← Rich Habits Podcast
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- [00:01]
Advertiser
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- [00:46]
Austin
To the Rich Habits podcast Question and Answer edition brought to you by public.com these are our Thursday episodes where we answer your questions and Robert, I should have like a maraca or like some like party favors. This is our home hundredth Q A episode. Like how crazy is that? 100q and a episodes have been published now. This is our episode 100 of Q& A. I I mean think about like this. We answer seven to eight questions every episode, which means we've publicly answered now on this show between 700 and 800 questions from our hundreds of thousands of subscriber listener base here that we have on Spotify, YouTube, Apple, Instagram. I I'm so grateful that one, we have so many people that hang out with us every week, but two, we get to provide value directly back to them through these Q and A episodes. So sincerely, from the bottom of my heart, thank you so much for coming back every week and supporting the show that so we could get to a hundred episodes of Q and A.
- [01:45]
Robert
It's so crazy too to think back two and a half years ago. I think it was when we started this that, you know, we did our first few episodes. We had a couple hundred listeners here, a couple hundred there, and we're building this thing and it really is a testamen to just being consistent, sticking with it, finding our audience. And now we have one of the biggest podcasts in America on Spotify for business and finance. It's just been an incredible journey. I feel so blessed and we're still growing. That's the coolest part. Every single week that gets me exciting, gives me goosebumps that we do directly help thousands, tens of thousands of people with their personal finance questions. And I love it because everyone wins and the podcast is free and we get to do it every single week.
- [02:29]
Austin
I'm so grateful that we've been able to do these Q and A episodes. And again if you have a question for our Q and A episodes, hit us up at rich habits podcastmail.com or DM us on Instagram at Rich Habits Podcast or some other way that you get a hold of us. If it's in the Spotify comments, maybe you're in the Rich Habits network, or maybe just drop us a comment on our Instagram who knows where. You ask us questions, but we gather them from all the different sources and we answer them on these episodes. These are so fun to do because we never really know what we're going to get. We got someone that sources some cool questions for us, and they just throw them at us, and we do our best to answer them. We don't even, really, like, come together and think about it, Robert. We're just kind of going off the dome here and having a good time.
- [03:10]
Robert
Yeah. I had a first for myself this weekend in New York City. Gentleman walked up and he looked weirdly familiar. And he goes, hey, Robert, remember me from the street the other day? And I'm like, are you the guy that pulled over in the middle of the road to take a picture with me? He goes, yeah, dude. He goes, it was so cool. And then he bought a ticket and came to the event and flew all the way to New York. So however you have to get a hold of us, get a hold of us, submit the questions, because we love these episodes. Taking it from the dome and just really backing up what we preach, and that is personal. Finance is personal. And we love giving our opinions on your situations.
- [03:45]
Austin
And just to be clear, Robert was speaking at an event we didn't host, a Rich Habits event. If we ever do host a Rich Habits event, promise we will tell all of you exactly what's going to happen and all the fun stuff. We thought about a. A Rich Habits event in Nashville this summer, calling it a Rich Habits Rode. That would have been pretty fun. My dad, unfortunately passed away, so that kind of derailed our plans. Maybe next summer, Robert, we have a Rich Habits Rodeo in Nashville. That'd be fun.
- [04:08]
Robert
Well, we're definitely going to have a Rich Habits Network event long before next summer because people are losing their minds, telling me, why won't you guys do an event? But maybe we'll do something somewhere else and save the rodeo for Nashville, because I think it would be a blast, especially if I have the new farmhouse and we can do it all right on the farm. That would be dope.
- [04:27]
Austin
So before we jump into our first question here, coming from John K. Got to give a major shout out to public.com it's really important that you guys understand that the only way that you're ever going to be able to stop trading time for money is to have a nest egg that's growing for you. Something that's going to enable you to actually retire. And the easiest way to do that is on public.com they make it incredibly.
- [04:50]
Robert
Simple to build a multi asset portfolio including ETFs, stocks, bonds, crypto options and more. And they also offer an industry leading yields of up to 3.8% APY over for your emergency fund.
- [05:03]
Austin
And for a limited time you can earn a 1% match on all IRA deposits, IRA transfers and 401k rollovers. That's $1,000 in free money for every 100,000 that you roll over into their platform. So that old for 1k you haven't touched the IRA, sit on a boring broker, roll it over into public and get your 1% match.
- [05:23]
Robert
Yes, fund your account in five minutes or less, head to public.comforward/rich habits to claim your 1% match today. You know Austin and I love giving you guys ups and get that free money. And this is paid for by Public Investing. Full disclosures are in the podcast description.
