They Want to Retire Early. Their Lifestyle Says Otherwise.

Making a Millionaire Introduction (0:00)

Gina: But I say that to him all the time. Like, I see what we take home and I’m like, where? How do we not have more money? Where is it? Because we blow it.

Brian: I’m seeing y’all’s income and then I’m seeing you lament that you want to pay off that debt, and I’m like, we’re way too nice. I think if Dave Ramsey was here, he’d be like, “What? What do you mean? You’ve got to take the kids on all these vacations and all this stuff.” I should harness my inner Dave a little bit. No, you need to get serious about paying off all this stuff cuz it’s crazy. You have a lot of money. You’re rich.

Chapter 1: Welcome to Nashville (0:33)

Brian: So, have y’all been to Nashville before? Have y’all come?

Jaime: Years ago. Pre-kids.

Gina: Yeah, pre-kids.

Brian: How long ago was pre-kids?

Gina: Well, we have a six-year-old, so probably came here like ten years ago.

Jaime: Yeah, for New Year’s Eve.

Brian: Oh, you have a six-year-old now? How many kids do you have?

Gina: Two, a three, and a six. Actually, she’s going to be four tomorrow.

Bo: Let’s go. How long have you guys been married?

Jaime: It was twelve years in July.

Bo: Twelve years in July, awesome. How’s it been?

Jaime: Pretty good.

Brian: So, you all took some time for each other before you decided to start doing the kid thing?

Jaime: Yes.

Gina: Mhm, yes. We had a really good time before, and a really good time after kids. Just a different kind of time.

Brian: When the kids watch this, they’ll know that we’re having a great time after kids also.

Gina: Yes.

Bo: So, how’d you guys meet? Give us the story, what’s the background, how’d this all come together?

Jaime: Soccer. We both play co-ed indoor soccer, and some mutual friends got on the same team, and we played together for years. We were just really good friends, golfing buddies.

Brian: And what were you guys doing when you met, vocationally?

Gina: I was a nurse. I hadn’t done that yet, so I was a nurse, I was a nursing director for an assisted living facility at that time.

Brian: Okay.

Jaime: I was an HVAC technician.

Brian: So you’re in the same field but in a much higher up position now. You’re not having to actually go out and crawl.

Jaime: I still have to do that occasionally, but it means it’s a bad day, things have gone really sideways.

Brian: Commercial HVAC or residential?

Jaime: Residential.

Bo: Awesome. Okay, so you guys got married twelve years ago. All right, so walk us through financially when you guys got married. Were you on the same page from a financial standpoint? Did you talk about money a lot?

Chapter 2: How Gina and Jaime Handled Money (2:12)

Gina: I don’t think we ever really talked about money, because it just never was like that. I was a nurse making pretty good money as a single person. I was in the process of buying a home when we first started, or I just really wanted to buy a home when we first started dating, which was kind of an awkward thing because we weren’t married, so we didn’t want to buy a home together, but we just started dating. So I actually ended up buying a house and he moved in with me. We just paid everything together kind of right from then. We never had a weird money thing, we just sort of combined.

Jaime: Yeah, luckily she’s always had more than me, so I was all always all in, like, “Yeah, you can have whatever you say. This is awesome. Can I have my scraps?”

Bo: I love it. So no real money struggles, like you got started, both when y’all got married, you both were making a good household income. So no real struggles in terms of, you know, you hear some stories, “Oh yeah, I remember we were eating beans and potatoes every night.” That was not your story.

Gina: No. Our mortgage was based on just my income, so when the two of us got together, we were comfortable, more income, shared expenses. We certainly never talked about the future or saving or anything in that nature. We were just living, getting money, spending it.

Bo: So when did you guys start talking about the future and saving and building? When did that conversation happen?

Gina: Well, you kind of always have saved.

Jaime: I luckily, because I would never say that I’m good with money by any means, I’m certainly better now, but at that time I certainly wasn’t. I always had an idea, like, look to the people you want to emulate. I’m not an innovator, someone’s already done it, they’ve done it better than me. So I had a friend whose father owned a realty company and did really well, and he told me at eighteen, I was talking to him about my job offering a 401k, and he was just like, “Get into it. Get as much as you can.”

Brian: Love that.

Jaime: Use the company match. He said, “Pretend that money doesn’t exist, and then even if they take it away, just save, just take that same amount of money and save.” So I always had a 401k.

Bo: And how old were you when you were given that advice?

Jaime: When I started out full-time. I did two years of college and it really wasn’t for me. My father was in a trade and he was always looking for help, so I went to work for him full-time at twenty and kind of never looked back. I thought I’d go back to school, and then twenty-five years later, here I am.

Bo: So you’ve been saving since eighteen.

Jaime: Yeah, I had a pretty good 401k.

Gina: When we first met, I was putting peanuts into mine, because nobody, my parents, we never talked about money. Money was never, you got it, you spent it. It was about making ends meet. No one ever talked to me about that.

Bo: So when you got married, did y’all have that conversation, like, “Hey, I’m saving, you’re not, should we?” Or was it just, “I’m kind of doing my thing, you’re doing your thing”?

Gina: Yeah, we just never really did.

Brian: When y’all moved in together, did you set up a joint account? How’d y’all pay the bills?

Gina: I think so, yeah, I think we set up a joint account.

Brian: So your checking, we’ll get into emergency funds, is that all joint right now? No separation on that stuff? Okay, keeps it simple.

Bo: So, but you guys were kind enough to share a net worth statement with us, and we look at where you guys are right now. And remind me, how old are each of you?

Gina: I’m forty.

Chapter 3: Becoming Millionaires in Their 40s (5:17)

Jaime: Forty-six.

Brian: So right here in your early to mid-forties.

Gina: Just babies.

Jaime: Just a baby, in my head. I’m forty-six with a new hip, so I feel a little older.

Brian: A million dollar net worth, right? You were officially in the two comma club, which is amazing.

Gina: We had champagne that day.

Bo: Did you really? I love that. So obviously you said, “Oh, I didn’t really save a lot early on,” but you must have done something right. So give us, how’d you get from “I didn’t really pay a whole lot of attention to it” to here we are today with a million bucks?

Gina: Dave Ramsey. I actually just had to reach out to the friend that introduced me and said, “When was that?” In 2022 I was at work and I heard Mike, one of the nurses, talking about debt and how silly it is and how people spend. We’ve never really had a lot of debt, my dad said to me early on once, “If you don’t have the cash to pay for it, you can’t have it.”

