Is Aggressive Saving Derailing Their Short Term Goals?

[00:01] internal checklist. You're like, you know what? Good student, check. [music] AP classes, check. You know, been rewarded for every one of these decisions, but I'm here to tell you you're running up against the internal

[00:15] you're running up against the internal narrative is separated from the reality. >> Give us a background. Who are you guys, right? So obviously you come from San

[00:27] right? So obviously you come from San Francisco. What what got you from >> I grew up on the Central Coast of California. four brothers. >> That's good.

[00:43] >> I'm number four. >> Number four, okay. >> have a female name for you? >> You [laughter] know, I I'm sure. >> Probably Josephina cuz I know >> I'm just I'm just [laughter] curious cuz

[00:55] okay, here's the daughter. Here's the daughter. So this is going to be the >> Well, that's what I said. I I don't know if I'd exist if five they're just like, okay, I guess it's just not happening. But

[01:10] But yeah, grew up there, went to college locally. Kind of knew that I would have to cover most of college, so I was kind of researching when I was in high school. I'm I knew the college I

[01:24] into business and I was researching, you know, which college cuz I knew I was going to have to, you know, front that cost. Ended up going to Cal Poly San Luis Obispo, which is where

[01:37] >> How old are you now? >> 24. accounting? Is that what you do now? >> Yes, so I got my CPA license a few years >> Okay. >> Was working in tax while I so graduated

[01:50] and got a job locally, tax job, which I did enjoy, and then Leo actually ended up getting a job offer in the Bay Area, started looking for different jobs, wasn't sure if I wanted to stay in tax or kind of branch into

[02:04] something different, but I found a really cool opportunity and went into >> Ooh, nice. >> Yeah, so I am really loving that. I'm about two years into that. Forensic accounting can mean a bunch of different

[02:16] things. Uh, most people think I'm in the FBI catching criminals >> He's at the crime scene, right? >> Yeah. Have you seen the movie The The >> Yeah, [laughter] that's exactly what I was thinking about. That's exactly what

[02:28] >> Not Not quite, but >> You presented that in the most love that. That's so great. Leah, what about you? What's your What's your >> Yeah, so I was born and raised in Sacramento, California. My dad always

[02:41] did science experiments with me growing up and we're always working on something and that really sparked my curiosity and I had a great chemistry teacher in high school and my college actually offered like a blended BSMS program. I'm getting

[02:54] my ROI because I can still I work a side job as a professor at a local community college in addition to my day job as a research and development scientist for a San Francisco Bay Area. >> So, what's that mean? Like what

[03:09] >> I understand all of those words individually. >> [laughter] >> That's what RESEARCH AND DEVELOPMENT >> [laughter] >> He's going to start breaking out big

[03:21] >> Yeah, no, no, no, no, no, no, today. I'm a product development scientist. It's called like product / process development, so we carry products in then we lead them all the way to activation in large-scale manufacturing.

[03:34] like you like that's the kind of stuff that you use? Is it the packaging or is product? >> All of the above. We have special scientists that focus on packaging development and like oftentimes they

[03:47] backgrounds or they study packaging specifically. So, my role is more of like the product development. How do we slap a great claim on the package? How do we sell this? So, it's very cross-functional and like very consumer

[04:00] >> You said you guys are engaged, not married yet, right? All right. So, you met in college, stayed together through graduation in the working world, and now yet? >> Yeah, it's in July of 2027, so about a

[04:16] >> Okay, so a year away. And how how long have you guys been out >> Three, okay. >> I've been working for 2 years full-time. >> So, you guys are not fresh out of school, but you've been in the working

[04:29] you guys are sitting here thinking about, okay, what's the path? We're about like joining finance, how this works. You guys are kind of just share with us your net worth statement of kind of where you are today. And for you said

[04:43] >> I'm 25. >> 25. So, for 24 and 25, you guys have a total net [laughter] worth of $238,000 when you look at both of your individual net worths combined. And it's pretty

[04:57] wild of that, $27,000 is in cash or like liquid assets. is in cash or like liquid assets. Investments represent about $208,000. There is a cabin that's in there, that's a thing.

[05:10] And then we have only debt is we have some debt on said cabin, and then we >> It's not even a bad interest rate, though. >> Oh, it's super low cuz we were in college during COVID, so

[05:22] college during COVID, so >> So, so when we look at this, 24 and 25, $238,000 net worth, almost $200,000 household income combined. Do you guys recognize how unique that

[05:35] is? Just the situation that y'all are in, kind of where you're starting from? >> Yes, we are extremely grateful. We have great jobs. with our majors and careers that we've gone into.

[05:49] of living area and we're trying to balance that and also housing is an expensive thing, you know, wanting to break into owning a home one day,

[06:01] which seems a little out of reach and it's hard to it's hard to you know, like prioritize that when you know the power of your age. >> [laughter]

[06:13] when to scale back that savings. cuz you said you guys live in the Bay Area, right? In San Francisco. Give us for folks who don't know, like what's the housing market like there? Like when

[06:26] homeowners, what does that mean in sort of like real dollar terms? >> Well, we are not in the city of San Francisco. We're in a suburb, but it single family home is probably somewhere between $800,000, 1.2 million dollars.

[06:43] >> Right. And how like how much for context, how many square feet is that you know, different parts of the country, different cost of living. I feet. >> Okay.

