When Is It Finally Okay To Enjoy Your Money?

A Budget So Tight It Nearly Canceled Christmas Dinner (0:00)

Jacob: So Elyssa sends me out. “Please go buy some stuff for a Christmas dinner. Let’s have something nice.” I get to the grocery store, pull out the budget, and I see a goose egg. So I turn back around, walk home, and say, “Lyssa, we are not doing a Christmas dinner this year.”

Bo: If money were not an object, what are the things that you guys would be doing that you’re not doing?

Elyssa: I think we would have more fun money. Clothes, phone, got a Kindle Unlimited subscription.

Jacob: We would get a place that had more bedrooms.

Bo: She said Kindle subscription and clothes. You said another house. So, okay, let’s pause there for a moment.

Meet Jacob and Elyssa (0:35)

Brian: Where are y’all from? Where’s home?

Elyssa: We live in Denver.

Bo: Oh, Denver is so wonderful, isn’t it?

Elyssa: It’s great.

Bo: Are y’all from Denver originally?

Jacob: No, sir.

Brian: Where are you from originally?

Elyssa: We went to middle school and high school together in Ohio.

Brian: So, Ohio. Cool.

Jacob: Yeah. In Cincinnati.

Brian: Did y’all date since middle school, or did y’all come back together later?

Elyssa: We were studying abroad the same semester in college. We were at different colleges and met up abroad.

Bo: Where was this at?

Elyssa: So I was in Barcelona and he was a little north of Rome, and we had gotten a Christmas card from…

Bo: Geography is not my strong suit, but those aren’t close to each other.

Elyssa: I mean, you know, some people do a whole page on their Christmas cards, right? His mom does a whole page on Christmas cards, and it said Jacob’s going to be in Rome. And I was like, “Well, I’m going to be in Rome for spring break, so I should message him.”

Bo: So, hold on. Y’all were close enough friends growing up that y’all were on each other’s Christmas card list?

Elyssa: Yeah, we went to the same church together.

Brian: Okay. But wait a minute. Did you kind of think he was cute?

Elyssa: Not… I mean, we went…

Jacob: Wait, I thought she was…

Elyssa: We went to homecoming together sophomore year, but we didn’t ever date. We were friends.

Brian: Oh, but come on. Y’all are married now, and you have kids, so you can say it. One of you was like, “I always thought he was good-looking,” you know?

Elyssa: I mean, yeah, he was cute, but he was kind of a jerk in high school. And that’s what I had told my mom. I was like, “He’s really grown up. He’s not a jerk anymore.”

Bo: Wow. Hey, but you know what? Sometimes, however you have to bait the hook to have it all work out. It seems like whatever your long-term play was, it worked. All right. So y’all knew each other in middle school, church friends, school friends. You reconnected abroad in Europe. Did you start dating then?

Jacob: We kept in touch. That was spring of junior year.

Elyssa: Yeah. Six months.

Jacob: So, six months or so.

Elyssa: And then winter break of senior year, I’d been asking you out. I’d been like, “Hey, you should come.”

Bo: Noticing a theme.

Jacob: Yeah. I know.

Elyssa: There’s nothing wrong with it, but this is me.

Bo: That’s awesome.

Elyssa: So, I’m like, “We should go on a date.” I told him that our exams ended the same day. Mine ended a few days early. I was just chilling at school. And I was like, “We should meet up in Nashville. That’s about halfway. You’re driving to North Carolina, I’m going up to Ohio.” His family had since moved to North Carolina. We could meet up halfway. And we did. And that’s actually when we started dating, in Nashville.

Bo: In Nashville. And here we come back together full circle.

Seven Years Married and in the Messy Middle (3:08)

Brian: Man. Okay. So, how long have y’all been married?

Elyssa: Since 2019, so seven years.

Brian: Seven years. Family situation. You’ve got kiddos.

Elyssa: Yeah, we have a 2-year-old and a 6-month-old.

Brian: Oh, man. Y’all are in the messy middle.

Elyssa: Really. We’re potty training my daughter, and it is very messy. Literally.

Jacob: I mean, no, she’s crushing it. She’s doing great.

Elyssa: But we say that having been here now for 24 hours, right? As we left her with your mom.

Bo: I was about to say, they’re not with you. Is this the first time y’all have traveled without the kids?

Elyssa: Yeah, it’s so fun.

Brian: That’s the way my wife was. The first time we traveled, there was a little bit of hesitation right at first, but then after the first day, it was like, “Okay, this is good again.”

Jacob: And we should throw out a quick shout-out. Thank you, Mom. We really appreciate you.

Elyssa: Thank you.

Bo: You are the real MVP.

From Accounting to an Electrician Apprenticeship (3:56)

Brian: Well, I’m just reading the notes and bringing everybody up to speed. Were y’all both accounting majors?

Elyssa: Yes. Well, I was an accounting major, accounting and operations. So, I knew I wanted to get my CPA.

Jacob: And then I was just a bozo in college. I hadn’t figured out that you’ve got to work hard to get a good job.

Bo: Bozo in college. Earlier, what did you say? She said you were a jerk. What did you say it was?

Jacob: A bit of a brat.

Bo: A bit of a brat growing up and then a bozo in college. Wait, man. We are just on the upward track here.

Brian: I think you’re being very self-deprecating.

Jacob: No, I really did make kind of a fool of myself. I wanted to be a dentist. Made some poor decisions, slept through an anatomy final, failed anatomy, and said, “You know what? Maybe five more years and a quarter million dollars is not really a good plan.” So, I went and got a master’s in accounting and became a CPA.

Bo: Most people don’t default to a master’s in accounting, right? That’s pretty impressive. So, you’ve got something going on there.

Jacob: Yeah. There are some programs that let you do a one-year program. I was thinking I could either become a nurse in one year or become a CPA in a year.

Elyssa: And at that point, we had been dating. So, I was like, “I’m a CPA. It’s going to be a great career. You can do it.”

Brian: So, that’s what you did. But then obviously it was not for you.

Jacob: It was not for me.

Bo: Okay. So, you graduate and you start working. Talk to us about that. Did you get the CPA too?

Elyssa: We got that. We both got CPAs.

Brian: High aptitude, obviously. I mean, I chose accounting not because I loved the curriculum, but because I wanted to be guaranteed a job. I’m being honest with you, that’s why I chose it. I was originally a finance major, and I was like, “This is too easy.” And too easy equates to everybody can do it. We’ve got to thin the herd. Everybody who graduated from Georgia with an accounting degree had a job. So, I knew I wasn’t moving back in with the parents if I did this. Now, once I got into the profession, I actually loved it. I thought it was cool. But it sounds like your experience was the opposite.