Bo: Love it.

Gina: So maybe a thousand dollars on a credit card here and there, but we’ve never really been in debt. So he kind of just, I said, “What?” And he gave me the Total Money Makeover. So I read it, and at that point I had student loans, a car payment, all the regular things, a mortgage. So I said, we started listening to the podcast, I’m yelling at everybody every day, and I said, “This is it,” and I just went down the rabbit hole. I read every finance book you can think of, every podcast. That’s how I found you guys. He had a business, he sold it to a big company, so we got a buyout. Not a ton, but enough to pay off my student loans, so I said, “We’re knocking them out.” We paid off my student loans, and from then on out I opened a brokerage account, maxed out my 401k.

Brian: So really starting in 2022 is when you started taking it seriously.

Gina: Yeah.

Brian: So over the course of four years you’ve been able to cover a lot of ground.

Chapter 4: Their Income Explodes to $400K (7:07)

Brian: Obviously there was a business sale that helped with that, but you’ve been able to cover a lot of ground in a relatively short amount of time. What are y’all saving? Because I see the income is pretty big, and that’s what I was curious about when I looked at the net worth, I couldn’t tell how long y’all had that income, what the savings rate is. I’m just trying to figure out the health of living on less than you make.

Gina: Yeah, so we have not made that income for, that’s this year.

Brian: Okay.

Gina: For the last eight years I’ve been working for a small private company as an NP, and I made $120,000 for probably the first five years of that. Put a little pressure on them and got a raise to $140,000. And then last year we got bought out by a nationwide company, actually a year ago this month. With that new company there was a lot more room for a higher income, because I get paid based on what I bill instead of a set salary.

Bo: So in the last year is really when this income’s kind of blown up.

Brian: What do you think your savings rate is? Or even walk us through what accounts you save in and how much you put into those accounts.

Gina: So I max out my 401k. He puts, I think, $22,000 into his, so he’s almost maxed. We put $320 a week into a brokerage account, and then I think like $150 a month into crypto.

Bo: Tell me more about that. She’s like, “I don’t really pay attention to finances, but let me buy some crypto.”

Gina: They’re going to hate that. I don’t know where I got into it, my best friend’s husband’s into crypto, so he introduced me, and I’m a very competitive person, so it was like something I can do. It’s so volatile, so the excitement of looking at it and trying to, I kind of dove deep. We didn’t go crazy, but we got in. I’ve since backed out a little bit.

Brian: How much was it?

Gina: I love to gamble, but I don’t go to Vegas.

Brian: You said how much, I just saw the sparkle in your eye when you said you like the volatility. That’s most people don’t like that.

Gina: But you, if you put me at a blackjack table, it’s hard to get me out. I’m like, get away from me.

Brian: I love it. And how much are you doing in crypto? You said $150, a week or a month?

Gina: A month.

Brian: What about Roth IRAs, HSAs, any of that kind of stuff?

Gina: HSA, I do $100 a paycheck, so that’s $200 a month.

Brian: So you save somewhere between $1,200 to $1,300 a month just into the brokerage account?

Gina: Yes. We don’t do anything consistent with the kids.

Jaime: Yeah, we have 529s for the kids.

Brian: Okay, awesome, are you putting money in there?

Jaime: $100 a month for each kid. We’re trying to get more outside investors, to fund, grandparents and things like that.

Bo: You guys are interested in crowdfunding. I like that, crowdfunding the kids’ education, that’s great. Okay, so you said $1,300 a month going into the taxable account, so that’s $1,300 times twelve, it’s $15,600, plus $2,400 for the HSA, plus $22,000 for the 401k. That puts us at what, $62,000 annual savings roughly. So if we do $62,000 into a $412,000 income, it’s about a 15% savings rate.

Chapter 5: The Problem With Their 15% Savings Rate (10:12)

Bo: Is that kind of in line with where you thought your savings rate would be?

Gina: No, it was higher when I was making a lot less last year, so I felt like we were on track with like the 20 to 25%. But this year has, yeah, really.

Brian: Do you feel like you’re ahead of the curve, behind the curve, or right where you’re supposed to be?

Gina: Every day I feel different. Some days I say to him, “Look at us, a million dollars,” we had champagne. And then literally two days later I’m like, “Talk me off the ledge, we’re doing terrible, I’m not saving enough, I have no idea.” I take the FOO out and I’m like, “Where are we? I think we’re at eight,” and then I’m like, “No, we’re at three. We have a HELOC, you know.” I don’t, I’m all over the place.

Jaime: I’ve woken up before in the morning and she’s awake, and I’m like, “I haven’t even slept, we have $1,200 on the credit card.” “Okay, let’s just pay it.” Yeah, I know, but we shouldn’t even be putting it on there, and then we book a trip three weeks later. I’m all over the place.

Bo: Do you carry a credit card balance, or when you have that $1,200 you pay it off, right?

Gina: We’ve never had a balance in five years.

Brian: So it sounds like your question is, “Okay, are we doing the things we’re supposed to be doing, or are we not doing enough?”

Gina: Well, yeah.

Chapter 6: Can They Retire in 10 Years? (11:18)

Brian: And to begin with the end in mind, how much longer do you want to work?

Gina: Not long. I think that’s another reason we’re here, to retire early. I found FIRE, not that we want to do FIRE, but we’ve pretty much aligned that we don’t want to work.

Brian: So at forty and forty-six, your goal is like ten years? Do you guys want to retire together, or do you want to stagger the retirements?

Gina: I would like him to retire first, and then I’ll go part-time.

Brian: Give me some ages, put some details on that.

Gina: So fifty-five, fifty-six ideally.

Brian: And how about for you?

Gina: I can do part-time, I could do a lot of remote stuff, so I could do part-time as long as I feel like it. I think that’s what we’re trying to figure out, like how long would I have to do that, what kind of income would I need to keep us alive.

Bo: So ten years from now, we’re going to have a sixteen-year-old and a fourteen-year-old. When you think about retirement and financial independence and not working anymore, what does that look like to you guys? You said you’re going to be working part-time, but are you going to live where you’re living now? Are you going to do the things you’re doing now? Are you going to travel? What does the lifestyle look like at that stage?

