They Were Burned by a Bad Financial Advisor. Can They Recover?

The Story Behind the Hesitation (0:00)

Valerie: It just didn’t feel right. So, we decided to pull our money away. Forged signatures, penny stocks. He also changed our risk profile. There was something like $300,000 that went through our account and we did not have that kind of money.

Max: So, you ask me how I feel about being here. It’s a little reserved from that. I completely get that.

High School Sweethearts to Empty Nesters (0:22)

Max: So, we’ve known each other since high school. We met at 15 years old. And that was an interesting start. She didn’t really like me. I’ll just let that do the record. But I worked my way into it. And so then we got married very young. I was 19 and she was 20.

Bo: Oh wow.

Max: Yeah. And so we’ve been together since then. So 27 years.

Valerie: Yeah. I like to say we married for love because we did not have a plan. We just were like we’re going to get married and everything will work out great.

Max: I say she married me for potential. I had nothing.

Valerie: And we just entered the empty nesters phase.

Bo: How’s that going so far?

Valerie: Well, I mean, there’s some boomerang, right? Like they’re going to come back and our two youngest just started as freshmen and our oldest is like probably a sophomore, late sophomore year.

Brian: So, three in college at the same time.

Valerie: Three in college.

Brian: It feels like y’all also, it sounds like you did kids like let’s say kids and you’re like, “Yes.” And then you threw three of them like really quick.

Valerie: They’re all two and a half years apart, so it was quick. But it feels a little bit like the messy middle because we’re paying for three kids in college and helping some extra finances. And so we have like a scholarship plan for them and we help pay for school and but they have to work and they need to be paying for their groceries and life and fun.

Bo: So you cover school and the basics. They got to cover everything else.

Valerie: Yes. But does that always happen? Well, it doesn’t always happen. It’s not always happening. They’re in a small town. Sometimes finding a job is a little hard.

Bo: Got it.

Valerie: So there might be some help that we give.

From Feeble Beginnings to Finding Dave Ramsey (1:54)

Max: As far as background, none of my parents taught me anything about finances. I come from feeble beginnings. And so once I started having money, I realized how great it was to have money and spent that money.

Bo: This is awesome. I’m going to spend it.

Max: Yeah. It’s kind of like that candy. You can’t get enough really. So I started spending a lot of that and then we started to kind of whip it into shape.

Bo: When did like taking money seriously start for you guys as a couple?

Valerie: I was always the saver, the like pay attention to my money. But in about 2015, we found Dave Ramsey. Okay. Did the Dave Ramsey thing. We never really had a lot of debt. We had a car payment. We had some medical debt from some kid things. But never really credit card. It always stressed me out. But I wanted us to, like he had a real job. Like we were making real money and I was like, “Let’s get our let’s get on track.” And so we started Dave Ramsey in 2015 and it was hard. It was hard.

Bo: What was hard? You said it was hard. It was hard.

Max: It was hard for me. It was probably easy for her. It’s a song that she sings. So for me it was somewhat off track for me. I remember I recall I’m going to call you out a little bit on this one. I remember early on in our journey I would go out to lunch for example and she would call me a couple hours later and say, “How was that lunch?” And she was looking at that statement. This is her GPS. Yeah. And so I want everybody to know that. And so that it was a little bit of a control adjustment for me. And then for her, she’s come a little bit more toward the lenient side of understanding how really we need to manage our money.

Valerie: Yeah. Now after all these years, he’s a little bit more like I don’t know if we should spend money. And I’m like, yes, yes, we should.

Brian: Was it needed back then though, Max? I mean, were you, I mean, I know it’s probably like, uh oh, I’m getting a call from the boss, but was it needed back then to kind of get things going?

Max: Attention wasn’t there. And so I think it was needed to sometimes you overindex on it, but it’s necessary at that time. So I guess I’m a slow learner in this. So I’m glad that she was patient with me at least to usher me along. And so it definitely was needed.

Brian: And why is it, because Valerie just shared it’s kind of flipped a little bit. Why is it now important to you? Is it because you’re thinking of the future? What’s going on?

Max: It is the future. Yeah. I think if I spend it now, how many more years do I have to work? Whereas younger that wasn’t even a thought. It was a spot where I’ll just continue to work. I’ll make more money even if we’re in the red.

The Net Worth Reveal: $1.4 Million (4:21)

Bo: Well, obviously you guys have been doing something right. Like when it clicked, it seems like it clicked pretty well because you were kind enough to share with us a net worth statement. And as you guys sit here at 46 and 47 years old, it looks pretty solid. You have a total net worth of just under about $1.4 million. A household income $213,000. And it looks good. We have cash about $128,000. Your investment portfolio represents about $732,000. Your home is worth $720 and you only have a mortgage on it of about $220,000. So, it seems like you guys are in a pretty solid spot. Do you agree with that assessment? Do you feel like you are ahead of the curve, behind the curve, right on the curve, or you have no idea what the curve is?

Valerie: Because I’ve listened to you guys for a while, I know we’re behind, but I also feel like we’re okay.

Brian: But tell me why you feel behind.

Valerie: Well, when you look at our income versus that multiplier, we should have more money. But also, I know we don’t sometimes that income misrepresents what actually comes home. And so, I know we don’t spend that much money and I know that we’re saving money. And so, logically, I feel like whatever that number becomes, we’ll figure out how to live off of because that’s what we’ve always done. We’ve never really carried the debt. But when I hear the big number, like the multiplier, I’m like, “Oh gosh, we’re behind.” But are we? I don’t know. I guess that’s where we’re kind of at.

Max: See, and I don’t have the show to reflect on. So I feel like we’re behind. Okay.

Bo: And the reason based on what?

