This 22 Year Old Needs a Complete Financial Reset

Introduction: The Income That Disappears (0:00)

Bo: There are a lot of people that are going to watch this and be like, “Holy cow, I make substantially less than Peter makes and I’m doing a lot more with it and I’m able to build a lot more with it.” You have a ton of opportunity, but you got to get serious about it. Do I still want to be living paycheck to paycheck? Like when I ask you, “Hey, where’s this $5,500 going?” You’re like, “Oh, well, I see it and then I don’t see it.” That is not commanding your army of dollar bills.

Meet Peter: Three Jobs, No Traction (0:28)

Bo: What do you do for a living? What’s your, what’s vocationally? What’s your profession?

Peter: I’ve got, I’ve got three jobs kind of on and off, especially this late in the season. I’ve got two of my own companies technically. One of which is a record label for my music, which I am working on pursuing more full-time than the others. Okay. I have my own construction company and landscaping. And then I also work full-time as a machine operator.

Bo: Okay. When you say construction, what, what kind of construction, and you said landscapes? Is this like all outdoor stuff? Are you building houses?

Peter: I do a lot of landscaping, mowing. To get started and that kind of gets my foot in the door with the clients and builds the relationship to mention, hey, I was, you know, mowing your grass. Notice you’ve got some drainage issues. I’ll get an excavator in there. I’ll do some drainage like, “Hey, you’ve got some siding, you know, coming off. Let me, you know, let me get up there for you.” And just kind of build off of that.

Brian: I, I tell you, in these neck of the woods, people love that stuff because I’m, I have more trouble than I have time. So if somebody will take that off my plate, I’m, I’m willing to pay for that. And I bet there’s a lot of homeowners that are like, literally, someone knocks on my door like, “Hey, I saw your windows look dirty.” I’m like, “Done. Take care of them. Knock them out.” I was out at dinner last night for a birthday dinner for one of my neighbors and good friends. And he was talking about that him and his wife, they want to do these landscape projects in the yard. And the bid came back at like $4,500 and his wife was like, “We should just do this.” And he goes, “Okay, it’s going to cost us $1,500 to do this, but then it’s going to take us four weekends to do this. It might cost us our marriage. Maybe it’s cheaper to pay the $4,500 to the landscaper for the project.” And I, so that’s what I think that there’s lots of blue open water for a business like that.

The Country Music Side Hustle (2:24)

Peter: And a lot of times it’s the experience that, because I know I’m young. A lot of people look at me.

Bo: How old are you?

Peter: I’ll be 23 in a week and a half.

Bo: Oh well, first off, happy early birthday. And most 23 and a half year olds don’t have three different jobs. That’s, that’s a unique thing, right?

Peter: So my music I’ve been performing since I was 14 and I had my first paid gig, but I didn’t really start taking it seriously until about a year or two ago. This year my music really took off.

Brian: What, what’s your, what’s your, what’s your weapon of choice? What’s your instrument?

Peter: Guitar. I started on piano though.

Bo: Okay. So, and what kind of, what kind of music do you do?

Peter: Country.

Brian: Country music. Welcome to Nashville.

Peter: Right. Pretty much.

Bo: I love it. What’s the difference in not taking music seriously and taking music seriously from a business standpoint?

Peter: So, just being more professional stage presence. I’ve gotten so many more gigs. I used to do maybe two, three a month. August of this year, I had 12 or 13 gigs. Oh, wow. I was doing two, three a weekend and then one weekend I had four.

Bo: Wow. So, you know, it’s wild.

Breaking Down the Income (3:33)

Bo: So, you got these three jobs. You’re taking music seriously. Now, when you shared your information with us, you were kind enough to send us a net worth statement and kind of give us sort of the layout. This says that you’re making like $90,000 a year right now. Is that right?

Peter: That is an estimate. Okay. It is definitely give or take. But that’s kind of what me and Megan had rounded off to.

Bo: Okay. So, walk me through. You have these three different jobs. Can you break them down? Like what, what comes in from construction? What comes in from music? And then what comes in? You said the other one was you were a machine, you say machinist.

Peter: Machine operator.

Bo: Machine operator.

Peter: So for my full-time job running machinery, excavators, loaders, excuse me, all that type of stuff, that pulls in. So I’m not, I just started that job this year probably about six months ago. Okay. My old job in the first 6 months that I started at this year I made, year to when I finished, was about $30,000, $35,000. Okay. Then so far this year I’m up to $35,000, $40,000-ish.

Bo: Okay. So if we say make $35,000 in six months. Then realistically, probably $60,000 a year through the machine operating. Does that sound accurate?

Peter: A little more because I am not a full-time operator. So they pay me per what I’m doing.

Brian: Are you going to be a full-time operator, though? Because you got a lot going on.

Peter: I am fresh in this company, so I’m still making a name for myself. I’m still building up my own reputation. And it’s a very large company. I’m not used to nothing like it. I’m used to running a very small crew. But here we’ve got 400 employees. Okay. So I’m still working up a name for myself.

Bo: So maybe like $65,000, $70,000 doing that full-time.

Peter: Probably about that. Maybe a little more because right now I get paid for when I’m operating, but I’m also laboring and driving the triaxles as well. Got it. So the pay rate varies.

Bo: Let’s do, let’s, let’s stick with $70,000. We’ll be conservative, right? I don’t want to be overly rosy here. Just I want to get sort of a lay of the land. So $70,000 from that. What about from music? How much are, how much are your gigs?

Peter: So this year was by far my best year. Okay. This year I cleared $13,500.

Bo: That’s great. Is that replicable next year? If you’re working full-time as a machine operator, you won’t be able to do as many gigs.

Peter: So I do after work, occasional Wednesdays, Thursdays, but most of my gigs are Fridays and Saturdays.

Bo: Love it. So because you said you’re doing 12 to 13 gigs a month, right?

Peter: That was my high month of August. That was August. That was my high month.

Brian: So what do you get paid for a gig? Because if you’re making $13,000 a year, you know, and doing 12, is that like they throw a few hundred bucks at you. What, what is it?

Peter: So it depends on the venue, depends on how far it is. I typically charge $100 an hour for my gigs. Okay. I usually do 3 hours, but if it’s a real small place, like a little dive bar, I will kind of do $200 for 3 hours.

