← Rich Habits Podcast
Rich Habits Podcast
Q&A: Separating From Active Duty, Buying Airbnbs To Lower My Taxes, & Living With My Girlfriend
00:39:32
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A
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Hey guys, it's Christian McCaffrey, pro running back. I'm partnering with Abercrombie this season to tell you about their viral denim. All you need to know is denim should fit like this. Abercrombie's athletic fit is a game changer. They're designed for guys with an athlete's build like mine, just enough room and the perfect stretch. When a jean fits that well, I'm wearing it on repeat. Shop Abercrombie denim in the app, online and in store. Hey everyone, and welcome back to the Rich Habits Podcast Question and Answer Edition. These are our Thursday episodes where you guys ask us questions via Instagram dms@rich habits podcast or via email@richhabitspodcast gmail.com and we answer them. We answer your questions as if we were in your shoes, living your life, doing your things. These are very fun episodes because a lot of this conversation is just, you know, right off the dome. There's no real scripting or planning. It's just we get some cool questions from you guys and we try and answer them in real time.
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B
Yeah, I love these episodes just because like you said, it's off the dome. It's from our experience, what we know, what we believe is the right strategies for all of you. As we talk about on a constant basis, personal finance is personal life gets in the way and these episodes really help people see what everyone else is going through as well. So you get to see not only and maybe get your question answered, but also see what everyone else's trials and tribulations are along the way for themselves. So that is why these episodes are so incredibly insightful, but also fun for us to record.
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A
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B
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A
So our first question comes from Derek J. Derek says, hey guys, I've been loving the show. It's my routine to and from the office. I have a question. My girlfriend recently moved into my condo with me and we've divided the monthly mortgage payment in HOA accordingly. She's paying me $1,650 a month. Combined, we have just over half a million dollars invested in the stock market crypto and et cetera. And our 401ks together exceed $200,000. My question to you guys is, should I reinvest the $1,650 a month she's paying me back into paying off the mortgage faster? Or maybe do I invest it somewhere in the markets? If I were to reinvest it back into the mortgage, I would save over $300,000 of interest throughout the life of the loan. Additionally, I would save nearly 18 years of mortgage payments. Derek, really great question. Totally hear you. I wish we knew what your actual interest rate was on your mortgage. We could have made a suggestion here. But before we get into any of that, just want to be crystal clear, Derek, this is your girlfriend, right? You guys are not fiance. You guys are not married. You guys are. There's nothing going on here. You guys are boyfriend and girlfriend. You guys are roommates. Your roommate is paying you 1,650amonth. And you talked about we have half a million invested into the markets with our 401ks exceeding 200,000, right? So like you're using a lot of wheeze and hours and togetherness vernacular. And until you guys are married, I want you guys to be using I have this invested, she has that saved. I have this, you know, working for me, right? You guys are not together in the eyes of the law and in the eyes of the courts here. So I just want to make sure, like, do not combine your incomes until you are married. Robert and I have seen it 100 times. Boyfriend, girlfriend, we're in love. We've been dating for two and a half years when we've been together to save on rent, well, you know, nine months down the road, you know, we had a falling out and now they owe me this. And I, hey, I was paying on that mortgage too. So you should sell that house and give me some of the equity. It's a terrible situation. So please, if you are getting paid $1,650 a month, use that money. However you would use it if it was coming from a roommate, because that's all this person legally is to you. Robert, I'll let you take it from here as it relates to paying down the mortgage faster, how much they'd save, and things of that nature.
- [05:21]
B
Yeah, I want to touch on the relationship part, though. You nailed it. You should not be looking at this. As your funds are combined, you are boyfriend and girlfriend. So just to reiterate, I would even have a lease. I would have something that spells out what she gets for paying that amount in case anything down the road could come up and be said that you owe her money back or something. Because at the end of the day, when we're in love, we always want to believe it's forever. But until you're legally married, you have to look at it otherwise when it comes to money. Now, as far as paying down the mortgage, I look at it this way. Again, we don't know your interest rate, but let's assume your interest rate is 6.75%. Then I think it's okay if you wanted to pay extra mortgage payments to pay the mortgage down. But I also like the idea of taking that money, investing it into a basket of index funds and ETFs, getting that money built up further and further because this is your money. Remember, you have a roommate paying you rent for their portion of living there. It is not their portion of the mortgage because from what we know, you are not married. She is not on the mortgage. So keep that in mind. We appreciate you saying we, we, we, but at this point, it is you. So let's look at it that way. So I would say I would probably rather see you put the money building up your base, building up your investments, and just paying the normal payments on the house. But again, we don't know the interest rate to tell you what is the best way to do it.