- [05:40]
Austin
So with that being said, Robert, let's jump into our 100th Q&A episode. All right Robert, let's jump into our first question here coming from John K. John K emailed us at rich habits podcast gmail.com and John K said hi Austin and Robert, thank you for all you do. I appreciate the simple and steady approach to investing that you two give in your guidance. I'm reaching out because several months ago at the beginning of the year you talked about the potential growth opportunity that could take place in the quantum computing space. He's right. It was one of our major predictions for 2025 was the rise of quantum computing. And as you're soon going to figure out here, Robert, we were right. So John says after doing some research I decided to put some of my asymmetric risk high reward money into Rigetti, IonQ, Qubits and Qubt back in March and I've already seen some gains of up to 400%. Geez Louise, John, that is insane. John says I still believe most movement has only come from positive news cycles and hype with real profitability still several years away. Which we would agree with. John says. I know Robert has mentioned in the past his 50% off the top philosophy, but how do you balance being a long term believer in a sector versus amazing short term gains along the way for these asymmetric plays. Also, do you have any updated long term views on quantum computing? Wow. Well, first off John, super excited for you, man. We had our predictions episode back in January. I think it was like January seven or eight, it was like the first week of January. We had three major predictions. The first one was volatility which we absolutely saw in April when we had the Trump tariff tantrum. Our second big prediction was the reinvigoration of the IPO market and we've seen some major IPOs this year. And our third major prediction was the rise of quantum computing and how that's going to be a big new sector here to keep an eye on. And I would argue that we batted 3 for 3 on that one Robert, now that that we're in October. But what's your perspective here? If you were up 400% Robert, on some very asymmetric risk money, right? High risk, high reward. This isn't retirement money, this is play money. How would you take profits, reallocate? What would your strategy be?
- [07:50]
Robert
It's an incredibly great question and very difficult to ask because on one hand when you believe in a sector like quantum like we have for AI for years, it's really hard to think, man, this just keeps going up and up and up. I don't want to take profits, I just want to keep adding to my position and keep going. But the number one statement you hear in every casino across the world is I was up. When they walk away from the table after having a big run in blackjack, they didn't take any off the top, they didn't listen to any of the strategies and they didn't walk away. So as much as it's a difficult question, I think you still have to take money off the top. It doesn't mean you can't dollar cost average back in on the dips. But along the way I think everyone, even in the nvidias of the world and the palantirs of the world and the Q Tums and the Rigetti's and all of these really high flying stocks we talk about, you still have to take profits. What do you do with it? You redirect it into something a little less volatile, a little more long term and then you can always get back in on the dips. Because when asking the other part of the question, where do I see quantum long term? Obviously I think it's going to continue to grow, grow, grow. But I do believe we are very much in a hype cycle in quantum computing right now. We will see Volatility we will see some major retractions. But in the long term, I believe Quantum is going to be great. And some of the stocks we called out earlier in the year I think are still the leaders and are really, really good stock picks. So that's what I would do. Take some along the way, take some profits, get back in on these dips, see and wait out the volatility because I believe we will see it. Because you have to think of it this way. Jensen Huang said that he felt that quantum was 15 years off still, and then he kind of retracted that statement. But I do believe real Quantum interface and, and use is three to five years away before it's really heavily used on a daily basis throughout big companies. So I think you have some time and we will see volatility. But I would keep dollar cost averaging on the dips.
- [09:50]
Austin
Calling that answer, Robert? I think, I think the same thing, right? I was up, John, if I were in your shoes, I would probably take like, let's say that you had invested $1,000 and now you're up 400% on that $1,000. So it's now 5x'd in value to $5,000, right? 100 returns, a 2x 400 returns of 5x. So now you have $5,000. If I were in your shoes, I would take half off the table. So 2,500 bucks. I'd set aside money for taxes. Maybe if you wanted to wait until next year, depending on, you know, your tax situation, you know, you could wait until next March if you wanted to. I personally wouldn't. I don't, I don't believe in that. I would just take my profits and go. I would take 2,500 do bucks off the table. You still have a little bit, you know, rocket and rolling here, but it's only equivalent to $500 of original capital. Right. It's only equivalent to half of your original investment. And you've now made so much more back on the back end now what would you do with the other 2500? In my opinion, if I were in your shoes, John, I would think about adjacent industries that are going to benefit from the rise of that underlying industry. Right. So what has to be true for quantum computing to be a viable solution 5, 10, 15 years from now? Well, I'm sure Artif. Artificial intelligence has to do well. I'm sure we need some cool infrastructure stuff, you know, like, like what are adjacent plays that are going to also do well as quantum computing does well. And so maybe that's, maybe you just put in some money in AMD and Nvidia and ARM holdings. Or maybe it's putting some money into Taiwan Semi and ASML holdings. It's staying adjacent without being so risk on into an unprofitable sector.
