Loading summary
Transcript42 lines
- [00:01]
Robert Kroke
It's okay not to be perfect with finances. Experian is your big financial friend and here to help.
- [00:07]
Austin Hankwitz
Did you know you can get matched.
- [00:09]
Robert Kroke
With credit cards on the app?
- [00:10]
Austin Hankwitz
Some cards are labeled no Ding Decline.
- [00:13]
Robert Kroke
Which means if you're not approved, they.
- [00:15]
Austin Hankwitz
Won'T hurt your credit scores. Download the Experian app for free today. Applying for no Ding Decline cards won't hurt your credit scores. If you aren't initially approved, initial approval.
- [00:25]
Robert Kroke
Will result in a hard inquiry which may impact your credit scores.
- [00:28]
Austin Hankwitz
Experian hey everyone, and welcome back to the Rich Habits podcast, a top 10 business podcast on Spotify, brought to you by Public.com by the end of this episode, you'll know exactly how to turn your next raise into actual wealth instead of just more monthly expenses. My name is Austin Hankwitz, and I'm joined by my co host, Robert Kroke. Robert is a seasoned entrepreneur with lifetime revenues of over 300 million. And I'm a multimillionaire in my late 20s with a background in finance and economics. As the show name might suggest, every episode we talk about rich habits as they relate to business, finance and mindset. So, Robert, what are we going to be specifically talking about in today's episode?
- [01:08]
Robert Kroke
It's going to be a fun one. In this episode of the Rich Habits Podcast, we're talking about something that happens to almost everyone. You get a raise, you're excited for about two weeks, and then somehow you're still living paycheck to paycheck. Your bank account doesn't look any different. You're not saving more, you're not investing more. The money just disappeared. This phenomenon is called lifestyle creep, and it's one of the biggest wealth killers out there. It's why people making more than $200,000 a year can feel just as broke as people making it on $50,000 a year. It's why high earners are drowning in debt. And it's why most people never build real wealth, even as their income goes up year over year. Here's what happens. You get a $10,000 raise. That's an extra $833 a month before taxes, maybe 600 after taxes. And you tell yourself, I'm going to save it. I'm going to invest this money. You're finally going to build that emergency fund. But guess what happens? You move into a nicer apartment, just $300 more a month. No big deal. You update your car lease. You start eating out more because I deserve it. You get a few more subscriptions, and suddenly that entire raise is gone. You're making more money, but you're not getting any wealthier.
- [02:22]
Austin Hankwitz
And the worst part about it all, Robert, is most people don't even realize it's happening. The lifestyle creep is so gradual, so subtle, that by the time you realize what actually happened, you're now locked into these new exp. You can't go back to that cheaper apartment. You can't downgrade your car without feeling like a failure. You're truly stuck in your circumstances. So Robert and I are going to break down in this episode. 1 exactly why this happens, 2 how to spot it before it steals your raise and three what you can do right now if you just got a pay increase to actually use it to build wealth. Raises should build wealth, not just fund a slightly nicer lifestyle. But before we jump into those specific points, it's really important that everyone understands understands this reality. Investing toward your financial future is the only way you will ever be able to stop trading time for money in your 9 to 5 job. Which means if you want to retire one day, you need a nest egg that's growing for you over time.
- [03:20]
Robert Kroke
And the easiest way anyone can begin investing towards their Future is on public.com they make it incredibly simple to build a multi asset portfolio including ETFs, stocks, bonds, crypto options and more. They also offer access to industry leading yields up to 3.8% APY for your emergency fund.
- [03:39]
Austin Hankwitz
And for a limited time, you can earn a 1% match on all IRA deposits, IRA transfers and 401k rollovers, which is a free $1,000 for every 100k that you roll into their platform. So if you got that old 401k on an old stinky broker, roll it over and get your 1% match.
- [03:55]
Robert Kroke
Fund your account in 5 minutes or less by heading to public.comfront/rich habits to claim your 1% match today. Paid for by Public Investing. Full disclosures in the podcast Description all.