[06:55] >> When we first moved to the San Francisco Bay Area, we were kind of unfamiliar of like what suburb we are not city people. We just wanted to live like, you know, There's parks, you know,

[07:07] peace of mind. And the the first one-bedroom apartment which is considered to be on the the larger side of a one-bedroom, you know. We chose a place that's, you know, close to the downtown. We live in like this

[07:22] place. But it comes with a pool and a barbecue and a gym. So it's like one of those all-inclusive like copy-paste apartment complexes. And then we signed apartment complexes. And then we signed our first lease in 2024 at like 2660

[07:35] base rent. But then that comes with like paying for an extra parking spot a month and utilities. So that's added like probably another $300 to our bill each month. Um, and then over the past couple of years, we just got a notice of

[07:50] renewal for our lease cuz um, our lease is up at the end of July and they is up at the end of July and they renewed us at like 2890. So we're like, we need to search for something else. We, you know, we have

[08:03] two cats. The cats need more space. Um, we really wanted to break into a house. It's the cats. It's the cats. It's who >> Um, >> Man, it's almost $3,000 a month for our

[08:16] Um, but but you said something so interesting, Joe. You said, man, I I feel like it's hard to even prioritize saving for a home because the goal of home ownership seems so unattainable when you

[08:29] have to start at 800 to 1.2. Did I Did I paraphrase that correctly? this moment right now, a lot of like recent grads and young professionals >> Man, okay, there's no point in me even doing that. So why would I even try? So

[08:44] goal that you have, right? That's a goal that you want to work towards. What are you doing with like your current dollars? Like like if you're not just where's your money currently going? >> We're investing a lot. Uh,

[08:58] I So I'm trying to reach, you know, that 25%. I currently do 20% into my Roth >> Wow. >> Uh, I get a 5% match on that. Uh, and

[09:11] then I'm also maxing my Roth IRA each year. So it's about, I don't know, between 25, 30%, something like that. And then you invest a lot, too. >> For my full-time my scientist job, I put away 30% into my 401k and then he When I

[09:27] met him, I had $30 in my Roth IRA when I was 21 years old and he, you know, put me onto the Money Guy show and the power of the money multiplier. So here we are. >> [laughter] >> That's up.

[09:40] >> You guys are crushing it in that aspect. >> It's wild. Okay, so 30% going in your through the through the system? >> yes. It's like a 4% and then it vests certain period of years. >> Look, a lot of people are going to see

[09:54] y'all's situation and be like, you know, y'all are wicked smart. You went to college, fell in love, you got great jobs. the other drama? What other struggles or goals do y'all have that we can address

[10:07] in a second. >> I don't know about drama. We actually don't We don't have much conflict over finances. We're not married yet. We there hasn't really been conflict there and I think we're really aligned in our

[10:21] goals. I mean, housing's a big one. We want kids one day and that's a hard thing, especially you know, if we are to stay in the Bay Area income, how to prepare for that. Hopefully our

[10:33] salaries, you know, go up over time. >> An additional question that I had, where we're preparing to get married, everything around the word marriage, >> There's a tax that goes on top of >> [laughter]

[10:46] >> You know, there's a whole industry helping you try to to to relieve you of >> Luckily we have some help, you know, we're very grateful that his brother is a caterer and his sister is a wedding planner, so

[11:00] >> Oh, that's really helpful cuz you probably got some ins on locations and stuff, too, hopefully. >> Yeah, so I mean, venues are just Everything else that comes with a wedding is expensive, photographer, DJ,

[11:13] coming. So where were Was there >> Is there a point of reference we can have when planning for something like that? Cuz when I speak with people, they're like, "Okay, we were able to have a very like micro wedding at 20k."

[11:26] And then I hear people that spend like 80 80 to a thousand 100,000 and I don't think that's realistic for us and we don't of course want to spend all of our >> Who's paying for the wedding? Are you guys paying for the wedding?

[11:38] >> Yes, my my parents are assisting with some of that. a big pot of money waiting to to spend on your wedding. this wedding. >> Yeah, that that changes the algebra a

[11:50] funding it because you've you've already given the head start knowledge that you >> So, how much you plan on spending on the wedding? What conversations have you >> Our estimate based on where things are currently going, we have like you know a

[12:05] few vendors locked in and stuff. It's probably going to be around thirty-ish >> Hard stop at thirty or hey, we think that's what it's going to be but maybe it's so hard to know. I mean we want to have you know a fairly large large

[12:19] >> It's just hard to gauge. I think our net worth we're very investment heavy. We expenses so our cash balance is probably lower than what is even shown there like all right, thirty thousand dollars for a wedding next July so we're a year

[12:35] out from that and we have twenty-seven thousand dollars readily available in >> So we got to come up with that. >> There's a mismatch there. >> The first question, right? You're estimating it's going to be thirty.

[12:47] I really do want to know is thirty a hard stop like like hey, we will not spend more than thirty or hey, we're going to spend on this wedding and we're one fifty and we're going to have this we're going to have this and we're just

[13:00] different those are two different our fingers and of course we have a spreadsheet because Joey's an >> keep track of it. I would say I'm not like with our expenses I don't like

[13:13] dollar. I just know what we bring in and an idea the bank account at the end of the month. month. So I don't think I'm the best at uh

[13:28] right now to spend. Uh so that's uh a with the end in mind. Well, I chose this major and I did this and looked at the know this is not something you're thinking of the first time. What's your

[13:42] plan for how you're going to come up with that 30,000 between now and then or >> I've been teaching on the side and income in terms of like putting cash away cuz I'm like, you know, with my

[13:55] full-time job I'm putting 30% away in my 401k and after taxes and everything it's uh >> [laughter] >> amount um and then everything I receive uh for my monthly like teaching paycheck

[14:07] just goes right into the high yield. So >> So is one of these a sinking fund for No. >> Okay. So when we think about the side gig teacher income, how much is the does it is like a set amount? How much is