- [11:26]
Robert
Wow, that is an incredible breakdown. We always say take notes and take action. So I hope all of you are taking notes because I love that takeaway adjacent sectors. I really, really appreciate that taken. I think that is just really sound advice. So I hope that helps everyone listening. You have to take profits along the way, otherwise it's all unrealized Internet gains. And we want to see you guys diversifying and staying steady and keep it in order so you don't get in a situation where you're up 400% and then it comes back down 350% because you didn't take profit.
- [11:59]
Austin
So our next question comes from Rich. Oh, Rich says. Hey guys, I've been listening to the podcast for a little while and I really love the show. I wish I would have found it 20 years ago. I'm early retiring from the government and I'm starting a new job with a large company and I wanted to know what I should do with my funds that I have with the government for retirement. I'm 54. I have half a million in my TSP account with the government. I just started a little Roth IRA and a little bridge account because of you all. So my question is, what do I do with that half a million in my TSP? Do I roll it over into the new companies 401k plan? Should I leave it where it is? Because I know TSPs typically have low fees. Should I do something else with it? Thanks again, Rich O. All right, Robert. So if I was in Rich O's shoes, I would probably just roll over all of the funds that are in this TSP into a traditional ira. You mentioned as the Roth ira you, that's cool. You can have a Roth IRA and a traditional IRA at the same time. But I'd move it over, roll it over directly into the traditional ira. And here's why. Number one, you have full autonomy over how this invested. I'm sure that your TSP has low fees and it's, they're real nice to you. They massage your shoulders like it's all great. But nothing beats having complete autonomy over your money, right? Choosing the ETFs, choosing the stocks, choosing the everything you want inside of your retirement account. So I would roll it over into a traditional ira. If you want to go open one up@public.com and get a 1% match when you roll it over, right? That's $5,000 of free money by rolling your tsp over into this traditional IRA rich go. I would definitely consider doing that and then get it invested correctly. You're 54 years old. You've got 20 more good years of solid investing ahead of you, right? So I think that you can still be aggressive with this. The majority of it. Call that 80, 85, 90% should be invested into the index funds and ETFs we talk about like the S P 500, the NASDAQ 100, you know, your VTIs, your vugs, things of that nature, the ETFs, they're going to help you build wealth over the next 5, 10, 15, 20 years as you gear up for a very, very we retirement. Remember, if this money is invested in the s and P500 and the S&P averages about 10% per year, your money will double every seven years. So this half a million can turn into a million in seven years from now when you're 61 years old, and then 2 million when you're 68 years old. Right? So like, being aggressive here while you're still quote, unquote young could be a good idea.
- [14:29]
Robert
So I love this take and I think the most important part of it for me is autonomy. If you roll this over into the traditional account, you have full access to do whatever you want. You can be more aggressive, less aggressive, diversified along the way. But I really like that because TSPs do have low fees. And I think this is a really sound strategy at 54 years old to really set yourself up well for retirement.
- [14:52]
Austin
So our next question comes via Instagram. DMS from James. James says, what a wonderful podcast. I'm so glad I found your wisdom six months ago. I'm 40 years old, married with kids, and we now have a teenager in the house. Reality is hitting us that we've got maybe five or six years left with them before he goes out and is on his own. I enjoy my work in the media space, but I'm also not opposed to pressing pause on some work goals in order to soak in more family time. We have no debt. Our house is paid off. Here's the twist. We will be receiving $1.2 million from a car crash settlement in early 2026. Thankfully, everyone is okay. We're a little overwhelmed with this sum of money and are not sure how to use it to our benefit. Do you both have any investment ideas or advice for allowing my wife and myself to Work less for the next five years, invest this money, let it grow and compound, but also receive some dividend income. Thank you for your tips and ideas, Robert. I'll let you answer James question first.
- [15:49]
Robert
I love this mindset. This is an incredible question. My first take is most Americans will never sniff $1 million all at once. It's just the math. And for you to be getting $1.2 million, the first thing I would do is look at what we just covered in the last question. Take the million dollars, get it diversified in a nice portfolio and let it ride. Because if you can turn, at 40 years old, 1.2, let's say you invest 1 million, you turn it into 2 million by the time you're 47, and then 4 million by the time you're 54, you are set. You guys are killing it. And you did what you wanted to do. You lived life your way by spending time with your kids. So many people chase the American dream. They chase financial freedom, and they never stop along the way to smell the roses. So I love this mindset and this question. And it's really easy math. As long as you put that away, get it invested in all the things we talk about on a daily basis, you guys are going to crush it and get to spend a ton of time with the kids.
