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- [00:00]
Austin Hankwitz
Hey everyone, and welcome back to the Rich Habits podcast, a top 10 business podcast on Spotify. My name is Austin Hankwitz and I'm joined by my co host, Robert Kroke. Robert is a seasoned entrepreneur in his 50s with lifetime revenues over 300 million. And I'm an entrepreneur in my late 20s with a background in finance and economics. Since quitting my full time job in corporate finance a few years ago, I've built a seven figure media business and I actively advise some of the most well known fintech companies around the world. As the show name might suggest, every episode we talk about rich habits as they relate to business, finance and mindset. However, we try and bring you two unique perspectives. One from an industry veteran, which is Robert, and the other, myself, someone who's still in the process of building wealth and figuring it all out. Now, Robert, what are we going to be talking about in today's episode?
- [00:47]
Robert Kroke
In this episode of the Rich Habits podcast, we'll be talking about how to create a millionaire mindset in 2025. As you all know, I'm a Deca millionaire and, and Austin is a newly minted millionaire. And there are a handful of very specific traits that we've picked up along the way since becoming millionaires that have not only helped us achieve that status, but build upon it and maintain it permanently. This episode is going to be more mindset focused in nature because we've already provided you the blueprint for how to build wealth in your life. But many of you still suffer from mindset hurdles that that prevent countless listeners from breaking through in their own personal financial journeys.
- [01:29]
Austin Hankwitz
And you know, Robert, it is the second to last day of the year. It's December 30th today, which means a lot of people are either writing their New Year's resolutions, they're getting ready to write their New Year's resolutions. So why not make part of that New Year's resolution, shifting your mindset to have sort of this millionaire mindset, these specific traits and even rich habits that will allow you to become a millionaire in your lifetime if you're not already. And if you are a millionaire right now, listening, it's always a great idea to freshen up what other fellow millionaires think are things that allow them to make their millionaire status permanent. So this episode is going to be a lot of fun and I'll let Robert kick things off.
- [02:07]
Robert Kroke
Yeah. Let's start off with point number one is what do you want your life to look like? What are you working toward? What's your vision? And how do you Achieve that everyone has, whether it's a vision board or an idea of what they want their outcome of their life to be. And although it may go in many different directions along the way, if you have that tenacity and that drive, you will find your way eventually. Maybe not in your 20s or 30s, but it will come to you and you will finally get that life that you always envisioned while you were younger and throughout adulthood for all of you to build that, because it's in that desire you possess and you just have to manifest it over time to make sure you keep that vision alive to build towards being a multimillionaire.
- [02:55]
Austin Hankwitz
I love this point, Robert. And just to piggyback on it a little bit further, I've become a millionaire in the last, call it 18 to 24 months, right? I'm a newly minted millionaire. And the biggest thing that I changed in my habits and my character traits and everything about me that allowed me to achieve this millionaire status was I stopped drifting through life. I think a lot of my friends, my peers, friends from college, even people that were older than me, I looked at them and they seemed like they were drifting through life. They were living from one, you know, oh my gosh, I hate Monday till, oh my gosh, it's finally Friday. They had no purpose, they had no long term vision. They didn't know where they were going. Life happened to them, they didn't happen to life. And it kind of comes back to one of our favorite quotes, which is broke people react, wealthy people forecast. And once I began to have that mindset shift of I don't want to drift through life anymore, I want to have a plan. I want to have a one year, two year, three year, four year financial plan for me as it relates to becoming a millionaire and then having very specific action items I can take to, you know, back to. We talked, talked about tenacity and, you know, failures happen left and right. That's part of the journey here. But being able to stay disciplined enough to want to continue to work toward that was just really important. So not drifting through life is just as important as having that vision. We're telling you if you want to have that millionaire mindset in 2025, you need to stop drifting through life. You need to stop having life happen to you, and you need to start happening to your life, make those goals, have the vision, know where you're going so that you can too become a millionaire if you're not already one. Now that brings us to our second point, which is discip. Discipline Once you've built that foundation, that vision, the plan, the goals, you know where you want to go, you know what you need to do. Motivation can only get you so far. Watching those motivational YouTube videos, if it's some person working out or some guy doing a deal or some woman doing something awesome, right? Like motivation can only get you so far. But having the discipline to show up each and every day. Now, something I learned about discipline, Robert, over the last couple years as I became a millionaire was that it's okay to have bad days. You don't have to show up a hundred percent every single time, but you showed up regardless. And showing up and putting in just that extra 1%, 1% better every single day, just a little bit better, every single day will allow you to, over time, compound. These days, weeks, months and years, one over another, over another, that will just tremendously change your life if you do things in the right way. And staying disciplined, just as important it is, to work toward a goal means staying disciplined to avoid and ignore other things. Something that I definitely fell victim to in the beginning was this, like, shiny ball syndrome. And as you know, Robert, we're going into year three of this podcast and we've built it into something amazing. Throughout the last three years, there's been countless things that you and I could have gone and focused on or tried to quickly build or do something for fun. Right. But like, that takes away of the compounding we've already begun building with this podcast. And so I guess what I'm saying is, like, if you have something going for you, you're able to have an outsized impact on your time and your effort by working with other people and you're moving in the right direction. Don't scurry away from that for a short term win or a shiny ball syndrome gain if it's professionally or financially over here, when again, you have something that's compounding over there, focus on what's working and continually show up every single day to that. Again, this podcast is going on year three. No one listened to the show for the first 40 episodes, Robert. I mean, it was a couple hundred people. Now we have hundreds of thousands that come back every month. So it's just so different. Different to show people that like this took three long years of never missing an episode. That's showing up. That's discipline and that's not focused on shiny ball things over here.