Max: I’d like to retire as soon as I can. So obviously I feel like I’m chasing some sort of goal there, but also we had a reset in 2016 from the sense of investments. And so I feel like that time and that impact has set us back and I feel like ever since then we’ve been trying to recoup.

Bo: What happened in 2016? What happened in 2016?

The Financial Advisor Nightmare (6:11)

Max: Sure. We partnered with a financial advisor during that time.

Brian: When you say partner you mean like hired a financial advisor? Okay.

Max: Yeah. And so we began to see that we wanted to retire and save some of our money for the future. And so we interviewed a few financial advisors. We liked that it was a family. We like that they were young guys and so they kind of oversold some of their credentials and oversold their brochure is what it’s called. And from that side we thought they were going to be balanced and we thought they were going to take our risk profile to in consideration and it really went sideways.

Bo: Like sideways like the investments performed really poorly sideways.

Max: Well, this was right when Trump took office and the stock market began to recover from that side. And I was talking to my friends and they were like, “Oh, we’re loving it. We’re getting 8 to 10% sometimes more and we’re over here stuck at three, four, sometimes negative, sometimes negative.

Valerie: So it made us look into what was going on and it just didn’t feel right. So, we decided to pull our money away. And when we pulled our money away, we decided to contact a FINRA attorney and he looked at all of our statements. And basically what ended up being found was churning, forged signatures, penny stocks.

Max: He also changed our risk profile. He did inverse ETFs and ETNs.

Brian: Why?

Valerie: We have no idea. So, we ended up reporting. He lost his license. In total, there was a lawsuit that we were not able to be a part of and that lawsuit was only 10 people at his firm and they said $2.6 million at a minimum of a loss for that lawsuit. Our attorney said we had somewhere between 80 and $150,000 in loss.

Brian: But it was not just the loss. It was probably also an opportunity cost, right? Which the money could have been working and it just wasn’t.

Valerie: So we pulled out in 2019. That’s when we pulled our money out.

Brian: Okay.

Valerie: And to calculate the loss, the FINRA attorney was like somewhere between 80 and 150. But again, you’re right. We can’t calculate exactly what it would be because it was just too hard with all the churning. At one point, there was something like $300,000 that went through our account and we did not have that kind of money.

Max: And we were the first to pull our money out. So you ask me how I feel about being here. It’s a little reserved from that.

Brian: I completely get that. I mean you’ve been you lay your heart out there and then somebody takes advantage of it and uses it. Now I did think it was interesting when I looked at now how you invest. Y’all are 100% index funds.

Taking Control: The DIY Investment Journey (8:52)

Valerie: So after that I was like I’m not letting anyone touch our money again. Like this guy messed us over. We trusted him. We had meetings with him here or there. Occasionally he would give his brother to us who was not certified but we thought it was just like a pass through information and once this happened like no way. So I started reading books like Simple Path to Wealth. I found you guys because this is like 2019, 2020. Listen to other podcasts, read a few other things that try to give me more details about actual investing because that’s one thing you’re not taught if you do just Dave Ramsey. It’s just like go invest, find somebody. And now we’ve been so burned. I was like, I got to figure it out. And I just kind of went with what I could learn. I know there’s gaps. And I would kind of pass it by him and be like, this is what this says. And he’d read a podcast or read a book or watch a podcast and be like, “Okay, that sounds good.” And so, yeah, I mean, I’m just kind of at that VTSAX kind of like keep it as simple as can be. And it’s been doing well for us, honestly.

Bo: I mean, and one, thank you for sharing that. That’s like a super rough, difficult, hard thing to go through. But I think it’s worth level setting right now that even though you went through that thing in 2016 or from 2016 to 2019, you guys are still okay, right? It was, I think you use the term setback. It was not like this cataclysmic thing and you still have time on your side to move towards an ultimate goal that you guys have. I’d love to hear from you. What are the goals that you have? Obviously, you wanted to come get some insight and get some planning and think about that. What is it that you guys are trying to move towards? What would be a win for you guys from a financial standpoint in the future?

Defining Retirement Goals (10:32)

Bo: You said retire as soon as I can. Does that mean like today? Like tomorrow?

Max: Well, I throw that out there with the hopes that really we don’t have a number that we’re landing on per se from the sense of when I can retire. Because there’s a lot of dynamics going on right now with our children still being in college and they have not quite landed on what they’re doing. So, don’t necessarily know what that looks like on where we can redirect some of our funds or maybe even lower our overhead from the sense of what it takes to retire every month or so.

Bo: Do you even know what it cost like if the kids were truly out of the house? Not unlike the mom and dad and out of college. Do you know what it would cost you guys to live the life that you want to live?

Valerie: My guess is somewhere between $6 and $8,000 a month. Okay. That’s currently with a mortgage, which is a big chunk of that. So I think if our mortgage were paid off, it would be a couple thousand less than that. In Texas, our property taxes are high. So there still is always going to be a $1,200 to $1,500 monthly fee for taxes. So maybe if the house were paid off somewhere between 5 and 7.

The New House and High Interest Rate (11:40)

Bo: One, you have a lot of equity in your house, right? So, it’s a huge, you know, you don’t have a huge mortgage relative to the value of your home, but the interest rate’s pretty high at 7.375. When did this mortgage come to be? Walk us through how we ended up here.

Valerie: When our last child graduated, we were in a town we didn’t want to be in. And so we just, we’ve had this house one year.

Bo: Okay. So it’s a new house. You just rolled a lot of equity from the prior home into this one. Awesome.

