The Truth About $250,000 Saved by 42

Source's father had an accounting guy

and he goes, "How do you guys afford

anything?"

This period from 2017 to 2020, you're

like 34 to 37 years old. What you're not

saying is, "Hey, we had it all figured

out in our 20s."

When CO hit, 70% of the staff was laid

off. It was suddenly we were going

backwards again.

We live in this imaginary world. We

think everyone who is 26 years old and

they got a couple hundred grand saved

up. But when you started figuring it out

because you had those behaviors in

place, you began to really start making

some changes and making some

improvements. And as we sit here today,

you guys were great. You shared with us

your savings, like what you guys are

actually doing now that you have some

margin. And it's wild.

[Music]

20 years. Congratulations. That's

awesome, right? Like what's the what's

the secret? How'd you do it?

Just go to bed mad and wake up happy. I

don't know.

That is the opposite of what I think

that's the way you're supposed to do it.

Don't try to solve your problems when

you're tired. It's not going to go well

for My favorite thing Sorc has ever said

is it's not the more you give, the more

you get. It's the more you give, the

more there is.

Yeah. Okay.

You just got to put it into the bucket.

You're not waiting for somebody else to

give it to you.

I love it.

Just keep adding to the pot.

Complete management myself

and I Yeah. I'm a distribution manager

for uh fitness equipment.

Fitness equipment.

We'll talk afterwards.

Let's finish. Okay. Let's go, guys.

See what they told me.

Let's go. Just so you know,

they said, "Hey, one of you guys is

going to be very excited about what one

of them does for a living." And I

immediately thought

I'm the quirky one that has all the

Disney hobbies and all the travel

hobbies. Little did I know it was going

to be some meathead thing for Bo.

I have a degree in history in English,

right? So, I mean, I don't And I ended

up in fitness school. This is

Oh, yeah. I'm a fleet manager and I have

an opera performance degree.

We were two music performance.

Don't ask me to sing. Oh man, that's how

you know exactly where I was going with

that.

And we're done.

That's awesome. Got married. Uh started

pursuing the careers. Then what?

We had our first daughter 2 and a half

years after marriage. He got a promotion

when she was about 9 or 10 months old,

but it required us to move out of a

state. We kind of made the decision that

he's going to make up for my loss

income. We're not going to be able to

afford child care. We would have no like

extra car. Like everything was going to

kind of even out, but we were going to

do it for his job title, you know, for

the career growth.

So we moved uh for that for about a

year. Uh then we moved back to New York

because she was pregnant again.

Cuz I was pregnant.

So y'all were in New York and y'all

moved to Columbus. Got it.

We decided that Ohio was not necessarily

the good long-term plan. The support

system wasn't in place. And then I

worked again after he was born for a

little bit, like some part-time stuff.

And then we joined a first-time home

buyers club, which was a big thing.

What's the first time home buyers club?

It's like you had to take mortgage

classes and you get a little bit more

education on what you're getting into. I

love that. and they you have to sign up

for a savings plan. You have to put in

an exact amount every month for was it

10 months? Um and then they'll cover the

difference of that for your closing

cost.

That's a New York State program.

It's a New York State program through

like Catholic Charities or something.

But there was a requirement of PMI on a

time period as opposed to a percentage

percentage of you got.

So it was minimum of 5year PMI. Got it.

Yeah. So we kind of got a little bit

tight on that.

But it's to help people like who were in

our situation didn't have a lot of

money. And that helped us get our first

house for sure. And that was a big step.

It was huge. Yeah.

So this is after second kid back to New

York.

It's actually after third kid.

I think it was right around the time we

What's the What's the age distance?

What's the thirdish?

222.

Ameilia will be 17 in a few weeks.

Calder's 14 and Louis 13.

I want to hear more about the messy

middle you've made it through. But you

you said, "Hey, I feel like we're going

into the messiest part of the expensive

part of the messy middle. I think

cuz where you guys sit right now, you

were kind enough to share a net worth

statement with us. As you're st as

you're sitting here right now, total net

worth of about $537,000

and right now total household income,

you know, it's variable based on your

pay, but somewhere between like 250

$280,000 a year, but if if I'm hearing

you right, you haven't always earned

that sort of income. This is sort of a

relatively new thing. So, have you guys

always been like steady and consistent

savers or is this like a new thing

that's been able to happen?

Source's father had an accounting guy,

right? And in our first apartment when

we were first getting our first kid and

we're like, man, we just we feel like we

can't afford anything. And he said, I'll

look at your books, you know, pro bono.

We'll take a look at your books. And he

goes, how do you guys afford anything?

And and we just kind of I don't know.

We're just paying our bills first. I

don't know. We're not doing anything.

Um, stingy. Yeah, frugal is the word,

right? Like frugal, not stinky. We were

trying as a negative. Frugal sounds like

you just masters of or you know, field

generals of your army of dollars.

Interesting points came out of it. One,

we grew a lot of our own food when we

had our house. A lot of vegetables once

we had a yard, we were all in it. And

then and then we cook a lot. And I think

that was a big thing. A lot of our peers

don't seem to cook a lot.

We cook a lot. And that keeps our

grocery budget really predictable.

comparatively as much as we're into

things like oh I you know Dan likes some

watches you know or I like gardening or

we have nice cars but they're not like

sports cars they're not you know they're

we try to be sensible about all the

stuff we try to like always have the

long view so I think that that's been

informed by our past a little bit you

know our goals for the future about the

kids stability and our stability

y'all done everything kind of in tandem

and the fact that like I see Dan's 401k

I see your 401k. I see the Roth IAS.