Gina: I think my main goal, the reason I want to retire, is to be available for the kids. Those are tough ages and I’m nervous, honestly. I have some friends with teenagers, since we waited to have kids later in life, and I know what’s coming, and I just think I want to be there as much as possible, at least one of us. We’ve vacationed a lot recently now that we have more money, and that’s really important to us. Kids are hard at three and six, and they’re the greatest when there are no schedules and we’re on vacation and we’re all having a really good time. So we try to reproduce that as much as we can, and they’re already at the ages where they’re now referencing the trips we just went on and making memories. That’s huge for us.

Jaime: That’s just great to hear. Like I said, we have friends with teenagers, and then you travel with teenagers and they don’t tend to care as much and aren’t as appreciative. So we want to do it now while we have the time, but we also have to work.

Bo: Well, and one of the great things about traveling when your kids are young is you build this habit of, “Hey, this is what we do as a family, we spend time together, we go places, we experience these things.” It’s not a bad habit to build, so long as you’re doing it in the right order, at the right cost, and not sacrificing future stuff.

Chapter 7: Spending Guilt, Vacations & an Expensive Bathroom (13:38)

Brian: Well, you said something, Jaime, that you catch her waking up in the middle of the night and she’s just wide awake. What’s going on? Because it sounds like we’re on vacations, we’re living our best life, we’re making more money than we’ve ever made. Why would you be like that?

Gina: I think because I toggle with that, like maybe we shouldn’t go on vacation. I think about the opportunity cost of everything, so I buy something and I’m like, if we had invested that we could retire with that much more money in ten years. I’m always running projections.

Brian: How often is this stress that’s waking you up, is this something you feel like your nervous system is constantly under fight or flight, or is this something just every now and then?

Jaime: Every now and then.

Brian: Jaime, you answer the question, sure.

Jaime: Not that often, definitely right after trips, any big expense, a lot of buyer’s remorse.

Gina: The HELOC’s a direct result of, we’re renovating the bathroom.

Brian: What? Okay, that’s a very expensive bathroom, that’s not vacations, that’s not cars.

Gina: That’s actually truly tied to the house.

Bo: How much was the total HELOC when you took it out?

Gina: Well, it’s like we wrote checks to different contractors, so it just kind of builds.

Brian: I’m asking how much the bathroom cost when you did it.

Gina: Sixty-five.

Bo: $65,000 for a bathroom, this is the master bathroom?

Gina: Master bathroom. It’s the nicest bathroom you’ve ever seen.

Brian: A very, very nice bathroom. So as you think about this, is it done now? We’re not writing any more checks out of this?

Gina: This is it.

Brian: When you think about, you have this, you know, $60,000 at 6.75%, what’s your plan or thought process for paying that off? How are you guys attacking that presently?

Gina: So I pay $1,400 a month on that, I think my payment is like $250, so I try to crush it as hard as I can. But I think that’s probably what I’m looking for a little advice about. I know mathematically 6.75 is high, but I can also make 12% in the market, and I’m very competitive, so there are times I’m like, do I pause the brokerage account and hit the HELOC, or do I split it? But I hate that HELOC very much.

Bo: But you love that bathroom.

Jaime: I love the bathroom.

Gina: You love the bathroom, hate the HELOC. I love and hate the bathroom, you know.

Brian: I was going to ask, just to keep us from making desperate decisions, because you sold a company, but now you’re a manager for a bigger company, and you’ve recently been acquired, but y’all both work in jobs, I mean, whenever you watch TV shows and they talk about the end of the world with AI, y’all are kind of in the two places you’d want to be, because you’re working in heating and air.

Jaime: I’ve never had a fear of it, because if I somehow lost my job or the company goes belly up, I can literally walk to your house next door and install air conditioning for you.

Brian: Yeah, they make South Park episodes about how you’re going to be the ones ruling the world because you’re fixing everybody’s heating and air systems. But I still think about the fact that three months is the minimum we like in emergency reserves, and then I look at y’all, you have $25,000. Do y’all spend, let’s divide $25,000 by three, do y’all spend eight grand a month?

Gina: Nope.

Bo: How much do y’all spend a month?

Gina: I think it’s $15,000.

Brian: $15,000, so I hate to do public math, but that’s $45,000 if we’re doing the bare minimum.

Chapter 8: Lifestyle Creep Starts Showing Up (17:12)

Gina: No, no, it’s $13,000, it’s not $15,000. To be fair, this is all pretty recent, which is another reason we’re here, because it’s kind of newfound wealth to us too, it’s our new norm.

Bo: Can I tell you two things you said that kind of concern me? And I don’t mean concern is probably too aggressive, but that’s the second time I’ve heard a reference to this. This income is relatively new, your savings rate was really, really good when your income was lower, but now that your income has gone up, your savings rate is not as impressive. It sounds like as some of these improvements to the financial life have happened, it’s gone more toward lifestyle than toward future foundation building. Am I describing that correctly?

Gina: 100%. Yeah, we took more vacations this year than we ever have before. But I guess that’s what I’m struggling with. What we were doing before was based on our salaries, and it seemed like we were doing okay. So now we have this more money, do I need to be saving more, or can we live our lives? We recently had this conversation because I’m in healthcare, and what I do is elderly care, so I see a lot of people at the end of their life, and every day I see people laying in the bed, and I’m thinking, at any age, it’s like at any point it can be taken away. So I don’t want to wait until I’m sixty-five or seventy to live this life. So I think that’s what we go back and forth on, we had this money, “Let’s take the kids to Disney, do this.” I don’t want to be a miser, I don’t want to save all this money just for a rainy day.

Brian: You said the income is new at $400,000, what was it beforehand, was it like $250,000, $300,000?

Gina: I made $140,000 before we got acquired, and he was at $95,000.

Brian: It’s $250,000, that’s reasonable, and you’ll know since you’ve listened to our content, I’m just spitballing this, we’re going to get you real answers when we start throwing it all together and putting a plan together. But at forty years of age, you should at least aspire to have three times your income. By fifty, you should be somewhere around six or seven times. You’re not fifty yet, so you’re somewhere in between there, and it sounded like we want to base it more off the older age, because that’s when the first checkmark is on, hey, are we at some type of financial independence so we can be part of this FIRE movement and move on. So we probably should be shooting for somewhere between five to six times y’all’s annual income. And I’m not even going to average, let’s just go, because what I’m trying to figure out is the lifestyle is obviously pacing more than what we should be doing. Is there something to these wake up in the middle of the night things? If we did $250,000 times six, that’s right around a million and a half dollars, and if we took out your house, if we look at just your portfolio value right now in the net worth, y’all are looking at about $600,000 of investments. Y’all are very fortunate to be cash flow rich, but net worth wise, you are behind. I mean, I hate to say it, because other people go watch this and be like, “Hey, why is he picking on them, they’re millionaires.”

