Their Single Income Plan Needs Some Help

Introduction: Living in the Messy Middle (0:00)

Bo: How your life looks today does not dictate how it’s going to look tomorrow. Meaning, we are going to have seasons. There are going to be times when life feels hectic and crazy and tight and it’s not our dream life necessarily. We often call that the messy middle and that’s exactly where you guys are. So I want you to just pause for a moment and take a deep breath and just go, “Okay, it’s all right. Other people are here. We’re not alone. Other people have navigated this.”

Meet Matt and Hanna (0:30)

Bo: Who are you guys? Right. How old are you? You said you have a one-year-old little boy. Give us a story. Give us a backstory. How, how, how did you guys get to where we are today?

Hanna: Oh yeah. We started dating in 2021. We got engaged in 2023, married in 2023, and then we ended up having Barrett a day after our one-year anniversary.

Matt: So it’s like we went out to eat. What is it going to look like as parents in this next year? And then literally the next day was go time.

Hanna: Yeah. I called him and it was actually a little scary because I’m like, I haven’t felt him move. I was 2 weeks away from my due date. I was like, I haven’t felt him move. I said, what do I do? Do I call the doctor? He’s like, call the doctor. And we go in, all this stuff. And they’re like, it’s go time. She’s like, “Yeah, you’re having a baby today.” All right, let’s do this.

Brian: Wow, that’s awesome. How old are you now?

Hanna: I’m 25.

Matt: I’m 27. Now with the children, getting in that messy middle, starting to get a little bit older and feeling like, are we on track, you know?

Hanna: So yeah, we’re getting to that point where we’re starting to think about having the second because yeah, we do like that 2-year age gap. That’s why I was asking because it’s like we like that, he and his brother are just under two and my sister and I are just over two years apart. So it’s like that 2-year age gap we think is absolutely perfect. So we’re getting to the point where it’s like, all right, let’s start thinking about the next one and have the second and then I don’t know, maybe have a third.

The Dave Ramsey Years: Crushing Debt (1:50)

Matt: Even the journey getting to the first kid and before that we definitely before we even met. Growing up, my parents did the whole Dave Ramsey thing and never used credit card, that was the big thing that they went through. And went off to college, did two and a half years and racked up some debt. And then I came to the conclusion of “do I want to stay with this program?”

Brian: What were you studying in college?

Matt: I was studying computer information systems originally. I just kind of remember looking around in my classroom and seeing everything I was, I don’t know if this is really what I want. And I knew I wanted to work with my hands. So I work with my hands. I thought it’d be more hands-on, like working actually modifying stuff, but it was not that, which hopefully I would have figured that out sooner, but you know, life happens.

Bo: How far into your education before you had that thought, “this isn’t for me?”

Matt: Yeah, I was two and a half years into that program.

Bo: So you were a junior?

Matt: Yeah. Okay. I was a junior.

Bo: And how much student loan debt did you build up in during that period?

Matt: It was about $50,000. I didn’t see that on your net worth statement, missing it or maybe it wasn’t $50,000. It could have been less. We knocked out all of our student, being Dave Ramsey thing. When, when I dropped, it was, it probably wasn’t $50,000. Probably more like $30,000. Okay. Now that I’m thinking about it because I don’t, I did not get out and it’s been a couple years so I don’t remember. I just knew I made the decision to drop out. I dropped out, moved back home and then of course it was, all right, these loans are going to kick in. So that was weighing on me and we hadn’t met yet. So I was still living at home with my parents and they said, take whatever you’re going to do for rent, try and pay that down. Okay. Love that. So I mean I was living for free and then just pretty much knocked that out before we met. Took me probably three/four years.

Bo: Three or four years to knock out $30,000. It’s impressive. Yeah. What do you do professionally now?

Matt: I do woodworking for a custom cabinetry shop in Michigan. So that is working with your hands. Yes. Very different than computer information systems.

Hanna: What he makes is beautiful. He sends me pictures all the time of what he’s making and all the jobs he’s doing. And he does really, really good work. Got a couple cutting boards in our house that he’s made for me, too.

Matt: Yeah. So when I go in here and see the studio and seeing all the stuff, I’m like, “Oh, this is really nice.” And I have the eye for all that.

Bo: So did you know that me and Brian actually built most of the stuff in?

Brian: We did work with people to make custom things. We did not swing any hammers in the making of this set. Probably nobody but you have noticed this table is not shaped like a normal table. It was custom made. Yeah. Our conference room tables that y’all were sitting at were custom-made. Could you tell that those are real wood when you were sitting?

Matt: Exactly. Because I do the countertop. I’ve done countertops at my place that we work.

Hanna: He was like yeah you look at this seam right here and I know exactly what you’re talking about.

Hanna’s Education Journey (4:40)

Bo: And you said you had student loans too. What was your school background coming into adulthood?

Hanna: When I graduated high school, I went to the University of Toledo for a semester and that was the four-year university. I was planning on getting my doctorate in occupational therapy. Okay. And then I got a semester in and I was like, ooh, I don’t want to go to school for eight years. So I got,

Bo: Sense a theme with us, too. Yeah.

Hanna: So I ended up deciding to transfer to a community college and I got my associate’s. So I’m an occupational therapy assistant. Okay. So I went from that 8-year program down to a 2-year program. So that one semester cost me as much as my 2 years in my associate’s. So I don’t even know the total. I was probably pushing $30,000 too. Okay. And once I graduated in 2021, I graduated in spring of 2021 and I was on my own living in Toledo away from my family. I was all on my own. And I had been in my own apartment paying rent, working, and just kind of making ends meet right there. Kind of just paying for my immediate expenses. Hadn’t thought about student loans. I think at that point, student loans were still in deferment. They were pushed off. So I didn’t even have to worry about that. So when I met Matt, I had credit card debt. I had student loans. I had,

Bo: How much credit card debt?

Matt: We had the talk before getting married and going through the marriage classes and then it was after the honeymoon we went and got back and said, all right let’s sit down and look at this stuff. And then I was like, oh we got like $6,000 on a credit card.