Jacob: It’s definitely a good job, but probably since high school I realized I wanted to do something more manual, more hands-on and real. I remember staring at these spreadsheets, having to motivate myself, like, “This doesn’t matter. This is never going to go anywhere. All this is ever going to be is a…”

Brian: You’ve always been handy. You’re a person who’s always taking things apart and putting them back together.

Jacob: I like to think so. I hope so. So I thought about doing some other things. We were in Seattle, and then we went to London for a couple years because she was a good accountant and they accepted me with her. I switched over to being an FP&A analyst. Cooler. Didn’t love it, and I was thinking through other career options for when we came back, because I figured when we came back to the States, that was going to be our chance to make some career changes.

Bo: How long were you in London?

Jacob: Two years.

Bo: Wow. Okay.

Elyssa: Yeah. So, we had a couple years in Seattle and then two years in London. I was pregnant when we moved back to Denver.

Jacob: And so, I think the math was kind of, if we don’t make this change now, we’re going to get used to the money. We’re going to be locked into something that won’t allow that opportunity. So, we both stepped back and said, “What do we want out of life?” And we decided that we both wanted to take a step back in our careers. I wanted to try something new. And Elyssa has really been the one who’s made this all work. Elyssa’s been a super trooper, been super great, and supported me through quite a bit of folly, really. But I love doing it. I’m really excited about the future of being an electrician, and I really enjoy doing it every day. So, I’m really thankful to Elyssa for that.

Bo: And how old are you guys right now?

Jacob: 30 and 31.

A $523,000 Net Worth at 30 and 31 (7:14)

Brian: 30 and 31. Well, y’all must have done something right while you were earning that kind of income, because you were kind enough to share your net worth with us. And we look at this. It’s pretty good.

Bo: At 30 and 31 years old, here you are with a total net worth of $523,000. You guys have done well. Almost $300,000 of that is liquid between Roth IRAs, Roth 401(k)s, and traditional IRAs. You’ve got a really decent chunk of cash on hand at $60,000. And you’ve got a home with a mortgage at 5.875%.

Brian: I don’t know if you know this, but mortgage rates actually hit about seven and a half. So that’s not crazy right now.

Bo: And a ton of equity in this house. So you guys are sitting in a pretty solid financial spot. Do you feel that way?

Elyssa: Yeah, I think we both feel really good about our net worth. Thank goodness for our careers early on, and that we saved so much money, because that’s really what set us up: early savings.

Brian: And y’all had very aggressive savings rates back then, right?

Elyssa: Yeah, it was probably close to 50%.

Jacob: No, it was in the 20s to 30s. If you go net versus gross, it can get higher. But very aggressive.

Elyssa: It felt like a lot, but I mean, what else is there to do?

Jacob: This is probably a good point to talk about how we think about money, because I came in very cheap. Exceedingly cheap.

The Christmas Dinner That Almost Wasn’t (8:20)

Jacob: To put a point on it, when we first got married, we had to stay in Seattle for Christmas so I could do inventory counts for my job. So Elyssa sends me out. “Please go buy some stuff for a Christmas dinner. Let’s have something nice.” I get to the grocery store, pull out the budget, and I see a goose egg. So, I turn back around, walk home, and say, “Lyssa, we are not doing a Christmas dinner this year.” And she said, “Not a chance.”

Brian: What’d you say?

Elyssa: I said, “No, go back out.”

Brian: And you did?

Jacob: Yeah.

Bo: You thought that was going to work? She sent you for Christmas dinner and you thought, “Oh, the budget’s zero, so I guess we’re having leftovers.”

Jacob: You’re stuck with me.

Brian: I think I’ve seen a movie with this theme. Ebenezer Scrooge, something like that. You’re going to get ghosts visiting you at night.

Elyssa: It’s not like we had no money. If we actually had no money and you were like, “No, Lyssa, we really need to be on a budget,” fair enough. We had money. We were just saving up for an emergency.

Brian: Y’all had forced savings that was making your budget zero.

Elyssa: Exactly. So, I think you are a lot better now at making sure that we’re not crazy.

How Jacob’s Money Mindset Shifted (9:25)

Bo: What changed? You went from super tight, super frugal, no Christmas dinner, and now you say you look at money differently. What flipped the switch? Because I think a lot of financial mutants are going to resonate with that. At least one of the spouses is going to say, “Yeah, my spouse is that guy,” right? How’d you change, or what changed that allowed you to have that mindset shift?

Jacob: So, I talked about switching to accounting grad school. When I went into that, I was legitimately spending around $250 a month. It was real rice-and-beans, Dave Ramsey stuff. And so that’s what I came into our marriage with. I learned about time value of money, learned about 88 times over. And I would do the math of, “Oh man, this is five bucks. That’s a couple hundred.” But again, to Elyssa’s credit, Elyssa really is the key to a lot of this. She was much better about, “Look, you can’t take it all with you. You’ve got to live today. We’ve got to make good memories. We’ve got to do the stuff that’s worth doing.” And so I think she has a really healthy view of what money’s worth and what it’s for.

Bo: But it doesn’t sound like you’re a crazy spender. You’re not like, “Hey, let’s not save anything and spend it all today.”

Elyssa: No, absolutely not. I also think we need to have retirement and all that, but I definitely am more…

Brian: Are you the CFO of the house?

Elyssa: I would say Jacob’s actually the CFO.

Brian: I’m asking because I’m sitting here hearing that skill set, because you’re balanced. You actually want to save. Jacob’s taking himself all over the place here on his personality. So, I’m just wondering who’s driving this ship.

Elyssa: Jacob’s definitely driving the ship. He does more of making the proposed budget when we have income changes, or when we got the mortgage and bought the house, right? He would take the first pass at that. But then we sit down and look at it together and go, “Is this actually going to work? Yes or no?”

Jacob: And I think to that end, we both really enjoy budgeting because it’s a prioritization exercise for us. It matters.

Elyssa: Yeah.

Jacob: It really lets us think through what’s most important to us. It gets us on the same page, and then we’re pulling in the same direction. Maintaining a budget and keeping your spending in check is not super fun, right? But the process of determining what’s really important is a lot of fun. And we’ll do little dates that we can swing. So I do that and the investing, and Elyssa does a lot of the day-to-day management. Our CEO, really.

Going From $170K to $117K in Household Income (11:33)

Bo: So, you said when you were both in the accounting field, you had a higher income. What was household income at that time?

Jacob: It started at about 115, and then by the end it was in the 170 range.

Bo: 170. But now, as you’ve made this shift away from accounting into the electrical field, there’s been a decrease in income. So is 117 roughly the household income we’re looking at now?