Gina: You’re millionaires because of your house, you’re not millionaires because of your investments. But it’s not even a year yet that we’ve made this.

Brian: But you’re coping with that, you’re saying that, and that’s once again, if we did this in the right way, as soon as you got that pay raise, “Holy cow, we’re rich, money is just stacking up,” and it’s not, you spend it. That’s a great point. Up until a year ago, you guys knew how to live off of a $250,000 income, and I bet if your kids were here and we asked them, “Hey, how was life the last two years?” they’d say they’re already remembering some of the trips we’ve gone on. So life would probably have felt pretty good at a $250,000 income. You guys know what it’s like to live at that level. If you could go back to that temporarily for a season, do you realize how impactful that could be to your financial life? If you just gave yourself six months, eight months, twelve months, living like you made $250,000 but actually making $400,000, and knocking out some of these other goals, then you don’t wake up in the middle of the night thinking, “Holy cow, am I doing the right thing?” You wake up and say, “I got the HELOC knocked out, I got my emergency fund covered, we’re saving 25%, we feel great.”

Chapter 9: Where Is All Their Money Going? (24:35)

Bo: What’s interesting, even hearing you guys talk, I don’t think the decision is as binary as you’re making it sound. Either we make memories today and travel and do these things with our kids, or we save for the future. I think it’s probably somewhere in the middle. I think there are ways that you can live life today and experience the things you want to do and be able to travel, but it might not be to the same extent and degree that you have over this past year. You may have overcorrected on the today spending, and I would argue you can still make amazing memories today without having the same price tag.

Brian: There’s something that’s bothering me a little bit, and by the way, I want to talk about y’all’s dynamic of who manages what and find out how that all works. But I think you gave us a clue when you said we spend $15,000 a month, but then when it popped up on the screen it was $13,400.

Gina: No, no, no, we spent $13,000, I told you.

Brian: But now I did the math, and you guys know this answer, I bet Gina does, is that if you take $412,000 and just divide it by twelve, that comes up to $34,000 a month. Where’s the rest?

Gina: Right.

Brian: So this is an exercise, I love math because it cuts through all the noise of the world and you get real quick answers. So I just said, cuz y’all are probably in like the 24% bracket, but you have to run through all the different tax tables, so I just said, “Hey, what if they’re taking home 20% tax rate,” so taking home 80%. They’re not taking home 80%.

Gina: Okay, I think I can tell you what we take home.

Bo: That’s what I want to know. What’s the take-home every day, what’s the take-home?

Gina: Somewhere, not always, but I would say between sixteen and twenty depending on the month. My greatest month’s twenty, maybe average sixteen, it just totally depends.

Jaime: Seventeen after all the savings.

Brian: That’s automatic, that’s going out for retirement and so forth. You’ve just answered the question. So if all the savings goals, we have a hole of about $3,500 that’s unaccounted for.

Gina: Yeah, I know.

Brian: And that’s big, and I think that’s probably the part that, cuz when we build this plan for you, I really do want you to have peace of mind, but it’s going to be worthless if you tell us you’re spending $11,000 to $12,000 or $13,000 a month, and then the real number is you’re consistently spending $16,000. Because when you quit work and cross that threshold, that’s the scariest thing in the world, when you walk away from gainful employment, now you’re counting on the money to work for you. It works great as long as the numbers are good, but if you’re having to pull at a faster pace than what you’re supposed to, it blows up really quickly, and then the market, I know you love volatility now, but you’re going to hate it when you’re in the retirement phase.

Gina: Yeah, I do think it’s just so hard to tease it out. I do think there’s a lot of stuff missing, but I think a lot of it was probably the bathroom, cuz honestly we wrote a lot of checks because I didn’t want to use the HELOC, so we paid a ton of cash.

Brian: And is that really painters? Well, so it was not a $65,000 bathroom.

Gina: No, this bathroom, or $85,000 easy. I don’t know, I don’t even know what the problem is with construction projects, everything’s possible, it used to be $200 a time, now it’s like $1,000.

Jaime: Contractor told me the same thing, “We can do anything you want, how big is your budget?”

Gina: So there was probably a check, I think the painters was like two grand, I just wrote a check in cash, so the money just, they left last week.

Brian: How fresh is this bathroom, within the year?

Gina: Yeah, okay. But that’s what I say to him all the time, it was like the fall, or like six months ago basically, but I say that to him all the time. Like I see what we take home and I’m like, where, how do we not have more money? Where is it? Because we blow it.

Brian: Yeah, this is fixable, that’s why I feel so good about this.

Bo: That’s why I said we need these guys, that we’re going to be able to behind the scenes take all of your, as long as the variables are good, that’s why it’s imperative, and that’s why I think it’s on the homework list, go back through and use Monarch to give us real, concrete numbers. So we just have to balance that, and if we get the numbers right, this then just becomes a math equation to figure out what we have to make automatic, both the good habits and the bad habits, and what we can budget, and then what we can save, and then you can sleep well and everything starts working out perfectly at that point.

Bo: Well, that’s what’s beautiful. Once you have a plan in place, it does relieve some of the guilt. You’re not like, “Am I doing everything right?” You know a plan, you know where the finish line is, you know where you’re at today, you know the steps you’re taking toward that finish line. If there’s anything left over, it’s okay if I go buy the $50 shirt, or if we go on the trip, or we go out to eat, or whatever that thing may be, because you’ve already taken care of the main things first, you’ve taken care of the most important things. When you guys sit down to have these conversations, when you talk about budgeting or looking at where the money is, how do those go? Do y’all have a weekly, do y’all do net worth statements?

Gina: We don’t have conversations, I just do it all.

Jaime: Yeah, I’ve got enough meetings in my life, so having another meeting at home wouldn’t be. Everything she’s, I was a person of very simple means, I would say, and everything she’s done for me, or pushed, I don’t want to say push, cuz it sounds aggressive, coerced me into doing, has always been in the long run for my benefit. Doing something like this, for example, fifteen years ago, not a chance, I roll along because our life is so good now, with the kids, and financially where we are, from where it was even before I met her, and even where we got started, all because of her work ethic. When she gets into something and dives into it, this is what it turns into, so if any of those financial drivers, I’m on board.