Valerie: Yes. So it’s a little bit smaller than we had with a family home, but still big enough for the kids to boomerang back and forth from. Is it going to be our forever home? I’m not sure. I want to be where the kids kind of land and the next five to eight years they’re going to be starting their life and finishing college. And so I don’t know that this is our forever home, but also I care give for my family. I have some family members that are pretty sick that live close by and that home could potentially fit them in it or we might have to put a casita on the back, which in Texas is like a pool house, like a little casita on the back to help with some of their caregiving as it progresses. So, we could be here somewhere between 5 to 8 to 10 years, but eventually wherever the kids land is probably where we’ll land.

Max: And I’ve been so hyperfocused on revenue. I’ve not necessarily worried about retirement. I just work from that perspective, increase my income, that kind of stuff to support the overall goals that we have. And so, I really haven’t taken a step back to land on a number. Feels like, and she mentioned the monthly, feels like we’re halfway there where I feel like maybe if we doubled what we currently had from our net worth perspective that might put us in a comfortable spot where 60, 62 comes along and we feel pretty comfortable to retire.

Bo: So maybe like age 60, age 62 is a timeline that we can work towards that seems feasible and reasonable.

Valerie: I told him 60. He would like to go sooner. So I mean sometimes I run the number and I think it has to be two and a half million. But also, I feel like if it was 1.8 million, we could probably live on it if the house were paid off.

Navigating the Messy Middle (13:46)

Brian: Well, a lot’s in flux right now, too. Kids in college, kids just starting really. So, there’s still a lot of, this is what I always talk about. This isn’t necessarily a fire retirement, but it is one of those things where I always tell people when life is busy and happening, that you mentioned the messy middle, it’s hard to set firm goals. So, I think all you can do is just kind of line things up and then try to maximize the moment, but then have consistent check-ins just to make sure you’re on the right path. You know, just like you look at your compass to make sure your journey is going well. You do the exact same thing financially. I will tell you, you know, there’s a headline just this morning. I’m waking up and they’re like, “Hey, first time in three years mortgage rates have gone below 6%.” Okay. So, we are now getting close to the point that you guys are probably going to be on that wave. And I know Bo’s probably going to put an asterisk there for your homework list. Okay. There might be some opportunities to get you a little relief through even a refinance.

Current Savings Strategy and the Roth IRA Question (14:41)

Bo: From a savings standpoint, right, from a building, you said, “Okay, we’d love for the accounts to kind of, if we doubled from where we are now, we’d feel pretty good about that.” How are you guys saving? Walk us through like on a monthly basis, where’s the money going that you guys are putting to work?

Valerie: So, all of 2024, Max was unemployed. Okay. And so prior to that I was a solid 20, we were at 28% savings. 2025 we bought the house, the kids graduated from high school, we got them on to college. So we were paying for moving and getting the house situated and getting the kids off to college. So we were just matching 401k, HSA. 2026 our goal is to get back up to there. And so currently we’re just doing 5% to his 401k. We are maxing out HSA. And then one of my big questions is we have this large rollover IRA from previous employers. One time I heard on your podcast that if you have that, you’re not allowed to do Roths. And so I stopped contributing to Roths because I was worried we were doing something illegal.

Bo: So this is one of those areas where you heard 90% of something, but there was a little 10% that really really matters. What you probably heard us say is that if you have outside IRAs like a rollover IRA or a SEP IRA, you can’t do what are called backdoor Roth contributions. Backdoor Roth contributions are for folks who make too much money, their income is over the Roth eligibility threshold. You can make a contribution to a traditional IRA, not take the deduction, and if you don’t have any other IRA assets, you can convert that to Roth completely tax free. Those are for folks who are in the income threshold where they can’t contribute directly to Roth. I don’t think that’s going to be the case for you guys. You guys are going to be in the income situation where you can likely do direct Roth IRA contributions. So that rollover would likely not impede your ability. Do you have the number right there?

Brian: Yeah, I have, well I have the 2025 number. It starts phasing out around 236,000 to 246 and I know it went up in 2026 even higher.

Valerie: So we do get a bonus. It’s anywhere from zero to 30% with a projected of 20%, but this is the first year he’ll get that at the new company. Okay? So we don’t know.

Bo: So you could be as high as 240ish.

Brian: But here’s the beauty of this is that you know IRA contributions allow you to go beyond the year. You know like we can still make contributions for 2025 even though we’re in the year 2026. You have until April. So, we could wait, see what your income comes out to be, and then you still potentially, like we could still make contributions for 2025 right now to your Roth IRA because if you’re well below that and what I like about that is that it gives you a moment to say, “Hey, we were under this year. Let’s go load up those tax-free growth assets and it’ll let you, you know, check the box on that really strong goal.”

Valerie: Yeah. I guess that clarifies it a lot because I was just worried that some of our income might require that backdoor and I didn’t know if I was going to be doing it appropriately. And so I haven’t done that for a few years.

The Challenge of Educational Content (17:50)

Brian: This is the hard part of doing educational content is because I get it on both sides. Because you guys here you are in an income that very likely you could have just directly contributed to a Roth IRA. Meanwhile, I have dear friends of mine who call me and say, “I did that. I got so excited after listening to your show. I did the Roth backdoor to a Roth contribution and I’m like, “No, no, no. Remember, you have a rollover IRA with this much money in it. You don’t have the proper structure to do it.” And he’s like, “Oh, dag gum it.” So, this is the part where we give away as much free advice as we can because we want you to simplify your life, maximize things. And that’s why I hate that y’all got burned by a bad financial actor is because life gets complicated the more successful you are and you’re trying to figure out how you navigate this. So it just breaks my heart when even well-intentioned when we’re educators at heart. It is, it’s just sometimes there’s so many details that it can get muddy really quick.