[14:21] coming in net? >> Net would be around like 28. >> And and is exclusively just getting parked in high yield savings? It's not >> see much of that unless we have like emergency funds. Um

[14:37] you know, recently if we just got an opportunity to rent a home and there's that security deposit, you know, first month's rent, you know, we're really you know, a couple days ago. So >> [laughter]

[14:51] >> Um yeah, that's just been a lot of cash right now. But we're trying to use that thing. I don't want You don't have to force it because you've got a year and you just I got to be honest with you, you just solved half the problem. I mean

[15:06] consistently for 6 months? >> That's Okay. So she teaches Leo works extremely hard. She has a full-time job uh and then she's also teaching this uh class on the side which is a class plus a lab. And so this class goes until

[15:22] >> I'm in a general chemistry course. >> Yeah. So she teaches full-time job, then goes straight to school, teaches until 10:00. Uh that's 2 days a week. And then she has office hours the other days.

[15:35] Obviously, there's more hours that go into all of that. Um you know, grading sustainable for the >> know. That's That's one of the things we >> Give us a reality then. On $2,800 a month for 3 months, what do we got

[15:49] >> Actually, so I'm teaching both semesters this year. So spring semester and fall pretty comfortable in that 20 >> Yeah, so I'm getting paid 10 months out of the year. Um you're paid monthly and

[16:02] um you know, I'm receiving paychecks 10 months. So I think that is a substantial amount of cash to be saved. >> like 15,000 per semester that you teach. >> About, but I am taking a break next spring and you know, that was a heavy

[16:16] >> I'm like maybe I should try to, you know, enjoy life, have more of a balance cuz it has been such a grind the past like year and a half so far. Um and I I me the best of both worlds. I can work my industrial scientist job, but I can

[16:32] also, you know, like exercise my passion for teaching and getting to know community. So it's been a great learning experience, but also like I'm tired at the end of the day and I'm grateful for Joey cuz, you know, I come home

[16:47] at 10:00. Yeah. He folds the laundry and cooks dinner. So um yeah. Remember [laughter] the movie? That's it. He did all that stuff. That's it. Uh okay, so so 6 more months, right? That's going to get us somewhere 14,

[17:00] 16,000 depending on when the pay hits of cash you'll be able to be able to bank up. And you've already got $27,000. But we want to make sure we don't get your monthly burn rate. Do you guys have an idea of what your like baseline burn

[17:14] >> Okay, the slide is helpful. Yeah, we we tried to put this together the best we tried to put this together the best we could. Some of it is an estimate. >> Okay, great. I I was going to ask you cuz y'all let something slip that y'all

[17:26] just potentially are renting a house now. So, give give us the scoop on that. >> Yeah, so this all just happened in the last week. So, our previous landlord we're still living there in the meantime, but big corporate landlord,

[17:38] big apartment complex. >> copy and paste apartment complex. I've never heard it said that way, but I was like that makes a lot of sense. So, give >> I mean in the Bay Area because housing is so unobtainable for a lot of people,

[17:50] there are a lot of these huge apartment complexes everywhere because that's what when we moved here, we chose that to start. Uh but they kept raising our rent every year pretty consistently. Uh even this last increase which I thought was

[18:05] pretty ridiculous. They raised it to they post their current um rental prices online. Uh and the exact same unit that we could rent today, sign a lease, uh they want $200 less than what they're trying to renew us for.

[18:20] >> Yeah, you switch your name, you sign a different >> So, tell us about this house. What's what's the deal on that? >> So, we we got a really good deal. It is 2,900 a month. Uh that's for a

[18:36] >> Wow, amazing. >> Yeah, we're so excited. are. That's almost the same rent that we were paying for this one-bedroom are renting it? What's the landlord? What is what's their goal with why

[18:50] a rental house or is this a house that they moved out of the area and they're >> he's he's owned it for a long time. Tenant just moved out and he's looking for some long-term tenants and we uh this was a pretty competitive house to

[19:04] get. There were a lot of people interested, so we really jumped on it grateful that we got it. So, owning a house a lot of that was just, you know, single family home. >> Okay.

[19:16] >> Uh and so now that we have that, uh you know, I I'm fine with staying here know, make that purchase. >> So, and not not to cuz man, I feel like uh the the crazy uncle here asking y'all like family questions before you even

[19:32] get married or whatever. But y'all come from big families. So, you know, and that that the cat out of the bag and the fact that you said we're going to have timeline on that? Y'all are planners. I've already I bet y'all have had this

[19:45] >> Yeah, we've talked about it. Around 5 to 7 ish years, uh which is also kind of the home timeline. >> 5 to 7 years. How many kids y'all want? >> I >> They both looked at each other and

[19:59] >> Well, Joey come He's one of five, so maybe he has a different perspective, but um I don't know. Mine's like two max, perhaps, >> We'll see how we're doing, but I feel like our finances are big part of like,

[20:13] comfortable? Can we afford child care? You know, our families live far away, so babysit during the day, unfortunately. >> we both I mean, we both bring in similar incomes. Uh so, if one of us were to not work, that's obviously a big hit.

[20:29] same? Like uh if you both continue working, do you both have the same a uh a more rapid increase in income >> Um >> Or a higher ceiling than the other?

[20:42] >> Fairly similar. I mean, uh so, my career goal is to one day become um to be able to provide expert testimony uh in like the the counties surrounding the Bay Area. Uh

[20:56] >> Right. >> Uh but you know, that's going to take experience. But that that's my goal one day. Uh and if I get there, there would obviously be a considerable bump in pay.

