Rich Habits Podcast Episode 112: The Art of Staying Rich

Hosts: Austin Hankwitz and Robert Krok
Release Date: April 7, 2025
Podcast Description: Introducing the Rich Habits Podcast — a financial literacy podcast for anyone ready to take back control of their money by implementing new habits. Join Robert Croak and Austin Hankwitz every Monday and Thursday as they demystify the financial habits of the rich, share their own mistakes and shortcomings, and lay out the blueprint for you to succeed with money.

Episode Overview

In Episode 112, titled "The Art of Staying Rich," hosts Austin Hankwitz and Robert Krok delve into the essential strategies for not just accumulating wealth but, more importantly, preserving it over time. The discussion centers around three core wealth retention strategies, enriched with personal anecdotes, practical advice, and insightful takeaways aimed at empowering listeners to maintain their financial stability and ensure long-term prosperity.

1. Live Below Your Means

Timestamp: [02:22]

Key Points:

• Consistent Saving: Austin emphasizes the importance of saving 15-25% of monthly take-home pay consistently, irrespective of income fluctuations.
• Avoid Lifestyle Creep: Resist the temptation to upgrade lifestyle in tandem with income increases to ensure savings remain robust.
• Practical Tips: Cutting unnecessary expenses such as subscriptions, dining out, and other non-essential spending can significantly boost monthly savings.

Notable Quote:

"The real flex is keeping your expenses steady while your income grows. That gap is your wealth building fuel."
— Robert Krok [04:21]

2. Avoid Depreciating Assets

Timestamp: [08:50]

Key Points:

• Understand Asset Types: Distinguish between depreciating assets (e.g., cars, boats) and appreciating assets (e.g., real estate, investments).
• Financial Impact: Depreciating assets lose value over time and often come with high-interest payments, undermining wealth accumulation.
• Smart Purchasing: Opt for used vehicles or lease new ones to mitigate the initial depreciation hit. For instance, buying a two to three-year-old car instead of a brand-new model can save substantial amounts.

Personal Anecdote:

Robert shares his experience of purchasing a used Aston Martin DB9, saving $80,000 by avoiding the steep depreciation of a new luxury car.
"I saved $80,000 by buying it used when I could have easily wrote a check for a brand new one and eaten the depreciation myself."
— Robert Krok [11:17]

Notable Quote:

"These are money pits disguised as status symbols."
— Robert Krok [08:50]

3. Diversify Your Investments

Timestamp: [15:10]

Key Points:

• Spread Your Bets: Avoid putting all your investments into a single asset class. Diversification acts as a financial shield against market volatility.
• Balanced Portfolio: Incorporate a mix of stocks, ETFs, real estate, precious metals, crypto, and alternative investments to balance risk and reward.
• Automate Investments: Robert advocates for automating savings and investments to ensure consistent portfolio growth without the temptation to spend.

Practical Advice:

• Diversification Test: If all your assets are moving in tandem with major indices like the S&P 500 or NASDAQ, your portfolio might lack sufficient diversification.
• Long-Term Strategy: Focus on building a strong investment base with diversified, low-cost index funds before branching into more volatile or speculative investments.

Notable Quote:

"Diversification is your shield. It protects you when one piece of your portfolio takes a hit."
— Austin Hankwitz [15:10]

Personal Insights and Anecdotes

Automating Finances:

Robert discusses the significance of automating financial processes to ensure money is allocated towards savings and investments without manual intervention.
"The more automation and forecasting they have in their money every single month, the better off they're going to be down the road."
— Robert Krok [04:21]

Millionaire Spending Habits:

Austin highlights that many millionaires prefer purchasing practical vehicles like the Ford F150 used, rather than flashy supercars, to prevent unnecessary depreciation.
"The most common car driven by millionaires in America is the Ford F150. It's not a fancy supercar, it's not a crazy. It's just a reliable cool truck."
— Austin Hankwitz [14:17]

Q&A Session

The latter part of the episode features a dynamic Q&A session where Austin and Robert address listener questions, offering tailored advice on various financial topics.

a. Education Savings: 529 Plans vs. UGMA/UGTA Accounts

Timestamp: [25:10]

Listener Question:
Greg inquires about saving for his children's future education without solely relying on 529 plans, expressing concern over the rigidity of UGMA and UGTA accounts.