- [06:48]
A
Yeah, just to get more context too, right? I mean, the NASDAQ, for example, total return is up just over 10% year to date. And we're filming this on July 21, 2025, which means if you had used money to go pay down that mortgage, you would be essentially leaving some money on the table because the Nasdaq is up 10% versus over one year period of time, maybe your interest rate could be 6 and a half or 7% now. It's a couple percentage points. Nothing crazy there. I totally hear you wanted to save 300,000 on interest. You have our permission, assuming you have an interest rate that's in the high. Sixes, sevens, eights, things like that. Yeah, pay it off. I mean, that's essentially what the markets do on an annualized basis. Any but here's the kicker. These extra mortgage payments that you use to pay off the mortgage once it's paid off, take that extra 1650amonth or whatever it is and go invest it. Right. We want you to be investing throughout this entire process. We don't want people to pause all of their investments to go pay off debt that is arguably, you know, not high interest debt at 6 or 7 or 8%. Invest throughout the payoff process so you can continue to earn as the S and P in the NASDAQ Trend higher throughout 2025. So our next question comes from M. Mike are Mike says, hey, fellas, my name is Mike. I'm 40 years old and I've finally come into my own. I listen to you guys religiously and I love hearing your case by case breakdowns. So it'd be really cool to hear mine on the show. Well, Mike, you're listening to it, my friend. Here we go. Mike says, so up until 35 years old, I was a mess. I was working as a restaurant manager, living paycheck to paycheck, paying the bare minimums on my student loans. In my 20s, I actually was the worst and wasn't even paying anything toward the principal. Today I owe $57,000 and my payments are going to be 1003, $134 a month starting in a couple months. I work in construction equipment sales and I make about 120,000 a year. I have $44,000 in a high yield savings account, 25,000 in my checking account and 89,000 in my 401k. So my question is, should I use this money to pay off my student loans? Do I keep my student loans around for the next 25 years that I owe them for? What do I do in this situation? Robert? I'm going to kick this one off, Mike. If I'm doing my math right here, my friend, between the 44,000 in your high yield savings account and the 25,000 in your checking account, you have $57,000 to pay off these student loans today. And the reason why I want to encourage you to do that is because one, you already have $90,000 invested, which is more than the 57,000 balance, right? So that's, that's our main rule here, right? You don't want to go make a big lump sum payment to pay off a debt like this unless you have the equivalent of already invested, which you do, right? So you have more than that 57,000 invested in your 401k here at 89,000. And then also you now will be able to free up a $1,134 a month payment. That $1,134 a month is just over $13,000 a year. Assuming this $89,000 you have in your 401k is invested correctly, you invest from 40 to 67, let's say, for example, this 1134amonth, you're going to have two and a half million dollars in your nest egg by the time you're 67 years old. And that's by unlocking and investing, right, this eleven hundred dollars a month payment. If you're going to do this, please, please, please don't think, oh, I've got an extra eleven hundred dollars a month, I'm going to go buy a new car and have a new car payment or I'm going to go, you know, rent this or buy. If you're going to do this, you use that extra eleven hundred dollars a month and that goes straight to investing. You put it in a taxable brokerage account, use it to max out your Roth ira. Maybe you now have some more monthly liquidity to contribute more to your 401k depending the investment options. But please, please, please, Mike, do not use this extra liquidity on a monthly basis to go backwards.