Hanna: That’s literally, pay all my rent, it’s like, all right, do I want groceries? Put it on the credit card, did I make a few couple stupid purchases? Sure. Do I want groceries? On the credit card, that’s the way that goes, yeah. That was kind of my downfall. My dad is super super smart with finances but I didn’t take that from him unfortunately. It’s more of he just kind of did it and you’re like okay, type of thing, right? So I kind of wasn’t financially smart in my younger years. So meeting Matt, he definitely took charge of the whole financial situation. He’s like, all right, you have a 30% interest on your credit card. We paid that off that day. We had enough saved up. It’s wild.

Coming Together: $100K of Debt (6:52)

Bo: So you guys come together. You start dating, you meet each other, you’ve got $30,000 in student loans, you’ve got $30,000 in student loans, you got another $6,000 in credit card debt, and you’re just like, “All right, hey, we’re going to attack this.” How’d the conversation go between you guys about, “Hey, this is where our money is going to go right now.”

Matt: It was pretty easy. I mean, for the most part, she’s been very good about…like she said. I don’t know, so just teach me. And more so the trust, the way that we talked beforehand was if we can, you know, share bed, we can share finances. That’s part of marriage. It’s all together. So that made it super easy for us, we’re on the same page. So this isn’t just your debt, my debt. This is all our debt. And even before that, when we were dating, because I was in Detroit and she was in Toledo. So it was an hour drive for us to see each other. And I was driving my car at the time and it was getting to the point where it kind of took a crap. And I was needing a new car. So I ended up purchasing a Toyota Tacoma, but it wasn’t with cash. That was also financed. So we ended up with another $32,000 of debt on top of that.

Brian: I’m missing something here because…and Bo, I want you to kind of pull up the net worth and the income. I’m hearing all these things and look, we come in here and I know what your income is. I’ve seen your net worth statement and on paper, you guys look great. I mean, right now you guys have a total net worth of just under $86,000 and you have a household income right now of $55,000. So for all intents and purposes, I mean, you have more than one times your household income in terms of net worth at a pretty young age at 25. That’s the thing. I don’t see enough time to have passed. I mean, because at 27 and 25, y’all are young and you’re already over one times, your net worth is higher than your income is, which is your age 30 goal. I’ve just heard $30,000 student loan, $30,000 student loan. I’ve heard $6,000 of credit cards. I’ve heard then another $32,000 of, $100,000. We got $100,000 of debt that is gone-ish. So what happened?

The Severance Package Game-Changer (8:57)

Hanna: I was working at the time. So I had a full-time job. I was making good money from, I had just started a job when we started dating. So I was working all the way up until this past June. Okay. So my contract got bought out at my company and they pretty much paid me the six-month severance. And I was making really good money there. So we kind of took that and paid off our debts.

Brian: So how big was that severance?

Matt: It was about a little over $30,000. Which, because I guess my debt too with the $30,000 school loans was pretty much paid off before we got married. So it was living and living. You extinguish it just from living. Pretty much especially during that time, you couldn’t go out and do stuff. So I was like, “Well, I might as well pay off some debt. I can’t go and do,

Brian: Look, I’m not even going to pick on the, because normally we do this whole interest rate arbitrage thing, but if your parents told you, hey, you can live at home, not pay any rent if you pay down the debt, I’m not even, behaviorally. I’m like, “No, that sounds very noble.” You know, because now maybe, you know, because if you’d gone and said, “I want to go fund my Roth”, they’d have been like probably okay. But I just think that it’s good to be focused on what you, what the goal was. And it sounds like you accomplished the mission. Yeah.

Bo: What was the household income when you were both working?

Matt: It was about double. So about double.

Bo: So about $110,000.

Matt: She was making a little bit more than I was.

The One-Income Transition (10:20)

Bo: Because obviously making that kind of money, you were able to do some intense things. You’re able to knock out a bunch of debt, get that all knocked out, but then you make this decision to go down to one income. How’s that been?

Hanna: It has been tough, but we made that off of me staying home and taking care of our son. So we’re not paying for child care. I’ve been a little bit more diligent on not going out to eat as much, making the meals at home, which was something we used to do quite a bit before shopping. I would get a fun drink here, fun drink there, and there’s 30 bucks a month, if not more. Real easy. So definitely had to change our lifestyle a little bit. But making the sacrifice and being able to stay home with our son has definitely made it so worth it.

Bo: So even though it’s been hard, it’s been a worthwhile hard. Is it likely that income is going to stay at the place it’s at right now or is it likely you’ll go back to work?

Hanna: I would at least love to stay home until our son, if not more kids, are in school. So maybe like a 5-year thing. I would love to go back to work eventually, but I want to make sure our kids are taken care of. That is my number one priority. I even told him when we were kind of determining if we wanted to if I wanted to go back to work, I said, if we don’t find a safe place for our son to go, I said, “I’m not working.” I said, “He is our number one priority no matter what.” I would love to stay home. If we have a second kid here soon, maybe 5 years before I go back to work. So I guess one of our main goals is, how can we make that possible?

Discovering The Money Guy (11:46)

Matt: Because for me, like even with the paying off the debt, I had some financial backing with Dave Ramsey, but I didn’t find you guys until probably I don’t know, 6 months, 7 months ago on YouTube, type of thing. And with my job, since I’m working 48, 50 hours a week, and with that, I can listen to music, listen to podcasts. So I’ve gone back and I mean, the way I like to say it is, I’ve gotten a second education over the last seven years between different podcasts, interests that I have. And I mean going through, I’m like, oh, even with the $30,000s on the severance, I’m like, why did we pay off the low interest debt, we could have, I just, you, you don’t know what you don’t know. And after that, now sitting down and crunching these numbers, I’m like, oh man, it feels like we’re really squeezing, unless I’m missing something but, I know we’re in a good spot. I know we’ve, we’re building up our emergency fund. Doing all the steps to get through, but it feels, if we were to add another kid into the mix and move on with just life, like how much are we actually enjoying our life versus, squeezing too much out of it?

Surviving vs. Living (12:48)

Bo: Well, answer that question for us right now. How much are you enjoying life or do you feel like right now in this moment you are just surviving?

Matt: I myself feel more of the just surviving, we do have our moments and I grew up not having a lot anyways with my family. We were pretty middle-income family, so I learned to make the fun memories out of the stuff. So I’m, I know what to expect and I just, it’s hard for me because I’m very family oriented. When we got married, in our vows, I was like, the one thing I know is, I’m not always career driven. I’ve never had that thing that I knew I really wanted to do, but I wanted a family, right? With that it’s tough when I come home and after working 10-plus-hour day and then only get to see him because he’s got to go to bed early, being young, for couple hours, 2 hours maybe if we’re lucky, if he’s up. So that’s, you know, because I’ve tried to make up what we’ve lost by working the extra overtime and a half and all that. To me I’m like, how much enjoyment am I getting if I’m not being with them as much?