Elyssa: And mine’s variable, so that’s hard. I do finance and accounting consulting for small businesses now. Once we had our daughter, I stepped back from full-time, and so I work 10-ish hours a week.

Brian: Oh, great. Doing finance and accounting consulting for yourself or for a firm?

Elyssa: For myself. Well, my parents own a small business doing finance and accounting consulting and HR consulting as well. So, I work with them.

Bo: So, as you guys have adjusted the budget from $170,000 of income to $117,000 of income, how’d you do it? Because I think a lot of people are going to be curious about how you were able to successfully scale back?

Elyssa: Our fun money, or discretionary spending, went down. Savings went down too.

Bo: Savings went down. Okay.

Elyssa: Yeah. Savings went down and the fun money went down, but what we would call the necessities stayed the same. Groceries stayed the same. What we would have spent on housing probably stayed the same. So it’s really just in the savings and fun money that we’ve seen quality of life decrease, for about two and a half years now.

Brian: And how are y’all doing through this? Plus, you added some kids in there, too.

Elyssa: We added some kids.

Jacob: If I can take this one, I think “conflicted” is the good way to say it, because we look at the top line and it seems like a good number. $10,000 a month is not a joke. We look at the balance sheet and it’s really encouraging. We feel very confident about the future, and that’s why we made the switch. We felt like we were in a position to have that foundation. But at the same time, living in it, there’s a feeling of, “Wow, I can’t believe there’s this little left over.”

Elyssa: And maybe an important part of that is it’s really important to us to tithe.

Jacob: So, we tithe 10% of gross. We have a pretty decent tax load because Elyssa is self-employed. And I think everything else is in the guardrails. No credit card debt, no car debt, under 25% for housing. So it’s kind of like, how does it feel so tight? And again, I was cheap to begin with, but why are we always the cheap ones, all the time?

Bo: Amongst your friends and family?

Jacob: Yeah.

“This Is a Moment in Time” (13:52)

Brian: Can I just give y’all a little perspective? This is a moment in time.

Jacob: Sure.

Brian: Because you are in this apprenticeship phase right now. So you haven’t reached your potential yet.

Jacob: Certainly. Yeah.

Brian: And because you’re in the messy middle, you also have a governor on you as well. So I think take a moment to celebrate that, even with you in a recast of your career and dead in the middle of the messy middle with littles…

Jacob: Yeah.

Brian: This is pretty good. If you can survive this period… and that’s the only thing I worry about. Look, deferred gratification is the first component that I always teach high school kids about. You have to give up a little bit of today to get that awesome thing in the future. And y’all have done that. And you’re also in the middle of it right now. But don’t be too hard on yourselves. I would just keep a carrot out there that this is a moment in time. It’s not permanent. It would be a different feeling if this is all you could do forever on the memory-making, the travel, the fun, the savings.

Life as an Apprentice Electrician (14:56)

Brian: So, what’s the next chapter that you’re envisioning? Give us the path. I would like to know what your career looks like in the next three years.

Jacob: So, I have three years left in my apprenticeship.

Brian: Is this like a residency for a doctor, where you get no pay and you’re just broke, broke, broke? Or how does it work for an electrician?

Jacob: So, I’m just starting my second year. That one’s tight. Third year will still be pretty tight, and in fourth year it’ll start feeling good, and then when I turn out it’ll be… It’s based on a percentage of the journeyman wage. So every year that wage goes up.

Elyssa: And then there’s Monday and Wednesday evening school too.

Jacob: Yeah. I grew up really anti-union, so it was quite a strange transition for me, but it’s been a great experience, and having that certainty around pay and benefits is great.

Elyssa: And the pension. You would eventually get a pension. Right now, it’s not worth very much.

Planning for a Third Child (15:48)

Bo: But from a family situation, two kids. Are y’all having more kids, or are you stopping at two? What’s the plan there?

Elyssa: Our younger son has some health issues, and so that just leaves us with uncertainty on timing for the third. Before, we were like, “Yeah, let’s rock and roll.”

Jacob: Yeah.

Elyssa: But now it feels a little hard to do that immediately. But we definitely want a third.

Bo: Okay. So, the plan is for a third. And when the third comes, is your workload manageable? Can you continue doing 10 hours a week even while having kids in the house and that sort of thing?

Elyssa: Yes, I can. I started child care, so I’ve got child care for about 12 hours a week.

Bo: The mathematics substantiates it. You make more than child care costs. That’s the thing y’all worked out.

Elyssa: I will make more every month than child care costs, by a significant margin.

Jacob: Legitimately, if it weren’t for her, this would all be…

What They Wish They Could Spend Money On (16:41)

Bo: So, okay. Brian’s already laid out that this is a temporary moment in time while you’re working through this apprenticeship, but you said, “Man, I just feel like we’re so tired of being the cheap ones.” If money were not an object, what are the things that you guys would be doing that you’re not doing? What are the things you would spend money on that you don’t feel like you’re able to spend money on now?

Elyssa: I think we would have more fun money, right? Right now, it’s…

Bo: What do you do with fun money?

Elyssa: Fun money is clothes, phone, got a Kindle Unlimited subscription, right? All those small things that would be just for one of us. And then we have a little bit of money that we spend together on dates and eating out. That’s maybe 100 bucks a month. More of that would be nice. And then more gifts.

Jacob: We were talking about this last night, and yeah, the first one is we would get a place that had more bedrooms. We’re in a two-bedroom place, and we’re comfortable with that.

Bo: Okay. So, she said Kindle subscription and clothes. You said another house. So, okay, let’s pause there for a moment.

Elyssa: But when we’re talking about wanting to be more generous, those would be the things we would want to expand.

Jacob: If we step back and look at the macro level, because we talked about this a little bit, at some point we would like to get a bigger house. Five people in a two-bedroom is going to be really tight. We would like to be able to have hobbies again. We have effectively no hobbies. We live in Denver. We’d like to be able to ski and teach our kids to ski.

Elyssa: Yeah.

Jacob: Bring people over for dinner, be generous with the community and neighbors and stuff. That’s something we would like to get back to being able to do. And just for me, because of my excellent personality, having that set aside is really encouraging, because then I want to do it as opposed to being cheap.

Bo: Meaning if you budgeted for it, it’s easier to spend the money. But if it’s an unknown, if it’s something you didn’t plan for, it’s harder for you. Like Christmas dinner.

Brian: Is there anything you can do to accelerate your income journey? Because it sounds like y’all are giving everything you’ve got on Elyssa’s side, but on your side, is it just that you have to put in the time and go at the pace?

