to kind of process this. I love budgeting when you're starting out because I think the discipline component is so lacking for the majority of Americans that we need to kind of get the reps in to figure out how to be good with money. But there is a point, and this is back to make, maintain, or multiply. When you're in the make phase, I do like people budgeting and using apps like you need a budget and so forth. But there comes a point, and this echoes something you shared with us, Margo, is that I have seen very successful couples to where especially the financially minded one takes this a little too long, too far to where they're asking for receipts, they're asking, hey, what did you spend this money on? And so forth.

[Margo]

You can't harass me for a receipt.

[Brian Preston]

But I'm just, I'm going ahead. The guy being married 27 years is just reaching into the future to tell you what risks are out there, is that there will come a point that while you're in the build or making wealth phase, this is empowering, this is good communication. But after you're getting closer to the maintain and you're still asking what was that money you were spending on? It's going to start feeling more controlling or once again putting power back to the money. You have to be careful that in a marriage. And I would just have a transition point to where and that's why Bo and I talk on the show all the time. I love budgeting, as you're starting out, but we eventually transition into cash, what we call cash management plans for scarcity. And I talk a lot about this in Millionaire Mission too. And the fact that I think what will happen is once you put enough of your assets on autopilot, meaning that your retirement savings are going in monthly, your after tax accounts being funded. That's why we love talking about the saving and investing 25%. Once you know those boxes are being checked, it should give you the freedom to just know, who cares what happens with the rest of this? Because this thing's on autopilot and you have the muscle memory because you did all the hard work with the budgeting at the beginning, you don't have to keep the control and all these things that create the, the drama in the relationship if it's not necessary.

[Chuck]

Yeah, I think we're getting there. And like Margo's income is like increasing a little bit. We really have like more flush cash now too. Where like initially it was just really when we started off, you want to.

[Bo Hanson]

Make sure right after.

[Brian Preston]

Yeah.

[Chuck]

Was just, do we have enough to do X, Y and Z?

[Brian Preston]

And I'm not saying cut it off right now because like I said, y'all are squarely the beginning of this thing and in the make phase. So, you know, Margot has to put up with a little bit longer on it, but, but it, but be honest with him in the communication. If it gets to the point where you feel like it's control. Yeah, y'all have those discussions because that's when you probably need to graduate from, you know, doing, you know, doing a full, full budget to more of a cash management. Especially if y'all do your checkup as a couple and you look at your financial life. Yeah. And you go, holy cow, do you see those guys? They use 6%, which is super conservative. And because I think this is going to be much bigger than even what you've shown what. What we've shown you. So this, this is probably going to be even rosier for you guys down the road.

[Margo]

So I have a question.

[Bo Hanson]

Yes, ma'am.

[Margo]

Um, so mine is more about, like, the mentality and psychological part, because that, I think is a big. That's just something that, you know, I think is really important and that I worry about on his behalf. Do you guys have, like, recommendations like you said? And thanks for walking us through all of this? Like, you know, we're in the early stages, but it, for the most part, right, like, there are changes we can make, but for the most part, like, we're on a pretty good track.

[Bo Hanson]

We're doing great.

[Margo]

Do you guys have any recommendations, like, on the anxiety component of it for him, like, in the stage we're at now, but then also moving through those other buckets of. What was it? Maintain and multiply.

[Bo Hanson]

Yeah.

[Margo]

You know, psychologically, the scarcity not enough. Like, he probably would be so happy if we came in here and you guys were like, okay, you have to save 90% of your. Of your income and only spend, you know, $10 a month. He'd be like, see, I told you. Psychologically, I think that would be easier for him to hear than to hear you're doing okay. And how do you find that balance between. Right. Like, we are at the very beginning of this. None of us are fortune tellers, so we don't know what the future is going to hold. But, like, how do we walk that tightrope of, like, enjoying life now and setting ourselves meaning, like, not being so stressed out about finances while setting ourselves up for, you know, a good future?

[Bo Hanson]