- [06:34]
Robert Kroke
Yeah, I think one of the most important takeaways, and that gave me chills, is the fact that we live in a comparison Based lifestyle. Every day when you're on Instagram and TikTok, you're seeing the fabricated highlights of other people's lives, especially the motivated ones, and the motivational channels that act like no one ever takes a nap, no one ever sleeps in, no one ever takes a break, no one ever has a bad day and it's all rainbows and unicorns. And I can tell you, the buck stops here. I have days where I don't feel like doing as much, so I take a couple hours off. Do I take naps? Absolutely. If I feel like crap that day or I have a headache and I want to go cuddle up and relax for a while, I do it because at the end of the day, I have built a life that allows me that freedom, just like you have Austin. So don't get it twisted that all these fake gurus out there and these accounts that are telling you that you got to get up at four in the morning and you got to read three books before noon and you got to do a cold plunge and you got to make your bed, that's all bullshit. That has nothing to do with building a millionaire mindset. That has to do with them selling you something and selling you on a theory, not getting caught up in the shiny ball syndrome. But also lastly on this point, is not letting lifestyle creep get in the way. So many people, when they start becoming successful, they're building the business, they're finally making real money, they get caught up and they lose discipline and they start buying all the toys, investing in too many businesses, and they forget about the discipline that got them there and staying focused on the business at hand so they can optimize their gains and their wins within the business that they're already doing.
- [08:13]
Austin Hankwitz
You know, Robert, there's a motivational speaker named Eric Thomas that I used to listen to all the time growing up. And one of his more famous speeches is sort of around this idea of like, you finally made it to the big leagues and now you want to relax. You put in all the work. You went from a college athlete, now you're a professional athlete, and now you want to chill. And so it's like you finally built your base, right? You put in the hard work, you finally got 100,000 invested, or, you know, you got half a million dollar net worth or you just bought your first home or like things are finally moving in the right direction for you and now you want to get lax and celebrate, now you want to go eat out more, now you want to go spend more time and whatever during the week or go golfing more, or go get on the jet Ski, whatever's going on with you, right? It's like just, no, to this point of like, lifestyle creep and shiny ball syndrome and all these different things that come with discipline. They're going to come, and they're going to come in forms of like, hey, man, like, I'm here visiting for a couple of days, would love to catch up. Or, you know, maybe it's family or maybe whatever it's going to be. But just know that one of the most dangerous animals, the crocodile, is very easy to kill. And here's how you kill it right after it eats, right? And so, because right after it eats, it's full, it's tired, and it goes to slee sleep, and anyone can go in and take it out. And so why I make that analogy is because it's dangerous when it's hungry, it's dangerous when it wants to continue to work forward and do things that are, you know, helping it reach its goals. But once it hits that goal, it's just another person. So don't ever feel like, you know, you finally got this little thing going, it's finally going for you. And now that lifestyle creep comes up, the emotional spending comes up, and all these things, like, don't fall victim to that, please.
- [09:48]
Robert Kroke
This brings up a very, very important thing that I've talked about for years. I bring it up in all my speaking engagements as well, and that is momentum. And making money can be very fleeting. And to your point, so many people, when they finally make it, they get the breakthrough, they start getting the money in, they take their foot off the gas. And I can tell you from experience, especially with momentum, once you get it, do not ever take your foot off the gas until you're sure you're ready. Because momentum can leave you in an instant and be gone for months, years, and even decades. And it's very hard to replicate. So keep that in mind. And I'm so glad you brought that up, because so many people I went through this last week. I felt myself whining and complaining a little bit to Elizabeth and people around me in the office because I just couldn't catch a breather. It was one phone call, one meeting, one this. Hundreds of dms, hundreds of emails. I got to get in school and respond, and da, da, da. And I was like, what am I doing? I am the luckiest guy alive to be in this position, to have created this personal brand and this legacy that we're building with the Rich Habits network. And I'm sitting here bitching about it at this moment because I was tired. And so it's just always make sure you keep everything in perspective when it comes to this aspect of this emotional phase of building these mindsets to become a multimillionaire and sustaining it because it's so, so important. And that really leads us into our next point, continued learning. So many people will say to you, oh, I've been in this business, I've been an attorney or a CPA or this or that. I've been doing it for 25 years. And you're supposed to be impressed by that. But many of those people haven't re licensed. They haven't kept learning. If you're a lawyer and you're not keeping up on blockchain and you know the laws around cryptocurrency, guess what? You're going to get passed by from someone that is. And so continued learning is so important. And when it comes to millionaires and multimillionaire mindsets, it's all about reading the news, keeping up on the Wall Street Journal, cnbc, Bloomberg, staying ahead of market trends. You guys all ask how Austin and I do it and how we're so far ahead of the curve. It's because we are voracious readers. We never stop researching whether it's on X TikTok, CNBC, Bloomberg, it can be seeking alpha, it doesn't matter. We stay ahead of the curve to make sure we can keep you ahead of the curve. Because like I always say, you don't have to be first to an investment. You just have to stay ahead of the curve. And that's why continued learning is such an important part of having that multimillionaire mindset.