Jacob: As an unlicensed electrician, there’s very little that I really can do. I can’t do anything with permits, but I do help people out when they’ve got little electrical things, from the church or the community. So I’ll do little stuff like that in a way that’s mindful of the legal penalties of such actions. But in the future, that’s something that opens up more. Right now, it’s fairly constrained.

Prioritizing a Bigger Home (19:13)

Bo: You said one of the reasons you like budgeting is it allows you to prioritize what’s most important. When you think about these things you laid out, like being more generous and the Kindle subscription…

Elyssa: Yeah.

Bo: But also moving into a newer home. If you had to prioritize, what’s a bigger priority for you guys? Having more flexibility in the little things today, or being able to move into a new home sooner? How would you prioritize those two things?

Elyssa: I would say probably the new home, even if that meant fewer date nights and less ability to be generous and have people over.

Brian: But how in the world does that even happen? I mean, that’s the thing. I know they have tremendous equity in the house, which would at least allow them to get in.

Bo: Well, that’s where I’m going. And I’ve got to ask about the cash flow. We’ve got to ask what the Denver market is like. For the types of houses you’re looking at, what’s the cost of a house that would be reasonable for a family of five that you guys would be considering?

Jacob: $500,000.

Elyssa: Yeah. Ours is at $295,000.

Jacob: When we think about this, we’re thinking about $150,000 to $160,000 of income. And just doing back-of-the-napkin stuff, that would put us in a position to afford that in five to eight years.

Bo: Okay. So it’s more a mechanism of, we’re already on this trajectory where we think we’re going to be able to do this. We just need time to pass.

Bo: There’s not really a lot that can change today to make it happen sooner. It’s a function of you working through the apprenticeship and getting to where the pay gets really good.

Should They Pay Extra on the Mortgage? (20:38)

Elyssa: Yeah. Maybe not sooner, but I would say easier in five years. One of the things I would love your guys’ opinion on is I think we should pay down the mortgage. That way, when we do want the other house, we could have more flexibility in the project.

Brian: I’m just saying no.

Bo: Go.

Brian: No, go. Ask her questions.

Elyssa: You know what? That’s what you would say. But I think, you know, 5.875%… I get that you said that’s low, but it doesn’t feel low. It feels very high.

Brian: I get that. But y’all already have $170,000 of equity in this house. When did y’all move into this house?

Elyssa: A year and a half ago.

Brian: How much did you put down on this house?

Elyssa: We put down 80, and then we’ve made an additional…

Brian: I think you’ve already taken some liberties. You’ve been paying down the mortgage, basically. Why? You made an additional principal payment.

Elyssa: We received an inheritance.

Brian: Okay.

Elyssa: And we put that towards it. And we actually have a little bit more that we had received that’s sitting in our emergency fund. Our emergency fund is a little high. We typically like it around two to three months.

Why Liquidity Matters in This Season (21:39)

Brian: Can I give you a mindset issue, though? You’re in a moment in time where y’all are just being squeezed artificially, because there’s nothing else you can cut. You guys are literally the poster children of budgeters. I’ve seen your spreadsheets. Every month you’ve even got all these variances. We always say you can either make more money or you can spend less. You’re already budgeting, so you can’t spend less. It’s already there.

Jacob: We’re done. We’re at the bottom.

Brian: And then I ask, can you make more money? You’re like, “Well, I’m in this apprenticeship. I have to just put my time in.” I don’t think you can make more money.

Jacob: No.

Brian: So, when liquidity came into your system, that was the relief valve to get you through this season of time. When I started my first company, I built up 50 or 60 grand of cash just so my wife wouldn’t feel the pain of how bad the first three years were going to be. Y’all needed that liquidity to get you through this apprenticeship, because y’all are bearing the weight of the entire process with no relief. I know you think, as a debt crusader, it’s going to make you feel better, but as a tool of money, it would be better to have the extra liquidity so you don’t have to feel all this weight. Because you haven’t done anything wrong. You’re kind of punishing yourselves. A Kindle subscription, date nights with your spouse… these are things that shouldn’t just be thrown away because you’re stuck in this moment in time. I have to triage you where you are, and you can’t get that money back out unless you refinance, which is not a good decision either, especially with interest rates where they are. I need you to free yourself from thinking that you need to put more money towards the debt. That’s not going to solve y’all’s long-term issues. It’s just not, because you all need to have more grace on yourselves to live life. And I’m not getting on to you right now, because I already…

Bo: Sounds like you’re getting on to them.

Brian: I’ve already had one of those moments. She was asking for directions, and she’s like, “Why are you yelling at me?” I’m like, I’m not. When I get passionate, I’m loud. So I apologize if it came off that way.

Jacob: I appreciate that.

Brian: Does it help, or are you like…

Elyssa: Well, I worry that we keep this cash and then just have it as cash, but don’t actually feel comfortable using it, if I’m thinking about my lovely spouse. That we’d go, “Okay, well, we’ve got this extra cash…” because we do have the extra in the emergency fund that we’ve been waiting on.

Bo: Inside your emergency fund, what do you consider to be the extra cash?

Elyssa: $18,000.

Bo: 18,000.

Jacob: And this is a good point to identify another foo-ish opinion that we have. This one’s mine.

A Future Business and Competing Goals (24:15)

Jacob: So, I’m excited for this. I would really like to have the capacity to start a business in five to eight years. I would have my master’s license by then. It would allow me to do all the things I would need to do from all the work that I’m doing. I think I would really enjoy it. I think it’s really what I would like to do in the longer term. So, for me, I would rather have that liquidity in a brokerage account so that we can pull it out to start that business, to have the flexibility to buy a truck, to deal with the fact that our income might go down, buy inventory, buy all that sort of stuff. My preference, as you can see since we’ve got that brokerage account, is to put the money there as opposed to the IRAs, which I know is where we should start.

Bo: So, there are a few things that are going to happen inside the next five years. These things are in conflict with each other, too. I don’t know about having it in the brokerage account. I think keeping it liquid makes a lot of sense, in a high-yield savings account earning something. But in the brokerage account, you have risk of loss of principal, and all the goals you’re talking about using that money for are inside of three to five years. But I also don’t think it has to be all or nothing. Now, when you talk about starting a business and going out on your own, is there a capital cost to that? Do you have to buy a truck and that sort of thing?

Jacob: Yes.

Bo: Do you have a ballpark number? Like, “This is what I think it would cost, or what I would need to have, to be able to strike out on my own.”

Jacob: This is not a very informed number, but we think it’s north of 100,000.

Brian: Oh, wow.

Elyssa: Okay, you think it’s 50,000 for the materials, the truck, and maybe the tools, and then we were thinking another 50 to 100 for loss of income.