Max: It’s actually one of the main reasons why I agreed to come on is because I think the story is worth hearing because I think that we’re not the only ones who have been burned by a bad financial actor. And I think that it’s more hopeful of the message to say it’s more of a setback than a critical end. Right. Exactly. And so to try to build back up that hope or that trust with somebody who can help you such as the show to help you on your path so you can become much more comfortable with your finances.

Designing a Realistic Savings Plan (19:12)

Bo: That’s it. I love that. So we’re doing 5% of the 401k. We’re maxing out the HSA. Potentially we could do some Roth stuff. I want to make sure as we’re thinking about the plan and as we’re designing this, I don’t want us to, so our goal is for you to save 25% of your gross income. That’s what we love for people to be able to save. But I don’t want to design a plan if you tell me, hey, based on college and this other stuff, that’s just unrealistic. Do you guys know the number like, hey, we could probably save this much on a monthly basis. That would be like kind of the upper limit because again, if 25% is not realistic, I don’t want to show you a 25% savings thing if that just doesn’t align with what’s going on life-wise right now.

Valerie: If you look at our regular budget, what we bring home versus what we actually have, there’s a couple of thousand extra dollars. Okay, wonderful. And that would probably could all go to some sort of savings. There’s a few things that we do want to save for. Our youngest child will need a car. We do help with an inexpensive car. The boys already have one. Our daughter does not. And so somewhere in that $5,000ish dollar range, we help them with a car.

Max: And no one deserves a luxury car when they’re a teenager just to get a car.

Brian: Sinking funds though. Very large sinking funds. So is that already accounted for?

Valerie: Okay. And the sinking funds, a lot of that is actual college money because when we had that experience with him, when we pulled out some money, it was such a short time frame for our oldest to go to college. And again, we were like, we’re not trusting anybody. A big chunk of that is to pay cash for college.

Max: The other side of that, we call that our flex account from that side. So, as you need to pay 6 months or a year worth of insurance, in essence, we pay monthly into that flex account. So, then we can pay some of these larger bills.

Understanding the Full Budget Picture (21:04)

Brian: So, that’s what my question when I saw the budget that’s up on the screen right now. I mean, there was, I didn’t see college on here, so I was immediately, that was a big question I was. I was like, if they got three kids in college, how? Sure there’s some money going? There’s got to be money coming out. I was like, maybe because your biggest category outside of your house is miscellaneous. And that’s always a scary thing for me when I see because that’s a catchall is what that is. It means you don’t necessarily know where it’s all going. And I know and normally if you’re saving and investing the 25%, you know, that’s okay. I don’t care how big your miscellaneous is, but y’all got some big things you’re trying to figure out. It’s because we’re trying to land the airplane when Max makes it to 60. And then so we’ve got to, and we got three kids in college. We’ve got to hone in. We’re no longer playing horseshoes, you know, where we’re just hoping to get a few points because we got it close. You actually need to know specifically different. You have phases while the kids are in college. What is that burn rate going to look like? Kids out of college, out of house, but Max is still working. What does that burn rate look like? And then, hey, what do we need to just sustain us in retirement and a happy retirement? That’s phase Y. So, I see three different levels in this journey that we’ve got to kind of hone in and know exactly what’s going on for you guys.

Max: Yeah. If that’s not the messy middle, I don’t know what is.

Brian: That’s why it’s so much easier to say that than to actually do it. And that’s the hard part with, and that’s why it really breaks my heart that you got burned by somebody because this is why it turns into a lot of people say, “Well, just give me a plan.” And I’m like, “Well, I’ll give you a plan, but your plan is going to be completely different next year. It’s going to be completely different in the year after that because your financial life is in such a state of flux right now because every year the expenses are different with the kids’ college. Every year it’s different with what’s going on with your benefits at work. We have to be there to navigate that throughout the entire journey. And that’s why we try to do that for our clients as best we could. That’s why I love that we get to do Making a Millionaire because it really lets you kind of open the curtain, see what’s going on.

Red Flags and Protecting Yourself (23:10)

Brian: I mean, that’s why I want to make sure we don’t let too much time go by. If anybody out there is watching this and has red flags that the person you’re working with is not doing it right, I really do want to encourage you go to moneyguy.com/resources. We have a resource. It’s free to download. Eight questions to ask your financial advisor. And I think if you will take these eight questions, it should expose a bad actor if they’re not doing the right thing. And we’ve tried to, I’ve done, I’ve been, we’ve been doing content together. I mean gosh it’s 20 years now. And I remember when Bernie Madoff came on the scene and I did some after-action reports on going and pulling his ADVs and showing people all the, there’s usually some big telltale red flags when somebody’s not acting in your best interest. And that’s why if we can give you the tools or the questions that will uncover that, I want anybody who’s watching this to save them the heartache that you guys have had to live through. It’s just not good.

Valerie: Yeah, I appreciate that. I think credentials are important. We didn’t, he said it. We didn’t know how to research it. So, the credentials were falsified or they were rescinded from people that he had gotten in trouble before. The other thing that was big was he was not properly insured. And that I don’t know if that’s one of your questions, but he was only insured for $250,000 total, not per incident, not per year. And so people were just kind of left stranded because we thought at first, oh, we’ll take some, they’ll take some because it’s per incident, but that was not the case. He was not properly insured.

Brian: It is interesting because it was funny as we go to conferences and this has been years since we, this was talked about. There was a financial advisor who had gotten sued. Now, I think this person was acting in the best interest, but they just, you know, litigation happens even for people trying to do the best thing. But they were self-insured. They didn’t have any insurance. And the attorneys all dropped off the case, meaning the plaintiffs dropped the case as soon as they found out they had no insurance. I hate that, by the way. Not that I want to get sued, but we have lots of insurance. We operate on the other side. That’s, but it is, it’s an interesting dynamic that the world we live in is that because you said that statement is that they only had 250. It seems like it’s weird that the system rewards you for not doing the right thing. And that just in my brain that clicks is like that doesn’t seem like that’s the right way that the world should work. But somehow that’s the path we’re on with when it gets to litigation and holding accountability.