- [12:28]
Austin Hankwitz
I also want to though, kind of deviate from this like continued learning to making money sometimes. Robert continued learning. For a lot of people, listening might just mean reading a book about leadership so they can be a better boss at work or having a better relationship with your spouse. Like, it doesn't always have to be so like entrepreneur or like business or investing focused. Like continued learning can take any shape in any aspect of your life. Just we know that millionaire mindset is always learning about what interests you so you can always evolve and become a better human being and a better version of yourself. And the only way that we become better versions of ourselves is if we continually learn into the parts of us that we think might be lacking. I love the continued learning point and it's one of my favorites.
- [13:10]
Robert Kroke
I reread atomic habits parts of it. It Yearly because I always feel like it's good to get those tune ups to make sure. Because, you know, for us, Austin, so many people look to us for inspiration, guidance, education when it comes to finance and mindset. So for me, I always want to make sure that I'm tuned up and that I'm thinking and functioning optimally because then that helps me help others in so many more ways and just keeps me top notch. So that brings us up to the other part of this point that I think we can round out with and that is knowing your weaknesses and surrounding yourself with people who excel where you don't. I've never been great with spreadsheets. I'm really good with numbers and incredibly good with breaking down the numbers for investments and buying businesses and all that. But I've just never been really good at Excel spreadsheets and various types of spreadsheets like that. And so I always outsource those. So always understand in your journey, when you're building and growing these multimillionaire mindsets in these businesses, to hire to your weaknesses, not to your strengths. You don't need other people that are good at the same things you're good at because at the end of the day you need to cover all your basis. So always hire to your weaknesses. So that takes us to our next point. Networking. I always say you're one meeting, one event or one email away from a totally different life. And I believe it wholeheartedly. So many people, they whine and they cry. I don't want to go to this event. I don't want to go to this dinner, I don't want to go to this ball. I don't even want to go to this meeting because I have to wait in traffic for 20 minutes. And it always brings me back to a story. One of my friends that has always been a dog starving in a slaughterhouse because he's surrounded by multimillionaires and billionaires where he lives. But he never wants to engage and go to these networking events because he's not one of them. And it really bothers me. And one day he called me from the expressway in LA and he said, man, I'm going to turn around, it's raining and I don't want to sit in this traffic for 25 more minutes to go to this event. I yelled at him. I was like, you're an idiot. You are right there in the epicenter of everything in your sector of business, but you're not putting in the effort because you'd rather be at Home playing video games or watching TV or playing with your dog. And that is why networking is so important. It's not about your comfort, it's about your proximity. There's an old saying out there that proximity to power does not mean you possess it, but it certainly helps. So that is why you want to surround yourself with people that are ahead of you, not underneath you. Because at the end of the day, you want to be around people that are going to lift you up, that are going where you're going.
- [15:48]
Austin Hankwitz
Proximity, I like that word a lot because it kind of ties into what I wanted to talk about, which was like, how important it is to build these long lasting friendships with your co workers or your bosses from one place to another. Because you never know when in the future you might need someone in your corner that was working with you. Right. I mean, I remember when I was working at this healthcare company out of college, I had a great relationship with my boss. He was a wonderful leader, a wonderful boss. I asked him, I mean, he was very successful too. He's like 32 years old, making hundreds of thousands a year. And I was like, man, how are you doing this? How did you accomplish all this at such a young age? And he goes, because the CEO of this company was his boss when he used to work at a previous company. And he worked his ass off to impress this guy. And they built a great close relationship. And this guy was, you know, always working and doing everything he could to like, be a good employee for his boss. And so then when he was, I think 26 or 27, his boss at the time was headhunted to go become the CEO of this new company. And the first person that that now new CEO called on to come with him was my boss. And so now that's why he was a senior vice president at 30 something years old. And it's because he put in the time, effort, energy and focus to like be the, not only the best sort of employee he could be for this person, but like having that strategy and wherewithal to know, like, I think this guy is gonna go and do really interesting things, like I should be him. This idea of proximity, right? If it's always in the office where he sees me, or if it's just being helpful, whatever I can be. And so I had the same approach with my boss, right. I was always in the office doing what I could. Just that proximity principle, I think is really important, Robert. So I'm glad you mentioned that. And sometimes too, it doesn't have to be your boss. Maybe it's a coworker. It's just so cool to see how, like, whenever you're working around different people, like, if people enjoy working with you, they want to help you out, they want to work with you more. And if you're a good person to work with professionally and that person then goes and takes a new role, working for a great new company, making all this more new money, and you say, hey, can I come work with you too? Nine times out of ten, they're going to say yes. So back to this idea of, like, networking, understanding. Like, we're. It's so cool, Robert. And I envy this with people because, like, we're entrepreneurs, we're solopreneurs. Like, we don't get to go to an office. So I don't get to surround myself with VPs at, you know, $100 billion companies anymore. So, like, I wish that that was still the case because I miss being around these people who are making these big decisions and doing and introducing these new products and changing the world. So if you are that person working for a Fortune 500 or a for Fortune 1000 company in the United States, like, don't take that for granted. That's like a really, really cool thing to do.