Brian: Yeah. And I think that’s probably a healthy way to look at it. I was sitting there thinking there are actually two numbers. There’s the loss of income, because of that whole cushion you need to make it through life while you’re building. It’s probably going to take three years to build traction. And then it probably is going to be 50 for the equipment. So I think 100 grand is probably the number.

Bo: What’s a higher priority? Going out on your own or getting into a bigger house?

Jacob: There’s kind of a natural pivot point around the same time.

Brian: Oh, just do both of them at the same time.

Jacob: Just incidentally… but here’s what I’m saying. There’s a natural inflection point where, if we’re going to start the business, I would love to move up to the mountains, live in a small town, and live that kind of lifestyle. And if we’re going to do it, that’s a big commitment.

Bo: That’d be selling the house.

Jacob: On the other side of that, we’ve also…

Brian: Small town, and it’s still a $500,000 house?

Elyssa: Yeah. It’s in the mountains, so you’re paying a mountain premium.

Jacob: We’ve been looking at the rental market in at least a couple of these towns, and there’s a significant amount of inventory around $3,000 a month for a freestanding place with multiple bedrooms, which is kind of what we would need. And I feel pretty bitten by this house, with the amount of money we’ve put in compared to what we could have done by just investing that money and renting. It seemed really prudent to get into the housing market. It was something I think we got really fair encouragement to do, but in retrospect, I really wish we hadn’t.

Should They Sell the House and Rent? (27:00)

Brian: You know, Bo and I usually have a conversation at the end of the show about what the path forward is, but I’m so happy to hear y’all have the good sense to see where this is going. I’ve already told you that you can’t make more money in this moment in time. You can’t spend less, yet you’re sitting on $170,000 of equity. And the thing that rips my heart out is hearing that y’all want to grow your family. But doing that in a two-bedroom condo seems less than ideal. When you get to be my age, the kids are going to be what’s important. So, to not have a kid because of a lack of money seems like a bad decision, too. And then you also want to start this company. I think you have to put all things on the table. And I think selling the house is definitely a viable option.

Jacob: Yeah.

Brian: To unlock your options. And you rent a bigger house until y’all’s income gets to the point that you transition from renter to living your best life owning the house, too.

Working With Abound Wealth (28:00)

Bo: Brian, one of my favorite moments on Making a Millionaire is when a guest realizes something they never would have spotted on their own.

Brian: Yeah, I absolutely love that, too. These are smart people, but everybody has blind spots, because you just don’t know what you don’t know. And here’s the thing: on the show, we get about an hour with our guests, but with our Abound Wealth clients, we get to walk alongside them week after week, month after month, year after year, through career changes, kids, college, retirement, and everything in between.

Bo: If you’ve been watching this thinking, “I’d love that kind of feedback on my situation,” we’d love to have that conversation. We’re fee-only fiduciary advisers, legally required to work in your best interest. Just head over to aboundwealth.com or click the link below. We would love to connect and be a part of your financial journey.

Brian: One conversation’s great, but having someone in your corner for the long haul is even better.

What Future Income Could Look Like (28:56)

Brian: What about not starting a business? What does the path look like if you work through this apprenticeship and get your master’s license? Isn’t there a job waiting for you on the other side of that, with great income? What’s a great income once you come out the other side?

Jacob: So right now, the journeyman wage is $50 an hour, and then there are benefits on top of that which end up being about 20. So they’ll advertise it as $70 an hour. I would really like to be a foreman, I hope, and that would be 55 an hour, and I’d probably get a work vehicle. So in terms of starting the business in five to eight years, that’s a passion project idea. That’s something we’re planning to have the capacity to do. There’s a very real scenario where we just enjoy the fruits of that, squirrel the money away, enjoy the lifestyle that provides, and kick the can of starting a business down the road until it’s a better financial decision.

Brian: Well, it would also let you build the expertise to see everything you need to see to be a good business owner, too. Because I have no doubt, from the analytical side, you’re going to be the opposite of most business owners. Most business owners are really good at the thing they want to start the business around. They have the passion, but most of them are clueless when it comes to the accounting side of it, the bookkeeping and everything. Y’all have that in spades. So, I’m not worried about that. What I’m worried about is, have you seen everything you need to see to be the best electrician, especially on the commercial side of things, to be really equipped to be successful in the long term?

Jacob: Very fair.

Bo: Yeah. Just the idea of striking out on your own right when you get to the point where you can finally start making good money from all the apprenticeship… I don’t want to say it’s aggressive, but it just seems fast.

Jacob: Okay.

Pausing Retirement Contributions (30:33)

Bo: I want to understand where you are from a savings standpoint right now. Walk us through how you guys are currently saving. What accounts are you putting money into right now from a future financial independence building standpoint?

Jacob: Effectively, none.

Bo: So it’s really just letting your current assets grow, but you’re living…

Elyssa: Yeah. We do have our emergency reserves. And the brokerage, I think that’s mostly all from the last 18 months.

Bo: Last 18 months.

Elyssa: So we’ve saved 16,000 in the last 18 months, but we haven’t put it into retirement.

Jacob: If I can put a point on this, we budget assuming we’re going to make X, and then things come up that make it X plus N.

Elyssa: Yeah, if I work extra hours, then I make more. I just bill however many hours I work. So that’s really where that money comes from.

Bo: Got it.

Jacob: So we pretty much do the opposite of what everyone says to do. We live to the point that we have budgeted, and then we save the excess when there’s excess. Not to toot our own horn, but we are actually accurate at living to our budget.

Brian: I was going back to it… I heard you turned away Christmas dinner. We all know that you can live by the budget. You came back home empty-handed.

Jacob: I did not.

Brian: Yeah. Yeah.

Elyssa: So I think that’s where we look at our retirement and we go, is it good enough that we could just pause for a few years? That way we have flexibility. If you want to start the business, we have that cash on hand and we have that liquidity.

Bo: Is $150,000 an accurate household income to project for you guys?

Jacob: I think it sounds low.

Elyssa: I think it sounds low.

Bo: Okay. What would be a household income if we fast-forward five years, assuming you don’t strike out on your own?

Jacob: We would like her to be able to step back so that we don’t have to do the child care, and so that she can work a little less and have more freedom to be with the kids five years from now.

Elyssa: Yeah. We’ve got some younger kids.

Bo: In my head, I’m trying to think through what we will project for you guys in terms of building a plan.

Jacob: 150, 160.

Bo: 150 to 160 five years from now, once you’ve completed the apprenticeship.

Elyssa: And then once the kids go to school in 10 years, I could go work more hours.

Bo: Sure.

Finding Room for Fun Money (32:40)

Bo: When it comes to today stuff, like the clothes and the phone… do you not have a phone?

Elyssa: No, we do. But if I had to buy a new phone, that’s coming out of my fun money.