[21:09] >> How about How about your opportunities? >> Yeah, I think it really depends on how the company's doing overall, but personally, I like where I'm at. My goal is to continue like trying to climb that corporate ladder, you know, use my

[21:21] Um, and just try to build up a diverse set and development sometimes could be limiting depending on the area, and I think that's why we're living in the Bay Area just because it's like a technology

[21:34] >> Sure. for us to start our career. >> Yeah, I think my career I have more flexibility in where we would end up living, but uh, you know, a job in as a scientist or a chemist, uh, those

[21:48] are more concentrated in urban areas. Uh, so not like quite as much >> Well, and I I don't mind asking that question cuz we just before, I don't know how much makes it into the show, we were just talking about y'all couldn't

[22:00] beautiful Franklin, [laughter] Tennessee is. I mean, are y'all set to staying in high cost of living area. I mean, since you guys are young, you're you're both highly educated, you're you're talented, you you know, really you can do

[22:15] anything. So, I that's why I feel like it's worth asking the question, are time or is that open-ended? >> Well, I've tried to um convince Joey >> Yes, [laughter] actually, cuz I got the chance to live

[22:29] in North Carolina for like an extended co-op, which is like a long-term that I'm at right now, but it was like as I was finishing my master's degree like at Cal Poly at the college, you take your classes and then the last sort

[22:43] doing a thesis with like you can choose to do research at the university and work with companies to fund your research, or you can physically go do an internship for 9 months and write your

[22:55] thesis based off of the technical work that you've been doing there. So, I this would be a great time to work and be in grad school, you know, like this is a great opportunity to do so. So moved to North Carolina. It was in the

[23:08] Raleigh-Durham area. Beautiful. The grass is green, the trees are green. Not used to the hurricanes or the humidity. It reminded me of where I grew up mountains, 2 hours from the beach.

[23:21] And I had a very bougie one-bedroom apartment for $1,500. [laughter] >> [laughter] >> So I'm flexible, but I totally understand like our families are in California. He has a cabin

[23:37] >> Tell us about this cabin. This is the first time it's come up since the >> Before, I want to hear about the cabin, but what are your thoughts before on the that loop and then talk about the cabin. >> to say I can't cuz the cabin.

[23:49] That would actually close it. >> No, I I I am open to it. Uh family is here. I do love California. It is very expensive. Uh but as long as we can afford it, I would like to stay.

[24:04] Um at least for uh I mean, I we're both aligned on staying here for at least the short-term near future, you know, 5 to 10 years. jobs for a while. >> Sure. You said one of the goals is to

[24:17] own a home, but then you said, "Well, I'm going to be in a home." And then you said, "Well, maybe in 5 to 10 years we might be open to not being here." Does that Is home ownership as big of a goal or not so much now that you're going to

[24:30] and that you know, you get the home owner the home experience without having >> I keep going back and forth on it because again, just when you look at the and what you can do with that extra money and the power of those dollars,

[24:45] really, really hard to justify it, especially at our age. And now that buy a house? >> I just like the idea of >> It's built into the they This is what the American dream is. This is what

[24:59] successful people do, right? >> like put nails in the wall without the >> You don't have to ask the landlord. Did you watch our episode on is it better to >> What did you think? >> It seemed like a pretty clear answer to

[25:13] >> I mean I did the math for you guys and I still want to hear about the cabin, but what's funny is I took a $1 million house. I only had you put down 3% because you know on first time home buyer we give you lots of grace and and

[25:27] so you only had to put down 3% but then we financed the other 900 and 970 million 700,000 970,000 >> Public math, man. Be careful. >> Anyway, the monthly payment at 6 and

[25:43] 1/2% $6100. And that's not property taxes. That's interest. That's not even the property taxes. That's not the insurance. >> And I just heard you tell me that you've got a three bedroom house not too far

[25:57] from where you are for $2900. Do you know why they can give you that house a really low >> Yeah, the interest rate on that house is it's either exactly what you said, paid off or there's probably a less than 4%

[26:10] mortgage rate on there. And so that you're getting the benefit of that plus the purchase price was substantially lower before we had the the 2021 run-up in real estate where it almost doubled, you know, in that three

[26:23] to five year period. Financially, it doesn't make sense to buy a house especially with all the life stuff that y'all just said. You just you just answered your own question. And that's one of the biggest things I have with

[26:36] achievers is y'all think you're on a check you're running an internal checklist. You're like, you know what? I've been a good student check. AP classes [laughter] check. Hard major because I want to you know flex this

[26:50] this muscle I have in my brain that's you know can do a lot checking. You know you know I've been rewarded for every one of these decisions, but I'm here to and specially in this high cost of living area, you're running up against

[27:03] internal narrative is separated from the reality of what you can do cuz that is to be more than that. It's going to probably be 125% more expensive than um

[27:15] you're in right now. >> Yeah, that that's wild. >> You run that by the wealth multiplier? >> I'm talking about this is HIA's age really does. >> I agree. I I still want that to be a

[27:31] long-term goal for us and it's just so hard with the current market. I I know we're probably not expecting prices to increase at the rates that they have in the past 5 years. It's just hard to know when to jump in. And especially if we

[27:44] Bay Area. >> Exactly. >> That's the biggest red flag in my opinion. >> and then we decide to move, well, you know, if prices went down, you know,

[27:56] >> Yeah, that's the that's the problem with leveraged debt is cuz you lose 10% in the market of the value of the house, you know, cuz you have to sell it, you >> Yeah. >> hundreds of thousands of dollars.