Brian: And how long does it take you to drive to these places?

Peter: Well, that’s kind of what goes into the price. Usually most of my gigs are within an hour. Okay. Some of them are further, which I charge, you know, maybe $350.

Bo: So you got $70,000 coming from machine operating, you got about $13,000 coming in from music. And then what about from the construction landscape? How much money will you make doing that?

Peter: So for my own company, this year was my first year. February, we’ll mark a year, February 2nd. Mhm. The only thing that I’ve paid myself so far from that was about $2,500. Just what I’ve put into the business personally. So I’ve just been paying myself back. I have made no profit technically. Okay. On the business yet.

Brian: From an accounting standpoint, does that mean you have a business account that’s sitting out there with like $30,000, $40,000 in it?

Peter: No, I wish.

Brian: Okay. So, help me understand because you said you haven’t paid yourself, but you’ve done this work. What, what’s come in? What’s come out?

Peter: I think in total I’ve made $30,000 year to date. It’s like in gross revenue, $30,000, about $30,000 to $40,000 somewhere between there.

Bo: But all of that went out in expenses is what you’re saying.

Peter: Like equipment and people, a good bit. Yeah. So I, and I’ve had, just last month, actually I had a few major things break that I had to come out of pocket for.

Bo: So, it’s not uncommon most businesses right when you begin to operate you don’t immediately start profitable. So that’s pretty standard thing as you think about looking into 2026 because what I’m recognizing, a lot of this stuff is brand new right? So brand new to taking music seriously. This machine operating job with this new company is a brand new thing and even the construction thing is brand new. So you’re kind of starting at ground level one, right? Which is, it’s awesome. But you’ve got some unique stuff you got to navigate, right?

Peter: Right.

Brian: So when we think about 2026 realistically from construction, what would be a conservative like not the dream plan, not even maybe the down to earth plan, but what’s kind of like worst case I think I can probably make this much in 2026 doing the construction and landscaping.

Peter: Worst case probably, I feel like $75,000 is a solid number.

Brian: $75,000 for everything. That’s being a full-time employee that’s doing the gigs and doing, okay, that seems reasonable to me. But that’s got you, I mean that’s humping it. That’s busting it. I mean you, you got to be out there really, I mean because it, it is, I mean because that’s you’re working hard which by the way at 22 I think you can do it. I mean, I think that this is the time of your life to kind of do. Normally, if you came to me and you were 38 years old and you had your guitar and you’re doing all these three gigs and, and I would be like, “What are you doing? You’ve got to figure out what you want to be in life, right? You’re 22. It’s kind of the time to do it. You have the energy. You have the time. You should do all of, all of this to kind of be exploratory to see what really hits and takes traction.” Now what I’m concerned about is while you’re doing, going on these adventures because you’re, you’re limitless on it sounds like talents and going down these things, but I’m not seeing it turn into fruit yet on, on like on your net worth statement.

The Net Worth Reality Check (9:57)

Bo: And let’s look at the net worth statement because it is, it is interesting. Right now, your total net worth that you were kind enough to provide to us just a touch over $13,000. We have $1,000 in emergency fund. We’re going to talk about that. We got about $2,500 in investments. And then we have a lot of transportation things, right? We’ve got a car, we’ve got a truck, we’ve got a motorcycle, and we’ve got a quad. We have a, lots of means of transportation.

Brian: I’m trying to see where in the financial order of operations the toys were because they, they, they don’t, I don’t see them in one, two, or three. And there’s definitely a quad, a motorcycle, a truck, a car. But, but again, I want to, I want to have some grace. Oh, wait. If I was 22 and I made $75,000, I would probably have a quad, a motorcycle, and a boat. I’d probably had a jet ski. That’s what I’d have had.

Peter: I’d love to know. We were looking at boats a while back.

The Debt Story (10:54)

Bo: So, as, as you sit here, right, again, you’re at the, you’re at the very beginning of this journey, just starting out. You have your net worth. I do see some debt on here.

Peter: Yes.

Bo: You’ve got a personal loan. What’s that, guy?

Peter: Okay, so I actually started with the truck note. I need a truck for my business. I need a truck to do truck stuff. Yep. So, I had to get that loan, which I really did not want to do at that time. The market for vehicles was not great at all. Mhm. But I didn’t have many other options at the, at that point. I wasn’t making much money and I needed, I needed a vehicle. So, I bit the bullet. I got the truck. And then next year, I started making decent money.

Brian: So, when did that truck loan happen? What year?

Peter: 2023, I believe. This was before, you know, I found you guys. This is before I, you know, really thought about money, right, the way I do now, right? And my whole family started getting quads. And I’ve, I’ve ridden quads and dirt bikes since I was little, but everyone else was riding every weekend. They put me in the group chat, right? I didn’t even have a quad. I’m like, you’re just teasing me. So, I got one. I shouldn’t have, but I did. So, I got a loan for that, which was $8,000.

Bo: Is that what the personal loan is?

Peter: No, we haven’t got the personal loan yet. Not yet. So, I got the truck loan, then I got the quad, which was about $8,000, $9,000. Okay. Then my transmission on my truck went about 6, 7 months after I bought it. So, I got a bigger loan, paid for the transmission, and paid off the quad loan.

Bo: So, that personal loan is like a consolidation loan to cover the quad, to cover the work on the truck, to cover the original truck loan. Got it.

Where Did the Money Go? (12:32)

Brian: So I, I mean I have to ask Peter because we’re, we’re all bouncing around it. Yeah. Where’s your money gone? Because you, you, you for 22 it sounds like you’ve been in the money game since you were in your 20, like 20. And I don’t, look, you could have a quad because you make enough money but it’s just you shouldn’t have any debt though. I mean I, I don’t understand where, where, where your money’s gone.

Peter: So, I actually had about $7,000, $8,000 in my emergency fund. Okay. I put probably 85% of my emergency fund back into my loans. So, my truck is almost paid off. Then everything kind of broke down a month or two ago and I’ve been putting money into that and just other bills and I got a hard time saying no to my girlfriend. We got a horse. He’s expensive.

Bo: You have a horse?

Peter: We’ve got a horse.