Bo: Got it. Okay. A phone, a Kindle. If you had to put a dollar figure on an additional amount per month that you guys could budget for, what would be a number that would allow you to do some of those things?

Elyssa: Probably an extra hundred a person, maybe 150 a person. When we were young DINKs, we loved that life. We had $250 a month each in fun money, and that was really comfortable. And now we’ve obviously scaled back to $100 a person. I’d like it to be $400 a month.

Jacob: That’s too much.

Elyssa: 200 each, right? 200. That’s all I meant.

Bo: What I’m hearing you say, and I wonder if inflation has made things more expensive, is that if you had an extra $200 a month each, $400 total, it would change the way you live your current life?

Elyssa: I think so.

Jacob: Yeah, we’d get into hobbies. We’d be able to go out and get coffee on Saturday mornings, stuff like that.

Elyssa: We’d be able to go get a hot lunch sometimes.

Brian: It’s bedazzling your basic life, so you don’t look back on your early 30s and say, “What the heck were we doing during that period?” Like I said, y’all are so good, but I hate that you’re killing some of your happiness over such a small sum in the long term.

Bo: And what’s the current fun money y’all each have?

Elyssa: We each have 100.

Bo: 100. So we’re talking about adding an extra $200 for the household. So $2,400 a year. I’m just thinking… you have this extra $18,000 in cash. If you just mentally compartmentalized it and said, “Hey, we’re each going to add $100 to our fun money per month,” that’s 200 extra bucks a month. Over the next three years, you’re only spending about $7,000. That assumes no extra work, none of those things. If you guys actually agreed, “Hey, we’re going to let that be part of our budget,” would you actually spend it and be at ease and at peace if it were in the budget? Even though it’s not coming out of cash flow, it’s kind of coming out of savings.

Brian: It’s like a sinking fund of fun money.

Jacob: I’ll answer my part first. I don’t think I need it, frankly. With the way we do things, I get some portion of some of the other stuff.

Brian: I see the peer pressure already going. “Oh, no. You can have your hundred. I don’t even need mine.”

Jacob: This is the discussion we’ve had over time. Look, I don’t feel the pressure to buy clothes like Elyssa does. I don’t feel the pressure to do certain spending things that you really enjoy. As just the tightwad cheapo, it doesn’t bring me the kind of joy that justifies it. Whereas I would be very happy if you were able to get some more.

Take Your Wife on a Date (35:18)

Brian: Jacob, can I give you some advice?

Jacob: What?

Brian: You have a wife who loves you. Take this woman on a date. Don’t be such a tightwad that you don’t take your wife out on a date, because that’s where that extra money should go. I don’t count on you to spend it on yourself, but I count on you guys to go out on a date, because I can tell she’s all about you. So, you need to put in your part so she feels like, “Hey, he’s putting in the effort as well.” And I’m not getting on to you, because I love y’all. You’re a great couple. But take your wife out on a date with that extra money.

Bo: In reality, you’re only 30 and 31 once, and you’re only going to have a 2-year-old and a 6-month-old once. You’re only going to be at this stage, in this season, once. And you’re already on a trajectory and path where your life is going to look very different five years from now than it looks now, even if you change nothing. So you have the means, the mechanism, and the capacity to make a very small change right now to improve your current life. What we don’t want is for you to wake up when you’re 36 with three kids and go, “Oh, we were going to go on dates, but now we have sports, and now we have…” whatever those things may be. If you can fix this problem right now with minimal effort and minimal long-term impact, it seems, I don’t want to say foolish, but kind of foolish not to. You can’t go back in time and change that. Once these years are gone, they’re gone. You don’t get them back.

Brian: Well, I want to put a little thought in your brain. I could see that when you guys start making good money, y’all might need to transition at some point. You do budgeting now, but at some point you need to let loose a little bit so it becomes automatic cash management, where everything’s automatically going into savings and prepaying all the debts or whatever else you have. Then everything beyond that, just go live your best life, so that y’all don’t have resentment. I see financial mutants do that sometimes, to the detriment of the marriage and the relationship.

Jacob: Sure.

Getting Comfortable With Cash (37:23)

Elyssa: Yeah, I think that’s a great plan, to take some of the extra that we’ve currently got sitting in the emergency fund, of that 18K, and move it to a little bit of lifestyle flexibility for the next few years. What should we do with the next 10,000?

Bo: Well, I think we have to figure out the hierarchy of our priorities, because we’ve got a lot going on. Maybe starting a business, maybe selling the current house, maybe renting, maybe buying another house. I don’t know that right now we know exactly what the answer is. I don’t know that I’d be super quick to deploy those dollars. I think you leave them liquid as you begin to figure out where the priorities lie, because you’re going to know very quickly: is there a house we can realistically rent? Do we feel confident that we can rent it on a long enough term? What you don’t want to do, I would imagine, is sign a 12-month lease, get into a house, love that house, and then after 12 months it’s not available anymore and you’ve got to go move. Because then you’re going to feel like, “Oh my gosh, now we’ve got to go buy.”

Elyssa: Which is part of why we bought our place. We were like, “We don’t want to keep moving.” My gosh.

Brian: Well, I’ve picked on Jacob pretty hard. I’ll pick on you a little bit. I don’t think you feel comfortable with money sitting in cash. I can already sense it. You want everything to have a place to go. And that’s why, when it sits in cash too long, you’re like, “Well, just put it towards the mortgage, because we’re paying five-and-whatever percent.”

Elyssa: And it’s a variable rate. It’s an adjustable rate. But look, it adjusts six years from now.

Brian: In six years. Are you going to be in the house in six years?

Elyssa: No. No way. Not with three kids.

Brian: So, I can sense that about you, that everything has to have a place. But while y’all are in this season of transition, for this moment in time, you just have to be okay with a little bit of opportunity cost. Y’all are so governed right now. You haven’t reached your full potential. You’re still in the growth phase of your talents, the shovel, which is going to be so much more valuable in the long term. So it’s okay to keep that extra liquidity so y’all don’t feel so squeezed. I feel like y’all felt pressure to make sure the cash had a place, and it squeezed the liquidity to the point that y’all feel so much tighter than you really need to at this point in time.

Elyssa: Yeah, that’s fair.

Should They Convert Traditional IRAs to Roth? (39:36)

Bo: What other questions do you guys have? What else can we speak to that would be helpful for y’all?

Elyssa: Oh, I wrote these down, and now that we’ve had such a good conversation… One of them was about our traditional IRAs.

Bo: Oh, yeah.

Elyssa: We lived in England for two years, and in one of those years, maybe both, we messed up on our income and contributed to our Roth when we couldn’t. So, we had to convert it to a traditional. That’s why we have these two random traditionals. So, we’ve been thinking about converting them over to our Roths.