[28:08] oh, well, renting is just throwing money away, throwing money away. I would you not throwing money away. It's buying yourself options and flexibility. I'm months, whatever your lease term is and

[28:22] if I want to. I can just Once you buy that house, you are sort of at the mercy what happens with that particular home. And if that stuff isn't set, I would be careful rushing into it especially in a

[28:35] super high cost of living area like the Bay Area. So, even if you were going to do that, you got to save up for down payment. He said 3%, so it's $30,000. We trying to save up for as well that's 30. So, now we're like having these multiple

[28:47] goals we're stacking up. You guys said that your monthly burn rate is about they're somewhere in that ballpark. You also said that your your incomes are a wide disparity. So, I would argue that in that sort of environment a 3-month

[29:03] emergency fund is probably prudent. It's probably not like a crazy thing to think about. So, you take $6,000 * 3 months, it's $18,000 20,000. >> when I see your current emergency fund,

[29:17] according to your net worth statement right now, right now, I can see that it is $27,000, so in my mind I'm thinking if I'm trying to fund goals, all right, I got $7,000

[29:31] >> wedding, right? Like I got 7,000 for the wedding. We've already laid out that if you just can continue this pace of teaching for the remainder of the year, that's going to be another 14, 15,000. All right, well, now we're at like 21,

[29:45] All right, well, now we're at like 21, 22,000 of this $30,000 goal. 7,000 or 8,000? >> So, that was one of my questions on whether we can scale back on the savings at least temporarily. Uh

[29:59] one of my thoughts also was to I think we're kind of on that borderline Roth versus traditional contribution uh cuz California tax rates are quite high. We're looking at around 30, 31% marginal rates.

[30:14] >> So, we're we're kind of on that borderline. Uh we've been contributing to Roth uh in the past, uh but if we switched to traditional, we could, you know, free up some cash flow that way uh or just or just dialing back the

[30:28] >> still going to be putting money into the Roth IRA, too. I mean, you could even if we Because y'all's structure, even if you started blowing through the income structured as a backdoor Roth contribution.

[30:41] won't have to do that. Your income, you're not going to necessarily be there, but you are at the income where pre-tax You just said 31. So, you said 30%, right? So, how much total do you

[30:54] asking I'm sure you probably know. >> Uh it's about 20,000. >> Just mine. >> Just yours. 20,000 for you and the 30% >> Okay. >> So, [laughter] it's like

[31:07] >> 40 to 45,000 dollars a year going in. Do you recognize if all you did was switch your contributions from Roth to pre-tax at that 31% tax bracket, that alone

[31:19] >> Wow. >> Just doing that. That's an extra 1,000 dollars a month in savings that you guys could have to still fund Roth IRAs cuz increase, you can do the back door or to

[31:33] fund some of these other goals that you guys have. It's why and and we love Roth >> Yeah. >> But, you are the case study why if I you could potentially have an additional 12,000 dollars every year."

[31:48] significant, right? >> Yeah. And I think that could just be, even necessarily uh with the numbers you brought up, I mean, we don't even necessarily need to dial back the percentage and we can still get to that

[32:01] >> That's right. For the wedding. >> So, the wedding is a goal and the home >> Home owner is that a thing? >> I think it should be put on the shelf >> Um >> All right, so it's come up a few times,

[32:15] looking at your net worth statement, there was this cabin. This thing that showed up on You don't own a home. >> You don't see a lot 24-year-olds with a >> Walk us through What is this thing? Where did it come from?

[32:27] Where did it come from? >> Okay, so kind of a unique situation. Uh family for about a hundred years. Really old cabin. it. >> Not this cabin, but

[32:40] >> Tell me about the cabin what you thought he was about to go. >> I thought he was like, "Oh, it's the old family like we can't let this cabin go." >> So, what happened was uh yeah, that family's been in our uh that cabin's

[32:53] been in our family for a long time. Uh great great grandpa bought it. Very rustic. It's uh in California near Sequoia and Kings Canyon National Parks. going there every summer, going there Memorial Day weekends. Recently uh it's

[33:07] like 13 of them. >> And this is near the cabin that your >> Yes. So, it's in this like community of cabins where they rarely if ever come up for sale because they've been in families for you know, a long long time.

[33:20] >> And opportunity came up uh three four years ago. Someone was selling and they wanted to keep it within, you know, the group um to offer it to know, the group um to offer it to somebody first. I got approached to it

[33:34] it. Uh and you know, I had like just started my first big job out of college, didn't have a ton of money saved up. but then I asked my brother, "Hey, do you want to go in on it with me because,

[33:48] future." And he decided to go in on it with me. We bought it for $80,000. again, very rustic. It's more of a glorified wooden tent at the moment. Uh

[34:01] built like a hundred years ago. There's technically electricity, uh no running water. Uh so, there's a lot of work that needs to be done. So, we bought it, uh put down $20,000. We're financing the rest, seller financing at I think 5%

[34:15] rest, seller financing at I think 5% interest rate. Uh so, we're paying uh interest rate. Uh so, we're paying uh about $650 a month total on it combined. Uh and we're I think like a year and a

[34:27] >> Does that pay it off or is that balloon it? Does it balloon in 10 years? >> No, no, that is even uh yeah, evenly amortized over the 10 years. So, yeah, if we pay the 600 650 bucks a month for the next 8 and 1/2 years, it'll be paid

[34:41] >> Okay. So, the idea is one day this will be a place where your kids spend time >> Exactly. Yeah, and I didn't want to miss out on this opportunity that I just didn't think was going to come up again. Even though it it felt like a very

[34:54] uh premature move when I made it especially when I made it cuz my accounts my Roth and everything were not funded to where they are today at that like. >> Cuz you've you've obviously maxing out

[35:08] >> Exactly. I think there's still enough margin to you know, make those payments. I'm only paying for half of it and then there's uh my brother and I are aligned on you know, there's a ton of things we could do to the cabin

[35:21] and right now it's more more of a campsite and you know, it's still usable in its current state and it's more of a long-term thing. We'll get to those. Any chance you're inheriting the family cabin that's down the street?

