Prioritizing Financial Goals for Young Professionals

Prioritize building wealth over low-interest debt, considering their young age and high income, using the financial order of operations.

### Prioritizing Financial Goals for a Young Couple with High Income and Student Loan Debt
* 💰  The couple, aged 26 and 31, with a combined income of **$220,000**, is wondering whether to focus on catching up their 401(k)s with a **$30,000 balance** or paying off the **$162,000 student loan debt at 4.85% interest**.
* 📊  The "Financial Order of Operations" is recommended as a nine-step process to guide financial decisions, with steps 1-7 focusing on **building wealth** and steps 8-9 on **debt repayment**.
* 💡  The advice is to first establish an **emergency fund**, take advantage of **employer matches**, and invest in **retirement accounts** before aggressively paying off **low-interest debt**.
* 💸  With a household savings rate above **25%**, it may be appropriate to start prepaying the student loan debt after completing steps **1-7** of the financial order of operations.
* 🔗  The couple is encouraged to use tools like the "**Wealth Multiplier**" to understand the **power of compounding** and the impact of **starting to invest at a young age**.
* 📚  Additional resources, such as the book "**Million a Mission**," are recommended for more in-depth guidance on **financial planning** and **debt repayment strategies**.
* 💼  The focus for the young couple should be on **"get wealthy behaviors"** in their 20s and 30s, with a shift towards **"stay wealthy behaviors"** in their 40s.
* 🌟  The goal is to **maximize the benefits of compounding and time in the market** to set the couple up for **long-term financial success**.

[Music] Alexandra's question. She says, My fiance, who's 31, and I, who's 26, and a recent doctoral grad, have a 220k household income. Should we focus more on catching up our 401ks with a combined balance of 30ks? That's where they are with their 401ks. Or my 162k in student loan debt with an average of 4.85% interest. What do you think this is about prioritizing with an average of what, um, 4.85% interest? Man, so here's what's really interesting, Alex. I think a lot of people find themselves in this place like, man, I've got all these things going on. I've got all these unique circumstances. I have this situation that defines where I am presently, and I just wish that there were an instruction manual. I just wish that there were some method or mechanism that would tell me what to do with my next dollar. Alexander, I want to let you know you're not alone. A lot of people find themselves in that

situation. It's the very reason why the financial order of operations was developed. It's a nine-step tried-and-true process to tell you when you are 31 years old and 26 years old and you do have a $220,000 income and you've only, I'm doing air quotes because you're young, only have $30,000 in 401k but you have $100,000 in student loan. How do I prioritize what to do with my next dollar? The financial order of operations is the thing that's going to walk you through that. So if you don't have a copy, go to money.com/resources and you can get your free copy. Brian, when you hear this, when you hear Alexander ask this question because 31 and 26, $220,000 income, the world is the oyster, they have a lot of opportunity. Do they make up for lost time or they pay off student loans and how do they decide? The answer is yes, love it. And the reason it's yes and it and of course it depends but I do know

she gave us enough information that I know she's I think she's 26. And as she set up the question, that means if you understand risk premiums and where her student loan, because I love that she shared that her interest rate is around 4.85%. That is low enough that I don't think you're blowing up your financial future by, you know, kind of paying the minimum or paying the income-based payback scale, um, while you go through the financial order of operations. But as soon as you get beyond 25% savings and investment rate as a household, yeah, let's start attacking. Maybe that's part of your step eight and nine is that you're going to prepay this student loan debt just because you want to be done with it. You don't want to have this thing hanging over the top of you. I have no problem with you extinguishing that debt early after you make it through steps 1 through seven of the financial order of operations. So go to money.com resources download your

free copy or go check out my book Million a Mission because this is coming out this month and this is we actually have a a lot of case studies and actually has an entire um discussion on this type of topic when I get to step three and paying off high interest debt. I'll tell you one other thing you can go check out again just because you guys are 31 and 26. The reason why like the methodology behind hey maybe I should prioritize building up wealth saving and investing growing my dollars versus satisfying relatively low interest debt is because of how powerful your dollars can be at this age. So if you've not checked out our Wealth Multiplier again go to money guy.com resources and you can go play with our tool. You can go check out the Wealth Multiplier to see exactly what every dollar can turn into for you and at 31 and 26 it's powerful it's awesome you should let your money work for you. You should figure out how to use that huge income that you have at an early age to

really set your future s up for Success. Yeah, it's get wealthy behaviors, and then there's stay wealthy behaviors. We got to get you wealthy first, and that's what we're focusing on while you're at that young age while money has such a huge multiplier because you have so much time in your favor. So make sure you focus on the get wealthy behaviors, and then maximize the stay wealthy. And that's probably going to happen as you cross in your 40s. You'll see there'll be a great opportunity to pay off all those debts, be completely debt-free. But let's make sure we get you wealthy first.

We Make $220,000: Should We Prioritize Student Loans or Retirement?

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Prioritizing Finances: 401k or Student Loan Debt?

A couple with a $220k household income is wondering whether to catch up on their 401ks with a $30k balance or pay off $162k in student loan debt with 4.

The financial order of operations provides a nine-step process to guide them in prioritizing their financial decisions.

This framework can help them make the best choices based on their unique circumstances and financial goals.

Managing Student Loan Debt and Risk Premiums at 26

She is advised to focus on building a 25% savings and investment rate before aggressively paying off her student loan debt.

85% interest rate makes it reasonable to stick to minimum payments or income-based payback, following the financial order of operations.

Once steps 1 through 7 are complete, she can consider prepaying the debt to achieve financial freedom.

The Importance of Prioritizing Wealth Building at a Young Age

Prioritizing wealth building over paying off low-interest debt is crucial, especially for those in their 20s and 30s.

The "Wealth Multiplier" tool, available on moneyguy.

com, demonstrates the power of letting your money work for you from a young age.

Building up wealth, saving, and investing early can have a significant impact on one's financial future.

Focus on "get wealthy behaviors" while you're young to take advantage of the time multiplier effect.

As you cross into your 40s, there will be a great opportunity to pay off debts and become debt-free.

It's important to prioritize building wealth in your younger years and then focus on maintaining it as you get older.