Y'all kind of equally yolked on those

have started being funded at the same

time. You're in your 40s,

but you didn't start saving and

investing in your 20s. I don't get the

feeling because it sounds like there was

too much life on.

So, when did you catch that? Hey, we

ought to start turning some of this

these lifestyle choices into money that

shows up on the network.

2017. So 2017 was when we first had the

income to do it because I had my first

sort of manufacturer job where I was out

in the field being a rep and covering a

pretty big territory which gave us a

little bit of a bigger shovel than we

had. Right.

Um and at the time we still had student

loan debt, we had credit cards, we had

the the every thing that everybody has,

right?

And and we had three kids. We went from

first I had that job almost

simultaneously. Sorca got an actual

career job uh working at a place called

Boseies, which is a board of cooperative

education in New York. You know, we

didn't really know what to do. Uh my mom

was a banker, but you know, it's

she kind of fell into that.

She sort of pushed us though. She's

like, "You really need to be saving."

But information without context didn't

really hit us in the way that it needed

to, right? And so paying off the credit

cards first and then going after the

student loans. And then eventually we

had a surplus and we said, "Oh, well, it

would be great to have new windows,

wouldn't it?" Oh my gosh, our house

needed work. It was built in 1951. It

had no updates. So, we had the wood,

glass aluminum

stone basement leeching, you know, like

it wasn't bad. It had good bones and it

had just needed to be brought back up.

And but so 2017 to 2020 to answer your

direct question is that's when

that's the first time we sort of had

enough income and we had the habits of

being so frugal with no income before

that we were able to really dig out very

very in that threeyear period.

It wasn't like y'all changed who you

were. Meaning that you had a period of

waste and then all of a sudden you you

caught on, hey, I need to be better and

you you started saving investing.

Y'all's lifestyle was just so expensive.

life was taking all of your y'all were

already naturally being super

disciplined

cuz we had to be

but but then there was a moment where

you started catching some traction with

your career

that all that discipline that yes it

wasn't yielding money that was margin

that was turning up on the net worth

statement as soon as you caught traction

with your job it was like windfalls it

started coming in

because you had the behaviors already

established I think that might be true

in that threeyear period we paid off the

student loans we paid off the credit

cards and we paid off our cars

So we were left with just the mortgage

and you know and the mortgage was

reasonable.

Yeah. 750 months and you go oh well this

is I'm in no rush and the I think the

rate to stay at that house.

We bought it in 2012 so I think the

interest rates were really low then too.

So it was

but yeah there was no rush to pay that

off and so

we only owed like 70 something on the

house when we left.

The problem I had is that the problem we

had but sourc wasn't part of really this

is hey we want to start saving some

money and you know you go on the

internet you go how do you save money

and then you know there's Mr. Ramsay and

there's a this and there's a that and

you go, "Oh, gold, huh? Oh, gold."

So, I was I was buying gold. I was

buying gold. I mean, that was

Well, it was like a hobby, too. So, it

kind of kept us into a different

mindset.

Yeah. And looking back, that really

helped us with is that it did create a

couple steps in between. We're setting

this money aside and if we were to sell

it, there's an actual couple physical

steps we have to take.

It's hard to go take the bully to go.

So, so a little bit of extra friction

there to just not spend it.

When CO hit

and you know the company I was working

for 70% of the staff was laid off and

you know cuz I was I was distributing to

commercial gyms right and so they were

all closed in the northeast. So

and then we had to move to Texas for you

know work and it was suddenly we were

going backwards again.

Then we moved into a house that was

probably I mean it went from the house

we owed 70 something on to a house where

we paid 340. Yeah.

So, it was a huge change.

So, we're like, "Wow, we're starting

over. Cool. Here we go again."

The the boolean didn't help with that,

right? I mean, it did because you could

liquidate it and then, you know, it

would help pay for some stuff.

There's no income coming off. Yeah,

exactly. Just sitting there holding,

but I I do love that it instilled

discipline in saving the

kind of spending time thinking about

finances in a different way and us

talking about it,

right?

That also added to it that something we

hadn't done previously. this period from

2017 to 2020, you're like 34 to 37 years

old.

What you're not saying is, hey, we had

it all figured out in our 20s. We live

in this imaginary world. We think

everyone who you is 26 years old and

they got a couple hundred grand saved up

and they're saving. That was not the

reality for you guys. You guys uh got

married and had kids and got into the

messy middle and life was tight. And I

think a lot of people will resonate with

that. And it wasn't until your late 30s

you started figuring this stuff out. But

when you started figuring it out,

because you had those behaviors in

place, you began to really start making

some changes and making some

improvements. And as we sit here today,

you guys were great. You shared with us

your savings, like what you guys are

actually doing now that you have some

margin. And it's wild, right? Like when

you look at this, you guys are both

maxing out 401ks 235 235. You guys are

both maxing out IRA7,7,000

and you have another $18,000 a year

going into your brokerage account. So

you guys are saving like 30% almost

$80,000 a year.

Well, there's a lot to make up for, you

know. I mean, there's a lot of time to

compound.

Sure. Well, tell me this. Is it going to

is this strategy going to work? Is it

going to play

according to your lovely tools? Yes.

