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

[00:01] >> Penny stocks? >> He also changed our risk profile. There was something like $300,000 that went through our account and we did not have >> So, you ask me how I feel about being here. It's a little reserved from that

[00:15] here. It's a little reserved from that >> that I completely get that. >> So, we've known each other since high school. We met at 15-years old and um

[00:27] really like me. >> I'll just leave that to the record. >> Um but I worked my way into it and so then we got married very young. I was 19 >> Yeah, and so we've been together since then. So, 27 years.

[00:40] >> Yeah, I like to say we married for love cuz we did not have a plan. We just were like we're going to get married and everything will work out great. >> That's right. Cuz she bet she was betting on the outcome.

[00:53] >> That's right. I had nothing. Yeah. >> And we just entered the empty nester >> How's that going so far? >> Well, I mean there's some boomerang, right? Like they're going to come back and um our two youngest just started as

[01:05] freshman and our oldest is like probably a sophomore late sophomore year. >> So, three in college at the same time. >> honestly it feels like the messy middle. like let's say you kids and you're like yes and then you threw three of them in

[01:18] >> two and a half years apart. So, it was quick. But it feels a little bit like the messy middle because we're paying for three kids in college and helping some extra finances and so we have like a

[01:30] scholarship plan for them and we help pay for school and but they have to work and they need to be paying for their groceries and life and fun. got to cover everything else. >> Yes, but does that always happen?

[01:42] >> Well. >> It doesn't always happen. It's not always happening. If they're in a small town sometimes finding a job is give. >> And as far as background um

[01:56] none of my parents taught me anything about finances. I I come from feeble money, I realized how great it was to have money and spent that money. it. >> Yeah, it's kind of it's kind of like

[02:10] that candy. You can't get enough really. So So I started spending a lot of that into shape. >> When did like taking money seriously start for you guys as a couple? >> I was always the saver, the like pay

[02:24] attention to my money, but in about 2015 we found Dave Ramsey. Did the Dave Ramsey thing. We never payment. We had some medical debt from some kid things.

[02:38] Um but never really credit card. It always stressed me out, but I wanted us a real job. Like we were making real money and track. And so we started Dave Ramsey in 2015.

[02:52] >> It was hard? >> What was hard about it? You said it was >> probably easy for her. It's the song that she sings. So for me it was somewhat off track for me. Um I remember I recall I'm going to call

[03:05] you out a little bit on this one. I remember early on in our journey I would would call me a couple hours later and say how was that lunch? And then she was >> Yeah. >> And so I want I want everybody to know

[03:18] it was a little bit of a control adjustment for me and then for her she's come a little bit more toward a lenient side of understanding how really we need >> Yeah. Now after all these years he's a

[03:32] should spend money and I'm like yes, yes we should. mean are you I mean I know it's probably like uh-oh I'm getting called from the things going? >> Attention wasn't there and so I think it

[03:46] was needed to sometimes you over index on it, but it's necessary at that time. I guess I'm a slow learner in this part in this part. So, I'm I'm glad that she was patient with me at least to to usher me along, and so it definitely was

[04:00] shared it's kind of flipped a little bit. Why is it now important to you? Is future? What's going on? >> It is the future. Yeah, I I think if I spend it now, how many more years do I have to work? Whereas younger,

[04:16] spot where I'll just continue to work. I'll make more money even if we're in >> Well, obviously you guys have been doing something right. Like when it clicked, your net worth statement. And as you guys sit here at 46 and 47 years old, it

[04:31] looks pretty solid. You have a total net worth of just under about $1.4 million. worth of just under about $1.4 million. Uh household income 213,000. And it looks good. We have cash about $128,000.

[04:44] Your investment portfolio represents about 732,000. Your home is worth 720, and you only have a mortgage on it of about $220,000. So, it seems like you guys are in a pretty solid spot. Do you agree with

[04:58] are ahead of the curve, behind the curve, right on the curve, or you have >> Because I've listened to you guys for a while, I know we're behind. But I also feel like we're okay. >> But tell me why you feel behind.

[05:11] >> Well, when you look at our income versus that multiplier, it we should have more money. But also, I know we don't sometimes that income home. And so, I know we don't spend that much

[05:24] money, and I know that we're saving money, and so logically, I feel like whatever that number becomes, we'll figure out how to live off of because that's what we've always done. We've never really carried the debt. But when

[05:36] I hear the big number, like the what the multiplier, I'm like, "Oh gosh, we are But are we? I don't know. I guess that's where we're kind of at. >> I don't have the show to reflect on, so I feel like we're behind.

[05:49] >> Based on what? >> I'd like to retire as soon as I can, so obviously I'm feel like I'm chasing some sort of of of goal there, but also we had a reset in 2016 from the sense of investments. And so I feel like that

[06:02] time and that impact has set us back, and I feel like ever since then we've >> What happened in 2016? >> 2016? >> Sure, we partnered with a financial advisor during that time, and and that

[06:15] >> When you say partner, like hired a financial advisor? Okay. >> yeah. And and so we began to see that we wanted to retire and save some of our money for the future. Um and so we interviewed a few financial advisors.