Bo: Meaning, were they non-deductible IRA contributions?

Elyssa: I think so. We were over the Roth threshold, so I don’t think we got the tax benefit in that first year.

Bo: Did you have access to 401(k)s in the years you were working there?

Jacob: No, because we were…

Bo: I think they were deductible. I bet they recharacterized the Roth contributions to…

Elyssa: We did do the recharacterization.

Bo: You likely took a deduction on your tax return, would be my guess.

Elyssa: Okay.

Bo: So there’s likely no basis in those, then. And so your question is, “Hey, we’ve been thinking about maybe converting those to Roth, given that we are in such a low tax position.”

Jacob: I think our effective tax rate is 12%.

Bo: But still, if you do that, you’ve still got to spend the money on taxes. So, while you could convert those, if it were me, I’d think about, okay, instead of converting to Roth, why not just make direct Roth contributions? Because then I’m not having to pay any sort of tax on that. People get so excited: “Oh, I’m in a low tax bracket and I can convert this.” I think there’s going to be a means and method for you guys to build Roth dollars in the future, especially once you start working and have access to 401(k)s. Let’s say your income blows up to that $200,000 range. If you want to build up Roth assets, you’re going to have the flexibility to do it through Roth 401(k)s and Roth IRAs. If you were going to spend an extra $200 on something, I would spend it on date nights instead of paying taxes for a Roth conversion.

Brian: Kindle subscriptions, everything you said there. All the fun stuff. That stuff seems so doable. Y’all should do that stuff. You really should. And I love talking to you. I hope y’all don’t think we’re too hard on you. I just see so much potential. I see so much potential with huge-horsepower motors, meaning your brains. But in how y’all are directing them, I think you’re getting caught up in the minutiae instead of the big-picture stuff that y’all really need to be working through.

Jacob: Yeah. Ultimately, 200 bucks a month isn’t going to change our ability to retire.

Brian: You’re going to be my age one day, and you’re going to be like, “Why didn’t we?” It’s so crazy.

Bo: And this is so counter to everything you normally hear us, or financial people, say. 200 bucks a month likely will not change your future based on your trajectory, but $200 a month will very much change your present. And that’s something you should factor into the equation.

Elyssa: Yeah.

Is Saving 15% Enough? (42:20)

Elyssa: Maybe our last question is just about our future. When we look at what we have in retirement savings, we’re like, okay, we feel like we’re in a comfortable spot.

Bo: You’re ahead of the curve.

Elyssa: Yeah. It’s not going to kill us to not save for retirement this year or last year. We’re going to be okay. And when we’ve done projections on how much we need to save in the future, and by “we,” I mean Jacob, we think we could be okay putting aside only 15% of our income. Is it foolish to do a lower percentage if we look at it and…

Brian: I think it’s a mirage to you right now. Here’s where I’ll give you the exception to what I just told you. Y’all are thinking about everything right now, but when you go to the broader sense, you’re like, “We’ll just do 15% forever.” There’s going to come a time when you start feeling flush, and 25% is going to seem reasonable. Right now, 25% is like, “What the heck?” And so I get that. I don’t want to tell you right here and now that 15% for the rest of your life is going to… it’d still be better than the average American. But because I see the potential y’all are building, that’s not going to be your best life. I think you can have it all.

Why Saving More Early Pays Off (43:32)

Bo: We have a deliverable at moneyguy.com/resources that shows how much you can save at each age to reach financial independence by age 65. For a 22-year-old, if you save 6%, you’ll get there before retirement age. If we could rewind to your 22-year-old selves and I told you, “Hey guys, you don’t need to save 20, 30, 50%. Just save 6% and you’ll be okay,” and then life happened and you ended up where you are now, how happy are you right now that you saved more early on than you, quote-unquote, had to?

Elyssa: Thrilled.

Bo: Thrilled, right? In our experience, people arrive at that same conclusion as they get into their 40s and 50s. Could they have gotten away with saving 12% or 15%? Sure. But the fact that they got to that 20 to 25% savings rate allowed them flexibility and options much earlier in life than they would have had otherwise. So long as it’s not causing you to sacrifice today and skip the things you enjoy, when you have the ability and propensity to save that way, we think you should. Okay? Because it gives you that flexibility, and you reassess it. That’s why we do the annual net worth statement. You reassess it. You use the Know Your Number tool. You figure out, okay, are we ahead of the curve, behind the curve, or on the curve? And then you make that assessment every single year.

Brian: And when y’all reach your full potential, you’re going to be so ticked off at how much you pay in taxes that the best place to legally hide it is going to be those retirement accounts. So, trust me, it’s going to happen. You just haven’t reached the full version of yourselves yet. That’s why I get so excited. Y’all are making very mature decisions. You’re way ahead of the curve, but you’re only 30 and 31. Holy cow. A person my age looks at y’all and sees so much potential. You just have to be patient. It will happen. Just don’t let the vision of right now get in the way of having the full vision for the long term. Because I think y’all are going to reach it.

Jacob: Great. Yeah.

Bo: Awesome. I’m excited. I feel like I’ve got some decent stuff here. I think we’re going to put together a pretty exciting plan. Maybe not for what 65 looks like, but certainly for what the next 5, 10, 15 years could look like. And I think it’s going to be great.

Brian: I feel like I’m the ghost… what is it, the ghost of the past or the ghost of the future?

Bo: Yeah.

Brian: I feel like we’ve done A Christmas Carol right here today with you guys. I’m excited for the date nights and the feedback and everything else y’all are going to share with us after this.

Jacob: Awesome. Thank you guys so much. Appreciate it.

Brian and Bo’s Takeaways (46:06)

Bo: Yeah, Brian, what a great conversation we had with Jacob and Elyssa. I’ll be honest, I like them. I like them a lot.

Brian: I feel like we use the phrase “our favorite guests” over and over, but it really is true that when we do Making a Millionaire, we get great people coming through the doors. What I loved about this couple is that they obviously love each other, but man oh man, you just want to look at Jacob and be like, “Dude, come on, man. What are you doing?” When your wife tells you to go to the store, buy Christmas dinner, and bring it back, this is not the time to be young Ebenezer Scrooge and come back empty-handed. That’s definitely drifting from financial mutant to financial miser territory. But I think we got to him. I think by the end of this, he’s not going to try to skip any more Christmases.