- [10:40]
B
I love this breakdown and I think it's incredible that I want to back up for a second because the headline for this is late bloomer need catching up. Mike, welcome to the party. You're not late. You have plenty of years ahead to build wealth if you follow the plan that Austin laid out. I agree 100%. Get it paid off, get it knocked out. It's been around long enough. This really kind of highlights what we say a lot, that you can't out invest high interest debt. And so many people just keep kicking the can down the road on student loan debt, on credit card debt and they never get to a point where they're fully moving forward because we always want the arbitrage of our money going in our favor, not someone else's. So welcome to the party. You got plenty of time to really crush this and get back on track and get where you desire to be as long as you follow the plan laid out by Austin and stay consistent. Remember, when you pay this off, don't then all of a sudden think that 1100 and some dollars is free money that you can go blow. Act like those payments are still there and invest it consistently and even further. Auto invest it. Set it up with public.com, get it auto invested so you don't tinker around and think you can go buy stuff with this money and you will be perfectly fine in your wealth building journey.
- [11:58]
A
100%. Public.com has their investment plans. You can set up some sort of auto invest where you're taking this 1100amonth, getting it invested on public. They'll have a whole plan for you as how to invest it, the weightings, the different names and index funds. You're going to be just fine, Mike. You will be a multimillionaire in retirement if you follow this plan. So our next question comes from Eric G. Eric says. Hey Austin and Robert, thank you for your advice. It has helped me tremendously over the past year, which is why I started listening to your podcast. I've made some recent stock and crypto purchases based on names that you guys have mentioned on your show. Mainly Ethereum, xrp, the ura, etf, Palantir, Broadcom, Oklo and Constellation Energy. However, some of these purchases were at or near their all time highs and now I'm concerned I got in too late. Can you guys give me some general, general frameworks to use as it relates to investing near or at all time highs for some companies and cryptocurrencies that exist. Robert, I'll let you kick this one off.
- [12:58]
B
Yeah, so I think this is a great question and the way I look at it is this, when I was talking about Palantir is around 6 or $7 and now I think it's at $155. So when you're looking at these high growth, secular growth trends in these stocks, these big tech companies that are on fire, you have to look at it from a standpoint that if they're crushing it, they're usually going to be at all time highs or close to it because they're growing so rapidly and so are the stock prices. So I tend to not worry about it, especially with bigger companies that we believe for the long term are going to continue to grow, like Palantir, like Nvidia, like xrp, in the crypto space, like Broadcom. So I don't care what the stock price is, I care about where I believe it's going in three to five years. So I wouldn't worry so much about buying at all. Time high is because a lot of times people when they're looking at stock purchases, they want to find a deal and they look at the stock price and go, oh, it's cheap, so that means it's going to go up more. That is absolutely not true. I have bought Nvidia, Palantir, Microsoft, Micron, all of these stocks, Amazon, near or at all time highs for years because I've been dollar cost averaging into these positions. That's the way I look at it. That is the best way to think about it because too many people think if a stock is cheap, that means it's a good deal and that just doesn't make sense.
- [14:22]
A
Robert, I love what you just shared and it really reminds me of a phrase that is near and dear to me, which is bears sound smart, bulls make money, right? Bullish investors are the ones that actually make the money, while all the bearish investors are like, oh, I'm running for the hills, right? They sound smart in the moment, but they're not making any money. So to be optimistic about American capitalism and be invested in that secular growth trend that is America is likely a good ide. Now, I'm going to pull up a chart on screen right now. This was Robert's call out in last week's Rich Habits newsletter and it does a really good job of illustrating how since 1989 through July of 2025 here, by purchasing the S&P 500 at all time highs, your investment will have performed better than purchasing the S&P 500 at any other period of time, right? Not at all time highs. So quite literally on a one, three and five year period of time, you get a better return by buying at an all time high versus buying at a pullback or any other time that that existed. And the reason for that is again, all time highs are bullish. There's nothing bearish about an all time high. Now sure, an all time high is the last thing that happens before some sort of market correction or a pullback, but that's normally when bubbles and things of that. And I would argue that Broadcom and Palantir and Some of these other names that you'd mentioned. Yeah, they're up there right now. Totally agree. But I'd also argue in the next 3, 5, 7, 10 years they're going to be much, much higher because they're very much part of this new technology that is called artificial intelligence. So I really appreciate Eric G. For chiming in here, trying to ask a little bit more about frameworks as it relates to buying at an all time high versus buying at a pullback. To give you the short and sweet, it's totally fine to buy at an all time high assuming you have a long enough investment horizon. Right. You can see on screen it's 135-year-investment horizon, not 135-month-investment horizon. Right. That's what's important.