[06:28] Um we liked that it was a family. We liked that they were young guys, and so credentials and oversold their brochures, what it's called, and from be balanced, and we thought they were going to take our risk profile to in

[06:43] sideways. >> Like sideways, like the investments performed really poorly sideways? >> was right when Trump took office and the side, and I was talking to my friends and they were like, "Oh, we're loving

[06:56] it. We're getting 8 to 10% sometimes more." And we're over here stuck at >> Sometimes negative. >> So it made us look into what was going it just didn't feel right, so we decided to pull our money away. And when we

[07:11] pulled our money away, we decided to contact a finra attorney, and he looked at all of our statements. And basically what ended up being found >> Oh. >> um forged signatures,

[07:24] >> penny stocks, >> he also changed our risk profile, >> he did inverse uh ETFs and ETNs. >> What? >> It We have no idea, so we ended up

[07:37] reporting him. He got He lost his license. In total there was a lawsuit that we were not able to be a part of. And that lawsuit was only 10 people at his firm and they they

[07:50] said 2.6 million dollars at a minimum of a loss for the that lawsuit. Our attorney said we had somewhere between 80 and 150,000 dollars in loss. >> But but it was it was not just the that's what you lost it was probably

[08:03] also an opportunity cost right and what the money could have been working and it and it just wasn't. What um >> So we pulled out in 2019. That's when we >> And

[08:16] thinner attorney was like somewhere between 80 and 150 but again you're right we can't calculate exactly what it would be because it was just too hard with all the churning. At one point there was something like 300,000 dollars

[08:30] not have that kind of money there. >> Yeah we were first to we were first to pull our money out. So you ask me how I feel about being here. It's a little >> that worry yeah. Absolutely. I mean you you've been you

[08:42] somebody takes advantage of it and uses it. Now I I did think it was interesting when I looked at how how you invest you're 100% index funds. Um >> So after that I was like I'm not letting

[08:56] anyone touch our money again. Like this guy messed us over we trusted him. We occasionally he would give his brother to us who was not certified but we thought it was just like a pass-through information.

[09:08] And once this happened like no way. So I started reading books that like simple path to wealth. I found you guys cuz this is like 2019-2020. Listen to other podcasts read a few other things that try to give me more details about actual

[09:23] you're not taught if you do just Dave Ramsey. It's just like go invest find And now we've been so burned I was like I got to figure it out and I just kind of went with what I could learn. I know there's gaps.

[09:37] be like, this is what this says and he'd read a podcast or or read a book or watch a podcast and be like, okay, that sounds good. And so yeah, I mean, I'm just kind of at that VTSAX kind of like keep it

[09:51] in the simple as simple as can be and it's been doing well for us, honestly. that. That's like a super rough, But I think it's it's worth level setting right now that even though you

[10:03] weather the thing in 2016 or from 2016 to 2019, you guys are still okay, right? term setback. It was not like this cataclysmic thing and you still have time on your side to move towards an ultimate goal that you guys have. I'd

[10:18] What are the goals that you have? Obviously, you wanted to come, get some insight and get some planning and think about that. What is it that you guys are win for you guys from a financial standpoint in the future? You said

[10:32] retire as soon as I can. Does that mean >> Today? Like tomorrow? hopes that really we don't have a number that we're landing on per se from the sense of when I can retire. Um because there's a lot of dynamics

[10:45] still being in college and they've not quite landed on what they're doing. So, like on where we can redirect some of our funds or maybe even lower our overhead from the sense of what it takes to retire every

[10:58] >> Do you even know what it cost like if the kids were truly out of the house, not unlike the not unlike out of college and out of college, do you know what it that you want to live? >> Uh my guess is somewhere between six and

[11:14] >> Okay. >> That's currently with a mortgage, um which is a big chunk of that. So, I think if our mortgage were paid off, it that. In Texas, our property taxes are high, so

[11:28] there still is always going to be a twelve to $1,500 monthly fee for taxes. Um so maybe maybe if the house were paid >> One, you have a lot of equity in your house, right? So it's a huge you you you

[11:44] the value of your home. But the interest rate's pretty high at 7.375. When when did this mortgage come to be? Walk us through how how we ended >> When our last child graduated, we were in a town we didn't want to be in. And

[11:59] year. >> Okay, so it's a new house. You just home into this one. >> Yes. So it's a little bit smaller than we had with a family home, but still big enough

[12:11] from. Um is it going to be our forever home? I'm not sure. We I want to be where the kids kind of land and the next five to eight years they're going to be starting their life and finishing college and

[12:25] um so I don't know that this is our forever home, but also I care just for my family. I have some family members that are pretty sick that live close by. And that home could could potentially fit them in it or we might have to put a

[12:39] casita on the back, which in Texas is like a pool house. Like a little casita on the back to help with some of their caregiving as it it progresses. So we could be here somewhere between five to eight to 10

[12:52] years. But eventually, wherever the kids land is probably where we'll land. revenue, I've not necessarily worried about retirement. I just work from that perspective to increase my income, that kind of stuff to support the overall

[13:05] haven't taken a step back to to land on a number. Feels like and she mentioned the monthly feels like we're halfway there where I feel like maybe if we our our net worth perspective, that might

[13:19] put us in a comfortable spot where 60 62 comes along and we feel pretty >> like >> 60, age 62 is a timeline that we can >> Yeah. >> I told him 60. He would like to go

[13:33] sooner. So, I mean, sometimes I run the number and I think it has to be 2.5 million, but also I feel like if it was 1.8 million, we could probably and so >> Well, a lot's in flux right now, too.