- [18:16]
Robert Kroke
Well, so many people say that your network is your net worth. I see it all the time. When I go to networking events or when I go to speaking events, everyone wants my contact, everyone wants my number. They want to take a picture, but 90% of them don't do anything with it. They don't follow up. They don't do anything to improve their situation through their network. And I'm the opposite. It. I take the note in my phone, I take a selfie with that person, I get their phone number, their email, and then I take a selfie. And in the note section of the contact, I write down what we talked about, who they're with, and why they're in my phone number. Because when you meet a ton of people, it's hard to remember. But networking is so valuable. It's kind of like how you would look at it from a business of the value of your email database. That's the way I look at my network. And I probably don't even do a good enough job of getting everyone's phone number and staying in touch with them like I should. But it is so, so important.
- [19:12]
Austin Hankwitz
What's important, too, about networking, Robert, is being cognizant of those people they need to cut out of your network. I think that's equally as important. Right? Looking around and saying, man, is there a couple people that are just like, either they're mooching off me or they're bringing me down. They're draining my energy. Right. That's also important with networking. And having that mindset going forward is very important too.
- [19:31]
Robert Kroke
Yeah. People say all the time that you are the top five people that you associate with with, and I totally believe it. I know of people out there right now today that are in my life, but on the fringe, that are intelligent probably could be very successful if they applied themselves. But because they're caught up with other people that are the ones that are out drinking every weekend, that aren't applying themselves, that aren't trying to better themselves, they're not going to break free from that if they don't break free from them. So that leads us to our last point, and that is the three biggest mindset hurdles that I see most people suffer from. Number one, lack mentality, Number two, victim mindset, and number three, and we all go through this is imposter syndrome. So let's break that down a little bit because I think this one really puts an incredible bow on this episode to help everyone really flush out where they're weak, how they can build on their mindset shifts for 2025 to get them into that multimillionaire mindset moving forward. Because I see it every day, whether it's one on one calls people that I do business with in day to day lives where they really suffer, where they think, you know, I have this victim mindset. I grew up poor so I'll never be rich. Or they have lack mentality and they think, oh, you know, being wealthy and financially free isn't for me. Because XYZ imposter syndrome, everyone goes through that. No matter how many people I've come across that are highly successful, they still have their doubts. Even I have my days where I'm like, I am not good enough. I am not doing enough. I am not there enough for everyone that needs me. So I think this is a great point to really flush out so people can understand. There are ways to overcome these mindset hurdles and get that brain in the right place for 2025.
- [21:24]
Austin Hankwitz
One of my favorite things about this sort of just subject matter with the lack mentality, victim mindset and impost syndrome is that as you sit down here, wherever you are, maybe you're at the grocery store, at the gym, or wherever you're listening to this episode, and you look around you, everything around you was created by a human being. And that human Being was no different than you. You're probably listening to this on Spotify. Spotify was created by somebody and now it's a hundred billion dollar company. That person that created Spotify is no different than you. They had an idea and they executed upon it. You might be listening to this on your iPhone. Steve Jobs is no different than you. He was a genius.
- [21:58]
Robert Kroke
But.
- [21:58]
Austin Hankwitz
But he was a human, right? And we're all humans. So I guess what I'm trying to share here with this, like the imposter syndrome is like, why not you? Why not you? And once I realized that myself, when I was like 24, 25 years old, I was like, yeah, Robert, why not me? Why don't I go start this podcast with Robert? Why don't I go have a newsletter? Why don't I go do these things and really try and figure it out for myself? Because if it's not gonna be me, it's gonna be someone else. You know, I think this idea of like fake it till you make it is so true because we're all faking it till we make it. I had no idea how to start a podcast, so I learned along the way. I had no idea how to start a multi million dollar until I did it and learned along the way and made mistakes. Right. You have to just do it. You just have to do it. This isn't a Nike commercial, but it very well could be.