Bo: Well, I do want to, I want to make sure I understand when you say surviving because you say you’re family oriented and in a minute we’ll bring up what your budget is. Do you feel like you’re, you’re only surviving because you also know what you should be saving and other things? Because you sound like you’ve, you’ve loaded yourself up, but if it, if we actually bolt it down to just the life that you’re living, like you come home and you sleep on the weekends and you think about and you look at your life around the holidays, do you feel like there’s anything you’re missing from, of not, not savings goals like the 25% or anything, but just from your family nucleus? Are there memories or things that you’re missing or do you feel like you’re sustaining and, and living a good life right now? I think that’s really what Bo’s asking. Yeah. Okay.

Hanna: At the end of the day I do love where we’re at. I do feel like we’re in a good spot and I don’t feel like we’re missing too much. Like he said, at the end of the day, as long as I’m home with him and Barrett, that’s all, that’s all that matters. But do we want to go out and be able to take, mini, little trips here and there? Do we want to be able to buy a house because we’re renting right now? So it’s, I guess we’re kind of looking more into the future at that stuff, too.

Matt: Yeah, that’s probably my biggest downfall. I know, we’ve jokingly talked about, and seeing the future, the life that we want to have for our son and for our family. For me, I think it’s probably harder, yes, we are doing good. And I think it’s more of just a reminder to myself that I need to, take a second, live in the moment and it’s for a couple years. And, because in my head, I thought she was saying she originally, when she’s like, “Yeah, I don’t think I want to go back to work.” I’m like, “Forever? Forever?” No, no, no, no. Which if I was able to do that, I’d love for her to be able to do that. But, I said, with the things in the future, the house and trying to do those things, I need to realize, we are, we are good where we’re at and I do get to do the things, especially him being one, he’s young. He’s not going to know if we don’t go on a vacation for a week long thing at this point. We can suffer through and, we grew up tent camping so, for me that’s pretty cheap and easy and he can still do that. And I think it’s probably more of the reminder for myself, it’s okay for this time in our lives.

Defining Goals and Priorities (15:44)

Bo: I want to hit on some of your goals. You said one of the things is, how can we make that possible? You just said something so great and we say this on the show all the time. How your journey starts does not define how it ends. Right? That’s a thing we say. But another thing, we don’t say this as often, but it’s in that same vein is, how your life looks today does not dictate how it’s going to look tomorrow. Meaning we are going to have seasons. There are going to be times when life feels hectic and crazy and tight and it’s not our dream life necessarily. We often call that the messy middle. And that’s exactly where you guys are. So I want you to just pause for a moment and take a deep breath and just go, “Okay, it’s all right. Other people are here. We’re not alone. Other people have navigated this.” And then I want us to calibrate. Okay. What are your goals? Because I heard, I want you to listen for, I heard, we’re renting. We want to buy a home. We want to have more kids. Walk us through some of the goals both personally and then financially that you guys have and give us a priority list on that too because I heard from your heart, it sounds like staying at home for the next 5 years is that, that’s probably, is that one, is that number one,

Hanna: Number one and having another kid, having another kid definitely because yeah, we’re getting close to that 2-year age gap that we really like and with that, getting, getting me a new car and with that being kind of our family car, yeah, he got his Tacoma but that’s not necessarily big enough for what we want.

Matt: It barely fits with the one car seat and, she’s up in the dashboard and it’s not as big a room. When I got it, it was just me and even with her car, starting to have some, starter, starting hard because it’s cold out now and I want to make sure that they’re not driving something where it’s not reliable and something that will, you know, help us grow our family too. Yeah.

The Family Car Discussion (17:25)

Bo: Help me, give me an idea of what, what does a family car mean for you guys?

Hanna: We would like a bigger SUV.

Matt: Or a minivan. Really anything family-oriented.

Bo: Do you sign up on the minivan?

Hanna: So the newer ones with the built-in vacuum, those would be super nice. Yeah. Something with more room because it’s like when we travel down to Ohio to go see my family, we obviously take his truck, but we’re packing every, we’re packing to the brim. So it’s like something we can do a little bit of traveling with and be comfortable, fit that second car seat. So it’s like we don’t know if we should buy new, buy used, how much can we afford in that sense. I know at this point we are going to have to finance a car, but we would like a bigger SUV to fit the lifestyle that we want to have. And if we’re going to invest in a newer car, it’s going to be something we exactly want. Like we’re not going to get something we kind of want if we’re going to put the money into it.

Brian: Now, if it was just a, okay, though. So you can put a visual. If it, if it was like a Chrysler Pacifica minivan, would that, see, see, that’s, that’s why I, as, because look, I, I’m going, I’m just going to straight up tell you, you guys, because Bo and I are going to do the same thing. We’re trying to build this vision of what y’all are trying to accomplish. But there’s a push-pull system that’s going on. And when you have big goals like, I want to stay at home for the next five years, and we already know your earning potential is just as much as Matt’s. It is. That’s a big ask. Yeah. And it, but it’s very important and we’re perfectly fine with the big ask because I think lifewise this is something that’s very worthwhile. But there’s going to be a sacrifice. If you make this, you have to go into it knowing, to get everything we want. I’m going to have to give up something. And so vacuum cleaner isn’t even showing up anywhere on the radar. And then that’s why, that’s what I’m trying to understand is, the, the, the attachment to the SUV. Look, I have one of these. This is in my household, too. And we, we’ve had lots of conversations now. I think you’ve heard us talk about how Bo got the third child. Part of that was a minivan in the negotiation. You know, and I, I just saw her yesterday. I saw Bo’s wife yesterday. We were out walking to go to lunch together and his wife, I play chess, Bo plays checkers, rides by with all the kids loaded up and, you know, and she’s like, “Brian, please help me get out of this minivan.” And I’m like, “I’m not, I’m not the one you need to be talking to on this.” Do you see why I’m trying to get context? Because you’re giving me mixed signals in some ways, Hanna, is because I was very impressed. My first impression of you is you’re like, “Okay, we met this year.” You start, you gave me the list very in a very analytical type way. And I was like, “Okay, I’ve got a calculator brain here who probably can see how you move parts on the table.” And I was even asking you guys, who’s the financial personality of this household? Because the way you were laying out logical stuff, I was like, I was immediately drawn to you as being the financial person and then to hear, I want an SUV, you know, and all, it felt disconnected from the analytical side. It seemed more emotional. Is that true?