[35:34] >> Yeah. >> The one I thought you were telling us >> The issue is it's cuz my great-great-grandfather bought it. So, now it's split between a bunch of relatives.

[35:46] >> Maybe maybe you have access to use it as much as you wanted to. >> to use it but not exclusively. >> that's that's a solid answer. The next think of this? >> [laughter]

[35:58] purchase when we were like kind of freshly dating and he was like 21 22 and really you're going to buy a cabin right now? But being able to go up there with

[36:10] the family and you know, experience >> been to the cabin location? Yes, I will say the only bad thing is the mosquitoes but it's a gorgeous too. Like you said the mosquitoes are the only bad

[36:25] great. >> Well, there's a creek that runs right by >> is literally running water right there. >> like >> Yeah, go ahead and lock it down. >> Just go ahead and lock this down. If you

[36:37] then you >> I saw how important this was to him and time once I could actually see it for myself, but like totally like months into dating and him buying a cabin, I'm like whoa, I got to think about

[36:51] >> And do you from a blossoming memory standpoint, does this seem like with y'all's future kids as well? >> Absolutely. Like I had so many wonderful my parents growing up and you know, having the privilege of like a secondary

[37:07] having the privilege of like a secondary space to enjoy summer is like awesome. So, I'm here for it. It's going to I'm I don't think we have the the cash to invest in those renovations immediately, but I I'm glad that we're all on the

[37:20] time and >> Yeah, we're we're not in any That's the next question is what's your brother's timeline on on renovating and and building this cabin up? >> Uh similar. We're both not in a rush.

[37:33] are on the same page. Do you foresee a problem cuz there will fast forward 10 >> Yes. Just rocking and rolling. I mean, based upon your net worth statement, >> We got a few kids now. I want to start making those awesome memories. Is there

[37:47] brother or the when you want to start throwing money at it or is he going to cuz Is he going to be able to financially do it when you want to do >> Yeah, I mean, I I hope not because we >> Are you hoping will or hope not?

[38:02] >> There won't be any drama. Yeah, I mean, there hasn't been thus far and I was a little wary about, you know, going into anything 50/50 with somebody of you know, that you're not like married to. Uh and so, we're

[38:16] >> I I That's the That's the biggest advice I could give you is go ahead while it's on the scale of life concerns. This is like at the bottom as long as you just conversation with your brother be like, "Hey, when do you think I just want to

[38:30] what the next 10 years looks like. I I want to make sure we don't have some out the push-pull system that's going to create the the action element on this. There's nothing wrong with just cuz land is it's one of those great locks

[38:44] this is sounds like it's going to have a scarcity of access to it in the anyway. So, I see nothing wrong with it as long as you've had good communication with want to get into a weird dynamic where you want to renovate this cabin, but you

[39:02] your brother doesn't and or the or the other way around or one of us you know those conversations while it's really low on the priority scale. >> I am curious though cuz you said right now you guys are separate finances. Like

[39:14] >> Yeah, I want to hear about that. >> What's going to happen you know Joe fast forward to July. What happens? How does that work? What's that look like? And and even I think it'd be valuable for some couples out there who are perhaps

[39:27] dating right now or engaged. How do you guys navigate finances now and what will change when you get married? >> I want to start off by saying like first of all Joey really impressed me because his nature he's a financial mutant by

[39:40] But I feel like he's always been very generous when we first started not when we only first started dating, but I feel like the way you handle money and I the

[39:52] way you you know, of course treat me and we enjoy our money, but I also respect the fact that you prioritize saving and you encourage me to do the same in a respectful way and um just like learning that about you has

[40:07] with the idea of combining finances Um especially if it's like I don't want to feel any sort of anxiety if I not don't spend a lot on material things. >> Yeah, I I mean I think we're both aware

[40:22] of what we spend money on and we don't really spend on extravagant things uh over money. Uh there's a lot of Venmos happening, >> what you do? You square up via Venmo? >> Yeah, yeah, I mean just with rent and

[40:38] >> You'll split everything You'll split everything 50/50? Is that the way it >> Uh for the big stuff and then, you know, uh smaller things is just we pick things >> But it's never I don't want to feel anxiety if we go like if I go buy a

[40:51] shirt, for example, it's like, "Oh, I see $40 on the account." You know, like I feel like that's not going to be a concern going into >> Do either one of you like use some sort of like budget tracking? Like are you

[41:03] see the transactions? >> No. >> No. >> When you combine, will you like like she has and you see all the transactions that he have like when that happens?

[41:15] >> Yeah, I mean I I imagine we'll have a joint checking account and then, you know, separate credit cards that you can spend what you but uh >> How you going to pay for those credit

[41:27] >> Okay. >> I think. I I mean as long as this month is like I spent like a thousand on yours? We got to >> Most of the time it's like eating out

[41:40] together. I feel like that's our crutch is just food right now. But um I feel like I trust you with your money. Hopefully you can say the same the transactions. >> I'm not too concerned, but I mean it's

[41:53] >> [laughter] >> Who went to Costco for 500 bucks last >> Who did go to Who did go to Costco [laughter] for 500 >> That's a dramatic addition [clears throat] right here. [laughter]

[42:07] probably cuz every time I go to Costco I feel like I come home with some pillows, some mixed nuts, and then I end up with like a case of like some flavor drink >> Let me ask you this. So, we were asking you questions about like combined Are