- [04:07]
Austin Hankwitz
Right, Robert, let's now talk about why every raise feels like it disappears. First and foremost, it's not just you. This is a psychological trap that catches almost everyone. When you get a raise, your brain does something interesting. It recalibrates your baseline. So before the raise, for example, you're making 60k a year and you make it work. It's tight, but you make it work. Then you get that $10,000 bump to 70,000 a year and that 10,000 begins to feel like free money. But you start making a few small upgrades. Nothing crazy, but maybe your apartment. You move apartments and you go from a $1,200 a month payment to 15 because you can afford it now. You trade in that 10 year old car for a newer one and sign up for a $400 a month payment. You start buying organic groceries instead of regular ones. Maybe you sign up for that gym membership instead of continually working out at home or outdoors with your the premium streaming services instead of just the basic ones. Each decision feels small. It feels justified. But here's what you're not seeing those small decisions add up to exactly the amount of your raise, if not more. So now your baseline in your life is 70,000. And maybe it feels like you're living a little bit better in the moment, but in actuality, you're just spending more and not building wealth along the way.
- [05:23]
Robert Kroke
And Austin, here's the kicker. Once people upgrade their lifestyle, it's incredibly hard to downgrade. Psychologists call this the hedonic treadmill. You adapt to your new lifestyle really quickly and then you need the next upgrade to even feel that same boost. And it's never enough. You're always chasing the next level. And this is a vicious cycle that will never end unless you end it. Most people think, if I just made more money, all my problems will go away. But the reality is, if you don't fix your spending habits, more money just means more spending. I remember back in my 20s when I was like, man, if I could just make a hundred grand, life would be great. As soon as you make that a hundred grand, you're like, if I could just make 200. It's a vicious cycle and it never ends. And it's up to you to end it. So let's get into our three categories of where lifestyle creep shows up so you can identify where you're discarding your extra cash, making it easier for you to stop it. The first category is the biggest for a lot of people, and that's housing. You get a raise and suddenly you're looking for that nicer apartment or you're thinking about that bigger home. I'm not saying you should live in your first apartment forever, but housing is usually your biggest expense. The average household right now spends roughly $25,436 per year on housing, which amounts to about 32.9% of the average person's total annual expenses.
- [06:50]
Austin Hankwitz
So the smart move is to keep the same housing cost. Or if you absolutely have to upgrade, limit the increase to only 20 to 30% of what your raise was. Right? So not all of your raise, but a portion of your raise. Now the second big category of lifestyle creep, Robert, is transportation. You get a raise and suddenly your car feels old, right? It doesn't have that cool touchscreen. Maybe your ac is not as cool as you thought it would be. Whatever, you start thinking about upgrading. So maybe got this paid off car and you're going to trade it in, you're going to go get the lease. Maybe you go from a Honda or an Acura to a BMW, right? You think you can justify it? Transportation is a wealth killer if you're not careful between your car payments, your insurance, the gas, the maintenance, the average American is spending north of $12,300 a year on this category. So if you upgrade your car, every time you get a raise, you're throwing money away. Not to mention, these are depreciating assets. Robert.
- [07:48]
Robert Kroke
Yeah, I talk about this all the time, and I do a lot of about this because you drive through all these beautiful neighborhoods and you see all these driveways lined up with the new Jeep and the new BMW. And then on top of that, you just really all just manifests into this living beyond your means situation in lifestyle creep. And you don't always need the latest BMW, the latest iPhone. You don't need all this. You need to build wealth so you have financial freedom later on. So this third category is the silent killer, and that's your daily habits. This one is sneaky because it doesn't feel big, but it adds up fast. You get a raise and suddenly you're getting coffee at Starbucks every morning instead of making it at home. You're ordering lunch instead of packing it. You're using DoorDash three to four times a week, and you're buying the premium versions of things instead of the basic ones. I'm sure you've experienced this. These expenses don't feel like luxuries after a while, and they become the new normal. This is the key here. You get so used to it, you're like, oh, I have 11 Stanley water bottles now. I've got 30 pair of Lululemons, 20 pairs of Nikes. That's the new normal. And you forget that you used to pack your lunch. You used to make your own coffee at home from time to time. And once you upgrade, you rarely ever turn back. This is where most people lose the battle. It's not just one purchase. It's the hundred small purchases that add up to thousands of dollars a year.