Hanna: Yes. And I would say, yeah, definitely. I make the impulse buys. It’s like, I want this. I get my mind set on something. I’m going to get it. I’m going to get it now. Not tomorrow. Today.

Financial Transformation Journey (21:37)

Brian: So where are you in your journey though from being, because if you’re analytical and now you’re the financial person of mine, but you were the person, you got credit card debt. Yes. Where are you at in this journey on, on transformation from being a financial mutant versus somebody who’s just general public?

Matt: Probably like 3, 4 months ago when I, for me I, I’m pretty, she’s very analytical and so am I. And getting into this and when I, I said when we went down to the one income, my whole thing before was, as long as we have this amount in our checkings and we don’t go below that and I see it grow and then we can move money around there, we’re good. And then it had been a month, I’m like okay maybe we just spent more this month, and it just kind of stayed and then slowly went down a little bit I’m like, okay so I need to really dive into what’s going in here. And when I did that I was like okay she said the fun drinks, the going out to eat, the making those purchases and had to have the tough conversation of do you see what’s going on, and, it wasn’t, it definitely was an easy conversation.

Brian: So what’s more important to you Hanna? The lifestyle stuff because that’s also family stuff, is going out to eat once or twice, you know, and doing little mini trips even if it’s camping. Is that more important or is the SUV?

Hanna: I think probably the lifestyle.

Brian: So we can bring you back, and do you have resentment from that though or is that something that is this, something if you made this, this decision you would be okay with it?

Hanna: I would be okay with it. Okay. I need to get that in my mind though. That’s the thing. Needing a new car is pretty important.

Bo: But, first time you said need. So I love that because you just said, “Hey, I really want a big SUV. I really want”, and, and what I was going to draw you back to is, there is a delineation between wants and needs. Because I would argue if you guys have a car that will not start in wintertime and a Tacoma, you guys, if you’re going to be a family of four, five, even, you need a larger automobile. Yeah. Is having a big SUV the need? Perhaps not. Perhaps that’s, and so I think really diving into, okay, what’s the bare minimum that we need and then we’re in a second, we’ll sort of triage back into, what can we afford, but I think that’s beautiful that you recognize that, hey we do need a bigger car and I think we would all agree,

Brian: I think she subconsciously just did that, it’s great.

Hanna: I also feel like we’re at a point where we’ve talked about this so many times it’s like we have so many different variables that we could take the path to, it’s just making that first decision of do we want this lifestyle then we can’t have this, do we need the car, then we can’t do this. So it’s, we’re, we’re stuck in so many different variables that we just need to take the first step of, okay, we’re going to do this and this is going to be the stuff we’re going to have to sacrifice.

United Front or Fighting? (23:05)

Brian: Do y’all ever fight over that stuff or is that, are y’all kind of a united front? Because that’s super powerful if y’all are united about it.

Matt: I mean, I wouldn’t say we really fight, obviously we both have our feelings towards everything, but we’re really honestly pretty good at trying to communicate. Since we started dating, I’m come from the mindset of having those tough conversations and then when we the way we looked at it is, it’s not her and I versus each other, it’s her and I versus what’s the problem. So we try to be united front on all that and I think having the, because she is analytical, seeing that stuff, and when I bring it forth, it’s not, hey we just need to do this let’s talk through, she said, of, okay, if you go back to work, this is the lifestyle we can have, you might not be home with him as much, or do we sacrifice not getting the new SUV and not making those type of decisions and then we have that family oriented where you get to have that one-on-one with him and any potential kids down the road.

Brian: If you don’t come on this show, is there any chance that, your car doesn’t crank up one morning because it’s cold outside and y’all go, “Well, let’s go to the dealership.” And then you end up with a $1,200 car payment and a brand new shiny SUV. You wake up one day and then you go, because they’ll, I mean, you show up at a dealership, they’ll put you in the car. Yeah.

Matt: I’m probably the emotion there, and then he’s the, the reason. Yeah. I’m like, “Let’s do this.” He goes, “Well, let’s back up a little bit.”

Brian: And, and a husband loving his wife. I mean, there’s a lot of things you’ll put yourself in just to, to try to make you happy. Yeah. And that’s what you guys, the reason I asked that is because your income now that you’re at half, you know, of what it was, it’s tight. I mean, we’ll go over the budget here. You’re, you’re one car payment away from this dream that you’re living where you get to make memories, probably falling apart. And I want to make sure we have the, all the goals because you said staying home, having another child, getting a family car. Were there other goals that you guys have in the intermediate and long term,

The Health Insurance Crisis (25:05)

Hanna: Insurance for her and our son. Because with her, leaving her job and the severance, they also paid her insurance up until February. Coming in a few months.

Brian: Do you have a plan yet? Do you, don’t have health insurance at work?

Matt: I do. For them to add, for them to add into my insurance would be almost another $600 a month. And that really squeezes to the point where it’s like, again, I’m trying to work this over time to see and I just, for me I’m not seeing where that makes sense in that math and not really sure where to go there.

Brian: You can’t go without health insurance.

Hanna: And that’s where I’m like, and I’ve looked into, ACA marketplace plans, that sort of thing. I don’t understand insurance. I don’t even know. I’ve looked into, healthcare.gov and you just kind of put in your basic information. That’s one thing I can’t figure out as an adult is insurance. That stuff is, affordable. You’re also not alone in that. It’s a super complicated system. So you’re not alone in that. We’ve looked at, just, the basic plans, kind of figure out how much we can afford. So I’ve looked in and that’s anywhere from $150 to $250, $300.

Brian: And that’s even questionable right now because there’s the subsidy is in jeopardy at the moment that we’re recording this show.

Hanna: And that’s also with I think the child tax credit and that’s, $300, and that’s going into it. Yeah, that, and wouldn’t go without the insurance because they need that. We have to have it. It’s for Barrett and I.