[42:22] as two guys who've kind of gone through that threshold? Anything you are curious be valuable as you guys have your conversations moving forward. >> I guess going into marriage, do you have any advice in terms of approaching

[42:36] I feel like we have a pretty stable, you know, relationship with money, similar like life ebbs and flows. There's going Of course like there's going to be a purchase made where we're like, "What

[42:49] the heck? Why did you do that?" So, would you recommend, you know, what if we have a personal savings that, you know, we can make our fun purchase on? Or how could we mitigate or prevent future conflict with money like going

[43:03] question because my wife and I never really had conflict over finances. Uh however, we had a very different expenses and what were not justifiable expenses. And where I struggled early

[43:20] >> [laughter] >> Is I did not assign enough value to the things that she valued because I didn't value those things. So, when she'd spend X number of dollars on X thing, in my mind it was wasteful. And I'd see the

[43:35] transaction come through and I'd, you know, we'd have our miscellaneous bucket categorize it in the app and I'd be like, "Hey, hey, you're blowing through through it because I care about the shampoo that I use. I'm not going to use

[43:48] >> [laughter] >> Right? And so, I think having an understanding around, cuz what it felt like early on in my Hey, why are you doing this? Why did you do this at Target? Why did you buy this?

[44:01] Hey, why did you go buy this thing at Whole Foods when we could have gone to thing is. Uh and we had to have like a very sincere conversation on hey, just cuz you don't think this is important, just

[44:13] doesn't mean that it's not. It means that that's your opinion. And if I feel to reconcile that. The earlier you can have these conversations, in my opinion, the more valuable. Cuz what happens is, at least in my case, new marriage, in

[44:26] love, all the wonderful stuff, you don't want to say anything. So, you just let in you start making these like passive-aggressive comments, and you start and they just turn into this nasty thing that if you can communicate on the

[44:38] of that. >> Let me give y'all some homework. Bo got married on June 9th of 2012. And we've been creating content for 20 years now, if you can believe it. And we it's all out there. So, we're crazy. So, you can

[44:52] beginning all the way through where we are now. And right around that June of 2012 period, I did a show with Bo. Where we interviewed him on what he

[45:04] upcoming wedding. So, this was either in May. Um and it's just probably going to be entertaining for anybody. Maybe we can even help everybody out by giving >> Oh my goodness, what if we did >> did a we did a one-year episode. We did

[45:17] >> update. Go listen to the one before his to the one year later episode, and you're going to hear a lot of growing up that went into it. Now, you Bo's been married over a decade now, so he's he's

[45:30] >> Fortunately, next to us. >> You're hearing us at at at veteran level status here on this, but I think it would be good for anybody who's and I I was trying to sit here, was it $40 or

[45:42] >> $40. Bo said any transaction that she spent over $40. And I can remember >> That's why he brought it up, is cuz I was like, Bo, her shampoo costs more >> He's like, no, it's not. >> $40 about me 30 years worth of shampoo.

[45:56] >> You can tell I This was still This had a not a scab on it. It's probably got a a enough that it's about That's why he brought up the whole suave thing is because I told him on that show that her shampoo is going to cost $40. And he was

[46:09] like, "No, she can go suave just like I do or whatever else." So, I think if you go listen to that, there is a growing element that cuz what you any couple has great job. Y'all have already probably graduated beyond a budgeting. I mean,

[46:23] answered it. Y'all aren't using Monarch or anything like that because your money is going where it's supposed to through automated savings, so you don't feel any >> Exactly. And I think that's one of the reasons like why this hasn't been an

[46:37] issue yet because I mean, we have currently we have the margin enough money that the money just goes future to where y'all have to do when you're doing the family planning where

[46:50] to take a few years where maybe we live off one income." And we got to figure out how that's going to go. I encourage you when that happens, do a you're actually tracking. You're already kind of you know, doing it, but there's

[47:02] tools that make it easier. But then once you get to that point, what I'm trying to help you do, take the power out of the money. Is because so many people it's a struggle when, you know, you put value to what people are

[47:16] spending and then you My money is my money, her money is her money, and it creates these weird dynamics to where you don't want to get a situation where when y'all decide one of you is going to stay home with the the child for for a

[47:29] while or children. And then, you know, just for a moment in time, you don't they're in the situation where you have to go ask the other spouse for the money to go ask the other spouse for the money because then, holy cow, what a weird

[47:41] why I love that y'all are already planning when you cross those thresholds to become one, open the joint checking account, go ahead and redo your direct deposit forms for your employer where they're they're going right into

[47:55] that joint checking account. So, that way it just seems like we are two became one. Our our household expenses are one. You know, the good news is the know, your Roth IRAs. Those aren't joint Roth IRAs. They're not joint Roth 401

[48:08] Ks. I mean, they're they are individually tied to your you know, you know, there's already some protections on some of that stuff on what you have brought into the marriage. But, I love everybody kind of setting up a joint

[48:20] joint brokerage investment account at one of the low-cost providers. And then y'all build this thing together. So, it's you two in you versus the world. going to be able to build a plan that gets you from today to the wedding. And

[48:36] happens, okay, post wedding, what does life look like at a reasonable savings clarifying question. You got 20% going in your 401k. You said you're maxing >> Mhm. >> You said you got 30% going in your 401k.