- [16:53]
Austin
Yeah. So tactically speaking, here's what you're doing, right? You're going to have 1.2 million of cash deposited to your checking account. You're going to open up an account on public.com, a normal tax possible brokerage account. We dubbed this the bridge account. And you're going to deposit this 1.2 million from a car crash settlement into this brokerage account. I'm 99% sure people do not owe taxes on settlements. Robert, correct me if I'm wrong here, But I'm like 99% sure that this 1.2 million is not taxed, which means you should just deposit all 1.2 million of it into your brokerage account. Now you have a decision to make. How much of this do you want to be focused on generating income to supplement your lifestyle? So you can press pause for the next handful of years, half a dozen years, and spend more time at home and with your teenager. And how much do you want this to be invested so it can compound over a long period of time? In my humble opinion, I think there's a world where you could split it 50, 50. So here's what that means for me. That means 600,000 of this gets invested into Vooqq VGT, V U G, V T I and other, you know, index funds and ETFs that are going to compound by 8, 10, 12 over a long period of time. Okay? So that's going to double every seven years. The other 600,000 of this should be invested into NEOS funds, Spyi, QQQI, IWMI, IYRI, and maybe some BTCI if you want some bitcoin exposure there. But long story short is by putting this $600,000 into those funds that I had just mentioned, let's say that half of it is in spyi. So let's call it, let's give you numbers here. Let's say 300,000 goes into spyi. Let's say one is in QQQI and then the other 150,000 is 50, 50, 50 in IYRI, IWMI and BTCI. So now you have all 600,000 accounted for. That should yield just about 18% annualized, which will be a hair over $100,000 a year in annual distributions from their cover call strategy, which comes out to about eight and a half to $9,000 a month, month deposited to your brokerage account that you can now live off of. Now here's the kicker. This $9,000 is not taxed in the same calendar year it is received. You will be taxed on this money when you sell the shares of the ETFs, because every month that they are paying you this $9,000, the cost basis on that $600,000 total investment goes down by 9,000, right? So you, that's when you realize the profits. And if you hold it for over a year, essentially what you're doing is turning short term income, which is normally short term capital gains, to a long term capital gain which is a much more favorable tax treatment. So if I were in your shoes, I'd break it up that way. I'd make 8 or 9,000 with NEOS funds, I'd have 600,000 doubling for me every seven years. So hopefully by the time that you know your teenagers out of the house in five, six, seven years from now, you have a million, a million, two, whatever, something like that sitting over here. And then you also have got now the same 600,000 after getting paid out, you know, a hundred thousand a year from it as well. So now you've got, I don't know, let's call it one and a half to $2 million because you invested this 1.2 million correctly. And you now have so much more time that you got to Spend with your teenager. That's the most important part. I think a lot of people, Robert, I don't know if you've seen those, those videos on TikTok or Instagram, but it's a, you know, it's a video of a family and maybe it's a wife or a husband and they get to spend, you know, all this time with their family and they get to hang out and do these things. And everyone in the comments is like, oh, that's a rich man, man, that's a rich woman. They get to hang out with people they love. And you know, that's how you define wealth in my opinion. And you're definitely doing that and I'm really excited for you. James.
- [20:41]
Robert
Yeah, that is a great breakdown. And you're right. When I see someone having coffee at 10am at a really nice cafe, that's a rich life. When I see people that are at the gym at 10am on a Tuesday or doing whatever they really, really enjoy, that is a rich life. Because, because so many people spend their entire careers 30, 40, 45 years, 50 years and they're at a 9 to 5 job and just don't ever have that freedom. I've built a life for many, many decades now. I don't have to grocery shop on Saturday or Sunday. I don't have to stand in the lines, I don't have to wait in lines for gas because I get gas every Tuesday if the cars need gas because no one's at the gas station on a Tuesday. And I think that is really an important thing to talk about but also to click back on the tax side side, you're absolutely right. From everything I've ever learned, if it's personal injury or anything related to an injury or getting hurt or some type of loss of work, those are non taxable funds. Always check with your lawyer or your cpa. But I think you're spot on Austin with that breakdown.