- [16:20]
B
100%. And I just want to add one more thing to that and that is when you're looking at a chart and you're studying a stock and studying a company, I'm not saying buy at an all time high. If this is some brand new penny stock that they're promoting to death to try and pump it and dump it, that's different. When you see a hockey stick chart and it's some brand new penny stock, I don't do that. That is not what we're talking about. We're talking about Estab and True companies that have been building for years, that have beautiful books, beautiful future plans that look really good for that sector that we are investing in, like AI, like nuclear right now, like precious metals, all of the above. So I hope that helps everyone listening.
- [17:03]
A
So our next question comes from Brendan B. Brendan says Austin and Robert. I've been interested in financial knowledge and retiring early since I was in high school. I have sought out for information on this topic over the years through many avenues. And your podcast Stay stands in a league of its own. Well done and thank you for what you do, Brendan. Thank you so much my friend. We appreciate the kind words. My name is Brendan. I'm 33 years old, serving as an officer in the United States Air Force. And I'm approaching a large decision point in my career. Should I separate from active duty military when my contract is up in three years or do I extend and sign a new contract? I have six more years to reach a full active duty retirement which is 20 years of service. Or I could move to the private sector, earn an annual income starting around 150,000 and this salary would grow to about 250 to 300,000 over the next five or six years. Currently I make around 130,000 a year and would likely not make more than 150,000 if I stay active duty. However, an active duty retirement would mean at 42 years old, I would collect a pension of $52,000 a year with an annual cost of living adjustment of about 2 to 2.5%. I would also have access to TRICARE health and dental insurance for myself and my family. I know this is not a simple question, but it's one that military members discuss frequently. It's very hard to analyz the best financial position versus a commitment to service of your country. Thank you both for your time and what you all do. Well, first off, Brandon, thank you so much for your service. We appreciate it very much. Robert, you want to kick this one off?
- [18:32]
B
I do. And Brandon, I like what you're saying here and it is very difficult because on one hand you get the pension, you stay in for six or seven more years. But the side I'm leaning towards, and that is version two, option two is getting out in the private sector, making more money. Because Austin and I ran some math simulations and we believe that for, for the long term into retirement and beyond that, you would be better off getting out, taking the extra earned capital that you would make in income and investing that versus staying in getting the pension and having kind of that lower income and lack of acceleration in income in the coming five, seven, ten years. So I think our takeaway, at least from my perspective, is you would be better off financially in the private sector because you'd be making more money and be able to invest it more as long as you stay consistent, but also in my opinion, and not trying to be morbid or weird about it, but you would be safer in the private sector in my opinion as well. I lost a very dear friend the last week of his retirement in the armed forces by friendly fire a few years back. It really, really was upsetting to me because he gave 25 years of his life to the service. And so I think getting out of the private sector make the more money and putting yourself in a safer position is the way I would go. Go.