Before we start giving you answers on

that, I do want to ask you cuz y'all are

unique perspective because you already

naturally disciplined so you're doing a

lot of the right things in life. I'd

love to know as two parents sitting

here, two people who've been married for

20 years, because I'm so worried about

my financial mutants is that they they

don't do life sometimes because they're

just worried we have to do this now or

we'll miss out. What are y'all's

thoughts? Are you glad you did life?

We've both had different moments where

we have felt pressure that oh, we want

to do more with the kids and we wanted

to spend more money to put them in a

sport or to put go on a family vacation

or summer trip. Yeah. Or whatever it

was. Um, but we don't feel guilty. We

don't feel bad about anything that we've

done. Not just because of the future or

whatever might they might need our

stability for or whatever that we're

setting them up for, but because I don't

really think we could have. I don't, you

know, we look back and you're like,

there just wasn't anything. There

wasn't, we went to the park all the

time. The kids were outside. They were

covered in paint as much as any other

child and baked with us in the kitchen.

And we read 50 million books a day. And

like we're very close family. So, I'm

not really concerned that they weren't

raised the way I wanted to raise them.

And none of that stuff cost a lot of

money, but I bet it created amazing

memories. Kids don't know they're poor.

Unless they have a comparative thing.

I want that t-shirt because that was

literally what I grew up.

Happiest times of my childhood is when

my dad was laid off

cuz he was around all the time. And

that's you saying it at the parks. And I

think sometimes us, especially if you're

a financially minded person, you feel

like I I don't need to do this until I

can afford everything. when truthfully

it's exactly what we just said. Kids

don't know they're poor

as long as you're giving them the love

and all the other things. It just it

I think there was some moments where

some of the charm wasn't there. Like we

have our kids are smart. So our son

especially is like well can we afford

that? I'm like okay yes we can. We're

choosing not to buy it.

We're not close to the curb because he

would get nervous sometimes and we to

kind of redirect that. The other part of

that too though is that you know

if you're being intentional with your

behavior and what is there time for

guilt. I mean it's just it doesn't

exist.

You know we did what we could at the

time with what we had. If we just think

about where you're at now with your

investment portfolio, $250,000 at the

age of 42, and if we can continue

saving, you know, 79, $80,000, a 30%

savings rate moving forward, and we just

assume based on your wealth multiplier,

7.8%

rate of return for you guys. By the time

you get to 50, 49, you've got like a

$1.2 million portfolio. By 55, it's 2

and a half. By 60, 4.1. By full

retirement age, age 65, it's like a $6.5

million portfolio.

I think I was using the tool wrong

because that's a much bigger number than

I look at. Purchasing power is not going

to be when that's $6.5 million. It's not

the same as what when we bring it back.

So that's why we put the box on the

right with the cash flow because that

does bring it back to present value from

a cash flow perspective. So you can

actually see what retirement would look

like.

It's still pretty impressive though. So

the question we would ask is, okay, if

if you had a portfolio, assuming a 4%

withdrawal rate that could generate for

you about $130,000

in today's dollars, could you guys live

off that? Could you guys live off of 10,

11 grand?

You're like, where would what would we

do with all that money?

Come look at our pantry. It's all beans

and rice and, you know, canned tomatoes

and stuff.

But those are easy things to cook. You

said you cook all the time. It's just

beans and rice. That stuff's easy. I

guess we can just fold up now in the

episode and say this is it, right? We we

did it. But we want to show you, okay,

based on the behavior that you have in

place, this is the trajectory you're on,

but you guys have some other stuff going

on, right? A lot of life ahead of you.

There's some life that's about to start

happening. Why don't you walk us through

some of this life?

Amelia, the oldest, is in her senior

year of high school.

Okay.

And it is a special high school.

It's a special high school. She's

earning her associates degree at the

same time for free.

It's like a dual enrollment type. So,

it's part of the district. So, it's

We're in a pretty big district. There's

four high schools,

like 30,000 kids.

and she's in a high school that is very

I think it's an open lottery but it's

it's a very specific smaller school

because of this in difficulty

essentially right so they work in tandem

with TCC which is Tarant County

Community College and through the high

school they can take concurrent

associate degree classes which will then

also count towards their high school

diploma

right so some of the some of the kids

will get through and they will get maybe

most of it but they'll still have the

ability to get credits lots of credits

and then if you're uh really knuckle

down. You can get the whole degree

and actually graduate high school with

you graduate like a week before you get

your high school graduation. It's a

little funny. Awesome. Yeah. And our son

just got in. It's his freshman year. So,

we're pretty excited.

Does is is he like his sister? Does it

seem like he'll

have a different take on how to handle

boy, too? I mean, so he's a little

he's not as organized, but he's he's a

really smart kid. So,

he's incredibly smart and he'll he'll do

fantastically. And for him specifically,

the smaller class size is going to be a

real boon for him, I think. So,

yeah, they've got other cool

opportunities there. They do Microsoft

suite certifications, OSHA

certification. There's a lot of cool

like set you up for your skill set.

It's also set you up for your four-year

degree because there's feeder programs

into so has already gotten into and

accepted into

okay

and that's where we're looking to send

but they also have a program with Texas

A&M and Texas University etc. etc. So

I'm thinking through like the financial

impact here. Assoc associates degree

first two years are covered. So

30 grand maybe

in terms of the net cut out half of

college

half of college.

You know we were so crushed by our

student debt that we're

committed cuz we can't

I like to say we but I consolidated.