[13:47] >> just starting, really. >> there's there's a there's still a lot of isn't necessarily a fire retirement, but it but it is one of those things where I always tell people when life is busy and happening that you mentioned the messy

[14:00] it's These aren't firm It's hard to set firm goals. So, I think all you can do is just kind of line things up and then try to maximize the moment and then sure you're on the right path. You know, just like you look at your compass to

[14:15] do the You do the exact same thing financially. Um I will tell you, you I'm waking up and they're like, "Hey, first time in 3 years, mortgage rates have gone below 6%." So, we are now getting close to the

[14:30] to be on that wave and I know Bo's probably going to put an asterisk there some opportunities to get you a little relief on with a through a even a refinance. From a savings standpoint, right? From a

[14:43] the for the accounts to kind of double If we doubled from where we are now, are you guys saving? Walk us through like on a monthly basis, where's the work? >> So, all of 2024, Max was unemployed.

[14:57] >> Okay. >> Um and so, prior to that, I was a solid >> Okay. >> 2025, we bought the house, the kids graduated from high school, we got them onto college. So, we were paying for

[15:10] moving and getting the house situated and getting the kids off to college. So, we were just matching 401k HSA. Um 2026, our goal is to get back up to there and so, currently, we're just doing 5% to his 401k. We are maxing out

[15:26] And then one of my big questions is we have this large rollover IRA from previous employers. One time I heard on your if you have that you're not allowed to do Roth's and so I stopped contributing

[15:41] to Roth's because I was worried we were doing something illegal. >> So this is one of those this is one of those areas where um you heard 90% of something but there was a little 10% that really really matters.

[15:54] What you probably heard us say is if you have outside IRAs like a rollover IRA or a SEP IRA, you can't do what are called backdoor Roth contributions. Well, folks who make too much money. Their income is over the Roth eligibility

[16:06] threshold. You can make a contribution to a traditional IRA, not take the deduction and if you don't have any other IRA assets, you can convert that to Roth completely tax free. Those are for folks

[16:18] they can't contribute directly to Roth. I don't think that's going to be the case for you guys. You guys are going to be in the income situation where you can do likely do direct Roth IRA contributions. So that rollover would

[16:31] have the number right there? >> Yeah, I have well, I have the 2025 number is two it starts phasing out around 236,000 to 246,000 and I know it went up in 2026 even higher. >> So we do get a bonus.

[16:46] Um it's anywhere from zero to 30% with a projected of 20% but this is the first >> Okay. >> So we don't know ish. >> But but here's the the beauty of this is

[17:00] that, you know, IRA contributions allow you to go beyond the year, you know, if I we can still make contributions for 2025 even though we're in the year 2026. You have until April. So we could

[17:12] wait, see what your income comes out to be and then you still potentially like for we could still make contributions for 2025 right now to your Roth IRA what I like about that is that it gives you a moment to say, "Hey, we we we were

[17:28] under this year. Let's go load up those tax-free growth assets and and it'll let you, you know, check the box on the on that that really strong goal." >> Yeah, I guess that that clarifies it a lot because I was just worried that

[17:41] some of our income might require that backdoor and I didn't know if I was going to be doing it appropriately and so I haven't done >> This is the hard part of doing educational content is because I I get

[17:54] it on both sides is because you guys here you are in an income that very likely you could have just directly contributed to a Roth IRA. Meanwhile, I and say I did that I got so excited after listening to your show I did the

[18:07] Roth you know, the Roth backdoor Roth contribution and I'm like, "No, no, no. Remember you have you have a rollover IRA with this much money in it. You don't have the proper structure to do it." and he's like, "Oh, dag gum it." So

[18:19] this is this is the part where we give away as much free advice as we can because we want you to simplify your life, maximize things and that's why I hate that y'all got burned by bad financial actor is because life gets

[18:31] and you're trying to figure out how you navigate this. So it just breaks my even well-intentioned when we're educators at heart, it is it's just sometimes there's so many details that it can get

[18:45] why I agreed to come on is because I I think that we're not the only ones who have been burned by a bad financial actor to use your words. And I think that it's it's more hopeful of the

[18:57] message to say it's more of a setback than a critical impact, right? >> And so to try to build back up that hope or that trust with somebody who can help your path so you can become much more

[19:11] >> Does it? I love that. So we're doing 5% of the 401k, we're maxing out the HSA, potentially we could do some some Roth stuff. I want to make sure as we're designing this, I don't want us to like so our goal is for you to save 25% of

[19:27] your gross income. That's what we love for people to be able to save. But I me, "Hey, based on college and this other stuff, that's just unrealistic." Do you guys know the number? Like, "Hey, we could probably save this much on a

[19:40] monthly basis." That would be the kind of the upper realistic, I don't want to show you a 25% savings thing if that just doesn't right now. >> If you look at our um regular budget,

[19:55] >> what we bring home versus what we actually extra dollars. >> Okay, wonderful. >> And that that would probably could all go to some sort of savings.