Yes. I've got two. Two quick psychology things that I think would be incredibly valuable. One is review a net worth statement every single year together. Do your net worth, everything that you own minus everything that you owe, and go through it together. And in that exercise, I want you to do two things. I want you to write your goals down in the same way that we wrote it down. Hey, here are long term goals. We want work, life balance. We want to be financially independent, want to be able to help our son out. We want to be able to be charitable and give to others and keep that at the top of your net worth statement. But then every year when you review it, do your annual goals. Hey, what are the things that we want to accomplish this year with our finance? Hey, we want to make sure that we give away this much money. We want to make sure that we go on this many trips. We want to make sure that we have this experience. So every year when you do this, not only are you keeping track of the long term goals you're working towards, you're also making sure that you're defining and clearly articulating what your short term goals are. Hey, we want to create a memory with our son doing this. We want to change someone's life in this way by doing this. If you can do that every year, what you're going to notice is two things. One, you're going to see as you progress each year, how you're moving closer and closer to those long term goals. Well then if you also track those short term goals every year, you're going to see how many of those goals you actually did accomplish through time. So you're going to begin removing the anxiety around, oh man, we're not, we're not living, we're not doing things today. No, look at all the stuff we accomplished last year. Oh, look over the last five years, all the things we're able to do. And yet here we still are moving towards the ultimate goal that we want to have for our great big beautiful tomorrow and our great big beautiful today. So that's the first thing I would say. The second recommendation I would give you is since you are on the very front end right now today, go ahead and envision your dream life. What does the house look like, what does the timeline look like, what all those things look like and define what that is and write that down. We want to be able to do this and do this and do this and do this. And then you work towards that goal and you have an income that's going to allow you to work towards that goal. But as you begin to see the numbers grow from half a million to 1 million to 2 million to 3 million, you're going to notice it's going to be really easy to push those goals out. If you can really remember what that dream life was today, 10 years from now, when you hit it, you're not going to feel the anxiety around, oh, I'm not doing enough or I need five million was a great goal, but now I need seven and a half million. When they went well, seven and a half is good, but I need 10. It will allow you to constantly keep yourself ground. Hey, remember, this is the dream life we said we wanted to live. Hey, we are there. We're now living that. We don't need more, we don't need to do more. Everything else above and beyond this is just gravy. If you can do those things to keep yourself grounded, as you move towards it, the anxiety will naturally get smaller and smaller and smaller and smaller.

[Brian Preston]

Margo because I love, because you're a professional in this, but you'll understand, you'll understand where I'm coming from with this is because I think if we unpack this first. Take the dynamic of saving versus spending. Majority of Americans have no problem with consumption. And I would even be willing to say it seems like we're addicted to consumption or spending. And then you have somebody like Chuck come along who his life, he's actually been rewarded by becoming addicted to saving. If you think about early in his career or starting out, he gets out of high school, he goes to college. He's got to be as lean as possible because the leaner he is, the less his student loans will be. And then he, you know, even when he goes through residency, the leaner he lives his life, the more reward it seems like it's paying. So he gets addicted to saving. And there's no support groups to people who are addicted to saving. Is because you become empire builders, you become extremely successful. But, but this is where we as financial advisors deal with this constantly because we have an entire client load of people who are addicted to saving because there's all these feedback loops that this has probably been the thing that has created lots of positives in your life. But it becomes potentially an unhealthy thing. That's why I say there's a big difference between being a financial mutant, which is an optimizer, versus a financial miser, which lets the money become the idol and the things that give you trouble with it. Now, y'all aren't in the bad phase yet because I want to tell you what I would do if to address this going forward. And this is what a good financial advisor will do is because a lot of people think like you remember if you watch financial content in the 90s, a lot of the public content that you saw on TVs on the cable Channels was this advisor and she would just yell no at everything. If you want to go to Hawaii. No, you can't go to Hawaii. You know, do I get a new car? No, you get. So everybody thinks that financial advisors tell everybody no. Our big job is to kind of unpack people's savings behaviors and their inability to consume and help them still live their best life. So here's the things I use to kind of break this, okay. Is I run the numbers. You know, Bo talked about doing the net worth. But also, you know, before you hire a financial advisor, we have the reason. We even crafted the course. If you go to learn.moneyguy.com is the know your number course is so people would have some type of tool to put in all their assets, put in their growth objectives and assumptions, their. The inflation assumptions, and then see how big the number is going to be. And so that way you can look at be like, oh, my gosh, what am I doing? Why am I worried about if we just keep doing this? Because, by the way, even though I picked on you about this debt, the reality is, is if you didn't come see us, your income is big enough and your discipline is big enough, you're going to be successful just off the raw, you know, discipline and determination of what you've done. It's just we're trying to help you optimize it. Yeah, but it's also. That's just one component. But it's also making sure this component of anxiety or inability to enjoy spending causes detrimental problems in the future. So if you run the numbers, it's going to give you permission to enjoy. And I've already used one of these components. Another thing I said, I want you to pretend to be your future self. And Bo kind of talked about this too, and he said, what is the goal of where you're going? How big is the house? What are the vacations look like? Go ahead and chart that path now so that you can, in a healthy way, think about who you want to be and start challenging yourself to get outside your comfort zone and actually start living that life now so that you don't have regret. Everything is about not having regrets because I want you to be. Yeah, I think there's this. Y'all aren't there yet because you're still in your 30s. When I got in my 40s, I became so sentimental, and now I'm in my 50s and I'm like, oh, my gosh, it's even worse because now my kid, my. My oldest daughter's in College and the life is cruel because your kids go to college and you become so sentimental, and yet they're becoming more independent. And I just. So you're going to have lots of time to reflect on this stuff, and I just want to make sure that you don't have regrets because. And I don't get the feeling it sounds like your brilliant employer has structured a job where you get quality life balance. You know, you're not giving all of your life to your career. You're. You're being able to be a good father, good husband. But I just want to make sure that you're doing that on the financial side as well, so you don't wake up one day and go, you know what? We should have done more things while our son was at home. We should have done more things to make memories as a couple that. That's. So jump into your future self to make sure you don't have regrets.