Max: That was our experience actually. We were talking to the FINRA attorney and we said what was going on to try to get some reconciliation with that. And they said, “Because you pulled your money out first, you’re no longer going to be a candidate for you to be included.” And so we were, happen to be on vacation. I know exactly where we were. And we were just devastating.

Valerie: It’s so devastating because we thought we were doing what’s right. We also pulled out when we felt the red flags. And in the end, thankfully, I mean, he did lose his license and so he can’t do this to other people, but a lot of people lost a lot of money.

Max: Some in the sense of 70% of their portfolio.

Brian: Goodness, that’s awful.

College Funding Status (26:19)

Bo: As we think about planning forward, I want to, because you said if we look at your sinking funds, we notice that there’s a big chunk in there about $88,000. Does that cover what you guys are planning on paying for college or does saving for additional college also need to factor into our plan? Like is college taken care of or does that need to come in as well?

Valerie: That is a majority college. I would say we’re probably 8 to $10,000 short, but it’s in a high yield savings account and over the next four years the interest we earn on that should cover the shortfall that we have. There’s a few other things in that sinking fund like we, the new house we purchased, there’s no yard so we have some grass and some landscape stuff we have to do. He is a car guy and so we have a car repair budget in there for a car that he wants to work on. And so there’s a few little things.

Bo: Car like you, you car, like working on cars. Let’s go. What are you working on?

Max: Right now? I have a 99 Lightning.

Bo: Let’s go.

Max: It’s a family heirloom. But next is Fox Body. But that was one of the jokes I was going to tell her. It was when you say what is our goals? I said how do I retire? And I was going to lay this whole.

Brian: So you’re a Ford guy?

Max: I am a Ford guy.

Brian: Okay. I can pick up on that.

Max: And then I would wanted to say plus get all the toys I want.

Bo: Plus I want to retire and do my hobby. Yeah. I love it.

Max: And I know that math doesn’t math.

Bo: Well, maybe we’ll see. That’s what’s fun about putting together a plan. What we’ll do is say, “Okay, you’ve laid out some goals for us. Hey, we know that our burn rate is somewhere between $6 to $8,000 a month. We know that around age 60 is our timeline. If we can save and if we can do the 401k and we can do the HSA and we can do the Roths and we know that right now we’re at 7:30 and we’re going to do this for the next 12 or 13 years. Where does that put us and what kind of life does that put us at? That’s the fun thing to begin to uncover because we may determine that you’re able to fund the 6 to 8,000 and there might be even extra for a hobby or for travel or for the things that you guys want to do. That’s the fun part about getting to put plan together. And I love that you guys are starting to think about it seriously at this stage. It’s not like you are two years away from retirement saying, “Okay, I best guess we better have a plan.” You guys have over a decade to work on this, which I think is going to be awesome and gets me super excited about the planning.

Max: Yeah, you make me smile because you sound just like her. Like finding joy, finding joy in planning.

Bo: Oh man, it’s awesome.

Key Planning Questions (28:41)

Bo: Seems very interesting to me. What questions do you have for us or what are some things that we can speak to or that we ought to know about as we begin to put together a plan for you guys?

Valerie: So, I know we’ve got to diversify better. And it has worked for us and it’s been working well. Like, as I’ve tracked how the VTSAX and VTI and all that have been, we’ve been doing really well since we left them. But I know as we age it’s supposed to be more diversified that we need to figure out how to make it a little bit safer for us. And so that is a gap we definitely have. So I don’t know how to appropriately fund our account if we start pulling out of that.

Max: She tells me that you’re the tax guy and that’s the thing about me that we just haven’t mastered. I think that we’ve got some tax opportunities on whether or not we’re needing to take distributions or whether or not we should, like just our tax approach from that side. I’m not necessarily sure that we’ve got that pinned down.

Tax Strategy and Asset Allocation (29:39)

Brian: Two things that y’all just talked about. On the taxes, I’ll hit that first. Is that so far it looks like everything’s been loading up into the traditional side. So, you’re taking the deduction right now with the understanding that down the road when you pull this money out, you get to pay at ordinary income tax rates. So y’all are very heavy in what we call tax deferred assets which are great. Because even if you look at the Financial Order of Operations, this thing is very tax focused because if you look at step five, these are the tax-free growth opportunities. Little nervousness on why you weren’t funding the Roth completely. We’re going to get that back on track. But then the next step is just maxing out those retirement benefits not only to get the free employer match but also just so you get the tax savings. Y’all are kind of doing those things. But it is interesting and this is why when we design the Financial Order of Operations, we talk about this step seven, the hyper accumulation. This is when I talk about the three buckets of getting access because as you start thinking about how we’re actually going to use this money, we’re going to need to be able to navigate what is the tax rates going and how’s the impact. Because yes, you have, you know, $700,000 of investment. But when I look at that and I see close to 600 of that is all tax deferred, there’s going to be a headwind from the taxes that every dollar, it’s going to be expensive every dollar you pull out of that. So, we better make sure your tax rates are low that year or have access to some other asset somewhere else if so we can get you through the bridge period of how are we going to use this money. So, that will definitely be something we help analyze.