- [09:13]
Austin Hankwitz
You know, Robert, I didn't realize. And again, this is me kind of reflecting upon a lot of the spending that I was doing in my early to mid-20s. I was religious about using the Apple card because they had a cool app so I could, like, track the categories and stuff. And I remember because I did the opportunity cost analysis of like, okay, last year I spent about $14,000 is just an example on not necessary things, right? And then I'm looking at it, I'm like, if I just put that $14,000 into Bitcoin at the time, that was maybe a 20 or 30,000 Bitcoin. Or in the S&P 500 at the time, which 300 or $400 VO or, you know, whatever it was, you just kind of. You begin to not only recognize that a lot of the little bits and pieces of your life that you're inflating, they're not intentional spending. So you don't really get to feel like you are actually benefiting from this raise. You're just kind of doing it out of habit. So one, be intentional when you spend. But two, think about that opportunity cost, understanding that, like, whoa, if instead of this I went and invested it, or I saved it for a dream vacation, or I went and, like, actually was intentional with the spending here, how much different your would be? You know, it's not just doing these small little things, but it's like it's death by a thousand cuts, right? It's like all these little ankle biters that happen to us over. We don't feel them in the moment, but you look back and you're like, whoa, did I really spend $2,000 last year on coffee and door dash or, you know, whatever it might have been.
- [10:36]
Robert Kroke
Yeah, it's just one of those things. We talked about this recently in an episode where every dollar you make needs to have a job. And it really comes to, the more you automate your money and your investments, the less money you're going to have sitting around idly by that you feel you can waste because it doesn't have a purpose. So that's why just this episode is really impactful for a lot of people because it's going to be a wake up call. Automate your investments, make sure every dollar has a job, and then you won't find yourself bored spending $300 on a Saturday afternoon at a farmer's market.
- [11:09]
Austin Hankwitz
All right, Robert, so let's now round off this episode with how to actually capture your next raise so that you can begin to build instead of spending it. So step one is to automate it before you spend it. Pretty straightforward, right? The moment you get a raise, and I mean literally the same day, same week, the money Hits your account, you're rocking this raise. You need to set up automatic transfers. So if you're getting an extra 600amonth after taxes, set up an automatic transfer of half of that, let's call it 300, to your investment account. And maybe the other half can go to a savings or, you know, whatever else you want to really intentionally spend this money on. But automating it before you spend it. And if you do this correctly, you're able to do it before it feels like extra money, right? It feels like, well, I'm only have $300 to work with now, despite actually making an extra 600amonth. Do this before you get used to it. Do it before your brain recalibrates into that new baseline, right? Because once you feel like you have more money, you're going to spend the money. That's just human nature. This is the single most important thing you can do. You automate it immediately. Do not wait. Don't think about it. You just do it.
- [12:15]
Robert Kroke
I want to click back on that. Get rid of the money as soon as possible. Because once your brain and your lifestyle is adjusted to that new money, it's hard to go back. And that leads me into number two, and that is use the 5050 rule. Here's how the rule works for most people. When you get the raise, commit to saving and investing at least 50% of it. Pretend it doesn't exist. The other 50% you can use to make those subtle upgrades to improve your lifestyle if you want. But you have to hit the 50% first threshold of getting that money invested. This gives you the permission to enjoy some of the raise. You're not living like a monk, but you're also not giving away all of your financial progress. It is a balance and a very important one. And honestly, for the first few years of your career, I'd argue you should be capturing 70 to 80% of every raise, because that's when you're getting your base built and you're setting yourself up for the future. So when you're young, you don't need a fancy apartment, you don't need a luxury car upgrade, you definitely don't need the new iPhone. Every single model. Austin and I don't even have the new iPhones, and we have millions of dollars. You need to build your financial foundation. You need to get out of debt, build an emergency fund, and save and invest for the future. That's what matters now.