[Chuck]

No, I like that because, I mean, that's what I like. And I worry about that, too, is like, am I. I think I asked you last night before we went to bed, I said, is there something we could change? Like, should we say maybe a little less? Like, couple percent less and, like, go do more things? Like, would that be. Would that make us happier? She's like, no, we're doing everything we want.

[Brian Preston]

Right?

[Margo]

Yeah.

[Chuck]

Which I think is supposed to be.

[Margo]

No, I mean, we're extremely lucky that. If we haven't said that already, we are lucky.

[Chuck]

Extremely fortunate. Like, I. Yeah, I don't know what to say.

[Margo]

I think, like, even though, like, drilling down a little bit more on that point, though, is like, we're doing all the things we want to do, but even, like, within those events, right. Or experiences that we're building. Right. Like, obviously, if you go on a trip, it's amazing you can go on the trip. And like, then if it's like, oh, well, let's stay at a place that's $100 more a night because it's more comfortable. We'll have a separate spot for the baby, whatever. Or, well, overall, it's. We'd save $500 if we stay at this. In this closet. Like, be like, well, we don't. We're. We're fine in a closet. Which, like, we are fine in a closet. And, like, that would be fine. But I think, like, I don't know, I. I would love if you can start thinking about some of, like, on that level. Not that, like, we need to be doing more experiences or things like that, but optimizing what we. Optimizing what we are doing already, you.

[Bo Hanson]

Know, and then it's being on the same page. It's like, hey, why don't. Instead of this year, instead of us doing these three trips, let's do two trips? Let's do them maybe nicer than we've done them in the past. Let's stay in the nicer place or let's fly the better ticket or whatever. Whatever that thing is for you guys, that's going to be a marital communication thing that y'all have, because you may need to feel comfortable saying, hey, we're gonna spend the same amount of money overall, but we're gonna spend it on less things, and we're gonna do it nicer. I think that's okay. You guys are gonna have to define where that middle ground exists and how it satisfies both of you. It's fun things to figure out as a marriage.

[Margo]

Yeah, no, I feel like we're both pretty flexible, so we can meet in the middle, which is. Which is good.

[Brian Preston]

I know we're coming to a close. I will say one final thing, and then I'll close this out. Is that something that I've loved about life is if you heard about the hedonic treadmill. It's where, you know, if you spread out, you're supposed to do bad things as fast as possible because you adjust to your happiness level. But good things, you should spread out. So I love. Maybe every year you go on a vacation, kick it up a little bit more so you don't get too established on how bougie you are too early. But it's just every time, you know, it gives you a little bit more enjoyment and you get to. It gets to be renewed and refreshed for each of you.

[Margo]

So this year we take the airline where they charge you to breathe, but.

[Bo Hanson]

Next year we take the one we get first check guy for free.

[Brian Preston]

I love it.

[Bo Hanson]

Are you guys. Are you ready for your homework? I got some homework items. You ready? These are all fun ones. First order of homework. I would increase my emergency fund based on where you guys are. I think having six months of liquid cash, six months of living expense and liquid cash makes a lot of sense. I'd revisit my asset location. I think if you looked at the types of investments you hold and the types of accounts, you are not optimal right now. I think you can move some stuff around. You can keep the same allocation, but just locate them differently, and you're likely be in a better position. I think that you ought to rework your current savings strategy. Rather than prioritize paying off all that debt this year as fast as possible, we might recommend taking advantage of other opportunities like Backdoor Raw so that way you actually get your money working for you at some interest rate greater than 0%. And then these are the last two. Number one, get together and define your today goals. What are our goals for this year that we want to accomplish? Whether that be travel, experiences, giving, whatever that is. And then define okay, what are our long term goals? How can we accomplish both without one making a sacrifice the other? And then rinse and repeat that every single year and you will begin to move towards your great big beautiful tomorrow.

[Chuck]

Great.

[Margo]

Love it. We love homework.

[Brian Preston]

Chuck, Margo, y'all have been awesome. This has been a blast. We we've really enjoyed you came on shared all this information. I will tell you I've really enjoy embracing just the journey y'all are in and I can't wait to hear the updates as y'all reach more and more success. I know all of you out there in the audience. Hopefully you guys also have learned from from what Chuck and Margo have shared today. Bo, if people wanted to join and become part of Making a Millionaire, what do they need to do?

[Bo Hanson]

If you'd like to be a guest on Making a Millionaire, you can go to moneyguy.com apply or if you'd like to talk about any of the if you'd like to see any of the resources that we talked about today, you can go to moneyguy.com resources well guys.

[Brian Preston]

This has been a blast. I'm your host, Bryan Preston, joined by Mr. Bo Hanson. MoneyGuy team out making a Millionaire is.

[Bo Hanson]

Hosted by Bryan Preston and Bo Hansen. 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.