Well she had a 1% interest rate. I had a

5% interest rate. So

the same

we know what it's like to get out of

college and and have that hanging over

you. something we don't want for our

kids. And so our our trade-off here is

that if you buckle down and you do this

associates and you get it, then we will

cover the next two years of tuition for

you to get your four-year degree

if they go to the local school

because you can live at home.

Yeah. I mean, we're not talking

boundaries put on this in the schools as

well.

If uh Cornell calls, I'm not sure we're

going back to New York for that.

What else do you have going on in life?

We think there might be a car in the

future. Okay.

Okay. Car's getting to the college. You

need a car if especially if you're going

to live at home. There's no bus from

where we are for at least.

Certainly, there's there's a real need

for convenience because just especially

with her and and she's now taking

responsibility for driving school and

stuff. It will become a lot easier if we

have that third car, right? Um but also

I think what you're getting at is that

yeah, we are looking to move out of

Texas again. You know, work is what

brought us there. Texas has been very

good to us, but we were commenting

earlier to each other walking around,

what is it about it that's really, you

know, there's push and pull to

everything. And you know, it's just the

weather. You know, we grew up in the

snowiest part of the country and it's

not that snow down in Texas.

They get like two or three inches a

year.

No, they get ice and I do like the way

that Texas deals with it, which is we're

just going to shut everything down and

wait for it to melt, right? I mean, I

can certainly appreciate that. So,

so, okay, so you're going to leave

Texas. Where are you going to go?

We have a target list. It's not locked

in because we want to get all our kids

through high school first and so we

still have four or five years before

that's done. Um, we're looking at the

Pacific Northwest right now just from a

weather standpoint and from a lifestyle

standpoint that suits us best because we

can get the cooler temperatures, but we

don't get the snow. So, okay. So, we've

got some some big plans, right? We got

our kids who uh we want to be able to,

you know, they're going to still got to

pay for college and then we want to

think about this big move. What's been

your strategy to think about how you're

going to pay for three different half

college costs? Well, that was where some

of my questions lie cuz I was like,

well, we have the cash technically to

get Amelia through.

Yeah.

Will Yeah. I was like, will we have the

cash again two and a half years later

when Calder goes in

and then only a year after that for Lou

because they're closer together.

So, we have an active strategy we're

doing, right? Which is that we have a

syncing fund on top of our six-month.

Uh,

so if we looked at the net worth

statement, which cuz I noticed y'all's

cash was a little thick because you have

the emergency fund. And so then that

high yield savings account is that what

when you say syncing fund is that what

you're talking about?

So technically the emergency fund is

that high yield uh because we have that

with AMX and then we have a cash plus

with Vanguard because that's where all

of our individual investments are and

that pays just as much if not a little

bit more than a high yield right now. So

um and that is the syncing fund. So that

that bigger number is the syncing fund.

Uh we're a little bit high on a

six-month because it's 4345 is our

monthly. So, give us the strategy. I

mean, what is what's going in because

obviously you have y'all built this

thing up to almost $50,000.

You said we're aggressively putting what

Well, we live a lay of the land.

We live frugally as we've established

and uh we try to put uh $2,500 in every

month. Awesome. Um, you know,

extrapolate that out over however many

years. That hopefully should give us not

just enough for our two years expansion

of college for our kids, but then also

enough for an extra down payment once we

sell our house and move up because the

Pacific Northwest is a lot more

expensive.

I love as you're thinking about the

sinking fund, you recognize that these

are like near-term goals. They're less

than, you know, five years out. And so,

one of the things we want to do is if

something's less than 5 years out, we

really like liquid cash. We don't want

to put that money at risk because we

know we're going to need it. And so

thinking through the timeline for the

kids, we thought, hey, let's model out

what this sinking fund looks like

practically. And you can see that right

now today, we have about $48,000 in

there. And if you're able to save that

$2,500 a month, and we just assumed that

you were going to earn about 3% in

Canada. High yields a little bit higher

than that, but average that.

It's probably coming down.

Yeah. Uh we have

Oh, I get them those emails from AMX

every

They're letting you know. Uh and so we

kind of have okay child 1 year 1 is

going to happen next year and then child

1 year 2 will happen the following. Then

we have a little bit of reprieve until

we have child 2 year 1 and then child 2

year 2 plus child 3 year 1 and then we

have child 3 year two and then by the

time we get to about May of 2032 we've

we're out. We've done it. The kids have

have have have made it through.

Right. And even with funding all the

college, if you can stick to that like

$2,500 a month, and by the way, we

assume that the cost of college is gonna

be about $13,000. We inflated that four

uh 3% every year going forward. We're

estimating that your syncing fund. Now,

this doesn't factor in like car and that

the garden and that kind of stuff. But

if you were to continue on that

trajectory,

about $187,000

even left over in the syncing fund to

help potentially with this move. The

strategy you have in place based on our

analysis would suggest will work to get

all three of the kids through school.

Yeah,

thank God.

Yeah, that's great. Well, and we hope to

depreciate our current mortgage enough

that it would continue to offset moving.

We're not paying extra. It's just, you

know, knocking down. Yeah, because that

interest rate's okay. Mhm.

How's the cost of housing uh in the area

in Texas that you live and the cost in

the areas in the Pacific Northwest

a little more I think in Pacific where

we live it jumped incredibly when we

moved in in 2020.

I think it did that for everyone.

It did. It did. But it right. So it

stabilized about um you know on our net

worth statement that we do for

ourselves. I I put per your advice what

we

cost plus improvements.