Bo: Do you love doing it alone?

Gina: Yeah.

Bo: Okay, so you’re like, “Hey, just let me cook, let me get in the kitchen, let me cook.”

Gina: Yeah, basically, because I don’t really want a lot of opinions.

Bo: So when it comes to spending, when you feel pressure from one or the other of you, like, “Hey, let’s go on this trip, let’s do this thing,” is it more of you? Okay, so you’re the spender.

Gina: I’m the spender and the saver. He spends no money. You’re the spender and the saver, and he spends no money, buys nothing, has a company car. This is iced coffee.

Jaime: Coffee and a haircut, five times a week.

Gina: Coffee and a haircut, that’s amazing. He’s the greatest husband in the world, coffee and a haircut, and he can fix everything.

Bo: So if we’re able to put together a plan, “Okay, here’s where you are, here’s where you guys need to be, here’s what that means,” do you think you’ll actually, if we give you a plan, can you take and execute the plan and stick to it? Do you feel like you have the propensity to do that?

Jaime: Yeah, I won’t have an issue with it. I think that’s why I was encouraged to do this with her, because I know she’ll listen if you guys say it, so if you guys implement it, since she trusts your opinion more than anything, we’ll easily be able to implement it.

Bo: So when we think about this, and this is going to be a hard one, but obviously one of the things we need to figure out, we can talk about what savings will do, and we can talk about, “Well, if you save at this level over the next ten years, this is where you’ll be.” Do you have any idea, the way you’re living right now, the money you’re spending right now, that’s somewhere loosely between $13,000 and $17,000 a month. In retirement, when you get to financial independence, if you had to put a dollar figure on the lifestyle you want to live, how much do you think you’ll spend? Obviously daycare will be gone, the home equity line of credit will be gone. When you think about, “Man, if we had this much money every month, we could travel the way we want to and eat the way we want to,” have you guys figured out what that number is?

Gina: $10,000 has been my goal, $10,000 a month.

Brian: So $120,000 a year, okay, come on, I think about it, no daycare.

Gina: No, because you travel, I bet.

Brian: I bet y’all are going to spend, cuz when you have more time, don’t you think you’ll try to travel more?

Gina: We’re not like, as far as travel, I’m not like “let’s go international, let’s go to Paris,” we love just going to Florida and looking at the water, we rent Airbnbs.

Brian: Are these like one-bedrooms, y’all stack them all up?

Gina: No, these are nice places.

Brian: What are they, like $3,000 to $5,000 a week?

Gina: Okay.

Brian: That’s not, all right, so hold on, so $17,000 spending minus $1,400 for the HELOC, minus $1,200 for daycare, that’s at like $14,000, right? And you just said, “I think a number that would be great is $10,000.” So when we get to retirement, we want to spend $4,000 less than we’re spending today, does that sound right? You have more time at home.

Gina: No, I know, but the kids, I hate to blame it on the kids, but I’m telling you, we walk into Target for toilet paper and we walk out of there $300 later with every chalk and toy and bubble and shirt under the sun for the kids. It’s only going to get worse, by the way. Let’s look at the expenses, the shopping is $1,100, I bet that’s all Target. And Amazon, we’re always getting something for the kids, I like to think that’s going to go down.

Brian: I guess I don’t, that might be a little hopeful thinking, cuz they get more expensive the older they get, and mind you, ten years from now when you have a sixteen-year-old and a fourteen-year-old, your insurance is going to change based on that sixteen-year-old, you’re going to have automobiles, you’re going to have two going into college. You’ve got to figure out how are you guys going to pay for college, are they going to pay for college?

Gina: We’ve had conversations around that, hopefully by then it’ll be free.

Brian: Maybe they don’t want to, maybe they want to do HVAC.

Gina: There we go, he could want to get into a trade, and I can hire.

Jaime: I took out loans, paid my own way through college, I don’t feel the need to give them a full ride. It’d be great if the money was in the 529s, I would love to help them, but my hope was that we’d be in a position where we’d have some to give them, and if they have loans we could help them if they needed it. But I’m hoping to teach them, “Hey, we’re going to save in the 529s, and what’s there is there, and anything else you need, you’ve got to figure out how to do.”

Gina: And we’ll help if we can.

Brian: All right, so I’m going to write down $10,000, I don’t think we’re going to stay with.

Gina: There’s no way, that is a pipe dream.

Brian: That’s a great idea, but we might iterate on that.

Gina: Also, in ten years I’m assuming everything’s going to go down and be cheaper.

Brian: That’s the way it works, that’s generally the way it works. Okay, what other questions do you have for us? What are some other things we can speak to that might be valuable for you guys?

Gina: I love it, there’s a list, she came in with a list.

Brian: Okay, so Jaime, I don’t know if it’s in that other slide, but Jaime has a rollover IRA from his old job. So I guess my question is, should we be rolling that into a new 401k? Should we leave it there?

Chapter 10: 401(k)s, Backdoor Roths & Early Retirement (35:11)

Brian: So let me tell you why you might consider rolling it in. If we were to look at Jaime’s 401k, where’s your current 401k with your current company at, is it Vanguard, TransAmerica?

Jaime: TransAmerica.

Brian: How are the investment options inside? Do they have low-cost index funds, or sub-advised insurance products?

Gina: I think he’s in low-cost index funds.

Bo: So one of the things you want to do is assess, okay, how good are the investment options inside of this? If there are only, say, four options and they’re super expensive, it may not be compelling to roll that IRA in there. But if there are decent investment options and they’re relatively low cost, one of the things you guys could do is roll his old rollover IRA from his old job into his 401k. When you do that, it zeros out his IRA balances, and now it opens you guys up to be able to do backdoor Roth contributions, because now you make too much money to be able to put money into a Roth directly. It’s a great way for you guys to build tax-free dollars over this next ten years just by changing your account structure a touch.

Brian: I love it, as long as you don’t skip the due diligence on the investment options in the 401k. And you have an $8,000 rollover IRA, what’s that?

Gina: That was an old 401k that our advisor said to definitely get rid of.

Brian: Same exact idea, you could roll that into your current 401k. Even if your current 401k is expensive, that’s so small, the opportunity cost is nil, and it may be better in the first year for you to be making Roth IRA contributions. And is there a reason you have two 401ks currently?