- [22:38]
Robert Kroke
Yeah. I mean, you think back to me. Let's use me as an example here. Grew up in a broken home. My father left When I was 6, my mother left when I was 11. I lived in the family home with two half brothers that were drug dealers and very violent people. I had very little help through high school, grade school, and into college. Still made it through college, graduated college, did all the things. I've had a lot of failures in my career, a lot of highs and a lot of lows. But guess what? I never gave up. I could have easily said, oh, I came from a broken home. Oh, my parents left when I was young. There's the victim mindset, the lack mentality. Could be, oh, I grew up in poor East Toledo, so there's no reason anyone would ever expect me to be a leader or a multimillionaire or someone that could have a top rated podcast on a company like Spotify on a platform like that. So all of those things have come into my life for eternity since I was a child. But I overcame every one of them because I believed I deserved it. And I would not let those excuses get in the way. So, like Austin said, it's possible. Almost everything is possible that you desire out there. It's just a matter of you applying, having the tenacity, and sticking with it. Because you can't let your past, you can't let your family life, your friends. You cannot let all of that affect what you become.
- [24:01]
Austin Hankwitz
It's all up to you, Robert. I'm ready to run through a brick wall right now, baby. I am so pumped up after this episode. You should, like, record this and just make that my ringtone when I wake up my alarm. You can do it, Austin. You can do it, Austin. I'm here for it, man. Well, listen, before we wrap up the episode and jump to our Q and A, I want to share what I thought was a quick pro tip for myself, which was this idea of risk management, right? Let's say you are a millionaire now. You got to manage risk proper. You need the umbrella policy. You need to make sure you never bet the farm on a crazy idea and lose it. All right? Once you're a millionaire, you want it to be permanent. And that comes with risk management. Warren Buffett. It's my favorite sort of quote of his. He has two rules. Rule number one is to never lose money. Rule number two is to never forget rule number one. So making sure that you invest properly, you've got your ducks in a row, all your eggs aren't in one basket, and you're diversified is a superpower if you're a millionaire. And having that mindset is really important, at least it is for me right now. Someone who wants to make their millionaire status permit.
- [24:56]
Robert Kroke
Yeah, this episode is mind bending for me right now because I think it is so important. And being the last day of the year, I couldn't be more proud of what we've done. And this episode to really help people get their mind right for 2025, life gets in the way. We all have issues, we all have problems. And just figuring out what works for you. And I hope this episode is one of those episodes you repeat and listen to once every couple months. If you need that, pick me up, because for me, it is a reminder that all things are possible. I'm proof of it, you're proof of it. It's just incredible that we get to do this every single day.
- [25:35]
Austin Hankwitz
So exciting, Robert. All right, now, before we jump into our Q and A section of the episode, let's take a moment to hear from one of this episode's sponsors, Neos Investments. They just launched a new addition to their High Income ETF. Lineup that provides exposure to the 2000 small cap stocks that make up the Russell 2000 INDE index. While aiming to provide tax efficient monthly income to their investors. Their ETFs may be especially interesting for folks looking to generate passive income inside of their investment portfolio.
- [26:03]
Robert Kroke
And as you've probably heard us mention recently, small cap stocks have historically performed well when rate cuts begin after a period of high interest rates. So if you're looking to add passive income focused ETFs to your portfolio, especially as the Federal Reserve may continue cutting interest rates in the coming months, consider learning more about NEOS ETFs@neospunds.com as with all investments, investors should carefully consider their investment objectives, risks, charges and expenses of NEOS exchange traded funds before investing. And to obtain a prospectus containing this and other important information, please visit neosfunds.com and please read the prospectus carefully before you invest.
- [26:47]
Austin Hankwitz
An Investment in NEO CTF's involves risk, including possible loss of principal. The equity securities purchased by the fund may involve large price swings and potential for loss. Past performance is guarantee of future results Major Shout out to Troy and Garrett and Zach from the NEOS team. We are so excited to have him back in 2025 as a partner of the podcast and we'll have him back on the show here very soon. Now our first question comes from Taylor. Taylor says, hey Austin and Robert, I've been listening to your podcast for the past couple of weeks. I started from the oldest episode and I've listened to all of them now. It's changed my mindset dramatically. I did have a question though about getting rid of some consumer debt. You both talked a lot about the Snowball method and the Avalanche method as it relates to paying off my debt. I have broken down my finances to pay the highest interest rate bill first and then move on to the next one. So the Avalanche method and with my calculations it appears I can be completely debt free this time next year by following this strategy. But I'm currently a college student and I'll be getting my bachelor's degree by summer of 2025 and I've got plans to move to law school next year. Right now I've got a very good paying paralegal job and a really nice apartment with my boyfriend. It's always been my dream to become a lawyer, but with the debt I have, I struggle to see how I can manage both my finances while in law school and get good grades. How would you tackle this? Would it be a idea to take maybe a few months off and pay off the debt. Ooh, Robert, you want to start this one?