Bo: Why is that not on here? I didn’t see horse on the, on the, where does that go on the balance? What do you put on the balance sheet?

Brian: No, no. Look, I, I mean, I was just talking to because I have a friend in Georgia. God bless him. He loves his daughters and they’re in, I think he’s on his third horse now and but you can, his first one he got taken to the bank. Second one made great money on, I didn’t even know you can make money on horses, but he says he’s learned the game a little bit. So, he’s, so, you can make money on horses assets.

Peter: So, we rescued him.

Brian: Okay. So, this is probably not a horse that’s out there doing, doing.

Peter: He’s, he’s in good shape now. He’s in fantastic shape compared to when we got him, but he’s not going to be making us any money. He’s starting to get older. He’s a little arthritic.

Brian: Okay. And we just, this definitely doesn’t sound like an, you, you probably more of a pet. This is a pet, not an asset.

Peter: That’s our boy. We love him. Peter, we love him.

Bo: You have a quad and a pet horse?

Peter: I am working on getting rid of the quad. I’m working on getting rid of my truck.

Bo: I don’t want to say it doesn’t matter a whole lot what you’ve done up to this point because that’s not true. It certainly matters, but you are so early in the journey. What really matters is what you do next, right? You do have debt, so you got a little bit of like a hole to climb out of. I’d love to know what’s your plan as you think about you got all these jobs. You got all this money coming in. You found our show. You’re beginning to like educate yourself on how money works. I’d love to know as we go, as we start into a new year, as you think about going into 2026, what’s your plan moving forward?

Peter: So, my biggest goal, like next step right now, is to completely eradicate my debt by, I think I said July. Okay. Before July, that gives us about seven months to wipe out. I’d like to get it gone before then. I, I feel like I make enough money. There’s no reason why I shouldn’t be able to do that. I, I realize that that probably wasn’t one of my smarter moments in life, but it’s been fun. I had a good time. It costs money, but money is nothing but a tool. And I use that.

Bo: This guy’s been listening. He’s like, “Look, I heard Bo say it’s a tool. So, I’m going to get the horse and I’m going to get the quad and get the motorcycle.”

The Wealth Multiplier Drill (15:39)

Brian: I have to do for myself and I want you to talk to him about the what his expenses and budget before I have a little, little rabbit chasing I want to do that I’ll bring you the results in a minute. So, but I have to ask Peter a few quick questions. Absolutely. What was the purchase price of the quad? Not what, what you think it’s worth right now. What was the quad purchase price out the door?

Peter: It was just under $9,000.

Brian: $9,000. And what age were you when you bought the quad? Was that 22 or 21?

Peter: I was 20.

Brian: 20. Okay. What’s your body? I was like motorcycle. What, how much, how much did you pay for that motorcycle? What your body? Because I can, I know you know but, but I’m going to let you work while I do the rabbit hole. So what did the motorcycle cost?

Peter: $500.

Brian: No, you say it’s worth $1,500. These things appreciate.

Peter: You, I bought it. It didn’t run. I fixed it.

Brian: Okay. So how much, how much did you pay plus how much did you put into it?

Peter: I paid $500 for it and then I only put in $250.

Brian: Okay. So you got $750 and how old were you when we bought that?

Peter: This was like six, seven months ago.

Brian: Okay. So 22.

Peter: 22.

Brian: Truck. How much did it cost?

Peter: $12,500 before interest.

Brian: Okay. And then how old were you when you bought that?

Peter: 22, 21.

Brian: 21.

Peter: 21.

Brian: Okay. What, what, we didn’t mean to ask you about it. What, what the heck is a car doing? You need multiple. You got, you got your.

Peter: I got the car because with my new job, I travel, I travel quite far at the job that I started at. So I travel with my personal vehicle to whatever job site they need me at. Okay. The first job site that they put me at was an hour and a half away in the morning without traffic.

Brian: So, what did this car cost you first?

Peter: $1,700.

Brian: You say it’s worth $6,000. So, how much you put in it?

Peter: Because I fixed it.

Brian: Well, how much you put in it, though?

Peter: About a grand, $1,500.

Brian: Okay. So, you’ve got, that’s what Kelly Blue Book said. So, $3,000 in it total, you think?

Peter: Yeah, I’d say about that.

Brian: And how old were you when you did this?

Peter: This was about the same time as the bike, as the motorcycle.

Brian: So 22. So this is just a few months ago.

Peter: Yeah.

Brian: So you actually have four jobs because you’re actually out there. He’s out there repairing vehicles so that they become shade tree mechanic. Okay. Y’all continue on with budgeting and all the other stuff. I’ll come back to you to tell you some things.

The Missing $5,500 (17:54)

Bo: So your biggest goal is to wipe out this debt. And, and I, I love hearing that. And obviously I’m going to ask you this question, but it’s going to be hard for you to like really like nail it down, but on an average month, how much money do you have coming in on average monthly that you could do something with?

Peter: So, I actually looked at my statements and ran up an average of the last five or six months. Okay. And it came out to about $8,000.

Bo: All right. So, a little under. So, that’s exciting, right? Because you were kind enough to share a budget with us, right? All right. And when we look at your budget, it looks pretty reasonable. You say you’ve got $550 a month going to rent. You got car insurance. You’ve got the minimums you’re paying on the debt. There’s that horse again you’re boarding. And then you got phones. So you got about like I’m going to say $2,500 in fixed expenses, right? And so $8,000 gross coming in, $2,500 in fixed expenses. Check my math on this team. And that’s $5,500, right, that we have to work with. Where’s that $5,500 going? Because like I don’t see truck insurance on here. I just see car insurance. Is that included in that? Motorcycle insurance.

Peter: I paid my insurance premium upfront for 6 months. Okay. And it came up to about $2,500. A little more. Sure. So I, I kind of just broke that down. It’s about $416 a month.

Bo: I mean, that, does that cover all the insurance for everything like truck, motorcycle. Okay, great. Awesome.

Peter: A little more. The, the bike is on a separate plan. Okay. But it’s, it was only like $250 for the year.

Bo: Okay. So you got $8,000 coming in. You got $2,500 going out. That gives us $5,500. Where’s the $5,500 going?