Yeah. And garden improvements.

But you know what is all the houses

around us selling for? It's ish 100,000

more than we paid. So when we look up in

the Pacific Northwest where we want to

be, it's probably a hundred to $150,000

more currently than

we did some assumptions.

And so we know that like okay, we're not

moving right now. So you're going to

have two things that are kind of going

to happen. The home you live in right

now will likely appreciate, but so too

will the house you'll be buying

somewhere else. So we wanted to kind of

think through what that looks like. So

if we think about your current house, we

know that right now it's worth about

$450,000. And again, there are so many

variables. We know there's a ton of

things that can change. We just want to

kind of give you an idea of

directionally where you guys are headed.

And if the goal was to do this move once

the third child finishes school, so that

way you're able to make it through the

local school. 2032 is kind of what we're

targeting.

Okay.

Uh your current home is worth 450 now.

Uh it'll be worth about 550. You know,

if we just assume very modest 3% growth

rate over the next couple years, but

basically inflation. So too will the

house in the Pacific Northwest. And we

know that right now equivalent houses

based on where we targeted for you guys

to look are about $650,000. So if again

if that grows at at the rate of

inflation, the house that you're going

to have to buy there is going to be a

little under $800,000 in 2032. Thoughts?

That's part of why we're thinking of

downsizing a little, honestly.

Does that freak you out to see those

numbers?

Yeah, a little bit.

Yeah, it does not freak me out at all.

Okay. I know we're have different

comfort levels. Huh? Why does it freak

you out?

Oh, I'm just I have a Dan's teased me

about it before. Uh I have like

emotional problems with money.

Debt or money? Tell us more. Cuz this is

the place we talk about emotional.

Very uncomfortable with debt. Very

uncomfortable with it. And I don't think

that's necessarily bad, but where it

gets bad is when I'm like, should I buy

that piece of cake? Can I? You know,

like it's a small stuff. Like I just

feel that she needs to buy school

supplies. And I'm like, baby,

just buy school supplies.

I have a lot of hang up. It doesn't

bother me like if I know if we spend the

time and say, "Oh, okay. This works out

in our actual budget in real time." But

projecting out, I go, "I bet I can beat

that."

Are you concerned at all that the I

don't want to use the term baggage

that's probably too aggressive, but like

that anxiety that you bought into that,

are you worried about with the next move

as you're moving to a new seeing it a

little better this time? And plus, I

like want to go. It's

not the first time anymore. So, you've

gotten some experience, some wisdom

through the whole process.

And there's so much stuff that could

change in five, six years. I mean, you

know that we're doing what we can now to

get us there and the numbers thankfully

reinforce that.

Who knows what happens in the next 5

years. I mean, there's there's a lot of

stuff that could happen between then

then and now. And just worrying for me

worrying about that is not in my nature.

And what what's your current mortgage?

Well, how much do you pay pay a month on

your current mortgage?

Just under $2,000.

Just under 2,000. Because one of the

things we said is, okay, obviously

extrapolating home prices is one thing,

but what really matters is the monthly

carry for you guys. And what we figured

out was that if we assume that you're

going to buy an $800,000 house, we've

already established that your syncing

fund was going to be about $187,000 and

that's even above and beyond your

$30,000 emergency fund, right? So you

have

187 you can use. We said if we just used

150 for that and there's another 30 in

there. Maybe it's for a car, maybe it's

for a garden, maybe it's for moving

cost, whatever. If you had $150,000 that

you had from the sinking fund and you

had home equity of another $325,000, you

have a big down payment you get to put

on this house. And if we did a we did a

mortgage, a 30-year fixed rate mortgage,

we just said, not knowing where rates

would be, what would that monthly

mortgage rate be if it was a 6% interest

rate or a 5%. Again, we're sort of

guessing at what it could be 5 to seven

years from now. But you see that even

though you're you're moving into a more

expensive house, the mortgage payment

goes from a little under 2,000 to

somewhere between like 2500 to $2,700 a

month 5 to seven years in the future,

right?

That'd give you a whole lot of anxiety

or you feel like we could probably,

right? Like

because we're not raising kids anymore.

It it seems manageable. It seems

feasible, right? Um, and it's because

you've done you've made the decisions

and done the things to be in a position

where okay, even if my mortgage is going

to be higher. Money is nothing more than

a tool that allows us to do the things

we want to do. And one of the things we

know we want to do is we want to live in

a different part of the country. And we

recognize there are

costs with that and tradeoffs with that.

And one of the trade-offs is more

expensive housing, but it sounds like

that's something you guys are okay with

and you guys are comfortable with.

Yeah. And the way that my um job pays, I

have a salary and then I have a

commission base. and the commission I

do, you know, we do get in more than

just the $2,500 periodically, not all

the time. And so those I tend to just

throw into this. So the savings rate of

2500 is probably on the

conservative side.

Conservative side, right?

Wonderful. So it could actually even

look potentially a little bit better

than this.

We talk about all the time on the show,

the three ingredients to wealth.

You guys are crushing the first two

ingredients because you think about the

fact of discipline, living on less than

you make. You guys do that. You've done

that even from the beginning. Yes, you

weren't able to build a lot of margin

initially because life was just

absorbing it all. But as you made more

money, you kept the focus on, hey, what

there's something bigger we want to do

with our money. So, you had the

discipline. So, then when your income

finally caught traction, that margin,

the difference between the two that

created the money,

y'all actually put it to work. Because

so often in our comments section, people

say, "No, we have to assume this about

everybody." Cuz nobody actually saves

and invest. You guys are what happens to

people who say, "No, you know what?