- [28:04]
Robert Kroke
Yeah. Taylor, I love this question. Congrats on the really good job. I don't think you need to do anything different. I think you download our budgeting tool, you put together an honest budget and you automate as much as you can. I want you to put every single investment, every single bill, subscription, whatever it is, on autopay so you know exactly where you are every single month. And I think that will take a lot of the anxiety out of where are you? And keeping track of it while you're focusing on School. There's 24 hours in a day. I'm really sure that one hour a day or less you can do all of these tasks and make sure that you keep the matters at hand handled in a professional way so you can focus and get the law degree.
- [28:46]
Austin Hankwitz
Yeah. Taylor, major shout out to you for getting this figured out and becoming a lawyer. That's amazing. A couple things I want to call out. First one is yes to the honest budget. You should know exactly how much it costs you to live your life right now. Like you should know what your half of the rent, what the half of the utilities are, half of the groceries. Like you should have a clear okay. If my paralegal job pays me $2,200 this month, I don't have to go into consumer debt. So you should know exactly what that number is, figure out what that number is, make sure you work enough as a paralegal, which apparently pays very well, so that you can sustain that and not go back into debt. Back to this idea of paying off the debt, work more hours, pay it off. You said you're going to graduate here summer of 2025 and then you have plans to go to law school next year after that. That's going to be a three month time horizon for you. Up as much money as humanly possible to make sure that when you go to law school that you don't have to go into high interest debt again to fund your lifestyle. Right. I have a friend who's in law school right now and she's got a quarter million of student loan debt and she's putting all of her lifestyle onto the student loan. She's paying for all the restaurants she goes like everything. She's putting it in that and like I'm not mad at her for doing that because that's how the system is made up and how she can, like she's going to pay it off eventually. But like if you can prevent that, that you should probably prevent that, right? So if you can only go $120,000 in student loan debt because you decided to live frugally and work as a paralegal part time and work on the weekends and like maybe get some scholarships, like you're going to set yourself up, Taylor, for a much better situation than someone who's a quarter million dollars of student loan debt that might be, you know, taking a low paying government job with their fingers crossed that the government's going to, you know, forgive it one day or something like that. So, Taylor, I think you're on the right track rack. You'll listen to the podcast, you're asking the right questions. I think you know what to do. I think it all comes down to now executing on what is the best path forward for you. And I have a hunch that you know what that is. You just wanted some reassurance from us that what you're thinking is true. And I think our answers help to do that. So our next question comes from Ernie. Ernie says, hey Austin and Robert, I love the show and it's changed my life. My question is I have a hundred thousand dollars in a fidelity money market account earning 5% and I don't know what to do with it. Quick breakdown of who I am. I'm 30 years old, I'm engineer and I make 150,000 a year. I've got 55,000 in my Roth IRA, 60,000 in my 401K, 5,000 in my HSA and 145,000 in my Bridge account on public.com inside of this 145,000 includes the 100,000 in the money market account. I also have three rental properties that I have about a hundred thousand of equity in combined, which is really cool. But now back to my original question. What do I do with this hundred thousand dollars? Do I go out and buy some more rental properties? Everything I've done so far says the numbers aren't working. I could I gu stick it in the markets, but I already have so much money invested and I'm 30, so I want to diversify more. Maybe I go and try and buy a business. I have no idea what to do with this money. I also kind of want to just spend 50,000 of it on a new car. So what do you guys think about my situation and what should I do with this money?
- [31:46]
Robert Kroke
Yeah, Ernie, I think your situation is incredible. Kudos to you. You've got the job, you've got good diversification. I didn't hear you mention anything about cryptocurrency. And at your age, I think everyone should have a portion of their net worth in cryptocurrency and a well balanced portfolio there. But I'll be honest, honest, right now I don't think is the best time to be buying real estate. You've got a hundred thousand dollars, it seems like it's burning a hole in your pocket. What's wrong with having more of that in the things that are already working? So for me I try to buy real estate every week of my life, but right now I haven't been able to buy a single piece of property in months and months because none of them pencil people are so used to sky high prices. So they're not selling their properties at prices that make sense for the current market conditions. And I think you're going to suffer with the same thing. Between high prices, high interest rates, it's really, really difficult to make a property make sense for the long term as an investment. So for me, the hundred thousand dollars, I wouldn't go spend 50 of it. If you want to spend a little of it, maybe 20 of it, go for it, go have some fun. But I would take the rest, I would get some in cryptocurrency, I would load up more on what you already have. That's working, working and really make your money work as hard for you as you work to get it and doing the things you've already done.