- [13:35]
Austin Hankwitz
Step three of capturing your raise to build wealth is to increase your retirement contributions. Every time you get a raise, immediately increase your 401k contribution percentage. So if before you were contributing 10%, bump it up to 12, maybe you were contributing 15%. Let's go to 18. Right? Just increase the percentage contribution. Most people Never touch their 401k contribution percentage after they set it up. That's a mistake in our opinion. Your contribution should go up as your income goes up. So if you're making more money, you should be saving more money. Simultaneously you're increasing your retirement savings, which lowers your taxable income. If you're doing a traditional additional 401k, which means you're paying less in taxes. A win, win, win. Right. Building wealth, paying less in taxes. And you're not even feeling the difference in your paycheck because you automated it away straight at the employer. You're like, oh, I don't know, I didn't get the money. Got a raise. More money. Like it's gone. You don't even see it. You don't feel anything. So please, step three, increase those retirement contributions if they make sense for you. This is an underrated step in my opinion.
- [14:36]
Robert Kroke
Yes. And step four, avoid new recurring expenses. This one is critical. Do not add new recurring expenses right after the raise. No new subscriptions, no upgraded car lease, no more expensive rent. Recurring expenses are wealth killers because they lock you in. You can't go back once you sign on that new lease or that new car payment. You just can't go backwards. Once you commit to that two thousand dollar apartment instead of the fifteen hundred dollar one, that money is gone every single month. And one time upgrades are fine, but don't add recurring monthly expenses unless absolutely necessary. And our final step to help each and every one of you capture more of that raise to build towards wealth is track your lifestyle inflation once a quarter. Sit down and review all of your spending, and I mean all of it. Just like we talk about the honest budget. Compare it to the last quarter, compare it to last year. Are your expenses creeping up? If so, where? Identify the leaks and plug them before they become permanent. These are usually thought of as harmless ankle biters, but death by a thousand cuts is still very real. Don't listen to the fake gurus that say small incremental changes don't add up to being financially free in retirement. Because they're wrong and they don't understand the math of it all. Most people never look at their spending and they have no idea where their money goes. Don't be that person. Be intentional. Track it, adjust it, control it.
- [16:05]
Austin Hankwitz
What a great sort of five step breakdown Here on how to capture your next raise to build wealth. I think you did a great job of explaining that, Robert. So here's kind of to close the episode off, right? Raises are opportunities, their chances to level up financially. But most people waste them. They let livestock creep steal every dollar and they end up no better off than they were before. So don't be like most people. Be intentional. When you get your raise, go capture it. Just like we laid out for you guys here to start building wealth, automate your savings, increase those retirement contributions, avoid those new recurring expenses, and give yourself permission to enjoy some of it, but only after you've secured your financial future.
- [16:47]
Robert Kroke
Yeah, the people that build real wealth aren't the people who make the most money. They're the people who keep their lifestyle in check as their income grows. They're the people who understand that true wealth isn't about what you spend. It's about what you keep and what you invest in. Automate. So the next time you get a raise, ask yourself this question. Am I going to let this money disappear into lifestyle creep, or am I going to use it to build the life I actually want for the future?
- [17:12]
Austin Hankwitz
What an awesome episode, Robert. Now, before we jump to the Q and A section of this episode, got to give a shout out to Blossom. You guys have heard us beat the drum on this company all year, but if you haven't already considered checking out the Blossom social network, you really have to go give them a try. We know a number of our Rich Habits members actually made it out to their tour earlier this fall and they said that they had a blast. It was amazing. It was really cool to see how they were able to connect to all these investors that meet online actually here in real life. So Blossom, I think they're doing some fun stuff, Robert.
- [17:44]
Robert Kroke
Yeah, definitely. And I heard someone call it the Facebook for investors. And that's exactly a good way to think about it. We're enjoying spending so much time on the platform and it just is a really good way to be transparent, get the information out there and share with other like minded people.
- [18:01]
Austin Hankwitz
Yeah, Blossom people share their strategies, their wins, their lessons. It's open, it's supportive, it's transparent.
- [18:07]
Robert Kroke
Yeah. And exactly. You can follow us, see our real holdings, even track when we add a new position. It's like learning by seeing from real portfolios, not random opinions.