Peter: So there is a bunch of other stuff that I couldn’t, not find, but there’s a bunch of other stuff that’s missing. Like with the horse, we also do, every other month he gets massage because he’s old and arthritic.

Brian: Did you hear? I’m over here knee deep in math and I hear the horse gets a massage.

Bo: I don’t mean to be laughing because I like, you know it’s, it’s, yeah, it’s a horse massage. How much, how much are horse massages going for these days?

Peter: About a hundred bucks.

Bo: 100 bucks every two months.

Peter: Yes. Every two months. Like I said, she’s hard to say no to.

Bo: Okay. So 100 bucks every, so that’s, okay. So we count. So from $5,500 we’re at $50. Keep going.

Peter: I do put significantly more than my debt minimums into my debts. Okay. So I am really focused on chipping that away.

Bo: How much is significantly more?

Peter: Probably an additional $500.

Bo: Okay. A month. We’re at $550. So now we’re at $4,950 left over.

Peter: Don’t see it on there, but putting money away for saving and investing and stuff.

Bo: No, that’s what’s going to be left over. We, we want to, we’re, that’s what we’re trying to figure out. That ain’t, that ain’t in here so far. Because you’ve been making money for a while. And what, what you’re telling me is, hey, I have this desire, my number one biggest goal is to wipe out debt in the next seven months. If I go back to your net worth statement, I can see that right now your total debt load is about $15,000. What this tells me is if your fixed expenses are $2,500 and you have $5,500 extra coming in, if you actually got serious about it and you really put your mind to it, you could knock out this debt in the next three months. Right. What I’m trying to figure out is, is that realistic or is there more money flying out than we’re talking about?

Peter: There’s definitely more money flying out. I see it and then I don’t.

Brian: Peter, we got, we, we got to get you, we got to get a, because you know that’s why I’m here. Behaviorally, we need to have a reset because do you do any, do you do any tracking? Do you use a Monarch? Do you use,

Peter: That’s one of the things I wanted to talk to you guys about. I used to be pretty good with money, but it was hard to be good with money that you didn’t have. And now I have money and I, I don’t know where, I don’t know where it went.

Brian: You don’t have money. You have income coming in, but it’s, but it’s quickly turning into expenses. And I just want to give you, and the Monarch would be a great start, you know, just so because you need to gamify your life. I think you’re very goal driven or you like to hustle and make stuff happen, but I need you to kind of have perspective of what the potential is that you’re, you’re dealing with here. So, and I’m not picking on everything because there’s, we could put the horse and the horse is probably a multi-million dollar decision just upon itself, but we’ll, we’ll come back to that. And I’m not trying to hurt because I love pets. My, my wife’s dog I think, the dog, I think my wife loves the dog more than me but potentially. So I mean I’m not going to make you, we’re not, we’re not telling you to go take and do something you know to make the horse go away but it, but it is something you need to have some perspective on because let’s go through each of these.

The Wealth Multiplier Math (22:48)

Brian: The quad, you were 20 years old, you spent $9,000. Your wealth multiplier was 88.3. That one decision alone against your future self is $795,000, three quarters of a million dollars. So, and look, I want you to make memories with your family, but this ought to be one of those things where I, I, I used to do shows called financial mistakes you hope your friends make. Yeah. You want to have the, you want to find out that a cousin or somebody can’t use their quad because they’re going to do something that weekend and then they let Peter ride their quad. That would have been a much better use than you going and, and taking $795,000 from your future self. The motorcycle. Now look, this one I’m not going to pick on you too much because it was $750. It’s worth supposedly more than that. But just if I’m staying with the drill here, you bought that when you’re 22. The wealth multiplier on that is 66 and a half. That’s $50,000. I’m going to argue that should not even be on your net worth statement because that’s a hobby. Yeah. If you bought, you spent 500 bucks on a hobby, you put $250 in the hobby and now you get to ride the hobby around, that’s not a vehicle. That’s just a hobby thing. I’m running an, an educational exercise here. And then truck. Now look, trucks generate money if you’re going out and getting jobs. So this one, but it’s still to finish a drill. You bought that when you’re 21. Your wealth multiplier was 76.56. So that decision is $957,000 from your future. The car, your wealth multiplier when you’re 22 is 66.12. That car cost you $200,000 from your future self. If you add all those up, it’s right at $2 million. So every time you make a consumption decision, now look, it can have a purpose like a truck who’s taking you to your job because I had, we all, that’s why we have 20/3/8, is sometimes you have to take on debt. You have to do things to get to your first wealth builder which is your income provider. But that’s not built into the quad. That’s not built in. So you need to get serious while you’re, because you’re in the perfect stage where you just do something with this level of income and your drive and your hustle. It’s going to turn into magical stuff. Instead of this stuff working against you of what you cost yourself, this could turn into what your wealth multiplier is actually built for your future. We just got to change your perspective so that you don’t look back and go, “Man, I made great income when I was in my 20s, but it never manifested or turned into or got traction and turned into actually wealth for me.” Because there’s a big difference between having good income, which I think in, in, in the world we consider that rich versus becoming truly wealthy. And it’s much better to actually have assets or to be rich than to look rich. And I think we, we got to get you working on that because your time is so valuable right now and your, and your work, you, you combine your time because you’re a billionaire of time with your work ethic. Man, oh man. I think you, you know you could go buy quads, you could buy boats, you could do, you could do anything you want, but you got to do it, put the work in first. There’s a time and a place.

The YOLO Mindset (25:54)

Peter: So, one of my biggest things that kind of happened, not happened, but that was going through my head when I was younger and kind of made all these rash decisions was that like up until a few years ago, my biggest focus was just surviving and getting through day-to-day. And once I started making money, I’m torn between you only live once, I’m only going to be 22 years old once, while simultaneously planning for my future. But like I said, I just sort of kind of snapped into this mindset once I found your guys’ show. And I feel like as a person, I’ve grown a lot and just matured a lot since I have started listening to your guys’ show. I want to fix this because I know I could be in a much better position if I put myself in it.