- [21:43]
Austin
So our next question comes from an anonymous follower on Instagram. They say hello Robert and Austin. Please keep me anonymous. I'm a big fan of the show and it has been a huge help. Help. I'm 21 and will graduate in 2026 with an engineering degree and a 90,000 per year job lined up at General Motors in my state. However, I don't see this as my long term career. I grew up working on cars and my real passion is to own a shop in the future. I average between two and a half to 3,000amonth only from working 15 to 20 hours a week as A mobile mechanic that's currently a sole proprietorship in the state of Tennessee. So my question is, as I start my engineering career, should I formalize my business by creating a real LLC or just keeping it a side gig? My finances are the following. I'm 21. I have 3500 in my Roth IRA, 6400 in other investments. I have 120,000 mortgage on some land that I had bought. It's 1100amonth payment. Thank you all for your advice. Robert, what advice do you have for our anonymous listener here about their llc?
- [22:46]
Robert
First and foremost, congrats. You, you're crushing it. I saw a headline last week that the US automakers are currently 600,000 mechanics short of their needs in the United States. I thought it was a incredible, incredible number. Correct me if I'm wrong Austin, but I believe that was the number that was the headline. It was the Ford Motor Company CEO was talking about it and we've been talking about this for a year now that we're going to see a big flip flop from everyone becoming programmers and all that because so many of those jobs are going to go by the wayside because of AI to getting back to the things that are going to take much longer to be replaced from humanoid robotics and robotics in general. But to get to the LLC part, I don't think that's necessary for now. I would just keep. Because it's going to roll into your wages anyway. So if you're getting an engineering job and it's going to be a W2, it's going to be in your name, I think think it's totally fine. I would memorialize the side hustle though and put that in an llc because that's all going to be income that's coming in sporadically from random people. And then you could use the side Hustle LLC to enjoy a lot of the tax credits that come with being a business owner. That's the strategy I would do.
- [23:59]
Austin
Robert, I'm right there with you. I think it's called TNTAP.com that's what I use. The thing weird about Tennessee is they have a six and a half percent tax on business profits. So just be weary of that whenever you set it up. But I, I couldn't agree more. I think that there's a lot of expenses, business specific expenses that you can take advantage of if it's a vehicle, if it's gas, if it's different type of equipment that you're using or maybe marketing things that you're doing there like just Work with a good CPA to help you identify those things. And congratulations on making an extra $30,000 a year being a mobile mechanic. I mean, geez Louise, that's so cool.
- [24:34]
Robert
Yeah, I love that story. And great takeaway. And just anyone that's listening, remember, if you have a side hustle, you don't even have to be profitable. All the IRS cares about is that you're making a meaningful effort to build the company and you can enjoy these tax breaks. So if you just got started and you're making cupcakes or you're opening a nail salon, or it's just a side hustle, maybe you're trimming trees. Whatever it is, get the LLC up and running. Because even if you're not profitable in the beginning, you can still enjoy all of these tax benefits. And I do want to click back because I fact checked myself. It was 400,000, not 600,000 mechanics short by his belief in the US market for all of the auto manufacturers in the United States, which is just a crazy number. And it just goes to show because these mechanics are starting out at like $70,000 a year. So think about that. If you're young and you're not sure what you want to do, find one of these high paying blue collar jobs because it is so good. Great benefits and there is a lot you can gain from it financially. So listen up fol folks. You can lock in a 6% or higher yield with a bond account on public. But remember your yield isn't locked in until the time of purchase so you might want to act fast. Lock in a 6% or higher yield with a diversified portfolio of high yield and investment grade corporate bonds only at public.com forward/rich habits so our next question.
- [25:57]
Austin
Comes from E. E says. Hey guys, I'm E. I'm 34 and I lived what below mine means for years. Even in my camper van for four years. And I recently went all in on my career career. I now earn $125,000 a year plus 20 to 30,000 in side hustle money. I discovered your podcast six months ago. So I joined public.com and I contribute 23,000 a year to my 401k matches discretionary. Maxed out a Roth IRA at 7,000. I bought a house this June. I owe 90,000 on the mortgage at a 6 1/2% interest rate with a $2,500 monthly payment. I also have a $95,000 family loan that I repay at 500amonth. My home has about 200,000 doll and I have a roommate. I've saved $60,000 and I want to split it between brokerage accounts, a high yield savings account, an emergency fund, and still invest in other fun things. So what is your recommendation for distributing that $60,000 between investing high yield and emergency cash? Given my current setup, I'm hoping to be financially independent by 55. Thank you for your guidance, E. Robert, what would you tell E to do with $60,000 in their situation?