[20:08] There's a few things that we do want to save for. Um our youngest child will need a car. We do help with a inexpensive car. Our daughter does not. And so somewhere in that $5,000-ish dollar range, we help

[20:23] >> And um >> No one deserves a luxury car when >> But just to get them a like like >> some sinking funds though. Very large accounted for? >> Okay, in the sinking funds, a lot of

[20:36] that is actual college money because when we had that experience with him, when we pulled out some money, it was such a short time frame for our oldest to go to his college. And again, we were like, "We're not trusting anybody." A

[20:48] college. >> the Yep. that our flex account from that side. So as you need to pay 6 months or a year worth of insurance, in essence, we pay monthly into that flex account so that

[21:02] >> So that's what my question when I saw the budget that up on the screen right I mean, there was I didn't see college on here, so I was immediately that was a got three kids in college, how much money going to there's got to be money

[21:16] coming out. I was like, maybe cuz your biggest category outside of your house is miscellaneous. And that always that's always a scary thing for me when that is. It means you don't necessarily

[21:28] >> And normally, if you're saving and investing the 25%, you know, that that's A-OK. I don't care how big your miscellaneous is, but y'all got some big because we're trying to land the airplane when when Max makes it to 60.

[21:44] And then so we've got to and we got three kids in college, we've got to hone horseshoes, you know, where we're just hoping to get a few points cuz we got it close. We you actually need to know specifically

[21:56] >> Mhm. >> While the kids are in college, what is that burn rate going to look like? Kids out of college, out of house, but but Max is still working, what is that burn rate look like? And then, hey, what do

[22:08] rate look like? And then, hey, what do we need to just sustain us in retirement and a happy retirement. That's phase three. You know, so I I see three different levels in in in this journey that we've got to kind of hone in and

[22:20] guys. >> Yeah. If that's not the messy middle, I That's why it's so it's so much easier to say that than to actually do it. And then that's why it really breaks my heart that y'all got

[22:34] burned by somebody is because this is what it turns into. A lot of people say, like, "Well, I'll give you a plan, but your plan's going to be completely different completely different in the year after that because your financial

[22:47] life is in such a state of flux right now because every year the the expenses Every year it's different with what's going on with your your your benefits at We have to be there to navigate that throughout the entire journey. And

[23:02] that's why we we try to do that for our clients as best we could. And that's why Millionaire because it really lets you kind of open the curtain, see what's going on. And that's why I want to make sure we don't let too much time go by.

[23:14] and has red flags that the person you're working with is not doing it right, I moneyguy.com/resources. We have a resource, it's free to download, eight questions to ask your financial advisor. And I think if you

[23:28] will take these eight questions, it was should expose a bad actor if we've tried to I've done I've been we've been doing content together. Um I mean, gosh, it's 20 years now. Um

[23:42] on the scene and I did some after-action reports on going and pulling his ADVs and showing people all that there's there's usually some big telltale red flags when somebody's not acting in your best interest. And that's why if we can

[23:57] give you the the tools to or the questions that will uncover that, I want anybody who's watching this to save them the heartache that you that you guys >> Yeah, I appreciate that. I think credentials are important. We didn't He

[24:12] said it. We didn't know how to research it. So, the credentials were falsified or they were rescinded from people that he had gotten in trouble before. The properly insured. And that I don't know if that's one of your questions,

[24:26] but he was only insured for $250,000 total. Not per incident, not per year. And so, people were just kind of left stranded we'll take some, they'll take some because it's per incident." But that was

[24:40] insured. >> It is interesting cuz it was funny as we years since we this was talked about. The there was a financial advisor who'd was acting in the best interest, but they just, you know, litigation happens

[24:54] thing. But they were self-insured, they didn't have any insurance, and the attorneys all dropped off the case, meaning the plaintiffs dropped the case as soon as they found out they had no insurance. I hate that By the way, not

[25:08] >> We operate on the other side of that spectrum. >> But it is it's an interesting dynamic that in the world we live in is that cuz you said that statement is that they only had 250. It seems like

[25:20] it's weird that the system rewards you for not doing the right thing. just in my brain that clicks is like that doesn't seem like that's the right way that the world should work, but somehow that that's the path we're we're

[25:33] and holding accountability. >> That was our experience actually. We and we we said what was going on to try to get some reconciliation with that, and they said because you pulled your money out first, you're no longer going

[25:47] to be a candidate for you to be included. And so we were happening to be on vacation exactly where we were, and um and we were just >> That's devastating. It's so devastating

[25:59] we thought we were doing what's right. We also pulled out when it felt the red when we felt the red flags, and in the end thankfully, I mean, the he did lose his license, and so he can't do this to

[26:11] lot of money. >> Yeah, some some in the sense of 70% of >> Yeah. >> As we think about planning forward, I sinking funds, we noticed that there there's a big chunk in there, about

[26:27] $88,000. Does that cover what you guys are planning on paying for college, or is saving for additional college also need taken care of, or does that need to come in as well?