We're going to be very deliberate on how

we spend our money. We're going to let

our life reflect what we want, but then

as we make more money, we're not going

to lose our mind in this consumption

society we live in and just start

throwing money left and right out the

door. We're going to kind of let it

focus." So, I love that we get to save

at this rate, but we wanted to put some

grace in the system because even good

systems can have breaking points because

college is expensive.

And y'all have even thrown up some

things that we didn't know. We This is

news to us about the new car, the

garden.

Hopefully not new, maybe used car,

but I just I want to make sure we want

to put some some some some flex in the

system

just in case

y'all go through this and maybe

housing's a little bit more expensive

than we have modeled here or maybe

college is a little bit more expensive

because y'all move sooner or something

happens right?

So, we wanted to kind because that 30%

savings rate is pretty aggressive. Well,

and we we know that uh one of the things

that we always try to counsel people on

who are thinking about changing

locations and moving is we often think

about housing. Okay, was housing more

expensive or housing less expensive? But

it's not just housing that affects cost

of living. We want to look at like

various cost of living in different

parts of the country. And so we actually

did an analysis comparing where you are

at in Texas relative to Vancouver,

Washington because I think that was one

of the places you kind of put on your

short list. And what you can see is

we've already analyzed housing is more

expensive. It's like 11% more, but

utilities are a little bit less

expensive. Food costs a little bit more

uh both in terms of groceries and eating

out. You guys are not going to eat out,

so it's going to be the grocery cost. Um

health care is actually a lot more

expensive in Vancouver, Washington. It

is in Denton, Texas. Transportation is

more expensive. Normal goods and

services are more expensive. And income

uh is actually down about 6% relatively.

So if you kind of consolidate and

conglomerate all of those, it's about 5%

on average more expensive to live in

Vancouver, Washington, Texas. So with

all the variables that Brian mentioned,

hey, okay, we might have a car and we

might have more for college and then we

know that this is going to be like a

more expensive place. What if the 30%

savings rate is not something that we

can that we can sustain? Because we

already showed you if you didn't think a

whole lot about college and you didn't

have to replace a car and you didn't

have to move to another part of the

country. The plan looks great.

Sure.

But your plan that you want is not to

stay where you are doing the things that

you're doing. You have other plans that

you want to do because you recognize

money is just a tool. So we said, "Okay,

how's this look? If while you're living

in Denton, Texas, you can maintain this

savings rate. We've shown that we can

pay for college, but what about when we

make this change? What if we can't save

at the same rate? either because of

income changes or just because of life

being more expensive. And what if we had

to drop our savings rate down to 20%.

Starting when we move up to the Pacific

Northwest. And what you can see is yeah,

it changes the numbers. They do

decrease. Now at age 55, instead of

having 2.5 million, you have 2.3

million. Instead of at age 60 having 4.1

million, you have three and a half

million. And then at full retirement,

yeah, not being able to save that extra

10% made a substantial significant

change. Instead of being $6.5 million,

you have like 5.7. But you can see even

with a portfolio of $5.7 million in the

Pacific Northwest with a mortgage

somewhere between $25 to $2,700 a month,

we could still count on this portfolio

to generate about $116,000

almost 10 grand a month in income for

you guys to be able to live off of. And

so my question is is that a worthwhile

tradeoff? I think that you are two of

the only people I've ever seen who could

actually truly explain the difference in

lifestyle between a 6.5 and a $5.7

million portfolio because I can't see

the difference in that.

Right. Because it's hard. It's hard when

you think about that.

Well, because the lifest part of the

reason that we want to move there is

because we want to just be able to walk

around outside, you know, like just want

to take in the ferns and take in the

air.

It's literally a day-to-day experience.

It's a day-to-day experience. So for us,

it's not like, oh, we want to in our

retirement. It'd be nice to travel a

bit, you know, to like have some

flexibility, but I don't think we're

going to be like cruising around or

backpacking Europe at this aggressive

level that some of some folks we know

have done.

I just love so much that you guys begin

with the end in mind. I mean, as I'm

sitting here hearing you talk, we talk

all the times about like the five levels

of wealth and everybody wants to get to

financial independence where it's I want

to do what I want, when I want, how I

want. But there is this like second

level. There is this level above that

where you actually know what you value

and what brings you purpose. And that's

what you guys are talking about. Like we

yeah, we could have more money and it'd

be cool to have $6.5 million. What we

really want to be is be somewhere that

we love doing the things that we love.

And money will allow us to get there,

but money is not the thing that we're

pursuing. We're pursuing the things that

we actually value.

And that's awesome. When I looked at

this chart, the things that got me

excited was really the spread between 55

and 60 because I know how you guys spend

currently.

Um because remember this is in present

value terms. And yes, things are

potentially going to be more expensive

when you move to the Pacific Northwest,

but it's probably going to fall

somewhere between the numbers we have

between 55 and 60. And what I love is

hearing you guys talk with such passion.

There's a good chance y'all might decide

somewhere in that 5year window. This is

enough, you know, and that, you know,

and and you you can you can own your

time that much sooner.

Sure.

And and just live your life at that

point. You don't have to work until

you're 65.

You want to know what the secret of 20

years of marriages? What?

Have something to do.

So Dan travels a bit for work, right?