- [27:06]
Robert
I would tell E. At 34 years old, I feel like you're, you're doing well, you're making good money. I would not do all just emergency fund, high yield savings because it's cash on top of cash on top of cash. I would have the emergency fund for sure, but I would probably look at being a little more risk on. You didn't mention having all the ETFs we talk about. You didn't mention cryptocurrency. You didn't mention some of these other sectors and investment strategies we talk about to make you more money. You're in an age where you can be a little more risk optimized, especially because you're a high earner. So for me, If I had $60,000 in your situation, I would look at a few things I would maybe consider, but we don't have all the details. What to do with the $95,000 family loan. Is that something that benefits you by paying that down or paying it off? We don't have all the details. I would look at getting more diversified and getting some money into these brokerage accounts like we talk about, into the ETFs and index funds. And just really try to look at it from the perspective, what is your risk tolerance and what are you trying to accomplish? You said you wanted to be financially independent by 55 years old. Well, this is how I would start to do it, rather than just having high yield savings, emergency fund, and, you know, kind of sitting on the sidelines. But also, you say you want to invest this one to 1.5k a month. I think you should be investing more than that based on your current financial situation. So I would really hone in your debt to income ratio and figure out exactly how do you get to 15 to 20% of your net investable income into the strategies we talk about on the Rich Habits podcast.
- [28:43]
Austin
I like that. Take, Robert. I do wish, though that we had more information on this family loan at $95,000. Like, I don't, I don't know what a $95,000 family loan is that you pay 500 bucks a month to. So like, let's say that you're just like, there's no interest and you're paying 500, it's going to take you 190 months, aka pay 16 years to pay off a family loan. Like, I don't know what that is. That kind of spooks me out, which makes me want to say, like, maybe half this money should go toward this family loan. Yeah. It's just weird, right? Because like, you know, if you owe your mom $95,000 and then you, you know, now you're investing or maybe you go on a vacation and now your mom thinks you're not giving her her money, that she, you know, it's just, it's a weird dynamic there. So I want more information on that. But take that out the picture to your point. I agree. Degree yet a three month emergency fund, let's call it $15,000. Then the rest of this 45,000 can go into a bridge account that is invested in voo, qqq, vgt, vti, all the things we talk about here. And then, yeah, this, this sort of 1,000 to 1,500 bucks a month. I agree. I mean, if you're doing, call it 25,000 a year plus 125 of a salary, it's 150,000 pre tax, 110 after taxes and things like that. So, you know, let's call it $8,000 a month. You're only investing a thousand of your 8,000 and your monthly payment on your mortgage is 2500 bucks. You didn't really mention anything else there. It's like, okay, cool. It's like, where's the other fifty five hundred dollars a month going? I agree with Robert. I think you get a little bit more aggressive than just this 1000-1500amonth when it comes to like consistently investing. Try and hit that 15, 20, 25% range if you can, because that's the only way. Hey, you know, you're, you're the one here that says I want to retire early. If you want to retire early, you have to really figure out how to increase your investing on a monthly basis as well as perhaps decrease your monthly living expenses, which you've already figured out here with the van living there four years ago. So, long story short, I'd want to get this 95,000 family loan figured out. But assuming that is not that big of a deal and I'm looking too hard into it, let's get your bridge account rocking and rolling and ensure that you are on path to retire early by compounding, compounding, compounding. So our next question comes from ZG. ZG says I have a question. I've got 40,000 in debt, which includes car payments, personal loans and credit card debt. I'm paying fourteen hundred dollars a month on all of it. I have a house with 50 to 60 thousand dollars of equity. Is getting a HELOC a good idea to pay everything off and then have a payment of only $727 since every month I don't have enough money, so my credit card debt is increasing. I have three kids, I have a fourth on the way. Please answer my question. I love your podcast. Thank you in advance, zg. We are rooting for you, my friend. You are in the thick of it. You need a plan of action and we're going to give you one here. So you've got car payments, personal loan and credit card debt, $1,400 a month. I do not know what kind of cars you're driving and what those car payments look like, but I would argue that the bulk of this 1400, probably 7, 8, 900 of this is car payments. If that's the case, I would figure out how to either one, become a one vehicle household or two, Maybe there's a world where you can get rid of one of these car payments by selling the vehicle. And then, I don't know, like maybe you can save up some money, call it 3,5000 somewhere. Maybe you can borrow a couple thousand from a friend to buy a beater car. Like all I'm trying to do is help you find this 4, 5, 600amonth. Because when you're saying that you don't have enough money to like, your credit card debt increases every