Rich Habits Podcast: Q&A Edition Summary Episode: Q&A: $850K in SpaceX Stock, Building a Barndominium & $50K in Credit Card Debt
Release Date: February 6, 2025
Hosts: Austin Hankwitz and Robert Croak

Introduction

In this engaging Q&A edition of the Rich Habits Podcast, hosts Austin Hankwitz and Robert Croak delve into a variety of listener-submitted questions, offering actionable financial advice tailored to diverse life situations. From managing hefty debts to strategic investment diversification, Austin and Robert provide insights drawn from their extensive business and entrepreneurial experience.

Market Volatility and Economic Outlook

Before addressing listener questions, Austin and Robert discuss current market conditions, highlighting anticipated volatility in 2025. They reference a December episode where they predicted multiple double-digit percentage pullbacks in major indices such as the S&P 500 and NASDAQ.

Austin (00:00):
"We alluded to the fact that 2025 is going to be a year of volatility... the S&P is off about 5% from its recent all-time high in early December."

Robert (01:55):
"Whenever we have a new president take office... we're going to see volatility because... negative market conditions that cause pullbacks."

They emphasize the importance of maintaining a long-term investment perspective, advising listeners to "zoom out" during turbulent times to identify potential opportunities.

Austin (03:09):
"Don't forget dollar cost averaging is your friend... we're building wealth... the Amazons of the world... will all be doing just fine."

Listener Questions and Expert Advice

1. Building Wealth as a 15-Year-Old in a Tourist Spot (Question from Akils V.)

Akils V. asks for guidance on building wealth as a high school student living in a tourist area, seeking ways to make money work for him.

Robert (05:57):
"You're already doing it... thinking like an investor, not a consumer."
He encourages Akils to identify gaps in local businesses and suggests various side hustles tailored to tourist needs, such as surfboard repairs or selling refreshments in high-traffic areas.

Austin (07:32):
"Don't fall for those people who say you need to make a million dollars a year... get down to first principles."
Austin adds practical tips, like selling water bottles at busy locations, emphasizing the value of time and the advantage of low expenses at Akils’s age.

Notable Quote:
"You're 15, you have very low expenses. Any money you make is just like money you can now have." (Robert, 05:57)

2. Financing Land and Construction for a Barndominium (Question from Trey D.)

Trey D., a 19-year-old, seeks advice on whether to finance land and construction separately or through a bundled loan while planning to build a barndominium in Alabama.

Robert (13:27):
"You can get a FHA construction loan... or a construction to permanent loan... make sure to shop around."

Austin (15:42):
"Don't buy the property thinking you can refinance rates in 12 months... use leverage to build more wealth."

They recommend bundled loans for efficiency and suggest consulting local banks for competitive rates, while also advising thorough research on property lines and seller’s financial health.

Notable Quote:
"The wealthiest people on earth use leverage and other people's money to build more wealth. And I think you should too." (Austin, 15:29)

3. Paying Off $50K Credit Card Debt vs. Investing (Question from Nick/Brendan)

Nick (addressed as Brendan in his email) and his wife, both 30, inquire whether to pay off $50,000 in credit card debt using taxable brokerage funds or continue making monthly payments.

Austin (05:21 - 25:14):
"Stop using high-interest debt... cash out the brokerage account, pay off the debt, cut up the credit cards."
He stresses the futility of out-earning high-interest debt, urging immediate debt elimination to prevent unnecessary interest accumulation.

Robert (22:16):
"You can't out-invest high interest debt. Stop. Get rid of this debt as soon as possible."

Their unanimous advice is to liquidate brokerage assets to eliminate the high-interest burden swiftly, emphasizing that no investment gains can counterbalance the interest costs of credit card debt.

Notable Quote:
"You cannot out earn your stupidity with money." (Austin, 23:34)

4. Paying Cash vs. Investing While Building a Home (Question from Kiko T.)

Kiko T. and his fiancée, both in their mid-30s, debate whether to pay $600,000 for a new home in cash or finance part of it to maintain investment liquidity.