Bo: And I wouldn’t even say that that’s so much a goal as much as that’s a, that’s a thing that’s going to have to happen and we’re trying to figure out where that enters because, car is a goal, staying home is a goal, having another kid is a goal. All those are goals. Insurance is, I know February, this is a pretty tight deadline. We got to have that solved. Yeah.

Hanna: I was going to say that’s probably our first priority is finding insurance and figuring out how we can put that into the budget and how much we can afford with that. And that definitely is going to take, precedent over the car.

Brian: Brainstorming off the cuff. I think right now on when we’re earmarking stuff, we just need to know, somewhere between $200 to $600 is probably going to need to be earmarked until we get this figured out. You know, so as we’re thinking about how much margin you’ll have in your life to look at goals, $200 to $600 needs to be kind of just cordoned off because that’s how important this is.

Budget Review (27:28)

Bo: Let’s talk about resources that you have available to you because you told us that you guys, you were so kind. You shared not only your net worth statement but also a budget of kind of where, where dollars are going monthly and it looks like your monthly budget is a little over $2,700 a month. For some context, what’s the net pay that you have coming in? Like what hits your checking account? Are you zero-based budgeting or is there more coming in than this $2,700?

Matt: There’s more coming in with the overtime that I’m doing. So I get paid bi-weekly. So depending on the month you can have two, three. But when I average out it’s, I think it was somewhere like $3,000. And I guess the way I’ve tried to budget, and I don’t know if this is the right way, is, if I were to only have a 40-hour work week, and then anything that’s over that, because I don’t always have the time for the overtime, it’s just kind of gravy on top.

Bo: So roughly $3,000 in a month, but according to this, about $2,768 out is kind of what we’re looking at, right? Are you guys doing any sort of saving right now? I mean, because obviously, we saw that you have $85,000 net worth, a lot of that’s in Roth and Roth 401(k). Any money currently going into savings?

Matt: For savings out of mine I have, with my work, the 401(k) program. So I’ve just, I was for years, and the reason it is so high is because when I was at home and the Dave Ramsey thing was 15%, as soon as I was able to enroll just set it to that and left it. And then they match, I think it was up to 5% or 4% at 5%, I forget how it’s a weird breakdown. I’ve now, when we did the, calculations, back down to only investing 5%, which is the employer match, you’re doing the maximum to get the max, the maximum to get the max and not over, in that account. And since then, I’ve not really invested anything into Roth for her or I. I do have the health savings account and it’s not really investing my money, but through, the United Healthcare with that we have, they do a tracker thing if you walk so many steps. So it’s up to $1,000 that you can earn in a year. So I’ve just been putting that into the HSA that I have.

Bo: Is there a matching formula likely if you put in five, they’ll give you four or is it,

Matt: I think that’s what it works out to. Yeah, 5% they match up for.

Bo: So right there on the, on the cuff, just doing that, just doing enough to get your employer match, you know, in the Financial Order of Operations, that’s step two in our world, you already got 9% going to work for you. What’s great about where you guys are is that when you start early, 25 and 27, it does not take a lot to do a whole lot of heavy lifting. So it’s going to be interesting to see based on the hard work you did when things were more comfortable, having, you know, $85,000 in net worth right now. A lot of that being in liquid assets and just saving the 9%. Have you projected out what that looks like by the time you get to retirement?

Matt: Kind of. Not really. I wasn’t sure.

Bo: I think it’ll be mind-blowing. We say 25%, 25%, and we, we love that, but you were doing that early on. You were saving at that clip early on. You’ve given yourself some flexibility that if this is perhaps, this is all you can save for the foreseeable future until you go back to work or some circumstances change. I love seeing that and I think you’ll be amazed the fact that you guys did figure that out at 25 and 27, how powerful that’s going to be for you all over the long term.

Hanna: He is such a future planner and I love that about him. But I’ve needed to tell him, we do need to figure out what we need right now. Yes, it’s super important to save but we might need to back, I had to tell him to back that down. It was tough for me to go through, especially watching the show. I’m like, but do you realize what it could be?

Career Trajectory Discussion (31:04)

Brian: Your budget doesn’t look like you’re wasteful. I mean, it looks, so that’s, so now I need, I need to ask you a few questions on this career you have because you make $55,000 in woodworking and you love it because you’re working with your hands. What’s your trajectory? I mean, do you get 2%, 3% pay raises or is there a chance where you’re going to make $65,000, $70,000? What’s your career look like?

Matt: That’s kind of up in limbo right now. They’ve done the last couple years the 3%, track. I know that I’ve had leadership roles in there and I’d like to keep moving up in that because it’s a, our company’s smaller, family, but it’s grown quite a bit to where now we’re 50 employees. And I’ve been there 7 years. I know, if I were able to make more, I would. I’d like to get something with a more of a managerial,

Brian: Well, look, look ahead of you and, and behind you. What opportunities do you see? I mean, does your, do you think your boss is making good money to where he can pay his bills and stuff too?

Matt: Yeah.

Brian: Because that’s what I’m, now we get to the hard stuff. Don’t you agree this is the hard point where we have to say this is off the cuff. You got $3,000 coming in. You got $2,700, and we’re not covering health insurance in there. Yeah, it already, we’ve already blown it up with health insurance and we haven’t bought the new car. We haven’t saved for a house. This gets really hard, really really quick.

Bo: Because when it comes to changing your financial circumstances in most scenarios, there’s really only two levers you ever get to pull, right? One lever is decreasing expenses. I’m going to spend less. I’m going to have less flowing out. That’s a lever. I don’t know that you guys are wasting a ton of money. You’ve already kind of done that part. And the other lever then becomes, well, how do we increase income? How do we figure out how to have a bigger shovel so that we can fund some of these other things? And I think that’s kind of, they’re at the income piece. That’s the other lever that you have to figure out, how we can adjust.

Hanna: And I wouldn’t be, opposed to even just getting a part-time job to kind of work around, his work schedule and then try to make a little money on the side. I’m not opposed to that. It’s just kind of figuring out how we can do that.