- [33:01]
Austin Hankwitz
That's a great answer, Robert. I think I'm going to take the other side. I think I'm going to encourage Ernie if he's driving a beater and he wants to upgrade in car, right? Maybe not getting the Corvette for $50,000 like he mentioned in this Instagram DM, but I mean he could afford it, he really could, right? I mean like he's got a hundred thousand of equity in these rental properties and 260,000 invested. So his net worth at 30 years old is 360 grand. That's amazing for a 30 year old you're making 150k a year year. I mean if you really, really, really wanted the Corvette, like I'm not going to get mad at you for it because you can afford it, right? And then this goes back to our episode that we published Robert, which was like how to buy a depreciating asset the right way. Go listen to that one Ernie. Pretty much just saying here, you're probably gonna have to take on high interest debt, quote unquote to buy this. It's going to be 9 to 12% interest rate, probably Just pay cash for the car if you want to do it that way. But if you cannot buy the car like what Robert suggested, or maybe you buy a different car, you have something else like, you know, go spend 20, 30, 30,000 buying, that's cool. But now you still have this, let's call it $70,000, $80,000 you're talking about now maybe 20 or 30k that you can invest into some cryptocurrencies and the other 50,000 that I think you just keep funding your bridge account with. I mean, you have hundreds of thousands invested, you've built your base, you've got this great net worth and you have this great diversification, but it's like you still have a long way to go, right? You've done a great job. You've done a wonderful job. At 30 years old, to have over a quarter million dollars invested, that's amazing. So that's what I'm saying, if you want to go and treat with a new car or like whatever, like go for it. But you are still, though, probably, I'd argue maybe 10 or 12 years away at this rate of investing, from retiring early, right? Having, call it a million to a million five in a bridge account will allow you to retire early. And I think you're on your way to do that. It seems like that's what you want to do, Ernie. So if I were you, I'd continue to stack and I continue to invest in the markets. I'd continue to fund that bridge account with whatever you can and maybe retire sooner than you think.
- [34:54]
Robert Kroke
Great job, Ernie. Great question. And Austin, way to wrap that up. So before we go into our last question of today's episode, you've all heard us talk about the importance of diversifying your investments for a while now. There could be a major opportunity today in private market real estate, especially with the market timing right now, because we.
- [35:13]
Austin Hankwitz
All know it's a lot of hassle to be a landlord and of course requires a ton of upfront cash. I'm sure Ernie knows that better than all of us here. We were focused on finding an option everyone has access to, not just Ernie. You can now become a real estate investor whether you have 50 or $5,000. And you'll have an entire team looking for opportunities to add to your portfolio with today's sponsor, the fundrise flagship fund.
- [35:39]
Robert Kroke
Yes, you'll gain access to the potential returns of real estate without the headaches of property management or maintenance. So check out the link in our show notes. To become a real estate investor today.
- [35:49]
Austin Hankwitz
As always, carefully Consider the Fundrise Flagship Funds investment material before investing. This includes objectives, risks, charges, expenses. This and other information can be found in the Flagship funds prospectus@fundrise.com flagship again please people, diversify your investments. 2025 we might see some volatility. Markets are going nuts right now. Never been a better opportunity to diversify into some cash flowing Real estate. Commercial, last mile, distribution center, real estate. It's all over the place. We know Amazon needs it. Fundrise Flagship Funds got it figured out for us and I'm so excited that they've sponsored this episode. So our last question comes from Kate L. Kate says hi Austin Good morning Robert. My name's Kate and I'm a big fan of the podcast. Thank you both for your authentic and actionable advice. My question is about going from a W2 employee to a small business owner. I'm 27 and I currently live at home with my parents in California working in food compliance, making 55,000 a year and as a part time Pilates instructor which adds about another 5,000 a year to my salary. Recently I've had an opportunity to buy a Pilates studio. Currently I have around $10,000 in cash cash, 4,000 in my high yield savings account, 25,000 in my Roth IRA & Co. 401k combined, 10,000 in crypto and $175,000 in a brokerage account. I have $19,000 of student loans and no credit card debt. Is this a good financial idea to make the jump from an employee to a small business owner? This would be my first small business. Thank you. What a cool situation. I'll take a stab at this first Robert and I'll let you jump in after Kate. I'm excited for you. This is amazing. I actually know someone named Kenzie who here in Nashville had a very similar situation. She was working as a legreese instructor I believe and then the person who owned the studio was wanting to sell it so she bought it and now it's thriving and she just expanded to her third studio. So I know that this is something that absolutely can work and if done correctly can be a very thriving and successful business. With that being said, said Kenzie, how she funded it is she took on a loan from her family which was one just a really cool thing to do first off, but she took on a loan from her family to buy the first business, then she paid her parents back on that loan and then she used the cash flow and the profits from the first business to fund the loan for the second one and then the Profits from the second one now to fund the loan for the third one. So she did use debt to buy these businesses. She didn't take outside investors. But good news for her is her husband is a general contractor. So when they built these buildings, they built them pretty cost effectively. So there is a lot at play here. And I think that if you feel like you could really do this, like, why not? In my head, there's like a couple big glaring, like, things that get me excited and a couple things that, like, throw me off. The first thing that gets me excited, you have $175,000 in a brokerage account. That's amazing. Like, if that just stays invested as is, you're going to be a multimillionaire in your 60s and 70s just by compound interest itself. So congrats on doing that and accomplishing that. The other thing, though, that kind of throws me off is you mentioned this is your first time, you know, doing this. This would be your first small business. But it seems like you've been a Pilates instructor for a while now. So maybe you understand how these businesses work and how they make the money. So, I mean, at the end of the day, this could be a great opportunity for you to take what you've learned as a Pilates instructor. Maybe you've been doing this for a couple years now, you understand the ins and outs of the business. But just also know that when I was talking with Kenzie about this, it comes with a lot of long hours, a lot of hard work, a lot of weekend work. I mean, there's a lot of stuff that goes into it. So I'm on board. If you want to do it, go for it. I'll let Robert talk about maybe financing opportunities here. But, like, I think it could be a really cool thing. Just know you're getting yourself into something really big here.