[26:39] >> That is a majority college. I would say we're probably 8 to $10,000 short, but it's in a high-yield savings account, and over the next 4 years that the interest we earn on that should cover the the shortfall that we have.

[26:52] sinking fund, like we the new house we purchased is there's no yard, so we have some grass and some landscape stuff we have to do. Um he is a car guy, and so we have a car repair budget in there for a car that he

[27:07] little projects >> you you what you work on yourself in What's the >> Right now I have a '99 Lightning. >> fam It's a family heirloom, but >> Next is Fox body. But that was one of

[27:21] was uh when you say what is our goals, I say how do I retire? And I was going to >> I am a Ford guy. >> Okay. I can I can I can pick up on that. plus get all the toys I want. >> Plus get all I want to retire and do

[27:35] >> And I know that math doesn't math. >> Well, maybe. We'll see. That's That's plan. What we'll do is say, okay, you laid out some goal for goals for us. somewhere between $6,000 a month. We know that around age 60 is our timeline.

[27:50] If we can save, and if we can do the 401k, and we can do the HSA, and we can do the Roth, and we know that right now we're at 7:30, and we're going to do this for the next 12 or 13 years, where

[28:02] does that put us at? That's the fun thing to begin to uncover. Cuz we may determine that you're able to fund the 6 to 8,000, and there might be even extra for a hobby, or for a travel, or for the things that you guys want to do. That's

[28:17] the fun part about getting to put together and and I love that you guys are starting to think about it seriously at this stage. It's not like you are 2 I best guess we better have a plan. You guys have over a decade to work on this,

[28:30] and gets me super excited about the planning. sound just like her. Like finding joy finding joy in >> very interesting to me. >> What questions do you have for us? So

[28:45] to or that we ought to know about as we begin to put together a plan for you guys? >> So, I know we've got to diversify >> And it has worked for us and it's been working well. Like as I've tracked

[28:59] how the VTSAX and VOO and all that have been We've been doing really well since we left them. But, I know as we age, it's supposed to figure out how to make it a little bit safer for us. And so, that is a gap we

[29:15] definitely have. So, I don't know how to appropriately fund our account if we start pulling out of that ETF shares. the thing about me that we just haven't

[29:28] tax opportunities on whether or not we're needed to take distributions or whether or not we should like just our tax approach from that side. I'm not >> Two things that y'all just talked about.

[29:41] is that so far it looks like everything's been loading up into the traditional side. So, you're taking the the deduction right now with the understanding that down the road when you pull this money out, you get to pay

[29:54] at ordinary income tax rates. So, y'all are very heavy in what we call tax-deferred assets, which are great from cuz even if you look at the financial order of operations, this thing is very tax-focused because if you

[30:06] look at step five, these are the tax-free growth opportunities. funding the Roth completely. We're going to get that back on track. >> But then, the next step is just maxing out those retirement benefits. Not only

[30:19] just so you get the tax savings. Y'all are kind of doing those things, but it designed the financial order of operations, we talk about this step seven, the hyper-accumulation. This is where I talk about the three buckets of

[30:32] thinking about how we're actually going to use this money, navigate what is the tax rates going and how's the impact cuz yes, you have, you $700,000 of investment, but when I look at that and I see close to 600 of that

[30:49] is all tax deferred, there's going to be a headwind from the taxes that every dollar you pull out of that. So, we better make sure your tax rates are low that year or have access to some other assets somewhere else that that if so we

[31:04] can get you through the bridge period of how we're going to use this money. So, that will definitely be something we help analyze. The other thing that that y'all brought up in Valor, you talked about your 100% index right now.