Jaime: I have an old one also.

Bo: Okay, so even that one, again assuming your current plan is low cost, well diversified, you could consolidate your rollover IRA and your old 401k into that, and you guys really just collapsed five accounts down into two, which is great. It’s a lot easier to keep track of your allocation, and it opens up some really great tax planning by being able to do backdoor Roth contributions.

Gina: Can you access, I don’t remember, this Roth IRA, prior to fifty-nine and a half?

Brian: You can access the money that you put in, the contributions you make, not the earnings, earnings have to be pulled out, but you really don’t want to.

Gina: If you can avoid it, well I know, but this is my problem, if we want to retire early, that’s why I feel like I don’t want to put anything else into retirement, because I need that bridge account.

Brian: Ultimately we’re going to want that to come out of a brokerage account, that’s going to be your bridge account. There’s all kinds of FIRE movements, and you’ve probably seen the blog post, we actually have a great show coming out, five ways to get access to your retirement assets early, where we’re going to share the Roth, you know, after you do the five year holding periods and so forth, you can get access to Roth funds. But I’ll be honest, I love the tax-free growth so much, it’s usually what I tell people, if you have the ability, I’d much rather you do it out of a taxable brokerage account, because the friction cost and the opportunity cost against your future self is just so much lower.

Gina: It is a break.

Brian: I just have felt like everything should go into the brokerage to get that bridge account.

Bo: I think what we’re going to show is, again, if we just use 25% as our mark in the sand right now, if you have to save an extra $40,000 a year, well even if $15,000 of that was going into the Roth, it still leaves $25,000 a year going into the brokerage account. So it’s not an either/or, it’s likely going to be a both/and, and one of the things that’s great at forty-six years old, if retirement for you is fifty-six, and that’s when you actually retire, even though you’re not fifty-nine and a half yet, so long as you still have that 401k that we’ve consolidated the assets in, and you retire in the year that you turn fifty-five, you can actually draw those assets without that 10% penalty after age fifty-five. So the age difference and timeline kind of works to your advantage, so I still think Roth is likely going to make a lot of sense for you guys.

Gina: So as far as the HELOC and the brokerage account, should I be pumping the brakes on the brokerage and nailing the HELOC, or doing what I’m doing?

Bo: Let us put together a plan on that, because what I want to see is, okay, what’s the finish line we want to be able to accomplish, what’s the most effective way to get to that finish line? There is going to be an opportunity cost if we prioritize paying off the HELOC immediately, you’ve got competing goals. We want to model it both ways and tell you, okay, if you knock out the HELOC, here’s how it changes the finish line timeline, if you move toward the finish line, here’s how long you have to deal with the HELOC, and we’ll lay out both of those scenarios so you guys can make an informed decision on which one you feel best about.

Chapter 11: HELOC vs. Emergency Fund vs. Investing (39:43)

Brian: And there’s a third player in that your emergency reserves, I’m going to tell you, we’ve got to get that up.

Gina: Okay, I said they’re going to kill us on the cash.

Brian: Listen, that $20,000 has been sitting there for five years.

Gina: I’m just like, why do I want to keep adding to it when I could make money somewhere else? I’m with you, I’ve never had a life-threatening car wreck, and so I just don’t even wear my seatbelt anymore, I don’t put it on, I don’t need it, I haven’t had to use it thus far, so why would I have it?

Brian: This has been there forever, right?

Gina: I just, why would, oh, I hate cash.

Brian: It’s a bit of a drastic example.

Gina: I said they’re going to yell at us about this cash.

Brian: It does become a desperate decision when you’re out of cash, that’s why every time there’s a market downturn, it’s so interesting to me that people are out of cash, they lose their job, their real estate’s getting crushed, and we’re surprised why everybody’s watching which planes are flying into Omaha to talk to Warren Buffett, it’s because he’s the only guy smart enough to keep some cash around. I just want to make sure you guys are also on that smart column, so you don’t have to make desperate decisions, because there are things outside of your control that can come your way and just devastate you guys. And the closer you get to retirement, the more that gets scary.

Bo: One of the most powerful things you have right now is this huge shovel, $400,000 is a lot of income. When it comes to pain, is your propensity as a couple to concentrate as much pain as possible into a short period of time, or to stretch it out? Because there’s a mechanism by which, if we look at your budget and you tell me how lean you guys could go if you wanted to get militant about it, we could get the home equity line knocked out and the emergency fund funded before the end of this year, if you guys were willing to go through the pain of really cutting back.

Gina: We actually just talked about that, I said to him when we looked at all this, I went, “Oh, God,” and I said, “I think for the next six months we don’t even think about vacation, we just hammer down.”

Bo: I’ll be honest, I think that we’re not doing you justice, I think we’re being too nice to you.

Gina: What?

Bo: I just do, I mean, I was thinking, I think if Dave Ramsey was here, he’d be like, “What do you mean, you’ve got to take the kids on all these vacations and all this stuff?” I should harness my inner Dave a little bit, because I’m seeing y’all’s income, and then I’m seeing you lament that you want to pay off that debt, and I’m like, we’re way too nice.

Brian: We’re telling Gina and Jaime, “Y’all, we’ll figure out a plan, it’ll be okay.” No, we should be popping champagne.

Bo: No, I’m not good at that, I’m not good at that.

Brian: You are a nice guy. I know, that’s the problem. I’m sitting there going, we are not doing them well. But because, I mean, I see $400,000, and then y’all should be like, “We don’t know what to do with our money. We’re making so much money right now, it just keeps stacking up in the checking account. How in the world? Please help us save or spend this money.” But that’s not what’s happening, you guys are like, “We don’t know where the money is.” And we’re like, “How are we going to fix this if y’all can’t even see it yourselves?” And you’re like, “I downloaded Monarch.”

Gina: I did, that’s where that came from.

Brian: Magical. No, you need to get serious about paying off all this stuff because it’s crazy. You have a lot of money, you’re rich, but you’re rich only on income. You’re not rich on your net worth statement yet, you’re kind of behind on that. I mean, I hate to say it, cuz other people go watch this and be like, “Hey, why is he picking on them, they’re millionaires.” You’re millionaires because of your house, you’re not millionaires because of your investments.

Gina: But I also feel like, it’s not even a year yet that we’ve made this.