Brian: That’s the other question I was gonna ask you is because you have a very valuable skill set. I mean, because obviously you, and I love the fact that you realized, I’m not going to do this for eight years, but I could do this for two, and you immediately made yourself marketable and, and made a great income. I’m wondering, and look, I’ve used, with my family and my youngest daughter, we’ve used occupational therapists for years. And what’s funny is I’ve seen some of them as they start growing their family, they can do some unique, it is a career that allows some uniqueness and that you could probably find a place, and I think there’s such a demand and need. You could probably go back, fill some hours, you know, if you had a mom’s morning program. But look, I’m conflicted because I want y’all to grow a family. Y’all seem like a lovely family, but, but I think that you have to, you’re kind of like our, our Rebie in some ways is that she’s had to figure out, how do you do the traditional, family stuff, but also how do you help out with the family if you have this capability? I don’t know what that answer is yet, but I think that that’s probably a smart path to kind of think, can you, because if we get to the point that Matt says, I’m giving it all I got. I mean, what’s woodworking in general? What’s the career trajectory? I mean, is this a six-figure type career?

Matt: I think if you go on your own and do something like that, and it could be. I don’t know if you’ll ever do six figures just in a shop. Honestly, and the only thing is because it is so tight already. I’ve, I’ve mentioned to her before of “hey, it would be kind of nice to maybe try doing this on my own,” but I know, but that’s a whole another journey. And that’s a whole another journey. That’s why I’ve pushed that off because, yeah, it’s, it’s 3 years journey and right now we just, that’d be way too scary to not know, because, risky. Too risky. And where I’m at, got review in February and there’s an opening for leadership roles. So maybe a little more, but I don’t ever see six figures at some point.

Bo: But those leadership roles would create an increase in income.

Matt: Hopefully. Yeah, it would hopefully.

Bo: Because what I’m thinking is obviously we, we know there are some goals that you have, right? Specifically short-term goals around, you have to have this insurance in place, you really want to, need a new car to be more appropriate for the family. I’m thinking the work that Brian and I are going to have to do is we’re going to have to figure out, okay, based on the way that you guys are spending money now and the things we know that you have upcoming, if we can’t cut expenses anymore, how much more income do we need?

Hanna: That’s, would be a really big help to kind of point us into the direction of what I need to do and what needs to happen in the future to make these goals possible. And that’s, I think that’s kind of one of the answers we’re really looking for.

Bo: Awesome. And it may be something where, okay, hey, if you just at your job, if you get a $10,000 raise or a $5,000 raise, it makes them, or hey, if you could work part-time and make $15,000, I don’t know what the answer is going to be. We’ll need to kind of, crunch through the numbers, but what I’m hearing is you guys, are both, you both recognize and are open to the fact that’s probably going to be where the solution lies. How do we create more income for the family?

Hanna: Definitely, love that. Yeah. And I was, kind of caregiving on the side, too. But that kind of, some of their family situations happen and I’m not doing that. So that was a little bit of extra money and that did help, but that’s kind of not in the cards right now.

Bo: Was that something you were able to do with Barrett?

Matt: Like you could, see, and that was pretty nice to have that where he could go along with her.

Bo: Are there other families or are there other opportunities in the area in which you live where potentially that could be an option?

Hanna: Probably. I would just have to look for it, but that’s kind of, I don’t really know how to look for it in that sense. It was, a family friend, kind of the opportunity arose. Yeah, it was a friend of friend that needed some help, type of a thing. So it just kind of fell in our lap, cool. We needed some extra, you know, side income anyway.

The Tacoma Question (37:05)

Brian: So we can do some math, number crunching and figure out, hey, what do we need to get them on healthcare at this? What if, what’s a reasonable amount on a car payment we can get them? And now you know, hey, we need to go find an extra $1,200 to $1,500 a month, right? How are we going to, make this happen?

Bo: Is there a scenario in which you could be a one-car family? And it’s okay if the answer is no. I don’t want to put that on you, but I’m just, I’m as we’re going to think about some creative solutions, because one of the thing I’m, I’m about to ask is, how much is your car worth and how much is the Tacoma? They’re both paid for outright, but what’s the current market value of each of those automobiles?

Matt: I think mine’s just under $30,000, $29,000, $30,000 somewhere around there.

Hanna: Mine, it’s a 2012 with 220,000 miles on it. So not really worth, yeah, that one’s just, it’s the drive till the wheels fall off pretty much. And I don’t really drive it on a daily either. It’s like if I’m home with Barrett, we would run to the store, we need to go pick up this, that, and the other thing. It’s like we don’t really necessarily need two cars. It’s super nice to have, too. If it was something like, hey, I need to get up with him at 6:00 in the morning and drop him off at work just so we have a vehicle just in case, I would, add more miles on it.

Bo: But is your vehicle mostly for commuting to and from work?

Matt: To and from work. Going down to Ohio to see her parents, hour drive. I mean, we pretty much drive that when we’re not, you know,

Brian: How far, how far is your job?

Matt: My job’s a 15-minute drive, so it’s not much.

Bo: Because I want to just introduce my line of thinking here, right? You have a need for an automobile that can be the support for the family. But right now, the nicest automobile in your home, the one that’s, that’s taking up the most wealth for you is your truck, which is kind of like a commuter vehicle, right? One of the things I just, again I’m just trying to figure out what ideas you guys are open to. If we were to determine, hey, honestly, it doesn’t make sense for the nicest car to be the truck. The nicest car ought to be the family automobile. Is there a solution where we use these two vehicles that you have to get that nicer family car and we figure out some sort of commuter solution for you to and from work? Is that viable?

Brian: Here, let me put it this way. What if there was a reliable, not super expensive, but reliable, minivan sitting at the house and then you drove a beater to work every day that would get you to work, a little bit. This is the reality. Let’s be honest here. This is what you’re building on this. But that’s what, that’s what we’re building. If we were trying to, because you, you have something valuable. You have a $30,000 equity vehicle. Look, Tacomas are great vehicles. I hate taking that away from you, but we got to get really, just like we took away the SUV over here. We’ve got to get honest and say, we’re going to need some sacrifice on your side, too, just to, to make this all work. Because a car payment, we got to get you health insurance. And I don’t see a car payment. I, I’m like, how the heck are we going to do this? It’s going to be tough.

Matt: So it’s got to be something pretty, pretty small. I know. I have said to her before, hey, why don’t we, let me drive your car? And then I’ll let you drive the truck around, type of a thing, because of that, and drive it as a beater. So I’m not opposed to that.

Brian: But why does it have to, say the truck?

Matt: But it doesn’t have to stay the truck. I guess I’ve never really thought that of, hey, you know…that definitely is my baby. So I get it.