[31:18] >> I you know, I'm not going to pick on that necessarily. We're going to talk plan to cuz I there will definitely need to be some type of asset allocation, but study that I'd love to get while y'all two are sitting next to each other and

[31:33] question. Last year was a pretty dynamic year, 2025 um and by was it April of last year between March and April? March and >> Mhm. >> in that now everybody remembers 2025 as

[31:46] a great year cuz we ended up the year strong, but if I if I'd gone back in time and said, "Hey, while we're in this March and April period where the market got its teeth completely kicked in and y'all wrote it 100% because it's not

[32:00] like you were diversified and you got, you know, 60% of the the volatility, you got 100% of it. You're like, "Give me more." So, um have any conversations? Did you did you not even notice, Max? I mean, where was

[32:15] that? >> very vulnerable. I did not notice it as that's not our plan. Our plan all along has been not timing the market but time >> And so, this whole thing about dollar cost averaging and all of the other kind

[32:29] kind of been thrown out there and I know there's there's some I don't have the stress capacity for me closely. >> Or you're just not looking though. Was

[32:42] it your strategy just I'm working and look that's a that's a pretty common behavioral tactic. Everybody while you're working it's like you know what? I can't control this but I have a job. I'm just going to ignore it. And you're

[32:56] also not the financial spouse if I'm being honest. >> So so let me let me pivot it back over to Valerie cuz I bet you were paying >> No, really? >> I look at it maybe every six months and

[33:11] then at the end of the year I do my like so since 2021 when we took over like the 2019-2020 when we took it over and moved it to Vanguard, I keep track of what our worth. This was the first time I did an actual true net worth but

[33:25] I just I just didn't look at it. >> So did you not even remember that we had >> take this So let's take that, right? Then that's great. We love hearing the bad the way. So you got I'm going to do round numbers cuz I can't do math in my

[33:38] head real well. You got $700,000. We have a 20% downturn last year. So all of a sudden $140,000 of you know evaporates quickly, right? And you don't even pay attention to it. Great. Let's fast forward 13 years. And let's say that

[33:52] your portfolio is now doubled and you just retired. You got a million and a half dollar portfolio and then we see a 20% drop. And now all of a sudden disappears. >> You retire at 1.5 and then you're at 1.2

[34:07] at the end of the year. >> Yeah, with with all joking aside >> Then then then we didn't do something right with our homework here. That's That's That's my intent. >> So I love you to that spot. So obviously

[34:19] something has to change. It's okay that it doesn't feel painful right now but would. So there must be some sort of path that we ought to be on to get from look like. >> Yes. Logically I know we need to

[34:33] diversify. I just it's a gap. I don't From >> Awesome. >> And >> And and and cuz I I and I'm saying this more from an

[34:46] educational standpoint cuz I have people who write us and share that they they I always use the analogy of landing a plane, but they always think that they're going to be 100% you know, index funds, you know, and then

[35:00] right as they retire, they're going to slam it down on the ground and do >> the most you know, and then they'll start diversifying and things. Y'all, I okay if there was a if you landed the airplane like a

[35:12] commercial plane where you actually came in, you like, "Oh, that was a nice landing. That that felt pretty good." versus let's nose dive this thing and that that that we kept the landing gear intact. Is Is that Is that a good read?

[35:25] >> His risk profile profile is higher than mine, but definitely as we start to get to a point where he's ready to be done working, he the money. We don't want him to have to go back to work. We don't want to have

[35:37] to be like >> And we've been shaved by our past of not losing a lot. So a lot of that also contributes to not watching to see that's that same approach is we understand that we've seen the trend of

[35:49] the market as a whole. We know that it's going to be positive from Well, we assume it's going to be positive from that side. And so we write it out in But and you're right, we're not pulling that money out for a long time. The

[36:02] plane is not landing yet. And so I know that we were heavy invested in some of these not maybe tax optimized scenarios, ready to make sure that that landing gear, the suspension, whatever's

[36:15] necessary for this to be a comfortable landing is there. And >> I love it. I love it. All right, I've got I've got some So we're excited. put together. We're we're to we're going to paint a picture for you, but I've got

[36:28] some homework I want you guys to do in the interim. ought to look at refinancing, at least just beginning to have the conversation with lenders. Hey, I'm at 7.375, what are rates right now? Now, that's

[36:41] refinance, but what I would do if I were in your situation, if I know that rates are at 6% right now, I would calculate, man, if my interest rate dropped to 6%, how much would my interest savings be on a month-over-month basis? And do we

[36:55] our forever home, whatever that break even is, if it cost me $3,000 to refinance, how many months will it take me to recoup that $3,000 cost in terms of interest savings? And I

[37:08] can just do the math on that to figure out, okay, yeah, if it's going to take this house 14 months, refinance could make a lot of sense, and that's going to immediately provide immediate reprieve to your monthly cash flow, which is

[37:21] able to fund some of these other goals. >> Okay. >> Uh I do think, since we are coming up on tax time, you guys ought to just go look at what your income was last year, verify that you were indeed Roth

[37:33] time right now and you can fund your 2025 Roth even though we're in 2026. Brian laid out sort of these three different spending uh areas you're going while the kids are in college. You've got spending post-kids in college,

[37:49] in retirement. I think it'd be good for you guys to do some homework around figuring out what those numbers are and how they change uh because it's just like we have uh when you when a lot

[38:02] of folks retire, they'll have their go-go years, their slow-go years, and their no-go years. A lot of folks, as they're approaching retirement, they do savings the same way. All right, we kind of have our no-go saving right now while

[38:14] stuff, and then we kind of have our slow-go, the kids are starting to get out, and then we're able to really kind of finish the drills, we run right into I think thinking through that would be super valuable for you guys.