Retiring right now. I can tell you that

much. You know, I'm not I'm not looking

for, you know, we hear the fine and the

fire and all that stuff. I It's It's

uninteresting to me, honestly. I think

that,

you know, retirement is the number one

killer,

but you know what's the best type of

work? When you get to choose to do the

work doing there is something about

owning your life completely and making

the choice when you wake up in the

morning is that I'm making the world a

little bit better by going and this

gives me fulfillment to go to work

versus a lot of times in your life, if

you really think about it,

you're not working always because you

want to. You're working because you have

to pay the bills. You're working because

the obligation to the kids.

Sure.

It's a different mindset when you do it

out of choice.

Any questions for us? Cuz I I believe it

or not, I actually have some homework.

It seems like there's because you guys

we've given you a really like rosy

picture here. We've shown what it can

be, but there are some things you have

to do to actually move in this

direction. Any questions you have for

us?

Specific questions.

Yes. Yeah.

So to kind of dial back to 2020,

the first thing that got me and you you

had asked earlier, Brian, you know, hey,

so when did you actually start doing

this, you know, the Roth and the 401k

and all that, it was in 2020. I was I

had sold all the bullion and I was just

like, okay, just trying to stay out of

debt. What do I got to do? And because

we were moving backwards and uh I I

actually found uh what is it? JL

Collins, the simple path to wealth,

right?

And I said, oh, but this guy gets it,

right? And so I said, I don't have a

Roth. I don't have a this. I don't have

a that. And Sorca, I'm sure, remembers,

I had gathered every weird little piece

of paper from every single account that

we'd ever have. The question I have is

that I had old 401ks and so did Sorca,

retirement accounts that we put into

that because I was looking at, wow,

what's the percentage we're paying over

there versus, oh, Vanguard's only .04%

or whatever it was. And so, but now that

our income is at a point where I'm

worried, I'm not investing actively in

the Roth right now because I'm worried

at the end of the year we're going to

exceed what we're going to do. Um, so I

really would love to hear more

explicitly what is the actual maybe

that's part of the homework. What is the

actual process for getting back into

Roth conversion compliance because I

know that we're not right now.

Right.

Well, let's look at your net worth first

because that's a that's a super helpful

place to start. So you already mentioned

you have these traditional IAS that

exist and you have one has about 22,000

and source yours has about 20,000. So

based on your current account structure,

you couldn't do backdoor Roths. If you

were to do a non-deductible traditional

IRA contribution and then try to convert

that, it would be taxable because of the

PR rata rule. The IRS would say, okay,

what's your after tax contribution

relative to all of your IRA balances,

right?

So the only way you get around that is

you have to make your IRA balances go

down to zero. So if we look at your

current account structure, you have

Roths and you have 401ks and you have

rollovers. If you wanted to be backdoor

Roth compliant, one of the things that

you would be able to do is you could

consolidate your accounts to where your

Roths would stay the exact same,

but you would want to think about

sourcing your rollover IRA that you

have, assuming that your 401k is good

and low cost and you like the investment

options. Fidelity is wonderful.

You could actually roll that rollover

IRA into your 401k, thereby doing away

with that rollover. And Dan, again, you

could do the exact same thing, assuming

that you have a really good 401k that's

low cost.

We won't mention the company for that.

Okay. Uh you could actually consolidate

that into your 401k as well. Now, one of

the things I want to make sure that you

think through is I don't know where

these traditional rollover came from,

but a lot of times we'll see people

blindly just roll them over all the way,

not remembering, oh, you know, this this

actual I made this contribution

traditional a number of years ago, but I

didn't get to take a deduction. I've

actually got some after tax basis in

there. You just want to make sure before

you roll it into the 401ks, are those

dollars all actually in fact pre-tax?

I can 99% guarantee they all came from a

401k roll.

Perfect. If that's the case, then you

can roll them in. Once you get this new

account structure where all you have are

401ks and Roths, now you're set up that

every single year, you can do a $7,000

non-deductible contribution to a

traditional IRA. And you can convert

that traditional IRA contribution into a

Roth, thereby completing the backdoor

Roth conversion. right within Vanguard's

own structure or Fidelity or

That's right. Who whatever custodian

you're using.

And I'm pretty sure most 401ks now have

auto invest functions when you But just

always tell people when you bring assets

in, it's it's usually a two-part

transaction, meaning that when the money

hits the account, check that. Make sure

all you got all the money you're

supposed to. And then the second thing

is the part two is make sure it gets

invested. Because one of my biggest I

hate when we do react episodes to to

people who do the right thing by getting

money into these retirement accounts,

but they just let it sit in cash. So

that's one question.

I give us a check box on that one.

What's question number two?

Question number two is I feel very

uneducated with insurance needs. What is

the minimum that I need to have here

that makes sense for what our situation

is? One of the things um that we've kind

of shown you guys here is that you're on

a great trajectory, but you're not there

yet. And right now, when you look at

your investment portfolio, you got about

$250,000.

If you were to get hit by a bus when you

walk out of the studio, that's likely

not going to be enough to provide for

Sorcerer and the kids. And same thing

reciprocally, right? So, we would argue

that there is an insurable need on each

of your lives. And so, then the question

becomes, how much? Well, there's a

really easy rule of thumb. You can do 10

times your income. I mean, a lot of

people like to start there, but we think

it can go even a step further. Since

you've given us all the information, we

understand, okay, based on your age and

based on when we think you're going to

retire, we know how much your income

needs to be saved between now and

retirement. And we know that we have

this college funding goal and we know

that we have this mortgage goal. So, we

can actually add all of those numbers

together and sort of reverse engineer

into a net present value calculation of

what is your true insurable need. And we

actually did this for each of you. So

Dan, for you, you can see that right

now, if we assume a $215,000 income, we

assume a retirement age of age 65. We

know your mortgage is right at about

240,000. We know your portfolio is at

about 250,000.