month because you're not making enough money. Like a thousand dollars a month changes your life, right? And so if half of that can come from no car payments, the other half can come from working 20 hours every weekend at a McDonald's or at a Target or a Walmart. Like now you have an extra thousand or even fifteen hundred dollars a month to really change your situation. So would it make sense to get a heloc? I guess like in this situation? Sure, it very well could make sense because you'd free up about 600 here assuming you could borrow that money. But you only have 50 to 60,000 of equity and to get a HELOC you have to have at least 20% of a loan to value ratio of like, of equity there. So like, I don' know how much you could actually Even borrow in this situation. What it sounds like to me is quite literally you are going to be in a season of your life where two things have to become true. One, you have to decrease your spending, and two, you have to increase your income dramatically. Right. So from a decreased spending perspective, that means every single dollar that is entering and leaving your bank account, you've got eyeballs on it. You know? Exactly. Oh, this subscription, we don't need that anymore. Anymore. This Uber eats. No way. We can't afford it. This specific, you know, weekend thing that my son wants to play baseball. Sorry you're skipping the season. We don't have the money. You need to figure out how to make your monthly payments. Everything that leaves your bank account on a monthly basis decrease by 500 bucks. 800 bucks, right. Like, I'm, I'm positive you can find some stuff in there. And then on the income side, maybe it's you, maybe it's your wife. I know she's pregnant right now, so I, I, I'm not a woman. I can only imagine how hard it is to work a normal job while being pregnant. I'm so grateful I to do that. So mad respect to our listeners out there who work jobs and pregnant. That's insane to me. But anyway, maybe there's a world where your wife could maybe start working some extra jobs. Maybe, maybe she's driving some Uber. Right. Maybe she's doing some door dash delivery. Right?
- [34:00]
Robert
Right.
- [34:01]
Austin
She got some kids in the back seat. She's picking up the stuff. Like there's a lot of different ways to get flexible here to earn an extra 507, $50,000 a month of income and then also take away 250, 500, 750 of expenses. And now you're net net where things are starting to look in the right direction. You get some of this debt paid off. Maybe in your instance, you do the snowball method to start cleaning up some credit card debt and then you're off.
- [34:23]
Robert
To the races here, Austin. I think those takeaways are great. My mind immediately goes to someone's got to get more money in the door or they have to lower expenses. I always like the side hustle effect because you can Uber drive doordash, whatever you want to do, get an extra $200 a month. That gets you that $200 extra a week. Week. $800 a month to chunk away at this. And like Austin mentioned, I would get the credit card paid off first because at the end of the day, if you can't get the heloc because you don't have enough equity in the home yet. You're kind of in a tight situation. So I would try to look at one at a time because unfortunately, these are all considered high interest debt and the car is a depreciating asset. So you're in a pickle and you have to make real decisions. So I agree with you, Austin. I would do the side hustle. I would do a really deep dive and get your honest budget in order. There's a link in the show Notes of the podcast for the honest budget that we've built that you can use. But you have to find a way to get more money out to pay off these high interest debts or you're going to stay in this cycle for a very, very long time and you have additional expenses with the next kid on the way as well. So that's going to be tricky for you. So you have to do this quickly and take it very seriously. And I think it starts with a size side hustle.
- [35:36]
Austin
Additionally, they could be in this situation where they can't cover their expenses every month because their house broke. Right? So maybe they've got too much house. Oh, we got four kids, we got, we got to have a big mansion. And then, you know, maybe the mortgage payment is just too much for them. If that is the case, maybe there's a world where you do end up downsizing a little bit. I had a bunk bed growing up for a little bit. I mean, it's, it's okay to do the bunk bed stuff with the kids. They don't remember. It's not a big deal. So maybe there's a world where you end up just selling the house entirely. Maybe you use some of that equity as either a down payment on your next spot or to help clean up some of this debt or something of that nature where you're able to have a little bit more on a monthly basis of margin because so much is not going to the house. You didn't tell us what your monthly mortgage payment is. We also don't know what your income is. So, like, I could just be completely wrong here, which I hope I am. But long story short, that's also an option to consider. But listen, zg, we are rooting for you. You got this lock in. There's a season of your life where you're about to earn, you're about to work your butt off, you are about to change everything because you are going to get yourself in a situation where you and your spouse are going to lock arms. And y' all are just going to figure it out, Right? You're just going to keep going and keep going and keep going. It is insane, Robert, how little sleep a human being really needs to survive.