- [18:17]
Austin Hankwitz
So if you're serious about building wealth or just want to surround yourself with investors who think long term, go check out Blossom. It's free, it's fun. We're both on there. Go check out Blossom Social.com type in Robert Croak. Type in Austin Hankwitz. You'll see us and it'll be cool. All right, Robert, let's jump over to our first question coming from Beth M. Beth says I currently live in Texas and plan to move to Massachusetts. Who can I contact about the cost of living for the east coast specifically there in Massachusetts versus Texas? I'm concerned my pension being taxed differently. Any additional income taxes and insurance I need to figure out, would a financial advisor have that? A CPA perhaps. I'm not too sure how to properly do this research. My spouse and I are in our mid-60s and we very much are excited to make the move. So any suggestions are appreciated. Robert, what's your take on this? How would you help Beth here figure out the sort of total cost of living change from going from Texas, which I think is a pretty reasonable state depending on where you live, to Massachusetts, which could be pretty petty.
- [19:22]
Robert Kroke
Yeah, I would say start with your CPA or your lawyer if you have one. They're going to know right off the gate, especially if they're for those individual states. They're going to know the state laws that are relevant to your situation. But also you can always rely on Mr. Or Mrs. Chat GPT. Put in the information, make sure it's a very detailed prompt and it will pull up all local legislation relevant to your task and help you along the way. That's what I would do. I think it's pretty simple. I have lawyers and accountants all over the country so it's easier for me. So if you don't definitely try out ChatGPT.
- [19:56]
Austin Hankwitz
Yeah, that's the fun thing about the show, Robert. I feel like whenever we have ideas or answers like there's no gatekeeping. Right. So I actually just did this exact same thing. I just put this question question inside ChatGPT for Beth here to fact check and see just how helpful that could be. And again, this is for anybody, right? It's like Austin, you guys are telling us to go use Chat GPT. Yeah, absolutely. Chat GPT, grok, perplexity, whatever you can figure out to use to help you be more resourceful. So Chat GPT says people to contact include your financial advisor or cpa, state and local resources including the Massachusetts Office of Economic Development. They offer relocation and cost of living information. You can Also go to mass.govsearch for cost of living or retiree taxes. And there's also non government related tools like the nerd wallet, cost of living calculator, bestplaces.net that allow you to compare city to city, housing, healthcare, food, et cetera, and then tax foundation or smart asset Tax calculator for comparing state income and retirement taxes. So Beth and everyone else listening highly recommend taking advantage of these platforms. If it's Chat, GPT, if it's Google, Gemini, if it's Perplexity, if it's Grok, whatever it might be. I mean, they are so full of resources and ideas here. But you were definitely on the right track for thinking about, you know, talking to an advisor, talking to a cpa. And do you have any pieces of advice for Beth here, Robert, as it relates to moving from such a low cost of area to potential high cost of area, you know, making a move like this.
- [21:21]
Robert Kroke
Yeah, I think it's all about just understanding before you move the difference in cost. Food's going to be more expensive, dining out is going to be more expensive. Rent, you know, everything, lawn care, it's all going to be relative to that area. So you're going to have an adjustment period of a few months to get used to it, because that's just the nature of the beast with higher cost of living, generally is higher wages as well. So it balances out pretty well. The good thing about anyone thinking about relocating is find the sweet spot. Like for me, I wanted to move to Florida. I wanted to be more southern in Florida, and everyone was saying, go to Miami, go to Naples. But then when I considered Miami and Naples cost of living daily and monthly to St. Petersburg and some of the other cities of that nature, it was immensely less, 20, 30% less in rent, food and drinks, everything else. So I chose St. Petersburg over one of these others because of the overhead and the cost of living. And so just keep that in mind because you want to be able to make that adjustment along the way and not have shock in what it's going to cost you, different from moving from one state to another.