Brian: But you’re coping with that, you’re saying that, and once again, if we did this in the right way, as soon as you got that pay raise, “Holy cow, we’re rich,” money is just stacking, and it’s not, you spend it.

Bo: That’s a great point. Up until a year ago, you guys knew how to live off of a $250,000 income, and I bet if your kids were here and we asked them, “Hey, how was life the last two years?” they’d say they’re already remembering some of the trips we’ve gone on. So life would probably have felt pretty good at a $250,000 income. You guys know what it’s like to live at that level. If you could go back to that temporarily for a season, do you realize how impactful that could be to your financial life? If you just gave yourself six months, eight months, twelve months, living like you made $250,000, but actually making $400,000, and knocking out some of these other goals, then you don’t wake up in the middle of the night thinking, “Holy cow, am I doing the right thing?” You wake up and say, “I got the HELOC knocked out, I got my emergency fund covered, we’re saving 25%, we feel great.”

Gina: All right, I feel good, I feel like we can put together a plan.

Brian: We get the easy job, the easy job for us is putting together the plan, the hard job for you guys will be actually taking it and putting it into practice. But y’all are a couple, like if y’all were clients of mine, I’d also want to start massaging you into creating checkpoints as a couple, kind of updating that net worth statement together. Even though Jaime is super husband, handy, makes a good handyman, and doesn’t spend money, you pull him out of the closet when he needs to play dad and husband, but then put him back in the closet because he doesn’t spend any money or have any opinions. I would still like y’all to take a more active position together, because look, if we had reversed gender roles on this, I would worry about the power structure of keeping your spouse in the dark on everything.

Gina: I think Jaime is just so, he doesn’t care.

Brian: I would totally spend some time talking about the power dynamics of that and why good communication is important for couples. It’s just that right now, I don’t think y’all have bigger fish to fry.

Bo: Yeah, but that is if y’all were ongoing clients of mine, that’s something I would want to be working out to empower both of you.

Jaime: I honestly think coming from you guys it’ll be easy for her to implement, and obviously easy for me to follow along. You guys will just have to explain to the kids why Disney’s cancelled this year.

Bo: Mr. Brian ruined our memories, guys, no bippity boppity boutique for you. No, y’all heard us. Let me scare you on the other side, if you do too much for your kids, they don’t always come out perfect on the other side.

Brian: That’s what I worry about, because we both grew up with scarcity Sounds like y’all grew up with scarcity, and raising kids with abundance is its own problem, so that’s why you need to be mindful of that, because I think there’s a tendency, especially if you grew up in scarcity, when you start coming into money, to say, “Let’s give them more.” But if your kids’ best life is while they’re under your roof, what type of adults are they going to be? You have to be just as deliberate with wealth as you do when you grow up in scarcity, because there are unintended consequences. So this is not necessarily a bad thing for the kids, for y’all to be super focused on getting these goals paid off, and it also lets you model how to be good and disciplined with your money.

Bo: All right, our homework is we are going to put together a plan. You’ve laid out for us what your goals are, we’re going to say, “Okay, well, here’s what would be necessary in order to accomplish those goals.” Your homework in the interim while we’re building out this plan is to figure out, “Okay, how aggressively do we want to attack this?”

Brian: Well, I’m going to steal a line from Uncle Dave, since you said he was the start of your journey, you have to live like no one else.

Gina: I know, so you can live like no one else.

Bo: So, this is basic, we pull this stuff back out, after you graduate from Dave, we’ll eventually get you.

Gina: I read it, I already signed up for the pre-order for the new one.

Brian: Y’all rock, this was a lot of fun. Thank you for, I feel like we were the tough love, but soft edition. But y’all have been great.

Gina: Thank you.

Jaime: Thank you for having us.

Chapter 12: Brian and Bo Build Their Financial Plan (47:32)

Bo: Brian, what a great conversation we had with Gina and Jaime.

Brian: I actually love this couple, they’re wonderful. But I will say they have fallen into the trap that we see so many people make, especially high income earning Americans, is they’ve made more and more money, huge numbers, but their lifestyle somehow was keeping pace, if not even exceeding these big jumps. They’re not beyond repair.

Bo: but it’s going to take some hard work if they really want to change their financial outcome, and really their financial future, they’re going to have to make some hard decisions. And so we sat down and we said, “Okay, let’s think about how do we prioritize what they’re doing right now.” Should we prioritize paying off the home equity line of credit, which is at 6.75, is that high interest? Do we prioritize building up the emergency fund? And there was a little bit of tension as we were kind of navigating that.

Brian: Well, I mean, look, 6.75 stinks, however, to have this level of income and not be able to cover an emergency, for desperate decisions that might come your way from the uncertainty, it gets scary. So I think we ended up, after talking about it, we landed on let’s at least get them to a moderate level of emergency reserves.

Bo: That’s what we said. We said, “Okay, based on their current spend, which they told us was right around $13,500, they should have about a $40,000 emergency fund.” And that at least gets them three months.

Brian: That gets them three months. But what we want to do then is, okay, that’s their base level spend, how are we going to make some adjustments? Cuz they have to find some margin to be able to do this.

Bo: So we said, okay, there are some spending areas that have gotten a little bit frothy, if we can shrink those down, it’ll create some margin. So we said, okay, for their dining out, let’s drop that from almost $1,100 a month down to $750. Shopping, let’s drop that from almost $1,200 down to $500. The loan repayment, we’re going to drop that down from the $1,865 they’re doing down to $500. And this one, I think, is going to feel painful in the moment, but necessary, their travel budget, which was big, was $2,700 a month, we’re going to drop that down to $1,000 a month. So we go from $13,500 in spending down to about $9,400.

Brian: So think about this, we have found for them $4,000 a month.

Bo: Yep.

Brian: I mean, we’re talking like fifty grand a year. And what was wild to me is over $2,700 of that $4,000 plus a month is from just consumption, with a lion’s share of it probably just on travel. Yeah, there was a lot of fluff in this system, and I’m glad we’re able to kind of, look, we’re not trying to steal all their future happiness, but this is definitely something they need to get serious about from a discipline standpoint, so they can actually have the money and be wealthy versus just looking rich.

Bo: And so what we said is, based on what we assume their net take-home to be with this cutting, is shaped their total margin to around $6,500 a month in total margin they have to deploy toward goals. And right now we want that to go toward the emergency fund, and if they do that, after three months they will get their cash up to almost $45,000 just doing it for three months. If they can put their minds to this and make the hard decision, they can start knocking out their goals pretty quickly.