Bo: Well, and I think that’s the realization right there. Because there are a lot of people that are going to watch this and be like, “Holy cow, I make substantially less than Peter makes and I’m doing a lot more with it and I’m able to build a lot more with it.” You have a ton of opportunity, but you got to get serious about it. You got to think, okay, and you have to think about what I want my future financially independent self look like. You’re close enough. You can say, “What do I want my 30-year-old self to look like?” Exactly. At 30, do I still want to be living paycheck to paycheck? Do I still want to be saying, “Oh, man.” Like when I ask you, “Hey, where’s this $5,500 going?” and you’re like, “Oh, well, I see it and then I don’t see it.” That is not commanding your army of dollar bills. That’s not, you’ve done one of the hardest things in the world, which is creating a big shovel. The hard part is making the income. Now, you got to finish the drill and figure out how do I actually turn that income into wealth. But I can already tell you, there’s going to have to be some consumption changes. Yeah, there’s going to have to be some discipline changes. Because while you have, when we think about the three ingredients of wealth creation, you have time in spades, right? Like you get so much of that, you have to increase how much discipline you have in your life. And I don’t even mean around like not buying stuff. I’m like, hey, I’m actually going to get serious about understanding where my money’s going. I’m going to go use, I’m going to download the Monarch Money app and I’m going to go sync up my credit cards. I’m gonna sync up my checking account and every single month I’m going to be meticulous about where is my money going? What? I’m going to go use, You Need A Budget. Like there are tons of free resources out there where you in today’s day and age, there is no excuse for us not to know where our dollars go, right? And if you’re going to meaningfully change the way your financial situation looks, you have to understand where these dollars are going so that you can appropriately redirect them into the places where they should be going. And it’s not, it’s not quads and horses.

Peter: Yes.

Bo: Right. It should be at your income. You need more than a $1,000 emergency fund.

Peter: Yeah.

Health Insurance and Pension (28:42)

Brian: Like we, you said that. Do you have health insurance, by the way?

Peter: Yes.

Brian: All right. I’m proud of you because I was, because you’re, you are dealing with some dangerous activities. I just want to make sure that you’re not sitting out there uncovered on that.

Peter: I have a very, very good plan offered by my employer as well as a pension.

Bo: I love that. And I think that’s awesome and that’s going to be super exciting. And we hardly ever say this, but even I think that is, is a few steps down the road from where you are right now. I think before I can even start thinking about, okay, well, how’s the pension work and what’s going on there? You, you were at like the very base level of personal finance. You were at the very, very beginning. And the very, very beginning of personal finance is understanding what’s coming in and what’s going out. And if we start at the very beginning, a $1,000 emergency fund, that’s not it. Right.

Peter: Right. Like I said, I had that up to probably $7,000 realistically, but I put most of that into my debts.

Bo: You know what that means? It means you have $1,000 in your emergency fund. I understand what you did with it, right? And that, and I totally get that. But when I think about, man, okay, if I got this, I have $2,500 of fixed expenses. I have this other $5,000. My immediate first priority is like, okay, what happens if that unknown unknown thing happens? And that’s all I’ve got. Okay. What’s your deductible on your vehicles then?

Peter: I believe $1,500.

Brian: Okay. So, so there’s $1,500. So, I mean, that’s, that’s probably at least, that’s, that’s potentially your step number one is your vehicle deductible.

Peter: So, at the moment, I do have $2,000 in my emergency fund. What I’ve, what I’ve been doing is I’ve been putting away $150 automatically out of every check into a high yield savings account. And letting that build up to $2,000. Then I put that $1,000 into a loan and then I keep that $1,000 and then build up to $2,000 again. That’s kind of where I was at. That’s what I thought made sense so that I still had a little bit of cushion but still focusing on that high interest debt.

Following the Financial Order of Operations (3:52)

Bo: This company that you work for. You said there’s a pension before. They also have like a defined contribution plan like a 401(k). Are you sure it’s a pension or are you sure it’s not a 401(k)?

Peter: It’s just a, it’s not a 401(k). It’s just a pension.

Bo: That’s so unique. So if we’re thinking about the financial order of operations and we just decided that okay, $1,500 is your highest deductible is what it seems like. There’s no employer sponsored retirement plan. Well then we do get to step three, high interest debt. And that is where I, I do think that you are likely doing the right thing, but a thousand probably is not it. It probably is $1,500 or, you know, whatever the deductible would be. But I think if I were in your situation, I would get militant about my spending because when I look at these two loans that you have sitting out there, one at 11.2% and the other at 9.5%. Those I think count as high interest. This truck loan you said it’s been sitting around for the last three years, almost three years now. So, we’re like outside of 20/3/8 at this point.

Brian: Well, but, and also I heard you say earlier that you, you have this whole FOMO feeling of you’re only going to be 22 once. The cool thing with your income, there ain’t much FOMO to leave on the table if you make the level of income you have with only $15,000 of debt. I mean, you can buckle up for two months and, and extinguish this and then move on to the next thing. And that’s what, that’s the biggest thing that we want for you is that we want you to kind of have a set it and forget it. So then you can go spend recklessly and not feel guilty about it because you will have already done what you need to for yourself. But you’re kind of, if you don’t do that, I think you’re, you’re going to have the worst part of what I see on the other side of somebody who’s got FOMO or feeling like they’re only going to be 22 because you’re doing hard work. And look, I know the machines do a lot of it, but you’re still getting out there and getting with it. I mean, and that’s when you get to be my age in your 50s, you, you’re, you’re not going to, you’re not just not going to have, I, I hate to put it out there, but you’re not going to have the same hustle, right? So, you got to have an army of dollars that you did something while you’re at, at the hustle age that you’re at because you’ll get to my age and be like, “Yeah, life’s kicking my butt if I, if I don’t figure out another way to, to make this work.” Now, hopefully if you’ve done this right, you’ll have crews, you’ll have everything working for you, but I just don’t want you to have regrets in the future.

Peter: So, I, like I said before, I did have a significant amount of stuff break down within my company, which really hurt me financially, but I realized it’s a part of it. I’m prepared to make those sacrifices. And then I also had some issues with my truck that I also had to fix. So the, the truck was about a thousand that I had to fix.