- [22:30]
Austin Hankwitz
I think that's great advice. Now our next question comes from Tandra M. Tandra says, hi. I hope this question makes it to you. I have 200,000 in a 403B with my job that I want to roll over at the end of the year. I'm retiring on December 12, 2025. I'm 51 years old and I don't plan to touch my $200,000 until I'm 60 to 62 years old. I'll be bringing home $9,000 a month from the Teacher Retirement System, so I won't need the 403B to live on. So all of that is really just extra money. Would it be a good idea to roll it into a public account and put it in V? I plan to work part time as a nurse practitioner one to two days per week after retirement, so I could potentially continue to contribute to this account as well. But love to know your thoughts. I need to get it working for me. I just don't know where to put it. So, Tandra, if I were in your shoes, I love that idea. Roll that 403B over into a public account. Get that 1% match, call it $2,000. In your instance here, a 403B would go into a traditional IRA. Correct me if I'm wrong, Robert, but once that money is in there, yeah, rock and roll. I mean, you're 51 years old. You've got 20, 30 more years of good compounding growth ahead of you. Put most of it in the S P and the NASDAQ and the total Stock Market Index with a vti. Maybe if you want some of it into some T bills or any other, you know, precious metals, real estate, things that are a little bit more consistent over a long period of time, you can do that. But it seems like your teacher retirement system has kind of got you figured out from that perspective. So if it really is just extra money to invest, consider it doubling every seven years if it's invested entirely in equities via the S P or the nasdaq. It's about the rule of thumb there with the rule of 72. So. So rock and roll. And that's what I would do. Robert, what do you think?
- [24:11]
Robert Kroke
I agree 100%. I think it's a great idea. Get it out of the 403B, have autonomy over it. You can then make the adjustments as you see fit. And like Austin said, I love that idea of like voo, vti, qqq, aiq. Maybe get a little bit of cryptocurrency with Bitcoin, Ethereum and Chainlink. Maybe a little bit of precious metals with GLD and slv. All really good ideas, especially for as young as you are, to really multiply this money over the next 10, 15 or 20 years.
- [24:42]
Austin Hankwitz
Now our final question comes from Fred on Instagram. Fred says, I recently got an interesting investment opportunity. A restaurant owner I know is looking to reopen his restaurant and wants to do it without debt. So he's offering 5% stakes to investors for $10,000 each. He didn't approach me as a potential investor, but as someone with restaurant and finance experience to get my Opinion on his strategy. Based on the sales of the exact same restaurant he had, he was doing about $115,000 of net profit over the last seven months. So the 5% ownership stake nets nearly 100% returns per year because his valuation is so low. My issue lies that at 29 years old, I have only 70,000 invested. And the 10,000 if I did invest would come from my emergency savings and bringing me down to about three to four months instead of six months. I want to hit the checkpoints along the way, but this seems like an asymmetric bet even if returns are halved. I would greatly appreciate any insight the two of you may have as I can't make up my mind to take advantage of this opportunity or maybe wait until later as to when my base could be built. Thank you for your insight and consideration. Alright, Robert, so just so we're on the same page about this question, Fred is saying, hey, I can put $10,000 into a restaurant. If I put that $10,000 into the restaurant, I have a 5% equity stake in that restaurant's profits. The restaurant did $115,000 of net profit over a seven month period of time, which is $16,430 a month. So if you multiply that by an extra five months and you add back the 115, the restaurant's doing about 197,000 a year in net net profit. And so if he takes $10,000 for a 5% equity stake in this business, that means that he would get about 9,850 back of his original 10,000 over the course of 12 months, assuming the restaurant, you know, did the same amount of profit. So that's what we're seeing here. Our friend Fred is like, listen, if I did this investment, it's coming from the emergency fund. I only have 70,000 invested. What's your take, Robert?
- [26:55]
Robert Kroke
Well, you know, my take is probably going to shock you. For me, this is a pass because we don't have full information. And I love restaurants. Everyone knows I've been in the restaurant business for my entire life. But in this instance, why was the restaurant closed in the first place? Is he opening the same restaurant back up? Which is what this question leads me to believe based on the wording reopening, it's not relocating. So I'm a little nervous because it just, just doesn't really add up. So you're going to sell me. I can buy 10% of this restaurant for $20,000. So that puts the whole valuation at $200,000 for this restaurant, yet it's doing almost $200,000 a year in profit. Something just isn't adding up in the numbers to me. And then if you extrapolate out to what it's probably grossing, it's probably going to have to gross at least $1.25 million to $1.5 million to be able to net out that 197,000 dol. And that is a lot of gross income for something that he says he's reopening. So without having more information, this is a pass for me. I agree. I would build the base. I would keep doing the things that I can pretty much guarantee that I'm going to make money off of and let this one go. Unless you were going to take a position at the restaurant because you're an investor and said, hey, I know this business, I know finances. So I'm going to invest this 10,000. But I want to run the books and I want to keep an eye on the money and the cost. That's a different story. But I wouldn't just do a blind investment here.