Brian: Well, I think that, you know, if you’re like, “Are we being too hard on them?” This is a couple that only recently started making an income over $400,000, it doesn’t seem unfair or unrealistic to say, “No, just go live like you did back when you made a quarter of a million dollars.” So I think this is completely reasonable from a planning standpoint.

Bo: And then what we said is, okay, if we can get their emergency fund built up, now we want to increase their savings rate. And even though 25% is our goal, we said let’s not even try to go all the way to 25%. If we can just go from their current 15% savings rate up to a 20% savings rate, it’s going to make a really big difference, because they said, “Hey, we really have this goal of retiring on this ten-year timeline.” Well, that’s sort of FIRE-ish, and so in order to get there, again, they’re going to have to be making some difficult but heavily disciplined decisions.

Brian: They have conflicting goals, because their retirement goal is less than ten years, so yes, let’s pay off the debt, but somehow we have to be building assets. I think that’s why it’s nice to land in the middle, let’s get them to 20%, that’s still a somewhat aggressive savings rate, but it allows them to keep nibbling and knocking down that home equity line.

Bo: So if they consolidate some of their retirement accounts, like we said, when we think about their savings priority, we think that they should both max out their 401ks, that’s $24,500 each. They can now do backdoor Roths if they clean up their IRA situation. They can max out their HSA, and they’re still able to build some dollars in that after-tax account, which I said they want to do for that bridge money, that’d be about $800 a month. So even saving 20%, it’s not 25, that’s still $82,000 a year, and that is a lot of money. But at their income, I’d argue that’s necessary, that’s what they ought to be doing.

Brian: Well, and it’s only for a moment that they get to kind of get this exception to the rule, because look, we’re going to pay off this home equity line, we’re going to knock it out in less than nineteen months, right around the eighteen month mark they’re going to be completely out of that home equity line.

Bo: That’s right. What we said is we’re going to cut their spending pretty aggressively, we’re going to fund the emergency fund, and then we’re going to get their savings rate from 15% to 20%, and with the additional they had cut, that’s going to go toward the home equity line. We’re going to pay $500 a month for three months, and then we’re going to aggressively knock that down at $4,000 a month over the next almost two years.

Brian: Well, remember the biggest consumption decision we knocked down was their travel. But I don’t really think we’re traumatizing anybody by taking an eighteen month pause to get this thing back in order.

Bo: Not at all, and I think if they can make some of these difficult decisions, what it’s going to do is put them in a position to have a higher probability of success getting to where they want to be. Cuz we said, okay, based on where they are now, if they can just continue saving at that 20%, that $82,000 a year, and based on their age, if we just assume an 8% rate of return on average, by the time Jaime gets to fifty-six years old, they will have built a portfolio of about $2.5 million.

Chapter 13: Two Paths to Financial Independence (53:34)

Bo: Now, Gina said, “We really want to spend $10,000 a month,” and I don’t even know if that number is accurate or not, but even if that were the goal, based on just saving 20%, it does not quite get them there by the time that the ten years runs out.

Brian: But come on, we actually have a get out of jail card here, because Gina, her job doesn’t have to end. She’s already said that she can pretty much work from anywhere, she can work just as much or as little as she wants as a nurse practitioner, so her job is in demand and she actually likes going to work. So I see that we have an easy button here, that we can allow her to keep working a bit even if her husband kind of drops out of the workforce.

Bo: Yeah, she always says if she can just cover the bills, if she can just allow them to meet their living expenses, and they can let that money they build up over the next ten years coast, this is sort of a version of Coast FIRE, coast until Jaime gets to age sixty-six. Well then that $2.5 million turns into almost $5.7 million, a $5.7 million portfolio at that time, with Jaime being sixty-six and Gina being sixty, would generate the $10,000 a month they’re looking for. So this is certainly a possibility that they could move toward, that’s option one.

Brian: There is another option, if they don’t like this and they don’t like kind of the Coast FIRE you just laid out, we could have where they just got really serious about the saving and investing, and then allowed that to build up the assets as well. So lay out that scenario.

Bo: Yeah, once they get the HELOC paid off, instead of leaving their savings rate at 20%, and having some of that excess go to lifestyle, they said, “You know what, we’ve cut down, we want to be really devoted to this, we’re going to have all $4,000 of that margin go toward our future financial well-being.” So now, instead of saving 20%, they’re actually saving almost 32%. That’s a big change, and in the next ten years we get to a portfolio of $3.3 million. And again, if she can just cover the living expenses and let that coast a little bit, they would only have to make it until Jaime hits age sixty and Gina hits age fifty-four. So now we’ve knocked six years off their timeline if they can make the hard decisions now.

Brian: So that sounds more like a true FIRE setup at that point. So it’s almost a choose your own adventure, how hard do you want to hit the lifestyle adjustments so that they can leave the workforce on their terms?

Bo: What they have to do is sit down and prioritize their goals. They’re going to, if they want their future to look different than their present, then they’re going to have to make some hard decisions, and they get to choose how hard they want to make it. If they want to make it really hard, it’ll be a lot shorter. If they want it to be not as painful, they have to commit to it for a little bit longer, but they’re in the driver’s seat, they have a big shovel, they can change their circumstances, but it’s going to take discipline.

Brian: Yeah, hopefully some of this, cuz if you remember, Gina was somewhat stressed out about her finances, Jaime was completely kind of tapped out on any of the decision making. I’m hoping from us having this discussion, it’s at least going to be a catalyst that brings peace of mind for Gina, and then hopefully Jaime now feels like he’s more of an active participant, and they get to live their best life.

Bo: That’s right, they are a couple that can be successful, but it’s going to require discipline. If you’re a couple like Jaime and Gina, and 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, you can go to moneyguy.com/resources.

Brian: Gina, Jaime, thank you for coming on, we really had a blast with you, and I think that you were one of those couples that just a little bit of discipline in this moment in time is going to create huge results for your future. And we just wish you the best. I’m your host, Brian, joined by Mr. Bo, Money Guy Team out.

This episode discusses a hypothetical case study for educational purposes only. Projections and account balances shown are estimates based on assumptions provided by the guests and are not guaranteed. Consult a qualified financial advisor before making decisions about your own retirement, tax, or debt payoff strategy.