Brian: Well, you’re, you’re getting right into the once again, brilliantly built into the financial order of operations. Once we get that $15,000 of debt paid off, now we get into the true emergency reserves, right? And that’s where we get 3 to 6 months. And that’s so that emergencies don’t hurt. Exactly. So you have the margin in your life to cover all the truck repairs, the horse vet massage bills, and all the other stuff. But you know, but the problem is, is because you’re, and that’s what I still think that there’s consumption going on beyond even horse massages. Yeah, absolutely. I mean, that’s why I’d be curious because look, I’ve had friends like you. I think I’ve mentioned one of my best friends in the world. I, I graduated from an accounting degree and I was making $28,000 a year. He was making already six figures selling tractors, right? I mean, I was shocked because he was the greatest talker I had ever met in my life and, and that personality translated perfectly into selling tractor sales in his early 20s and he was always the most, he’s the loudest personality in the room. He’s buying drinks for everybody. He’s doing. So I think sometimes when you’re young and you’re, you got it coming in, are you, do you find yourself doing a lot for, for everybody because you, you feel like hey, it’s coming in, why not?

Peter: Sometimes, but I don’t do it from the standpoint of, not boasting.

Brian: Oh he wasn’t boasting. I’m still good friends with him. I love him to death. You just a good time.

Peter: That’s not what I mean. I just like, not that I’m like flaunting it to my people, but like I do want to take care of everyone and know sometimes I, I probably do put myself out there more than I should.

Bo: But you have to put on your oxygen mask before you can put on somebody else’s. And I would argue that right now you have the ability to put on your oxygen mask, but you’re not there yet. You’re not in the position where you can be able to do that for other folks because you haven’t shored up your financial foundation just yet.

Peter: I, I want to get it under control. I realize the possibilities that I’ve already lost out on. I don’t want to lose out anymore.

Bo: But again, at 22, 22, it’s, I mean at 22, not 20, at 22 it’s okay. All the stuff before doesn’t matter a ton because you have so much time ahead, right?

Investment Strategy Discussion (35:42)

Peter: What do you guys recommend for splitting the 25% savings rate? I just kind of, I don’t really have a set number that I put into investments or any mutual funds or anything like that. I just kind of if I have it, I move it.

Bo: I think honest opinion right now, I think you’re completely out of whack. Meaning, let the financial order of operations be your guide. You shouldn’t split up your 25% at all yet on investments because you ought to be knocking out the debt. And I mean like relentlessly and aggressively. Every extra dollar you can put together should go towards that debt. And the sooner you do that, the sooner then you can increase the $150 that’s going into the emergency fund, the sooner then you can get the emergency fund fully built up and then you can get to the 25%. But you, you’re thinking about step seven really when you aren’t even done with step three. You just, you might not be done with step one, right? So you got to do that first.

Brian: That’s why we designed the financial order of operations, what to do with your next dollar, right? And we’ve got enough for you that the next six months ought to be you just going, what’s, what’s next on the list and we can get you there. And then I think this is going to get some muscle memory and it’s become automatic for the people, for you once you set up these automatic investment account builders. And then you’re going to be like, what was I thinking? Then you can feel, you can go spend money on your and your girlfriend. You can spend money on the horses and, and, and the weekends with the family.

Bo: Not horses, just one horse.

Brian: One horse. But you, but you will completely be freed because it won’t, you won’t be faking it until you make it. Because right now you have this income, but you’re tomorrow is not promised that you’re going, because that’s the thing when people tell me I’m only going to be 22 once. I’m like, “Yeah, but you’re probably only going to be 22 once making this type of money.” If you don’t have a fear about that, you, you, you know, because that’s the part that, that, that I feel like needs a lot of love just from a personal behavior standpoint.

The 2500 Truck Temptation (37:44)

Peter: Yeah, like I said, I do plan on selling the truck and the quad. My hope for next year is that I do need a 2500 for my company, but I’m not worrying about that just yet. I want to get rid of my debt. I want to get myself situated because once I sell the quad and I sell the truck, I’ll be able to get pretty much all of that debt gone.

Brian: Can I give you some tough love on this, on this buying a 2500 though? Is your biggest provider of income, is this job though? Do they require 2500?

Peter: No.

Brian: So it’s, it’s you doing the side hustles and other things and then if you,

Peter: So I would like to lean away from the landscaping portion and do more excavation on my own and kind of focus more on that because that’s where the money is. It’s not in doing $50 lawns. It’s getting the drainage jobs and the trenching and all that.

Brian: But I don’t want you to aspirationally go buy the biggest truck you potentially could ever need for something that doesn’t turn into the money producer you think it is. It’s more of a dream than a reality because your biggest producer is at your job right now. And that’s the thing. So I, I worry because we can do some false mental accounting where we think, hey, I can go buy this 2500 and that’s going to cost me, I mean, what does that even cost, $85,000, $100,000? What is it? What was it?

Peter: I’m definitely not doing brand new.

Brian: Okay. So, what would even in your, in your mindset, what, what would this 2500 cost if I were to do this?

Peter: Like I said, this is all just kind of thoughts getting thrown around. I’d probably be looking at about $20,000 on a realistic fair number. I’d probably be looking at about $20,000.

Brian: See, I would, I would challenge you if it’s, knowing it’s that reasonable. This just needs to be after you’re funding your Roth IRA and, and those type of things. You can set up and expand when we have your emergency reserves and we say we want you to have 3 to 6 months. You could push that emergency reserves bigger to have an earmark and maybe a monthly budget for that you’re going to start having a sinking fund for saving for this 2500. And at that price you could, I mean that could be something that 6 months in the future you, you would have it.

Bo: Because does your current truck work right now? Does it work for the construction job? Is it suitable for the construction job you’re doing?

Peter: It’s suitable for what I’m doing at the moment and the type of equipment I have and need to trailer. But the truck has issues.

Brian: Don’t go squeeze or fake it if you don’t necessarily, don’t, don’t turn a want into a need artificially is really what I’m trying to get your mindset up.

Peter: Absolutely.

Shutting Down the Business? (40:29)

Peter: And then there’s also been the other idea because since you know this job has been so good to me, I have been throwing the idea around of liquidating and just kind of absolving my business and-

Bo: Putting everything into the current day job.

Peter: Yes. Because if I could get, you know, Saturday or Sunday work at my full-time job, that would be an insane difference in pay.