[38:27] We're going to put together plan to see what 60 looks like. We're going to put might look like. We're going to put together a plan to see what a personalized FU for you might look like, and I think it's going to be awesome.

[38:39] Brent, how awesome was it sitting down and getting to talk to Max and Valerie? What What a lovely couple. >> Yeah, I I have a little soft spot for >> Yeah, I I have a little soft spot for them because um unfortunately, they

[38:51] we heard in their story they got taken advantage of. And in the wonderful world of personal finance, there are some bad actors out there. And we tried to address that, but still it I could tell that they were

[39:04] wearing the weight of that still heavily even though they have tremendous success in their current state. It just broke my heart to see that they had that. >> a lot of people that had that experience would, you know, bury their head in the

[39:16] financial world is broken. I'm not going "Okay, no no no, we have these goals. We have these things we want to accomplish. know and we want to seek out some help." I think one is just super

[39:29] brave of them to even put themselves out there to do that. And what I'm excited about is now that we got to like play with the numbers, I think their future >> Well, and this is this is kind of unique cuz we're going to talk about savings

[39:41] rates. And you know, anybody who watches our content, we are we pretty much are pretty straightforward as we want you saving 25% of your gross income. Well, finance is definitely personal. When we talk about Max and Valerie, it looks

[39:55] different direction. >> Yeah, we started to design a financial obviously, we want Max to continue taking advantage of 401k. And for those of you that don't remember, his 401k if you put in 5%, they'll also put in 5%.

[40:09] >> But, they make over $200,000. towards your savings rate, but it's still there. It's still going into the pot. So, if we're going to base things off of a $255,000

[40:24] salary for Max, that's going to be his his base play base pay plus what we assume a bonus is going to be, we know that he's going to have 12,750 of his money going into the 401k. Now, he >> Yes, we're not going to include it, but

[40:36] there is still another 12,750 going in. >> the background. But, in addition to that, we wanted to max out the HSA at 8,750. We wanted them to max out his Roth IRA at 7,500 and max out her Roth IRA at 7,500. If we're doing that,

[40:50] they're going to be saving on their own about $49,000 a year, which is about 14.3. And a lot of times at this point we'll say, "Okay, 14.3, where's that >> But, for them >> Well, remember they also they had three

[41:04] lot of them. We talk about the messy happen to you. They got a lot going on in their life. So, but here's the good in their life. So, but here's the good news. They already have $731,000

[41:17] working for you. And at their age, that's a lot of money that can start background. So, it was kind of fun to say, "Okay, what can they save with all reward them with all the hard work they've done in the past?" How does this

[41:31] >> Yeah, when we actually look at their path starting at 7:31, saving that path starting at 7:31, saving that $49,000 a year, just doing that by age 55 gets them to about a $1.9 million portfolio.

[41:44] By age 60 it gets them to about a $3.2 million portfolio. Well, they told us, live and the things we want to do, we need about $7,000 a month in living in today's cost living expenses." What's great is even at a 14% savings rate,

[42:00] great is even at a 14% savings rate, they are on track by age 60 to be able to have a portfolio that provides for them that level of income without having good news. We use some pretty conservative assumptions in here and the

[42:16] kids aren't going to be in college forever. So, and I imagine when the kids get out of school, they're going to feel like, "Holy cow, what are we going to do with all the success we've built?" So, good on them. And And who knows? Maybe

[42:28] they just reward themselves with more rate does go up cuz cash flow for example, all it does is give them more options, more flexibility. Maybe it's not 60 where they are able to exit the

[42:40] workforce, maybe it's 58, 57. So, that's kind of the way their plan looks, but think might make sense cuz one of the things that they let us know is, "Hey, our portfolio right now is pretty much >> Is it way out of base? I mean, you think

[42:53] about it. Max at his age doing 100% equities, that seems a little >> And so, in order to be able to design an appropriate allocation, you really need personality, their risk capacity, you need to have a real view into their

[43:07] entire financial picture. And we have a pretty decent view, but I would argue it's not quite a full view just yet. But, I do think that it would be what sort of allocation might make sense for us?" And just to kind of give them a

[43:20] an idea, we went and pulled the Vanguard target retirement funds, looking at those that are far dated to those that are more near dated to kind of show that examp- an example glide path of what that might look like. And based on their

[43:33] age right now in their mid-40s, if they were just using like a target retirement type structure, they might want to look like something like 82% risk on, 18% Vanguard is doing. >> you know, allocation.