Bo: Oh my gosh. Did you see how much he was smiling when we said no to the big SUV? And now the tables have turned. Yeah. Well, I, I don’t know if that’s going to be the solution, but I just want to introduce the idea that when we’re in these types of situations, we have to think really really creatively and we have to think outside the box. When there are things that really matter to us, like having another child, being able to stay home, those are wonderful, amazing, noble things, but there often are trade-offs and sacrifices that seem intense, but again, the way that your financial life and the way your life looks today does not dictate how it must look tomorrow. So this may be something that this is going to be the solution for this season. It does not mean this will always be the solution, right? Yeah.

Matt: I wouldn’t be opposed to it. It definitely would hurt because that was, that, that one thing, younger. Yeah.

The Steak Story (41:28)

Brian: What, what’s your favorite food in the world?

Matt: Favorite food? Steak.

Brian: Steak. Easy. You’re going to come to a point in your life and I’ll just tell you, it’s going to happen, that your, your child’s going to get to be four or five years old and they’re going to say, “Daddy, I want some of your steak.” And you’re going to cut them off a piece. I watch, I mean I watch, I watched Bo yesterday because, I said, we saw his, his family out. We were walking, two tacos and they gave us probably six chips with our two, chips and salsa. And I watched Bo because this is not a lot of food. And I watched his kids, they roll up next to us because it’s just coincidentally. They roll up. Maybe it wasn’t coincidence. Maybe she’s playing chess and we’re playing checkers. They roll up and every one of the kids, “Daddy, can I have some chips? Can I have some chips?” And I watched him give those chips gladly to the kids. So I’m telling you, you’re probably that Tacoma, as much love as you have for it. When you see your family in that safe vehicle, you’re not going to care about, as, as I feel that from, just from, from what you’ve already shared with us. I think it’s going to be A-OK. Okay. Yeah. Yeah. I think that’s definitely an idea.

Matt: I’ve never, I don’t know why I haven’t thought that, but yeah, it has more trading power and then getting a better payment for something if needed. For sure.

Brian: Well, y’all got to get through, because look, I want y’all to not put the family planning on a shelf, but we’ve got to look at this 5-to-6-year period where you’re going to not, and eventually you’ll be able to go full horsepower, make $55,000, $60,000 a year, but, absolutely. And, but it’s, it is very valuable, for y’all’s family unit. This is what you’ve put as a priority. Let’s look at this 5-to-6-year period where we’re not having to give up all of our future, but we have to be really smart with every resource that you have because there’s nothing that can be left sitting out there, not, not utilized, right?

Bo: Well, I think we’ve got our marching orders. All we ask for you guys is to be open to the creativity. And I bet we’re going to find a way that we’re able to do all of these things and end up in the place that you guys want to be for that great big beautiful tomorrow.

Hanna: Absolutely.

Bo: You guys are wonderful. Thanks so much.

Hanna: Thank you for having us on.

The Analysis Begins (43:30)

Bo: Brian, I love talking to Matt and Hanna because I feel like they are a wonderful proxy for what a lot of young people are feeling right now. They have goals of starting a family and doing some important life stuff, but man, things are tight and they just don’t know the best way to figure out how to make it all fit.

Brian: They are literally in the messy middle. Think about 25, 27, having a child. Now, here’s the good news. They’re definitely short on time. They’re short on money. While they were both working, they crushed it. They did. They had a lot of money that they saved up and they were very disciplined. I think they’re going to start seeing that some of these hard decisions they have to make with the health insurance, with the vehicles they drive, it’s going to be made better because they had discipline at the early part of their marriage.

Bo: And it’s not just they had discipline early on, they even have discipline now. When you look at their original budget, it was pretty reasonable. They weren’t living extravagantly. They weren’t living beyond. They just literally have some obligations coming their way that they aren’t going to be able to meet. But it’s not because they’re wasting money. They’re spending about $2,800 a month. And so we said, “Okay, we know we got this car thing we got to figure out. We know we got this insurance thing we got to figure out. And then you also want to live life and get to enjoy the here and now.” So we said, “Okay, what if we began reverse engineering some of this stuff? How would this look if we began trying to do some problem solving?”

Health Insurance Solution (44:48)

Brian: And in my opinion, the very first problem they had to solve, pronto, has to solve, is the health insurance issue. This, it couldn’t be optional. Now, we know that he had insurance covered through his employer, but you can’t have your wife and child just hanging out out there. There’s just too much risk. There’s too many things that could go wrong. I thought it was interesting is that they’ve done so good. I would love to get a guest on here that we could yell at them for how undisciplined they were, but they were just so good with their money. But there were several eye-opening things that I saw and the health insurance is something because I got the feeling that they knew it was important, but I think we opened their eyes a little bit more. This is a no-stopper. You can’t, you can’t pass go without getting this done. Another one is, I can’t wait to when you and I can kind of talk about this car and the vehicle situation. Yeah.

Bo: Before we get to the car though, let’s talk about, we did some research for him. We did a little bit of work. We actually went out on the healthcare marketplace looking at what coverages would be available. And we said that if they did a silver plan, because Matt is on his current insurance, but if they just put their son and Hanna on an ACA silver-rated plan in their area, it’d be about $335 a month. So again, we’re reverse engineering where their budget needs to be. We would need to add about $335 a month for health insurance. Now, and if, if, Matt just added them and created a family plan, wasn’t it around $600?

Brian: A month. It’s already creating well over $200 margin or differential already. And look, this isn’t, this isn’t a cost they’re going to want to bear, but it’s a necessity. They have to have it in there. So all right, that’s problem number one. They got to get at least enough, more, at least more income to be able to satisfy health insurance.

The Vehicle Solution (46:20)

Bo: But then they did have the car issue and it was so interesting because man, he was, oh, we’re going to drive a minivan. We don’t, the big SUV. And he was all on board until we uncovered the Tacoma. Yeah. Then we found out, oh wow, we have this vehicle that has a lot of equity sitting inside.