Brian: The other thing that y’all brought up, Valerie, you talked about your 100% index right now. You know, I’m not going to pick on that necessarily. We’re going to talk about it internally and figure out a plan because there’ll definitely need to be some type of asset allocation. But the question, I think we have a good case study that I’d love to get while y’all two were sitting next to each other and put you on the spot and ask you the question. Last year was a pretty dynamic year, 2025. And by was it April of last year? Between March and April, the market was down 20%. Now everybody remembers 2025 is a great year because we ended up the year strong. But if I had gone back in time and said, “Hey, while we’re in this March and April period where the market got its teeth completely kicked in,” and y’all rode it 100% because it’s not like you were diversified and you got, you know, 60% of the volatility. You got 100% of it. You’re like, “Give me more.” So, how did y’all feel? I mean, did y’all have any conversations? Did you not even notice, Max? I mean, where was y’all’s, what was the emotional impact of that?

Max: I’ll be very vulnerable. I did not notice it as much as probably I should have because that’s not our plan. Our plan all along has been not timing the market but time in the market. And so this whole thing about dollar cost averaging and all the other kind of stuff, right, all the terms that have kind of been thrown out there. And I know you just have to ride it and I know that there’s some, I don’t have the stress capacity for me to daily trade nor really watch it that closely.

Brian: Were you just not looking though? Was your strategy just I’m working and look, that’s a pretty common behavioral tactic. Everybody while you’re working it’s like you know what, I can’t control this but I have a job. I’m just going to ignore it. And you’re also not the financial spouse if I’m being honest.

Max: That’s true. We hear who’s talking.

Brian: So let me pivot it back over to Valerie because I bet you were paying attention.

Valerie: I actually don’t. I look at it maybe every six months and then at the end of the year I do my, so since 2021 when we took over like the 2019, 2020 when we took it over and moved it to Vanguard, I keep track of what our percentage has been, not a true net worth. This was the first time I did an actual true net worth. But I just didn’t look at it.

Brian: So did you not even remember that we were down 20% mid year?

The Hypothetical Retirement Scenario (33:31)

Bo: So let’s take that right then. That’s great. We love hearing that. That’s the way. So you got, I’m going to do round numbers because I can’t do math in my head real well. You got $700,000. We have a 20% downturn last year. So all of a sudden $140,000 evaporates quickly, right? And you don’t even pay attention to it. Great. Let’s fast forward 13 years and let’s say that your portfolio is now doubled and you just retired. You got a million and a half dollar portfolio and then we see a 20% drop and now all of a sudden $300,000 disappears. You retire at one and a half and then you’re at 1.2 at the end of the year.

Max: All joking aside then.

Brian: That’s not a joke.

Max: Then we didn’t do something right with our homework here. That’s my intent.

Bo: So obviously something has to change. It’s okay that it doesn’t feel painful right now, but you both acknowledge at that point it would. So there must be some sort of path that we ought to be on to get from where we are now to what that needs to look like.

Valerie: Yes, logically I know we need to diversify. I just it’s a gap. I don’t from everything I’ve read and studied, I don’t know what to do. And we definitely need help there.

The Landing the Plane Analogy (34:42)

Brian: And because, and I’m saying this more from an educational standpoint because I have people who write us and share that they always think that they’re going to, and I always use the analogy of landing a plane, but they always think that they’re going to be 100%, you know, index funds, you know, and then right as they retire, they’re going to slam it down on the ground into the most, you know, then they’ll start diversifying and things. Y’all, I don’t get the feeling y’all would be okay if you landed the airplane like a commercial plane where you actually came in, you’re like, “Oh, that was a nice landing. That felt pretty good versus let’s nose dive this thing and just slam it down the ground and hope that we kept the landing gear intact.” Is that a good read? Okay.

Valerie: His risk profile is higher than mine, but definitely as we start to get to a point where he’s ready to be done working, he does not want, we don’t want to lose the money. We don’t want him to have to go back to work. We don’t want to have to be like.

Max:And we’ve been shaped by our past of not losing a lot. So a lot of that also contributes to not watching to see that same approach. We understand that we’ve seen the trend of the market as a whole. We know that it’s going to be positive. Well, we assume it’s going to be positive from that side. And so we ride it out in hopes that it gets to a corrected spot. And you’re right, we’re not pulling that money out for a long time and the plane is not landing yet. And so I know that we were heavy invested in some of these not maybe tax optimized scenarios, but there’s a spot where we’re ready to make sure that that landing gear, the suspension, whatever is necessary for this to be a comfortable landing is there, and that’s why we need help.

Brian: I love it. I love it.

The Homework Assignment (36:22)

Bo: All right, I’ve got some, so, we’re excited. We’ve got a plan that we can be able to put together, and we’re going to paint a picture for you, but I’ve got some homework I want you guys to do in the interim. The very first thing I wrote down is we ought to look at refinancing. At least just beginning to have the conversation with lenders. Hey, I’m at 7.375. What are rates right now? Now, that’s not suggesting that you should refinance. But what I would do if I were in your situation, if I know that rates are at 6% right now, I would calculate, man, if my interest rate dropped to 6%, how much would my interest savings be on a month-over-month basis? Do we believe, because you said this is likely not our forever home, whatever that break even is, if it cost me $3,000 to refinance, how many months will it take me to recoup that $3,000 cost in terms of interest savings? And I can just do the math on that to figure out, okay, yeah, if it’s going to take me 14 months, and we believe we’ll be in this house 14 months, refinance could make a lot of sense. And that’s going to immediately provide immediate reprieve to your monthly cash flow, which is going to give us additional margin to be able to fund some of these other goals.