- [39:36]
Robert Kroke
I love your situation, Kate. And I'm never going to dissuade someone from opening a small business. I just want to make sure if you're buying an existing small business, this Pilates studio, that you understand what you're paying for, you understand the numbers, and you're not overpaying. Because in the situation of a Pilates studio, a lot of what you're buying is the base of the audience that comes there, the people that use the studio. And many times in this situation, kind of like a hairdresser or a lawyer, people go with them, they go elsewhere. And so you want to make sure you're not buying a space that 30, 40, 50% of the attendees and the members of that space are going to go with the old owners. Owner or go somewhere else because they were there only for the owner. Because at the end of the day, the equipment and the build out and most of that doesn't have any real value. So just make sure you're not overpaying for the studio unless it's an incredible space with an incredible deal on the lease in an area where you have kind of that crowd locked in. Because otherwise you might be overpaying. Other than that, I'm always going to say go for it. But just remember this. Don't quit the day job until you get far enough along with the studio. Because let's say that from the time you say yes to the studio till the time you get the keys is 90 days. Could be 60, could be 90, who knows? Don't quit your job the day you say you're going to buy the studio. Keep going on the day job as long as you can, because then that way you get every last paycheck you can leading up to when the studio happens. Because many times when you buy a new business business, you might go six months a year, 18 months without a paycheck. And you need to be prepared to be able to do that so you're not going backwards financially. And that's it. That's what I would say to do is I think you're on the right track. It's a great opportunity. Just make sure you understand the numbers.
- [41:26]
Austin Hankwitz
It's also amazing that you're living with your parents and you can like fall back on that. Right? So it's like, even if you did quit your job and this is not paying you for a couple months, like, and what's so cool too is you have $175,000 to fund your lifestyle with, assuming you can't pay yourself for a couple months. Robert, about the financing, how does she go about buying this?
- [41:43]
Robert Kroke
Yeah, I would ask the owner if they'll do owner financing. You know, I do that a lot. Where you find these situations where someone's retiring or they're getting out of the business, but they wouldn't mind the cash flow. So in that instance, never be afraid to shoot your shot. Let's say you're paying 125,000 for the business. You say, hey, I'd love to be able to give you $25,000 down. You finance the hundred thousand dollars over five years at 6% interest, something like that. But then also you could look at friends and family if they know you've been doing Pilates for a long time and you're good at it and you're really passionate about it. You've obviously been good with your money, so everyone knows that they're going to be willing to probably help you with some sort of low interest business loan against the assets of the business. So that's another way. But also, don't be afraid to go to a local bank or try SBA loan loans. Sometimes you can find these local branches, credit unions or the SBA to give you really favorable loans on these small businesses. So there's a lot of ways to finance it. And just don't be afraid to shoot your shot.
- [42:46]
Austin Hankwitz
Congrats Kate on the opportunity and we're rooting for you. Let us know if you end up doing it. That's really exciting. Thanks everyone for tuning in to what is the last Rich Habits podcast episode of 2024. We have so much in store for 2025. We cannot wait to greet you there in our next episode coming up here on Thursday. So be sure to come back day as we actually have a bonus flagship episode for you. It's not going to be Q and A, it's going to be a nice flagship episode. You guys are going to love it here. So come back in a couple days now and just thanks again for being such a wonderful supporter of the podcast here in 2024. It's been so humbling and so amazing to just have this happen and I can't wait to keep this momentum going forward too. Robert.
- [43:23]
Robert Kroke
Yeah, I'm definitely looking forward to 2025, year three of the rich Habits Podcast and now the Rich Habits Network. And for any of you that haven't joined the network, I think you're missing missing out. If you really enjoy what we do here in the podcast, take a look at the network. I think you'll get tremendous value from it. It's an incredible community. You get our live webcasts every single week. Our private community on school is phenomenal and I think it is just an incredible place to be. So take a look at it if you get a chance. There is a link in the show notes and in both of our bios.
- [43:55]
Austin Hankwitz
Thanks everyone and have a great and safe happy new Year. See you soon.