Bo: You’re going to make a lot more working on Saturdays with your day job than you are doing.

Peter: It would be unreal.

Brian: See, and this is something I’m gonna sound like an old man on the front porch here a little bit because I, I’m an entrepreneur. I’ve got multiple businesses. Bo and I have built multiple businesses now and I feel like there’s so much hustle culture out there that they tell people go out there and start your business ASAP, but the problem is, is, and I’m all for it. I mean I would be a hypocrite if I didn’t, but if you don’t, the biggest problem I see with businesses, small businesses, they are underfunded. They don’t have enough cash reserves. They don’t have enough money in the bank to give them an actual viable option to be successful. They’re more passion. They’re more dream than they are reality. I feel like as a 22-year-old, you’re trying to make this stuff happen, but all you’re probably doing is working against your day job to, to some degree and you’re not giving the dream of the entrepreneurship even an opportunity to take root because it’s so poorly funded, right, that it never, it’s, it’s all aspirational. It probably is cool at the bar with your friends when you get to say, “Hey, I got another gig. I got this and that.” So, but it’s not actually getting traction. Whereas, if you actually threw your, your, your heart into the job, making as much money as possible, but still enjoying life, don’t, don’t misunderstand me. I’m not trying to turn you into this, this miserable person that only works. But if that money caught traction, built up in the background, then if you ever said, you know what, I think I want to be my own boss. But maybe you’re 27, 28, 29, somewhere in there. You still can be a young person doing this, but if you have enough money behind you now, this, this dream actually is not aspirational anymore. It actually might pop because you can go buy a full, you know, the, the 2500, you can buy the, the, the reliable, you know, trailer, you can put the equipment on it, you can do everything. But right now, this is a, this is a more of a, a dream or a mirage than it is of a reality of life.

The Music Priority (43:00)

Peter: And on top of that, I 100% take my music. I 100% prioritize my music over my landscaping excavation company.

Brian: Well, that’s the other thing. You’re cannibalizing, uh, this other thing, this passion, this hobby that potentially could, you never, I never, I never take, living in this town. I don’t steal anybody’s dreams. If you want, you got the energy, you’re 22 years old, go out there and let’s see if we, if we hit a lick with, you know, something, something pops with the music career. That’s one more reason not to do this fake entrepreneurship that, that’s taken away from a lot of stuff.

Peter: I do really enjoy not so much the fact that I’m my own boss. I mean, obviously, who doesn’t want to be their own boss, but I do really enjoy making those connections and being able to help out and, you know, provide good work. I, I take a lot of pride in the work that I do.

Bo: Just because it might be no to being a small business owner operating your own thing right now doesn’t mean it’s no forever. Absolutely. You have to think about what’s the best use of my time, what’s the best use of my resources, what’s going to put me in the best place long term. Being your own boss today might not be that, but at 30 it might be. And so that’s something. I, I’ll be honest, I think we, we’ve got a lot of stuff to work with here. What I’m hearing is you’re malleable. So, as we put together a plan and hey, I would consider this and maybe think about this and maybe move this over here. I think that we could put together a strategy that likely a year from now would have you in a completely different situation.

Peter: And that’s, that’s why I’m here. You know, like I said, ever since I found your guys’ show, like I feel like I’m a different person, but I realize I still got a long way to go, you know, even working seven days a week, you know, 70 hours a week, I, I feel like there’s still more I could be doing, but I’d rather spend less time and be more efficient with it, so I have more time for myself. And, you know, I don’t want to work like this forever.

Brian: Yeah, you will be able to.

Peter: I’ve been working full-time since I was 14, right? So, it’s, I mean, you got a work ethic.

Brian: I mean, you got all the, the right pieces. It’s just making sure that it’s turning into fruit and not getting busy doing nothing.

Bo: I know you’ve let us know what your biggest goals are. Hey, I want to wipe out the debt in 7 months. I want to feel in control of my financial situation. I’d like to be more efficient, more effective with the effort that I’m putting into my financial life. Have we heard you correctly on that?

Peter: Yes. And my time.

Bo: And your time. Awesome. All right. I’m excited to get to work.

The Analysis: Opportunities (45:38)

Bo: Brian, what an awesome conversation with Peter. Sort of. I mean, it, it, it’s awesome in the sense that there is a lot of opportunity, but in my opinion, I don’t think he’s quite there just yet.

Brian: Well, I’m gonna be honest. This is one that I found myself driving home from that recording day and I felt like I failed Peter. Let me, let me tell you why I say this is that because Peter is working. He’s doing a lot of things right in the fact that he’s got a big shovel. He’s got a good income, but man oh man, he’s going down a dark path that if he’s not careful, it reminded me of, for, you know, years ago when I used to work with professional athletes, you know, a lot of these football players, the basketball players, and baseball players I worked with, they just assume that they, they, they’re spending and building their life assuming they’ll have this big shovel of income for years to come. And what I think Peter is not catching on to is that he’s got a limited window that he can hustle and go at it like he is right now. And if he doesn’t start turning that human capital and his youth and time that he has in abundance right now into actual working capital, meaning assets that show up on his net worth statement, it just is, he’s going to end up being a person that’s a cautionary woeful tale of great income, great opportunity, all the resources and, and things that could come his way, but he never actually turned it into something. And, and maybe I’m being too hard on myself, but that’s the way when I was driving home as I was like, I need to tell Peter, get on ASAP, start turning your good income into assets on your net worth statement because owning stuff is what’s going to get him through this.

Bo: I agree with you there, I think. But here’s the thing. Peter’s young and he’s a hustler. What I worry about with Peter is he’s putting all of his effort and attention in the wrong area and he’s not focusing on the right things. I agree with you. He needs to figure out how to turn his income into assets. But I think he’s just getting distracted at the stuff that he doesn’t need to be getting distracted.

Brian:He’s doing, he’s doing, I think he’s falling prey to, he’s doing what he thinks successful doing because think about, he, he’s got the work truck. He’s got, you know, he’s trying to run three different companies. It feels like he’s buying equipment and doing all these things. In a lot of ways, I think he’s trying to pretend to be successful without really seeing that the engine of his success is probably that high-paying job that doesn’t even require the trucks and all the other things. And I was also troubled. Peter doesn’t know where his money is going.