[48:49] >> Yes. >> Perfect. Just wanted to make sure we're >> One of the Just to clarify, that's >> 30%. You were contributing 20, 25. >> Uh but, since her teacher paychecks aren't having any

[49:03] increased it. >> You increased her to get her to 25% of >> Got it. Makes sense. I'm excited uh to be able to put this together. And I I I happen, but it's going to be it's going to be an awesome picture. Because you

[49:16] guys have done a lot of really great stuff early on, and I don't see I don't see you guys stopping to do that. >> Brian, what a great conversation with >> I mean, think about this. What do you get when you get a scientist

[49:31] and an accountant walk into a bar? >> I don't know, Brian. What do you get? >> You get a very successful young couple named Joey and Leah. I mean, this is a great time. They got a lot of great stuff going on. And I got to tell you,

[49:44] I'm shocked that the problem we're going to save for them is they over save. >> Yeah, it's not something we often do here, right? Like, we don't often talk have a lot of big goals coming up. Obviously they have a wedding coming up

[49:57] in July, home ownership they're trying to figure out is that the right move, is pressure. I feel like they're putting on themselves that they are saving so much, perhaps it's crowding out some of these other goals that they could be pursuing

[50:13] >> are. They literally are the perfect example of why personal finance is personal. It's because you just said it. With the with the wedding coming up, something they ought to consider? Well, how can they have these goals when

[50:28] they're going to be so retirement rich, but not have enough margin or leftover >> Yeah, so when we look at their current savings, it's pretty wild. Right now, Joey's putting 20% in his 401k and getting a 5% match. Leah's putting 30%

[50:44] into her 401k, getting a 4% match, and they're both maxing out their Roth IRA. So, with an annual savings of almost $67,000 a year, it puts them at a 34% savings rate, which for two young folks at their

[50:59] rate, which for two young folks at their age is a super heavy, big-time savings >> Well, and they also know they have a time certain wedding coming. And when you look at the funding of that, you're like, "Wait Wait a minute. How are we so

[51:14] >> Yeah, and and I think what's happened is they know that saving is a good thing, so they're doing all these noble, good things, but perhaps and and I say this lightly, maybe there is a little too much of a good thing going on for them.

[51:29] right, if we were going to triage, if we were going to adjust this, what would we think about? We'd say, "Okay, well, what if we reverse engineered to figure out to hit a 25% savings rate as opposed to

[51:41] like, again, if they're going to follow the financial order of operations, max out Roth IRA, $7,500. Max out Roth IRA, $7,500. And then we said, "Hey, let's back down both of their 401k contributions. Let's take Joey's down to

[51:56] 14% and let's take Leah's down to 15%." >> And instead of just not only backing it down, we flipped the script and actually turned it into traditional. They're in a young. I get it. There's a lot of

[52:10] we love it too because you get more time for compounding growth. But at the tax rates that they're currently paying, this could actually save them over >> Yeah, that's right. Backing down those contributions plus the tax savings is

[52:24] additional $25,000 a year, $2,000 a month they're going to be able to save. And what's great is the math works they know that their cash is right about $7,000 into this wedding fund. And we

[52:38] you're going to have to spend at the wedding?" And they said, "I don't know, maybe something like $30,000, somewhere in that ballpark." Well, if you just take the timeline from now until next May, June, July, and they have an extra

[52:52] $2,100 a month, if they just took that $2,100 and parked it in a high yield savings account between now and then, they would get that wedding fund fully furnished up to $30,000. >> is the term serendipity?

[53:04] >> Yeah, that's the term. >> Isn't it kind of amazing that the two is they're going to have if they change this from a tax standpoint? You multiply wedding. It gets them right around

[53:18] It gets them right around $1,000 or so. That's pretty magical. I >> But I know the question they're going to be asking is, "Okay guys, well, if we do back this down, if we're not saving at this same clip, what does that

[53:30] actually going to be able to reach our financial goals?" And what's amazing is they've done so much heavy lifting and hard work thus far at such a young age at 25 years old with a with over a $200,000 portfolio, if they were to just

[53:45] save the 25%, not the 34% they're currently saving, they're on path on track that by the time they get to 55, they could have almost a $12 million portfolio. By the time they get to 60, almost for retirement age, almost $20

[54:01] million. So, they've done the hard work and heavy lifting where they don't have to be in this hyper save, hyper accumulation mode unless they have some us about, like super, super early retirement, big time fire. And what

[54:15] they've been able to do by building up the pot of money they've done is now they're going to give themselves options and flexibility as they move forward in >> Yeah, I think they're definitely on a on a healthy path path for

[54:28] a great retirement. The thing that I did want to circle back on, this house. I I felt a little guilty because it's usually considered such a noble cause to save for for a house, but when they shared what they can rent this

[54:43] >> Yep. >> versus if they had to buy, >> gosh. I mean, if we're talking about maximizing the opportunity of wealth disconnect. So, I would I would encourage them, look, we like home

[54:57] ownership, but in their specific situation, once again, personal finance is very personal, don't get in any hurry to fund paying for that house. married, and so, yeah, home ownership may be something that they want to

[55:10] pursue at some point in the future, but I think that right now, they have enough the system, even when they get that wedding fund fully built out, and they get married, if they still stick to 25% savings, they're going to have excess

[55:23] liquidity they can move towards one of these other goals, like saving for a house, or like doing the family thing, or like whatever that thing for them may be. I don't think they have to worry about getting all of it as much as

[55:36] liquidity. >> Joey, Leah, hopefully you feel like we just released the pressure valve on you because you've got some big life stuff going on. We want you to enjoy that. Go save for that wedding, make beautiful

[55:51] memories for that. You're going to be A-OK. Bo, for those who want to come on >> Yeah, if you'd like to be a guest, you can go to moneyguy.com/apply. tools or free resources, go to moneyguy.com/resources.

[56:06] >> I'm your host Brian, joined by Mr. Bo. MoneyGuy team, out.