- [28:26]
Austin Hankwitz
Oh, I'm so torn on this one, Robert, because I. That's the thing. It's like, let's assume this was true. Let's assume the restaurant closed down because of something that had nothing to do with the business. It was a personal reason they closed it down. Let's also say that their customers love them and, like, everything's good, right? Let's just assume, best case scenario, this guy here, our friend Fred, could literally make essentially 100% returns, assuming the restaurant just did what it was just going to do every single year. So he'd invest 10 grand. The following year, he'd get that 10 grand back. So he's now his break even, and then he gets 10,000 every year that this restaurant's open. But the thing is, too, it's like if I was the restaurant owner, I'm only offering this because one thing is true. I can't borrow money, right? Because if this restaurant owner could borrow, you know, however many hundreds of thousands he needs, and also, like, what are you going to do with the money? Right? So, like, where's that money going for? But if he could borrow the hundreds of thousands he needs to do whatever he needs done here at a 5 or 7 or even 10% interest rate over the course of 10 years, like, do that and keep all of the 200,000 a year profits, like, don't pay them out to all of your investors. So I don't know the, the situation is there's a lot of red flags. I agree. If all the flags were green, I'd be like, yeah, the math makes sense. You know, you, you. Here's what I'm trying to say for you did a good job analyzing this. All your numbers are right. All your assumptions are correct. Congratulations. You did a great job figuring out this sort of situation. But there's a lot of unknowns and a lot of different variables that could throw all of your assumptions off. Those include maybe restaurant customers that don't come back anymore. Why did they close down in the first place? Like what Robert said, why doesn't this person just go get a loan? Like I said, all these different things. So at the end of the day, it's probably going to be a pass for me as well. However, if you could figure out more about the situation, get these questions answered, and feel really good about what's going on here, that then reminds me to say, and encourage me to say, you've got the rest of your life to go make $10,000 again. You know, I'm saying you're 29 years old. Like, 10 grand at this stage in your life is a nothing burger to lose, assuming that you lost it entirely. So from a, you know, build my base, invest like you've got three to four months of expenses. Assuming you took out this 10,000 still in it, you've got 70 invested. Like, financially speaking, you could swing it. I'm going to give you the green light. But from that perspective, you need to ensure that all these things we just talked about aren't like big red flags that are just throwing all this off.
- [30:52]
Robert Kroke
I love that you think about it. People invest with me in restaurants all the time. They have been for decades. And people are always worried about restaurants. But you gotta think restaurants print money. If they're run correctly and they're profitable, and not all of them are profitable, some of them are run correctly and still not profitable, or the location's not right or whatever happens. But at the end of the day, I love restaurants. I've made millions of dollars from restaurant profits. But I want to make sure you understand this is different. This is a little bit of a different because we don't have all the numbers, we don't have all the facts to understand it. So with the variables Austin laid out, go for it. I think it's fantastic. But without those variables and those unknowns, I would tread lightly.
- [31:34]
Austin Hankwitz
Everybody. Thanks so much for tuning into this week's episode of the Rich Habits podcast. If you've not already subscribed to the Rich Habits newsletter. There's a link in the show Notes below to go check that out. You can also join us inside of the Rich Habits Network that is a sort of community of our biggest fans. We host two hour weekly live streams over there every Tuesday night among a ton of other cool perks and features. And then finally, if you want to invest alongside Robert and myself into SpaceX, XAI perplexity, Mr. Beast, Beast Industries, Katy Perry, Desoi Graza, the Olive oil company, all the cool companies that are inside the Cashmere Fund as well as these late stage ventures, join us on Republic. There will be a link in the Show Notes below to learn more about that opportunity as well.
- [32:17]
Robert Kroke
And always remember to share the podcast with a friend, maybe a family member that needs a little boost in the right direction because usually when we get them hooked on the podcast they watch all the episodes and it's life changing information for most people, so always share it with a friend. And don't forget, the newsletter is free as well. We put out an incredible newsletter every Thursday morning, so we appreciate all of you that stop by each and every week. Give us those five star reviews and we'll see you next time.
- [32:45]
Austin Hankwitz
Thanks everyone and we'll see you on Thursday. Sam.