[43:47] into their 50s, okay, maybe it shifts to 75 risk on, 25 risk off, and then 70/30, and then 60/40. And then what Vanguard would have is by the time you get to retirement, they'd be recommending a portfolio somewhere around 50/50. Now,

[44:02] little more conservative than someone retiring at 65 should be, but it at least gives Max and Valerie an idea of adjust their allocation. >> I know this for a lot of my financial

[44:15] You're thinking, "Well, you know what? I just I can go 100% risk on and then right before retirement slam in some diversifiers." But But here's the just risk tolerance and what you can handle. It's also risk capacity

[44:31] >> what you actually have the time to wait for your accounts to recover and to make fulfilled. >> Don't Don't do this. Don't get, you slaughtered. So, you want to make sure you you you really honor the asset

[44:46] >> So, we think their savings rate is great. We think that their asset adjustments. And then one of the things that we uncovered is we noticed that on their current mortgage, their current interest rate was over 7%. It was 7.375.

[45:02] And we know that interest rates have decreased over the past couple of months. And right now, if you just look at the average interest rate on 30-year somewhere around 6%. >> We've even gone below 6%, but we wanted

[45:15] know, I know this will go out and it's bopping around all over the place. It's still a pretty significant change because it's greater than 1%, which is the first indicator we always say, "Hey, at least go do the math on refinancing

[45:28] once you get a greater than 1% delta." >> So, there are two options they ought to call their mortgage company and say, "Hey, I noticed that rates have dropped. I'm currently paying 7.3. Would you consider

[45:41] giving me a rate modification? Could I decrease my Now, the mortgage company That's not something we want to do." Totally fine. No big deal. Then they could begin investing, "Okay, what it look like if we refinanced our mortgage?

[45:55] look like if we refinanced our mortgage? Instead of having our 700 our 7.37 375% mortgage, we now want a 6% mortgage. Well, refinancing is more expensive than costs associated with it cuz it's a brand new loan you're undertaking. And

[46:10] so, what we wanted to figure out was, okay, what are the interest savings if we refinance? What are the costs of refinancing? And are those justifiable Now, >> this is a thought experiment. We like

[46:25] people to keep their payments the same so you don't reset the amortization schedule, but you can do the math exercise to see that there's close to a $200 a month interest savings by just getting the lower interest rate. And if

[46:38] we we went with a pretty conservative number, we said about $6,000 of estimated closing costs, we could quickly see that their break even point >> Mhm. >> So, a little over if you think about

[46:51] they stay in this house for at least the next 3 years, to 7 years if I recall. >> Yeah, if they stay in the house for the next 31 months, the interest savings alone would pay for what it cost them to

[47:07] years. >> And there's also a lever I like to pull cuz we are it's an interesting time in the wonderful world of finance right now mortgages. I don't love paying the $6,000 out of

[47:22] pocket. What I've done in the past is ask your mortgage brokers, can you take a little bit of a premium on the interest rate and then have zero closing >> of maybe like a 6% rate, maybe it's a 6 and an eighth, and 6 and a quarter,

[47:35] >> So, you could do the math on that, figure out Now, look, if you're going to you don't think interest rates are going down, probably paying for this makes sense, but this is at least gives you an option if you don't want to have to come

[47:49] out of pocket for the expense of refinancing because it's nice when we're environments if you can actually take advantage and let the premium on what the closing costs are. >> Now remember, if you are someone who's

[48:04] want you to do, and Max and Valerie, don't want you to do guys to do this. We paying that lower payment. Because all you're doing then is just extending your debt out. Rather, we'd love for you to keep making the same payment on the same

[48:19] to make the same payment, at least pay in the same timeline. That can provide uh some reprieve on your monthly cash flow, but there's a really good chance that interest savings could be substantial over the next four, five,

[48:33] >> Now, there is an issue we want to put an exclamation point on cuz it broke my about this. They got really burned by a bad financial advisor. And it And it to the point that the person actually lost the

[48:46] advisor anymore. And they're still carrying the weight from that. We try to talk about how do they not, you know, how do people and how do we educate the general public on this? We shared with them, go to moneyguy.com/resources.

[48:59] We actually have eight questions anyone should ask their financial advisor. Even advisor is a good person doing a good job, I still would go check out these questions because it's just it's really important that you make sure that your

[49:13] important that you make sure that your advisor has your interest front and and center so that you don't get caught in one of these bad situations because, you going on here. You need to have your army of dollar bills working harder than

[49:26] your hands. And you don't want to squander that valuable resource of time, >> man. I I I think that uh again, it was so kind of Max and Valerie to even let us take a peek into their financial life, given they have that that baggage.

[49:41] take away from this is just cuz there was a bad event, just cuz there was a go exactly the way that you had hoped they would, that does not dictate what from where we're sitting, I think the end of the journey looks pretty exciting

[49:57] >> So, Max and Valerie, thank you for being vulnerable. Thank you for coming and going to be educated and learn how not to even fall in that mistake or even maybe discover that they're working with a bad advisor. We're going to get them

[50:11] through that. Bo, if others want to come on Making a Millionaire, how do they Making a Millionaire, you can go to moneyguy.com/apply. Or if you want to check out any of our free tools and calculators, go to

[50:23] moneyguy.com/resources. >> Uh Max and Valerie, you're well on your tomorrow. I'm your host Brian, joined by Mr. Bo. Mr. Bo. >> Money Guy, out.