Bo: I do think since we are coming up on tax time, you guys ought to just go look at what your income was last year, verify that you were indeed Roth eligible, and you can still go back in time right now and you can fund your 2025 Roths even though we’re in 2026. And then I think it would be helpful, Brian laid out sort of these three different spending areas you’re going to be at. You have spending right now while the kids are in college. You’ve got spending post kids in college, pre-retirement, and then you got spending in retirement. I think it would be good for you guys to do some homework around figuring out what those numbers are and how they change. Because it’s just like when a lot of folks retire, they’ll have their go-go years, their slow-go years, and their no-go years. A lot of folks as they’re approaching retirement, they do savings the same way. All right, we kind of have our no-go saving right now while we have kids in college and all this stuff. And then we kind of have our slow go, the kids are starting to get out and then we’re able to really kind of finish the drill as we run right into the last couple years of retirement. So, I think thinking through that would be super valuable for you guys.

Valerie: Okay.

Bo: Awesome. We’re going to put together a plan to see what 60 looks like. We’re going to put together a plan to see what a glide path might look like. We’re going to put together a plan to see what a personalized FOO for you might look like. And I think it’s going to be awesome.

Post-Episode Analysis (38:39)

Bo: Brian, how awesome was it sitting down and getting to talk to Max and Valerie?

Brian: What a lovely couple. Yeah, I have a little soft spot for them because unfortunately they’re so willing to share with us, but we heard in their story they got taken advantage of. And sadly in the wonderful world of personal finance there are some bad actors out there and we tried to address that. But still, I could tell that they were wearing the weight of that still heavily even though they have tremendous success in their current state. It just broke my heart to see that they had that.

Bo: Well, I think a lot of people that had that experience would, you know, bury their head in the sand and say, “Okay, no, the financial world is broken. I’m not even.” And I love that here they are saying, “Okay, no, no. We have these goals. We have these things we want to accomplish. We know that there are things we don’t know and we want to seek out some help.” I think one, it’s just super brave of them to even put themselves out there to do that. And what I’m excited about is now that we got to like play with the numbers, I think their future looks pretty bright.

Designing a Custom Savings Rate (39:38)

Brian: Well, and this is kind of unique because we’re going to talk about savings rates. And you know, anybody who watches our content, we pretty much are pretty straightforward. We want you saving 25% of your gross income. Well, here we are. This is why personal finance is definitely personal. When we talk about Max and Valerie, it looks like we might be going in a little different direction.

Bo: Yeah, we started to design a Financial Order of Operations for them. And obviously, we want Max to continue taking advantage of his 401k. And for those of you that don’t remember, his 401k, if you put in 5%, they’ll also put in 5%. So pretty exciting stuff. But they make over $200,000 so they can’t count it towards your savings rate but it’s still there. It’s still going into the pot. So if we’re going to base things off of a $255,000 salary for Max, that’s going to be his base pay plus what we assume a bonus is going to be. We know that he’s going to have $12,750 of his money going to the 401k. Now, yes, we’re not going to include it, but there is still another $12,750 going in the background. But in addition to that, we want him to max out the HSA at $8,750. We want them to max out his Roth IRA at $7,500, then max out her Roth IRA at $7,500. If we’re doing that, they’re going to be saving on their own about $49,000 a year, which is about 14.3%. And a lot of times at this point we say okay, 14.3%, where’s that extra 10% going to come from?

Brian: But for them, well remember they also had three kids in college. I mean there is a lot, we talk about the messy middle or that life just is going to happen to you. They got a lot going on in their life. But here’s the good news, they already have $731,000 working for them. And at their age that’s a lot of money that can start really building momentum in the background. So, it was kind of fun to say, okay, what can they save with all this life that’s happening, but still reward them with all the hard work they’ve done in the past? How does this all line up?

The Retirement Projections (41:32)

Bo: Yeah. When we actually look at their path starting at $731,000, saving that $49,000 a year, just doing that by age 55 gets them to about a $1.9 million portfolio. By age 60 gets them to about a $3.2 million portfolio. Well, they told us, “Hey, based on the life that we want to live and the things we want to do, we need about $7,000 a month in living expenses in today’s cost.” What’s great is even at a 14% savings rate, they are on track by age 60 to be able to replicate that lifestyle, to have a portfolio that provides for them that level of income without having to go all the way up to 25%.

Brian: Well, here’s the good news. We use some pretty conservative assumptions in here and the kids aren’t going to be in college forever. So, and I imagine when the kids get out of school, they’re going to feel like, “Holy cow, what are we going to do with all the success we’ve built?” So, good on them. And who knows, maybe the savings rate goes up even more or they just reward themselves with more life.

Bo: And what happens is if their savings rate does go up because cash flow frees up, all it does is give them more options, more flexibility. Maybe it’s not 60 where they’re at 58 or 57. So that’s kind of the way their plan looks, but there are some tweaks that we think might make sense because one of the things that they let us know is, hey, our portfolio right now is pretty much Max at his age doing 100% equities. That seems a little aggressive. And so in order to be able to design an appropriate allocation, you really need to understand someone’s unique risk personality, their risk capacity. You need to have a real view into their entire financial picture. And we have a pretty decent view, but I would argue it’s not quite a full view just yet. But I do think that it would be possible for them to determine, okay, what sort of allocation might make sense for us? And just to kind of give them an idea, we went and pulled the Vanguard target retirement funds, looking at those that are far dated to those that are more near dated to kind of show an example glide path of what that might look like. And based on their age right now in their mid-40s, if they were just using like a target retirement type structure, they might want to look like something like 82% risk on, 18% risk off. Now that’s not prescriptive, but that would be the Vanguard, you know, allocation. And then as time moves on, as they get into their 50s, okay, maybe it shifts to 75% risk on, 25% risk off, and then 70/30 and then 60/40. And then what Vanguard would have is by the time you get to retirement, they’d be recommending a portfolio somewhere around 50/50. Now, in our experience, perhaps that’s a little more conservative than someone retiring at 65 should be, but it at least gives Max and Valerie an idea of what they should be thinking as they adjust their allocation.