The Plan: A Three-Year Sinking Fund for Fun Money (46:53)

Bo: Yeah. But what I imagine is it’s one of those things where, the first time you go to the gym, it’s, “Oh yeah, I love it.” But then you need some motivation for staying power. And so we asked, what’s something we could do from a planning perspective to really help them follow through? So this is what we did. Right at the very beginning, we said, “Hey, what would you do if you could spend more money?” And she said, “Oh, I want to do an Amazon Kindle subscription.” He said, “Maybe a new house.” Okay, one of these is not like the other. So, let’s start with the small stuff first. We said, “Hey, you guys are in a position where you’ve done a lot of the hard work thus far. What if we just took some of your excess cash and chiseled out a specific sinking fund for spending money?” I know that’s so counterintuitive to what a lot of financial advisors say, but I think it’s important for them because it will change the way they enjoy their lives. So, we said, let’s take three years, 36 months, at an extra $200 a month, and put a sinking fund of $7,200 in place. That’s $100 for him and $100 for her that they have to spend every single month.

Brian: This is worth repeating. We are basically, as financial advisors, saying pause saving and investing for three years, and on top of that, spend more money. That’s it. They’re in a season of life with young children, and Jacob’s also in a season of training where his income is somewhat suppressed because he’s changed careers. But he’s on the path to making a lot more money. I joked with him, “Jacob, please take your wife on a date.” And then we were joking behind the scenes about what he should do with that money if he doesn’t take his wife on a date.

Bo: If you do not spend your $100, you’ve got to send it to us and we’ll take our team out to lunch.

Brian: No problem spending your money, Jacob. So, make it happen.

Bo: So, you choose. You either take her on a date or you send us a check for 100 bucks every month and we’ll knock it out. Because I think what you’re going to find is that even this small change is going to add a lot of utility. It’s going to add a lot of joy to your life, so that you can continue on the path you’re on, because again, you guys have done a lot of really great things.

Pausing Now, Saving 25% Later (48:54)

Bo: So, from a planning standpoint, we said, “Okay, we’re going to pause saving and investing for three years.” I know that’s going to feel weird. It’s going to sound counterintuitive, but you’ve done a lot of the hard work to give yourselves this flexibility. As you work through your apprenticeship and get into the part of your career where you’re actually starting to make money, we projected a household income of $160,000. If that’s the case, we think an appropriate saving strategy for you guys might look something like putting $16,000, or about $1,354 a month, into your 401(k). We want you to max out each of your Roth IRAs at $7,500 each. And we want you to max out the family HSA. If you add those numbers up, it comes to $40,000. That’s a 25% savings rate. So, yes, we took off three years. We were not saving. But as soon as the income gets to where we can save the way we want to be saving, we’re going to start saving $40,000 a year.

Brian: Well, it’s pretty exciting, too, because I can’t wait to actually run the projection to show everybody what happens when you have a young couple with close to $300,000 at their age. But here we are as advisers telling them to take three years off.

Selling the Condo and Renting for Flexibility (49:59)

Brian: But there was a bigger elephant in the room, because remember, Jacob just blurted out that they need a new house. Kindle subscription, new house. They have two children and they’re in a two-bedroom condo. Something’s got to give. And they’ve also been on this journey of debt crusading. They were trying to pay off all this debt. So there’s been a revision. Let’s go ahead and answer it: what happens if they get a new house?

Bo: Well, I think they don’t necessarily have to have it right now, but if a third child comes along, they’re probably going to run out of space. One of the things we said is, okay, debt crusading and paying off the mortgage may not have been the most optimal, most advantageous strategy. But what it did do is create a lot of equity in their current condo. So, they’re going to be well positioned for a down payment on that next home. We said one of the things they might want to consider is, when it’s time, selling the condo and renting a house that makes sense for the family. At least that way they can figure out where they want to be and what the lay of the land looks like, and they’re not rushing from one housing decision into another. They’re going to take the proceeds from selling their condo and put them in a high-yield savings account. It’s just going to stay parked there so it can grow for them. And then once they’ve figured out the lay of the land, where they want to be, what kind of house they need, and what makes sense for their family, they can use as much of that $170,000 of equity as necessary to get back on the homeownership train. I think so many people, especially motivated, driven folks, go, “Okay, once I’m a homeowner, I’ve got to stay a homeowner.” I think this is a prime example of where renting might give them the flexibility to choose exactly what they want the next phase to look like.

Brian: They shared during the interviews that the next house is going to be $500,000 to $700,000. That’s going to put a lot of pressure on that 25% of your gross income for housing. Once again, remember he’s in an apprenticeship. He’ll be coming out of that within the next three years, but his income will still be on an upward trajectory. I think that additional time renting will give you a little more time to see what income actually looks like, so it doesn’t put so much pressure on that 25%.

How the Numbers Could Play Out (52:11)

Bo: And so the question becomes, okay, they’re doing these big things. You’re telling them to spend money and you’re telling them not to save. How does this actually play out for them? If you remember, the plan is that the money you have right now is working for you. We’re not going to pull any of it out. We’re just going to let it sit and continue to grow, kind of coasting for a little bit. But once your income gets to where we want it to be, we want you saving 25% of your gross. That’s going to be $40,000 a year. Starting as a 31-year-old, not saving for the next three years, getting to 34, then saving that $40,000 a year, and assuming an 8.9% rate of return on your investments, by the time they get to 40 years old, they will have crossed into the two-comma club. They’ll have a million bucks by 40 years old. By 45, $1.8 million. By 50, over $3.1 million. And look, there are so many variables and so many changes, a small business and all this other stuff, that we didn’t even project this out to 65, because a lot can change. But if they just stay on that path of saving 25%, even though they’re spending more today, and even though they’re going to take a pause and hiatus on saving, they’re still going to be in a great position.

Brian: And that’s a testament to the hard work they’ve done up to their current age, building nearly $300,000 in retirement assets.

Bo: And I hope they hear that. That’s the part I hope sinks in, because for natural savers, taking three years off is going to hurt. Use this slide right here as motivation to say, “It’s okay. Focus on living my best life right now. Focus on getting the income up through the apprenticeship.”

A Hallmark Ending (53:42)

Brian: Jacob and Elyssa are so exciting. I think they’re doing so much in great ways. You know, I always love closing things out by putting a bow on top. These are two longtime friends. They meet in Europe when they’re both studying abroad. They come to Nashville to start dating after hanging out in Europe. Now they come back to Nashville for us to give them purpose with their financial life. I love it. It’s a Hallmark movie, chef’s kiss. They really are an incredible couple on their journey to building their great big beautiful tomorrow. If other people want to be like Jacob and Elyssa, how can they apply?

Bo: Yeah, if you want 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, free calculators, or free resources, go to moneyguy.com/resources. And Jacob, enjoy your Christmas dinner.

Brian: I’m your host, Brian, joined by Bo. Money Guy team, out.