Bo: Well, that was the, I feel like that was the biggest gaping hole. We’ve already said, you know, Peter had a great income. He said he’s making about $8,000 a month coming in, which is unbelievable, especially at his age at 22. Exactly. But we could only account for about $2,500. That leaves a big gap like $5,500 that is completely unaccounted for. And if you want to be able to command your army of dollar bills, you have to know where it’s going and know what cracks your money’s falling through. And I feel like Peter just didn’t recognize that. And so when I think about the one thing he’s got to figure out, he’s got to figure out where his money is actually going on a month-over-month basis.

Brian: Well, that’s why I think what I love is now we get to say just a reasonable portion of this unidentified amount of money. He doesn’t know where it’s going. If we just put some of that to work, I think amazing things will happen.

Bo: Yeah. I think the very first thing I would tell him to do is he’s got to figure out, and, and it’s so easy. Technology’s made it super, super easy. Go get some sort of budget tracker, some sort of app, download that and start tracking where your money’s going. And then he would at least know where it’s going. Because we said, “Okay, if Peter knows that he’s got $2,500 of fixed expenses, let’s just go ahead and be very, very generous and say that he had another $2,500 of variable expenses going somewhere.” Well, if that were the case, $2,500 fixed, $2,500 variable, that still gives him $3,000 of margin on a monthly basis to be able to fund some of these other goals. Well, if he had that money, he knew he could like put it in the places that it needs to go, there are some exciting things he’d be able to do with us.

The Homework Plan (49:48)

Brian: So, I think we’re on the same page is that he’s, he’s probably going to wrap up the construction business or at least put a pin in it, deposit right now. Sell the truck. I mean, what are we doing with this? And then knock out all the additional debt that he has going on and then don’t just take for granted that he doesn’t need an emergency fund. I mean, he probably should lean into the emergency fund a little bit more, too.

Bo: If he were to do these things and he were to move in this timeline, we think that it would probably take about 6 months to completely right his ship and get into like a fantastic financial situation to where then he could start building for the future. Because we said, “All right, what if, what if Peter did this?” He took the next six months, really got serious about it, and we just assumed, okay, based off of his gross pay, what if he saved 25%. Like we said, what if he saved $2,000 a month for the future? Right? What’s interesting is if Peter were to just do that because he’s so young, it does not take a lot. Even though $2,000 a month is a lot, it does not take a lot. Peter doesn’t have to think about being like a millionaire or a two millionaire, a five millionaire, his picture actually gets unbelievable because if he can save at that clip starting at this age, he’ll cross over into millionaire status by the time he hits 40. And then if he can save at that clip from now all the way until he gets out to actual retirement age, actual age 65, he could be looking at a portfolio of like $14 million of assets actually working for him.

Brian: It’s kind of hard to believe that he can become a decamillionaire, still afford all the horse massages that, that him and his significant other have, have decided is important for him. But the big thing, he’s got to do something because he’s got shovel. He’s got time on his side, but if he doesn’t actually start turning that into assets that are showing up on his annual net worth statement, this is all just made-up stuff.

Bo: Again, I think, I think he’s got the right ingredients. He has the time. He has the hustle. He has the work ethic. He has those sorts of things. But what he has not figured out is how to put those ingredients together in a really good recipe. And to be true to himself that, man, I’m, I don’t want to say lazy. That’s too aggressive.

Brian: No, he’s definitely not lazy.

Bo: But I’ve got, I need to be more intentional. He’s just kind of, he’s just kind of out there floating. And I think with some intentionality, he can turn his financial life around and really set himself up well. So, if I’m thinking about next step sort of homework items for him, number one, I think starting to budget is like, uh, the very first starting point. He can go out and use Monarch, he can use YNAB, he can download, he can do a spreadsheet, he can track receipts, whatever his thing is. If he can start budgeting and understanding where his money is going, that’s going to be the first step in the right direction of doing what he needs to do.

Brian: Well, also paying off the debt. I mean, he’s paying 11.2%. That’s turning compounding interest completely upside down. So, if he could get ahead of that, I think it’s going to help him out tremendously, too.

Bo: And then again, we’ve already acknowledged this over and over. He’s such a hard worker, but I don’t think he recognizes the value of his time. He’s trying to make this like side construction business work when in reality, it’s really just kind of sucking resources away from him. I would think maybe shutter that business for now. Focus on the day job. Understand that if you’re passionate about music, that’s something you can pursue. But you can’t have all these passions at once, especially when you have this opportunity in your day job to make really, really good money, be able to put that money to work and not have your hobbies pulling away from you.

Brian: Well, what I think is, is interesting is that hopefully Peter will hear this well. He has, he’s doing all this hustling and nothing’s showing up really on the net worth statement like it should. But yet he wanted to make sure when he left he was like, “Hey, can I play a song for you guys?” So he’s obviously very passionate about the music because I thought it was pretty and here we are in Nashville and he plays Johnny Cash right out of the, the box with that. But this plan that we just put together with the homework is gonna let him focus on keeping the day job, saving and investing. And probably because he’s not running around doing all this, this wannabe entrepreneurship stuff, he can now do more of the music and see where that goes as well and pursue that passion. I think that’s a win-win. So get to stacking, Peter.

Final Thoughts (53:55)

Bo: I think one of the huge things that young people have is they have all this time at their disposal and that’s the most valuable resource, but so often that time just gets sucked away with distractions.

Brian: And I think that he, not let himself get distracted and just like you said, get really busy doing a whole lot of, my hope for Peter is either he becomes a famous country musician but if that doesn’t work out hopefully we’ve given him enough groundwork in the background that if he can just be disciplined with his young age, he’s going to have all of his financial needs met and he’s going to live the best life ever.

Bo: I love that he found us now. I love that he was able to come on Making a Millionaire right now. If you would like to be a guest on Making a Millionaire, you would like to tell your story, we’d love for you to go to moneyguy.com/apply. Or if you want to check out any of our resources, any of our tools, you can go to moneyguy.com/resources.

Brian: This was a lot of fun. I’m hoping that Peter will listen to us. Guys, I’m your host Brian joined by Mr. Bo. Money Guy team out.

Legal Disclaimer (54:53)

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 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.