Brian: Look, I know there’s for a lot of people out there in the audience, you’re thinking, well, you know what? I just can go 100% risk on and then right before retirement, slam in some diversifiers. But here’s the reality we always worry about. It’s not just risk tolerance on what you can handle. It’s also risk capacity of what you actually have the time to wait for your accounts to recover and to make sure your financial goals are fulfilled. Don’t do this. Don’t get, you know, pigs get fat, hogs get slaughtered. So you want to make sure you really honor the asset allocation.

The Refinance Opportunity (44:47)

Bo: So we think their savings rate is great. We think that their asset allocation could probably use some adjustments. And then one of the things that we uncovered is we noticed that on their current mortgage, their current interest rate was over 7%, it was 7.375%. And we know that interest rates have decreased over the past couple of months. And right now, if you just look at the average interest rate on 30-year mortgages in this country, it’s somewhere around 6%.

Brian: We’ve even gone below 6%, but we wanted to be somewhat conservative because, you know, I know this will go out and it’s bopping around all over the place. It’s still a pretty significant change because it’s greater than 1% which is the first indicator we always say, “Hey, at least go do the math on refinancing once you get a greater than 1% delta.”

Bo: So, there are two options they ought to think about. The first is they ought to call their mortgage company and say, “Hey, I noticed that rates have dropped. I’m currently paying 7.375%. Would you consider giving me a rate modification? Could I decrease my rate?” Now, the mortgage company may say, “No, we’re not interested. That’s not something we want to do.” Totally fine. No big deal. Then they could begin investigating, okay, what would it look like if we refinanced our mortgage? Instead of having our 7.375% mortgage, we now want a 6% mortgage. Well, refinancing is more expensive than a rate modification. There are closing costs associated with it because it’s a brand new loan you’re undertaking. And so, what we wanted to figure out was, okay, what are the interest savings if we refinance? What are the costs of refinancing and are those justifiable when you put them next to each other?

Brian: Now, this is a thought experiment. We like people to keep their payments the same so you don’t reset the amortization schedule, but you can do the math exercise to see that there’s close to $200 a month interest savings by just getting the lower interest rate. And if we went with a pretty conservative number, we said about $6,000 of estimated closing costs, we could quickly see that their break even point on this was right around 31 months. So a little over, if you think about, and what that means in terms as long as they stay in this house for at least the next 3 years, and they told us they were going to be in this house for the next 5 to 7 years if I recall.

Bo: Yeah. If they stay in the house for the next 31 months, the interest savings alone would pay for what it cost them to refinance. So, we think it’s kind of a no-brainer if they’re there for five or six years.

Brian: And there’s also a lever I like to pull because we are, it’s an interesting time in the wonderful world of finance right now is that interest rates have gone down on mortgages. I don’t love paying this $6,000 out of pocket. What I’ve done in the past is ask your mortgage brokers, can you take a little bit of a premium on the interest rate and then have zero closing cost? So, instead of maybe like a 6% rate, maybe it’s a 6 and an eighth, 6 and a quarter, something like that. So, you could do the math on that, figure out. Now, look, if you’re going to live in the house for a long time and you don’t think interest rates are going down, probably paying for this makes sense. But this at least gives you an option if you don’t want to have to come out of pocket for the expense of refinancing because it’s nice when we’re in these falling interest rate environments if you can actually take advantage and let the premium on interest rate cover the uncertainty of what the closing costs are.

Bo: Now remember, if you are someone who’s going to refi, what we don’t necessarily want you doing, Max and Valerie, we don’t want you guys to do this. We don’t want you to refi and just start paying that lower payment because all you’re doing then is just extending your debt out. Rather, we’d love for you to keep making the same payment on the same timeline or even if you’re not going to make the same payment, at least pay in the same timeline. That can provide some reprieve on your monthly cash flow. But there’s a really good chance that interest savings could be substantial over the next four, five, six years for you guys.

Protecting Others from Bad Advisors (48:34)

Brian: Now, there is an issue we want to put an exclamation point on because it broke my heart. I kind of started off talking about this. They got really burned by a bad financial advisor and to the point that the person actually lost the ability to be even be a financial advisor anymore and they’re still carrying the weight from that. We tried to talk about how do they not, you know, how do people and how do we educate the general public on this? We shared with them, go to moneyguy.com/resources. We actually have eight questions anyone should ask their financial advisor. Even if you think your financial advisor is a good person doing a good job, I still would go check out these questions because it’s just really important that you make sure that your advisor has your interest front and center so that you don’t get caught in one of these bad situations because you know there’s several things that are going on here. You need to have your army of dollar bills working harder than you can with your back, your brain, and your hands. And you don’t want to squander that valuable resource of time.

Bo: That’s exactly right, man. I think that again, it was so kind of Max and Valerie even let us take a peek into their financial life given they have that baggage. But what I hope that people hear and take away from this is just because there was a bad event, just because there was a bad experience, just because things didn’t go exactly the way that you would hope they would, that does not dictate what the end of your journey looks like. And from where we’re sitting, I think the end of the journey looks pretty exciting for Max and Valerie.

Closing (49:58)

Brian: So, Max and Valerie, thank you for being vulnerable. Thank you for coming and sharing. And I think a lot of people are going to be educated and learn how not to even fall into that mistake or even maybe discover that they’re working with a bad advisor. We’re going to get them through that. Bo, if others want to come on Making a Millionaire, how do they apply?

Bo: Yeah. If you’d like to be a guest on Making a Millionaire, you can go to moneyguy.com/apply. Or if you want to check out any of our free tools and calculators, go to moneyguy.com/resources.

Brian: Now, Max and Valerie, you’re well on your way to your great big beautiful tomorrow. I’m your host, Brian, joined by Mr. Bo. Money Guy out.