Key Points:

• Flexibility of 529 Plans: Austin clarifies that 529 plans are not limited to college expenses. They can also cover vocational schools, K-12 tuition (up to $10,000/year), room and board, books, supplies, and student loan repayments.
• Rollover Option: Funds can be rolled over into Roth IRAs, providing a versatile exit strategy if education plans change.

Notable Quote:

"The 529 is just my favorite hack for building generational wealth for children."
— Austin Hankwitz [25:10]

b. Roth vs. Traditional Retirement Accounts

Timestamp: [25:43]

Listener Question:
Rob M. asks whether to opt for Roth 401(k)s versus Traditional 401(k)s, considering current versus future tax implications.

Key Points:

• Roth Advantage: Robert argues that paying taxes now with Roth accounts is preferable, especially if tax rates are expected to rise. Roth accounts also offer the advantage of tax-free growth and withdrawals.
• Traditional Considerations: Traditional accounts might be beneficial if one anticipates being in a lower tax bracket during retirement, though this is speculative.

Notable Quotes:

"Never in history have we seen a time where taxes are going to go down over time."
— Robert Krok [26:25]

"What's most important is that you're actually contributing and you're actually investing, and you're doing that for 10, 20, 30, 40, 50 years."
— Austin Hankwitz [28:14]

c. Best Crypto Wallets

Timestamp: [31:05]

Listener Question:
Julie D. seeks recommendations for the best crypto wallets to secure her cryptocurrency assets.

Key Points:

• Recommended Wallets:
  • Austin's Recommendations: Myether Wallet, Solflare Wallet, Phantom, Coinbase Wallet.
  • Robert's Recommendations: Ledger Nano X, Trezor, Arculus, Coinbase Wallet.
• Security Tips:
  • Avoid Secondhand Wallets: Purchase hardware wallets only from official manufacturers to prevent tampering.
  • Protect Seed Phrases: Store seed phrases securely, preferably in laminated form and away from digital devices.
  • Test Transfers: Always perform small test transactions to verify wallet addresses before transferring large amounts.

Notable Quote:

"The seed phrase is essentially your universal password for any wallet. Never share it."
— Austin Hankwitz [33:50]

Conclusion and Additional Resources

Timestamp: [36:00 - 39:27]

Austin and Robert wrap up the episode by encouraging listeners to join the Rich Habits Network, highlighting the benefits of the community, live streams, educational content, and interactive Q&A sessions. They emphasize the importance of continuous learning and community support in achieving and maintaining financial freedom.

Notable Quote:

"Personal finance is personal. And I just want to see everyone win."
— Robert Krok [38:36]

Key Takeaways

1. Consistent Savings: Aim to save a significant portion of your income regularly to build a solid financial foundation.
2. Mindful Purchasing: Avoid depreciating assets that erode your wealth and instead invest in appreciating assets.
3. Diversified Investments: Spread your investments across various asset classes to protect against market volatility.
4. Automate Finances: Utilize automation to ensure disciplined saving and investing without emotional interference.
5. Educate and Protect: Continuously educate yourself on financial tools and protect your assets with secure practices.

Further Resources

• Rich Habits Network: Access exclusive content, live streams, and community support by joining the Rich Habits Network.
• Public.com: Mentioned as a resource for high-yield savings accounts.
• Blossom Investing: Featured as a sponsor offering a social investing platform.

Final Note: Episode 112 of the Rich Habits Podcast offers a comprehensive exploration of foundational strategies necessary for sustaining and growing personal wealth. By adhering to disciplined saving habits, making informed investment choices, and leveraging community resources, listeners are equipped with the knowledge to navigate their financial journeys effectively.