Robert (26:51):
"It's a bad idea to use all your cash to build a house... positive arbitrage going in your favor."
He advocates for leveraging loans to maintain investment growth, suggesting that financing allows capital to remain working in the market.

Austin (28:21):
"Don't buy a home based on what they'll lend you. Buy a home based on what you feel comfortable spending."
Austin warns against overextending financially, highlighting the risk of becoming housebroke and recommending a balanced down payment to preserve investment potential.

Notable Quote:
"If you can borrow at 6-7% and make 10-12% in the market, you always want that positive arbitrage going in your favor." (Robert, 26:51)

5. Expediting $80K Down Payment for a Home (Question from Brady B.)

Brady B., a new listener, seeks strategies to save an additional $62,000 in six months for an $80,000 down payment on a $900,000 home.

Robert (33:50):
"Move all your volatile stocks into a high-yield cash account... dig into your budget."
He advises reallocating investments to secure funds needed in the short term and scrutinizing the budget to identify additional savings avenues.

Austin (35:40):
"Jumping from $2,600 rent to $7,000 mortgage is a terrible idea... you’re going to be housebroke."
Austin expresses concern over the drastic increase in monthly obligations, recommending careful budget reassessment to avoid financial strain.

Notable Quote:
"There's nothing worse than being housebroke and not being able to get out of it." (Robert, 38:16)

6. Diversifying $850K in SpaceX Stock (Question from Mr. F.)

Mr. F., a 37-year-old SpaceX employee, contemplates whether to diversify his $850,000 in SpaceX restricted stock units to mitigate risk.

Robert (41:45):
"You shouldn't have more than 5% of your net worth in any one position... start to dollar cost average out."
He recommends gradually selling portions of the concentrated stock to invest in diversified low-cost ETFs, reducing exposure to company-specific risks.

Austin (43:26):
"Flip to the complete other side of the risk spectrum... very normal things that might experience 2-10% corrections."
Austin supports diversification, advising allocation into stable asset classes to balance the portfolio and safeguard against volatility.

Notable Quote:
"Having a major portion of your net worth in one stock is very scary... I'd like to sleep at night knowing that I'm not yoloing my net worth." (Robert, 41:45)

7. Allocating $210K in Roth IRA into ETFs (Question from Austin M.)

Austin M., a 30-year-old veteran, seeks advice on allocating $210,000 in his Roth IRA into a selection of ETFs.

Robert (47:57):
"VTSAX and VTI are the same... just use VTI and VOO. Consider adding QQQ instead of VTSAX."
He advises against duplicating holdings and recommends diversifying with a mix of broad-market and sector-specific ETFs.

Austin (49:24):
"Dollar cost averaging is the better move in the coming months."
He endorses gradual investment to mitigate the impact of current market volatility, suggesting a systematic approach over lump-sum investing.

Notable Quote:
"It's about six to 10 months... you are going to be just fine." (Austin, 49:24)

Conclusion and Call to Action

Austin and Robert wrap up the episode by encouraging listeners to engage with the podcast through Instagram, email, and their Rich Habits Network. They highlight the value of community support in financial growth and invite listeners to share the podcast with friends to broaden financial literacy.

Austin (50:17):
"Join us live every Tuesday evening inside of the Rich Habits Network... if you are a super fan of the show and like to nerd out a little bit on the markets, the Rich Habits Network is for you."

Robert (50:56):
"Share it with a friend... there’s so much help we can provide people right here at the Rich Habits Podcast."

They conclude with thanks and anticipation for future episodes filled with more insightful interviews and financial strategies.

Key Takeaways

• Diversification is Crucial: Avoid having significant portions of your net worth tied to a single investment or company.

• Prioritize High-Interest Debt Elimination: Paying off high-interest debts like credit cards should take precedence over investments due to the compounding nature of interest.

• Leverage Smartly: Using loans can enable continued investment growth while managing home purchases without liquidating assets.

• Strategic Saving and Budgeting: Assess and optimize your budget to meet financial goals without overextending, ensuring you avoid becoming housebroke.

For more insights and personalized advice, tune into the Rich Habits Podcast and join the Rich Habits Network community.