If we just assumed a 6% rate of return

on your investments and a 3% inflation

rate, relatively conservative

assumptions

on purpose, you want to be conservative.

we reverse engineer this back, we could

come up with today, we would argue that

the life insurance need that you would

have to be able to satisfy those future

goals, it would be about $2.3 million,

right? It's funny. It does come out to

roughly 10 times income. You know, it's

neat how that works out, but about $2.3

million. You may have said, "Oh, it's a

scam. I don't want to pay for this."

What's great is

you guys are 42, which is still young.

Like, that is not You guys are not aged

yet. And so, we actually went and ran

some quotes for you. a 20 million a $2

million 20-year term policy would only

cost about $170 bucks a month. Or if you

only wanted a million dollar policy for

20 years, you could do it for about $85

a month.

Uh so this is like very very affordable

insurance. It does protect pro protect

you in the event that you do get hit by

that bus.

This is term.

This is term insurance only term like

only because

that's what I've had forever.

All you really need to have in place is

enough to get you to financial

independence. It's not like you need

this insurance in your 70s and 80s

because you guys are going to save in

such a way by 65 you're financially

independent. So if you have life

insurance through work, you would

obviously decrease this. If you had

current policies, you would decrease it.

But the total amount of insurance we

think you need would probably about $2.3

million.

Okay. And we also we did use like a

preferred policy, but it's not preferred

plus. Meaning that you might be the

specimen that's hiking every year. You

might this might even be cheaper.

I think we call that the bow insurance.

Bow insurance for sure. We but we wanted

to put something in here so that you

could at least everybody who's watching

this content be like man I've heard all

these bad things about insurance but it

sounds like term life insurance which

would just you're buying the insurance

only. There's no like investment

component or anything else that bells

and whistles that are people are putting

out there. It's much more digestible and

it probably will feel like you're paying

an HOA fee but an HOA fee that will feel

good either honestly but an HOA fee that

will at least protect your family some

dividends on it.

Yeah.

All right. All right. So, that's for

you, Dan. Sor we did the exact same

thing for you. Same sort of assumption,

same sort of timeline, $65,000 income

assumption, same retirement age,

mortgage, investments, rate of return,

inflation, all the same. And we would

argue that you have an insurable need of

about $625,000.

Uh, again, we wouldn't price this a

750,000 just nice like round number 15

policy for you would cost about $45 a

month or a half a million dollar 15-year

policy would cost about $30. date,

right? Like it's a pretty

It's amazing. The ladies are always a

good bit cheaper than you do. That's

exactly right.

The actuaries quickly show you why it's

better to buy insurance as a lady.

And so we would argue that you guys

certainly have an insurable need on each

of your lives. You will need to arrive

at the conclusion. Do we want 20-year

policies? We want 15ear policies, do we

want 10ear policies? Do we want to go 2

million, 750? Like there there's a a

push and pull there based on your

comfort level. Uh, but you ought to have

something in place because it is

incredibly affordable and it's not a

difficult thing to do. And now's a great

time to do it as you have basically this

20-year window while you're building

into financial independence.

All right, you ready for your homework?

Yeah.

Okay, here we go.

Research life insurance. We want you to

look into life insurance because we do

believe that you have an insurable need

for each one of you. Uh, number two,

given your income is increasing and you

have a desire to build Roth assets and

continue to build Roth assets, you

should look at the backdoor uh, Roth

conversion consolidation. you'd have to

get those IAS into the 401k so you

consolidate. Uh number three, keep doing

the things that you're doing. Obviously,

we showed you this fantastic picture of

where the future looks like $6 million,

which is amazing, but that's not where

you guys are today. You guys today,

you're at $250,000. So, there's the hike

from where you are today to the top of

the mountain

is still a pretty severe hike. So, you

got to make sure you keep doing the

work. Uh you're doing a great job with

your kids. encourage them to continue

doing the things that they're doing

because if they really do graduate with

associates degree, all three of them, it

cuts the cost of college in half and

it's going to set them up for the

remainder of their life. And then the

last one I put was keep dreaming. Right

now, you guys have this vision of where

you want to be. I would encourage you

keep dreaming about the things you want

to be doing. Okay? What does chapter 2.0

look like? Maybe retirement is not

something that you guys ultimately do,

but maybe transitioning to the next

endeavor is the thing that you guys do

in your 50s, in your 60s, and based on

the trajectory you're on, you're going

to have the ability to write that

ticket.

Bo, if somebody else wanted to come on

making a millionaire, what where do they

go?

Yeah, if you want to be a guest on

Making a Millionaire, you can go to

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Or if you want to check out any of our

free tools and resources, you can go to

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This has been an absolute blast. Thank

you all for coming on guys. I'm your

host Brian Preston joined by Mr. Bo

Hansen. Thank you so much. Money Guy

team out. Making a Millionaire is hosted

by Brian 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 in 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 forformational

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of risk, including the risk of loss. The

guests featured on Making a Millionaire

are not clients of Abound Wealth

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Their participation should not be

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of Abound wealth management.