Summary of Their Single Income Plan Needs Some Help | Making a Millionaire

Overview of Their Single Income Plan Needs Some Help | Making a Millionaire

This episode of Making a Millionaire features hosts Brian Preston and Bo Hanson helping a young couple, Matt (27) and Hannah (25), who chose to move to a single-income household so Hannah can stay home with their 1‑year‑old son, Barrett. The couple has strong early financial habits (they paid off student loans and credit cards and built savings), but they now face near-term cashflow pressures from losing one income, upcoming health insurance needs, and a desire for a larger family vehicle — all while wanting to preserve family time and future goals (more kids, home purchase). The hosts diagnose the priorities, present concrete budget scenarios, and give a prioritized action plan.

Guests & background

• Couple: Matt (woodworker/cabinetmaker) and Hannah (occupational therapy assistant).
• Ages: Matt 27, Hannah 25. Child: Barrett, 1 year old.
• Relationship: Longstanding partnership, communicative and aligned on priorities (family-first).
• Career choices: Matt works full-time in woodworking; Hannah left her job to stay home (seeking a ~5‑year caregiving window).
• Past debt: Both had student loans and credit card debt earlier; they aggressively paid those off (including using a severance payment).

Financial snapshot

• Household gross income (when both worked): ≈ $110,000.
• Current household income (one earner + overtime): ≈ $55,000 (net pay averaged ≈ $3,000/month with overtime).
• Net worth: just under $86,000 (a lot saved early; retirement accounts + liquid savings).
• Current monthly budget: ≈ $2,700–2,800.
• Vehicle equity: Matt’s Toyota Tacoma ≈ $29k–$30k (paid off); Hannah’s older car (2012, 220k mi) is a beater.
• Retirement: Matt contributes to 401(k); had been saving aggressively earlier (15% then reduced to 5% to get employer match).
• Important deadline: Employer-covered insurance ends for Hannah/Barrett in February — they must secure new health coverage before then.

Main challenges / risks

1. Health insurance gap (immediate, non‑negotiable)

   • Employer coverage for Hannah/Barrett ends in a few months.
   • ACA silver marketplace estimate ~ $335/month in their area; adding them to Matt’s employer plan would be ~ $600/month.
   • Not having insurance is unacceptable given family risk.

2. Vehicle situation

   • Tacoma has high equity but is not a practical family vehicle for multiple car seats/long trips.
   • Hannah’s car is unreliable in winter; risk of breakdown could trigger an emotionally driven purchase with poor terms.
   • They want a larger, reliable family vehicle (SUV/minivan) but need a financing plan that fits the constrained budget.

3. Cashflow shortfall on one income

   • Proposed new recurring needs (insurance, family car payment, modest “fun money”) push monthly expenses from ≈ $2,768 to ≈ $3,700.
   • Average monthly net pay ≈ $3,000 — leaving a gap of roughly $700–$1,000+/month depending on overtime variability.
   • Limited room to cut further without sacrificing core goals.

4. Income dependence and timing

   • Solution will likely require increasing household income (Hannah part-time OT work, Matt promotion/overtime, side gigs) or asset changes (vehicle sale).

Recommendations & numbers (host plan)

• Immediate priority: secure health insurance before employer coverage ends in February. Estimated cost on the ACA silver plan (their county) ~ $335/month — earmark $200–$600/month until finalized.
• Vehicle strategy (creative, season-driven):
  • Sell the Tacoma (≈ $30k) to free equity.
  • Use ~$10k of proceeds for a reliable commuter beater for Matt.
  • Use ~$20k as a down payment on a family vehicle (minivan or midsize SUV) in the ~$30k–$35k range.
  • With $20k down, target car payment ≈ $250–$400/month (hosts suggested $400 as a conservative guardrail).
• Lifestyle buffer: add modest “fun”/memory money ≈ $200/month to avoid burnout and allow family outings (camping, occasional meals out).
• Gap math (approximate):
  • Current budget: ~$2,768
  • • Health insurance: +$335
  • • Car payment: +$400
  • • Fun money: +$200
  • New target monthly expenses: ≈ $3,700
  • Average net pay w/ overtime: ≈ $3,000 → shortfall ≈ $700/month (hosts noted the number could range up to ~$1,200 depending on what’s included).
• Preserve long-term saving discipline: keep contributing at least enough to capture employer match (they lowered to 5% to get match), because early savings are powerful—hosts note current trajectory could still lead to a multi‑million dollar retirement portfolio if maintained.

Actionable next steps (homework)

1. Health insurance (top priority)

   • Research ACA plans now (healthcare.gov) and calculate subsidies. Target a silver plan as a starting point ($335/mo estimate).
   • Decide whether to add Hannah/Barrett to Matt’s employer plan or buy from the marketplace — compare costs, out-of-pocket max, and provider networks.

2. Vehicle decision (short-term tactical)

   • Get an honest market value for the Tacoma and sell or trade it. Consider preserving funds for family car down payment.
   • Shop used minivans/SUVs in the $25k–$35k range; run financing scenarios to confirm monthly payment ≤ $400.
   • Buy a reliable commuter beater for Matt (~$8k–$12k) if needed.

3. Income strategy (medium term; critical)

   • Quantify exact monthly gap after insurance/car choices; target net income increase needed (approx $700–$1,200/month).
   • Options:
     • Hannah: explore part‑time OTA shifts, caregiving gigs, or arranging paid OT work that fits family schedule.
     • Matt: pursue leadership openings, raises, or side income projects (small carpentry/side gigs).
     • Short-term caregiving or family‑friend gigs previously used — pursue similar opportunities.
   • Revisit overtime dependence and stabilize predictable income sources.

4. Budget and cashflow

   • Convert to a zero‑based budget that includes the new insurance and car payments.
   • Keep an emergency fund intact; avoid draining savings to cover recurring shortfalls.
   • Maintain retirement contributions at least to employer match.

5. Timeline & decision points

   • Health insurance decision: immediate (before February).
   • Vehicle decision: within weeks after assessing Tacoma sale opportunities.
   • Income changes: start exploring within 30 days and implement within 3–6 months.

Behavioral & relationship notes

• Strengths: strong early discipline (paid off debt, sizable net worth by mid‑20s), honest communication, united approach (“us vs. the problem”), family-first priorities.
• Tensions: Hannah acknowledges impulse buying tendencies; both are emotionally committed to family-lifestyle tradeoffs.
• Hosts emphasize: the “messy middle” is normal — seasons change, and early savings give them flexibility to solve short-term problems without sacrificing long-term goals.

Notable quotes & insights

• “How your life looks today does not dictate how it's going to look tomorrow.” — framing for seasons and tradeoffs.
• Hosts’ financial lever framework: two levers — reduce expenses or increase income. For this couple, expense cuts are largely exhausted; income is the lever to pull.

Conclusion

Matt and Hannah are in a strong long‑term position thanks to early discipline, but they face immediate, solvable short-term problems: securing health insurance before February and finding a practical, affordable vehicle solution. The hosts’ plan centers on using existing equity (Tacoma) creatively, adding a modest car payment and insurance to the budget, and closing the remaining monthly gap by increasing predictable household income (part‑time work, promotion, or side income). If they act quickly on insurance and vehicle strategy and pursue modest income increases, they can preserve Hannah’s caregiving priority and keep their longer-term goals (home purchase, additional kids, retirement) on track.