- [36:54]
Robert
Right? Yeah. And sometimes for everyone listening, personal finance is personal. We all go through things. Things. And sometimes you have to go backwards to go forward. I know that sounds weird, but it's just the truth. You know, so many people live beyond their means. I think I read a stat recently and we talked about this. 64% of households making over 100 grand a year are living paycheck to paycheck. And that's all because their house broke and they're living beyond their means. $100,000 a year in most markets is plenty of money if you live according to what you make, not according to the perception of the neighbors and your friends of what they think you should be living like. So keep that in mind because lifestyle creep is the killer of all dreams. And you're in a situation, you should take a deep dive, have the serious conversation, and look at how you can lower expenses and raise income.
- [37:43]
Austin
So our last question comes from Darlene. Darlene says hello. Not sure if this will be noticed. I'm a silent follower. I started listening to your podcast last month, trying to figure out my life. So here's my question. Question. I have a Roth ira. It's from Primerica. Not sure if you're familiar with them. I wanted to open up another one through Fidelity, Vanguarder, Schwab. Can I do that? I've got so many questions, but I just want to start with this one. Thank you so much. Darlene, Darlene, Darlene. Yes, you absolutely can open up a Roth IRA. Here's what you got to do. Public.comforward/rich habits. Go open up a Roth IRA. Either cash out what your Primerica money is invested into. It could be in, like, some mutual funds that are, like, only for Primerica investors, which are likely high fees anyway. But it's like, turn that Roth IRA Primerica account to cash, right? Then do a direct transfer from your Primerica account into your public.com account. Assuming that your Primerica account is a Roth IRA and you're transferring it over into a public dotcom Roth Ira. There won't be any taxable. It's not a taxable event. If your Primerica account is a traditional ira, then open up a traditional IRA on public and roll it over that way. Just make sure that you're doing traditional to traditional or Roth to Roth so there's no, like, weird tax stuff going on. Then after that one you get that 1% match congrats. And then two you're off to the races. You got the autonomy. We talked about this with the guy's TSP account from earlier. You now have the ability to go and invest and rock and roll as it relates to the index funds and ETFs we talk about. If that's Voo, VGT, Spyi, QQQ, all of these things. You now now have low cost ways to build wealth over a long period of time. You're not dependent upon a 20 basis point, 50 basis point, 75 basis point mutual fund that is supposed to outperform and it just invest in the cruddy stuff that no one wants. Yeah. So get out of that Primerica account, go put it into a public.com account and we're wishing you all the best. Darlene. Thank you for being a silent follower. We don't care what kind of follower you are are. We answer questions from all types of people here. So we're excited for you.
- [39:57]
Robert
I don't have anything to add to that. You crushed that breakdown. And what an episode. So many wild questions kind of all over the board. That's the way we like it. So everyone can get a little piece of knowledge, a little piece of value. Whether it's your question or not, people love these episodes and I think it's because it's not. There's no formula. It's just all about personal finances personal and how we could provide as much value value to as many people out there. So thank you all for stopping by and keep the questions coming.
- [40:27]
Austin
Thanks everyone for tuning into this week's episode of the Rich Habits Podcast. Monday's episode is super cool. We talked about the three sort of year end things that you need to do to maximize saving, taxes, building wealth, things like that. So you've not yet listened to Monday's episode. Go back and check that out and be sure to come back tomorrow for our Rich Habits Radar episode. We will be talking about a lot of fun things. You're not going to want to miss this one. Specifically am MD and OpenAI's sort of partnership that was announced on Monday. So stay tuned for that little breakdown tomorrow. And always thank you so much for tuning in to the Rich Habits Podcast, for answering the poll that's below, for leaving comments on Spotify, for joining the Rich habits network. We're 750 members strong now. Robert. We're closing in on a thousand people in the Rich Habits Network. It's unbelievable. When we started this last year how quick. I had no idea it was going to grow so fast. And it's. It's been so much fun. And we're just really grateful that you guys keep coming back every single week.
- [41:22]
Robert
Thank you guys so much, and we'll see you tomorrow.
- [41:49]
Austin
And Doug, Limu and I always tell you to customize your car insurance and save hundreds with Liberty Mutual. But now we want you to feel it. Cue the emu music, Limu. Save yourself money today. Increase your wealth.
- [42:04]
Robert
Customize and save.
- [42:05]
Austin
We say that may have been too much feeling. Only pay for what you need@libertymutual.com Liberty.
- [42:12]
Robert
Liberty. Liberty.
- [42:14]
Austin
Liberty Savings. Very unwritten by Liberty Mutual Insurance Company and affiliates. Excludes Massachusetts.