Brian: Didn’t you see? I mean, even, even me and my wife, I mean, we all feel like it’s just human nature. We all look at ourselves and we think that we’re doing the things the right. And so when Hanna was saying she wanted to drive an SUV and we were picking on Hanna about that, Matt was sitting over there, “Yeah, yeah, I’m with you.” But then, he looked like a deer in headlights when all of a sudden we were like, “Wait a minute. You mean your wife’s car is not very reliable and you’re driving, what do you say his commute was? It was less than 15 minutes, something quick. Yeah. And you’re sitting on this Tacoma that’s got all this equity and, wait a minute, there has got to be a better way to do this.” And I could tell he was like, uh-oh. And I look, in the most loving way possible, I think he quickly realized there’s probably going to be a change coming for the Tacoma.

Bo: And look, this is not a recommendation we love making, but when we’re in tight times, sometimes we have to make difficult decisions. And that’s exactly what we came up with. We said that, okay, if Matt were to sell his truck right now, and he were to make $30,000, just cash in on the equity. We actually found that there are some reasonable cars in their area that he could buy for $10,000. Now, it’s not going to be the Tacoma. It’s going to be a truck. It’s going to be a beater. It’ll be a beater that allows him to get from point A to point B. We’ll call it a commuter. It’ll be a commuter vehicle. Commuter beater. What matters for them more was not him necessarily being able to commute, but it was for Hanna and their son to be safe, for them to be in reliable transportation. So we’re going to take $10,000 of that and get him a commuter vehicle, which leaves $20,000 left over for her. We said, “Okay, if we have $20,000 for a down payment, and based on where their income is, if they want to fall inside 20/3/8, we determined that they could afford a car that’s worth about $32,500.” So then we went and did some research and we said, “Okay, well based on this, what cars might be available?” Brian, look at those minivans.

Brian: Look at that. It is interesting because I thought it was 2024. That’s pretty new. Chrysler Pacifica did have 60,000 miles on it, but right around $25,000 now. You said $32,000, so we’re already going under. That might even cut down the car payment right there. And then of course, Toyota Sienna. You know, when people think of they’re thinking the Odyssey for the Honda, you’re thinking of the Toyota. So we’re even putting her in marquee stuff here. 2021, so it’s a little bit older, but only 50,000 miles. There is going to be something that they can find in their marketplace that probably fits this need so that every morning when Hanna goes out to crank up that car, she knows it’s going to crank. Matt can feel and have peace of mind knowing his wife and child are going to be in safe, reliable transportation.

Bo: So again, if we’re thinking about building this budget, we’ve already added in some money for the ACA health plan at $335 based on 20/3/8. We believe they can afford a car payment of about $400. Okay, so now we’re up to $735. They have to increase. But we didn’t want to stop there.

Adding Fun Money (49:28)

Brian: One of the things when they were talking about what’s important to them, going out to eat, just having a little margin in the system to create memories, to have fun, because they even said they can go camping. They don’t need anything exotic for vacations. But I hate to cut them so lean that they can’t at least just go out and make some memories by going out as a couple, going out as a family, and eating out from time to time.

Bo: So what we said is, hey, let’s add in a little fun money, little wiggle room budget of $200 a month. Well, if we add that, what you can see is we take their monthly budget from $2,768 to about $3,700 a month. That’s the number, their budgetary number they need to hit is about $735. So they got to figure out how do they cover an extra $1,000 a month or so. Well, what’s great is Hanna has this skill set where she’s going to be highly sought after. She’s going to be very marketable. There are ways she could potentially go get a part-time job or maybe even Matt could figure out, how do I make a career shift or how do I move to a different company, because they don’t need a ton more if they could just increase their income by $15,000 a year. I think it would change their entire living circumstances.

Brian: Well $12,000 a month is a difference. That might just be an uncomfortable conversation with Matt at work. This is all doable. You don’t have to move to a different part of the country. These are all doable things. You just have to take action and start making these things, letting them happen.

Bo: They laid out for us some, I’m going to say some problems they had. Health insurance was a problem. The automobiles were a problem. And not being able to have any fun money was a problem. I want to emphasize though, one of the things they have on their side is one of the most important ingredients when it comes to wealth creation. They have time on their side. And we just think it’s worth noting, we want you guys to know that just based on what they’re currently doing. He was putting 5% in his 401(k), getting a 4% match, and they had been saving really, really well up until this point. If all they did was continue on their current trajectory, not increasing their income, not increasing their savings, they already had about $70,000 saved up. Well, just saving that 9% into the future, not factoring in pay raises, not changing any of those numbers, they are well on their way to having a $4 million portfolio by their retire, by the time they retire. So they are already in a fantastic circumstance because they did a lot of hard work really, really early on. Yeah, that’s what’s so hard is because, we were, here we are talking about in their current situation because their budget was so lean, how do we save them on this with career and stuff, but kudos to them that they had so much already saved that it is going to help them out. If they came to us with zero, this is a completely different conversation. But because they were so good at the front end of their marriage, it’s created a lot of really cool opportunities.

Homework Assignments (52:14)

Bo: All right, so here’s their homework items. These are the next steps for them. I think they got to figure out an insurance plan. Got to figure out, how do we make sure that we cover that risk and I think this is a high priority. Next, they got to figure out what to do about the car situation. We laid out an example, a scenario potentially sell the Tacoma, get a commuter car, get into a reasonable 20/3/8 safe family car, and I think they can afford up to a $400 a month payment. Now, they don’t have to have $400. It could be $250. It could be $300, but that’s kind of where the guard rail is. And then number three, and this is probably the most important part, is how can we increase the level of income? When it comes to financial decision, we have two levers. We can either decrease expenses, they can’t decrease expenses anymore, so they have to figure out, how can we increase income.

Brian: Yeah, but that’s not going to be that bad because we have several things that can happen as we’ve already covered. You know, Hanna’s got options, but then Matt can go have some conversations with his current employer since he likes his job. This is doable. And I think this is one that I think if you look at this, when they get this, they’re going to be like, “Yeah, we can do this.” And hopefully they feel like a united front and there’s nothing but just wins and excitement and memories that they’re going to make off of this plan that we’ve built for them.

Closing (53:24)

Bo: And Matt and Hanna, you guys were absolutely wonderful. If you out there would like to be a guest on Making a Millionaire, you can go to moneyguy.com/apply. Or if you want to play with any of our resources or calculators, you can go to moneyguy.com/resources.

Brian: Well, and I want to give a compliment to Matt and Hanna. Y’all crushed it and we’re so proud of you and we just can’t wait to see your success. So keep in touch, guys. I’m your host, Brian Preston, joined by Mr. Bo Hansen. Money Guy team out.