- [19:51]
A
I really respect that answer. Let's unpack some math. You had mentioned that at 42 years old that you would collect a pension of $52,000 a year and you'd have that go up by about 2% per year for the rest of your life. Okay, so what is $52,000 a year equivalent to? You would need to have $1.3 million invested in the stock market earning, you know, 6, 8, 10% per year to be able to take advantage of the 4% rule, which we've talked about many times on this show, which would pay out about $52,000 a year. Essentially, how you can value your pension is by $1.3 million. And that 1.3 million equates to that 52,000 a year in income. So now it's like, okay, you're 33. How do you get to $1.3 million in your lifetime? Well, we ran some numbers for you, and by looking at this math, you're going to have about 4 to $500,000 more. By going private sector over this, let's call it 5, 6, 7, time, that you can now take and invest and let grow for you. And we know the rule of 72 tells us that the stock market doubles in value every seven years. So this four or five hundred thousand dollars that you have invested will turn into eight hundred thousand to a million by the time you are 40. And then by the time you're 47, it'll turn into about 1.6 to 2 million dollars, which is way more than enough to have that 52,000 dollar a year pension. And then the 2 million dollars will double again to 4 million. By the time you're 54 and you're 61, it'll be 8 million. Right? Like, like this money will grow exponentially. Your $52,000 a year will not. And I could be mistaken here, but I would argue that when you die, which you will die, everyone dies when you die, your spouse, your children, they might not get this $52,000 a year pension, but they will get a $4 million inheritance from their father. Right? And so, like, that's how we think about this. That's the kind of framework we used when thinking about staying active versus trying to, like, you know, get out and then do this private sector stuff versus this pension. The math is gonna take a little longer, right, because you're not gonna immediately have the 52, 000 a year at 42. It'll be closer to 47, 48 years old, but it will grow much more over your lifetime than the 52,000will that you'll get at 42.
- [22:09]
B
That was a great breakdown, Austin. Really, really appreciate that. But before we get into our next question, let's hear from our sponsor, public.com. listen up, folks. You can lock in a 6% or higher yield 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.
- [22:38]
A
Comes from Ross C. Ross says Austin and Robert, I've recently started listening to your podcast after a close friend of mine would not stop talking about the two of you. And to say the least, I now understand why YouTube brings such a clear, consistent and easy to understand approach when it comes to investing. That being said, I have a question with regards to how I can make my money work for me and bring my family more financial freedom. My wife and I own a duplex, a townhome and our primary residence. Our combined annual income is 150,000 a year. We have two kids who are four and one years old. Our duplex is worth $730,000 and we owe 250,000 on it. Our townhome is worth $400,000 and we own it outrigh. Our primary residence is worth 750,000 and we owe 560. Our 401k, 403b Roth IRA and crypto Roth IRA combined are worth roughly $125,000. So my question is, would it be wise to sell the townhome since it's already paid off, Use that money to either put more money in the markets or do we go out and buy another investment property? Or maybe we use that money to pay down our primary residence mortgage and recast it. What strategies should we be considering right now with our current situation?
- [23:53]
B
Ross I think you guys have done a tremendous job getting where you are, but I do believe you're very heavy in real estate. Whereas I'd like to see you migrate some money into a more diversified overall portfolio. I love where you're at. Don't get me wrong, I love real estate. I own a lot myself, so I would lean towards selling the town home, taking that $400,000, getting it invested into more of what we talk about every day. Love to see you have some precious metals, have you build a bigger base when it comes to the ETFs and index funds. We love maybe add some more into the crypto space and keep the rest of the real estate the way it is and we would just love to see you be more diversified because we don't ever want to see anyone be all in on one sector because you never know what can happen. If you think back to 2009 and 10 with real estate, many many people got wiped out. That is why we love diversification. That is my take on this. Congrats on everything you've built already. I'm not taking away from that. But I would sell the townhome, get that money working, have it be easy, easy money working for you while you sleep. That is the play I would make.
- [25:04]
A
I agree. I think getting rid of the townhome, taking your, let's call it $350,ish,000 that you're gonna have after, you know, some fees and some stuff like that. And Ross, when you go townhome, let's say you profit $350,000 after everything is said and done. You can take advantage of the section 121exclusion, which will allow you and your wife, you guys are married couples filing jointly here, to realize up to $500,000 of capital gains tax free. So now you're looking at $350,000. You owe nothing to the IRS. You get that money working for you across Both your Roth IRAs, make sure that you're rocking and rolling with those 401k, 403Bs that you're going up to the match and you're getting all the right things invested, things like that. But you're going to have probably $300,000 still to get deployed there. Which means that you're going to open up an account on public.com. we call this the taxable brokerage account, the bridge account. Right. And you're going to park that into the index funds in ETFs that we've talked about. Voo, Qqq, Vgt, Vti, Aiq, S, P, Y, I To Robert's point, some precious metals, perhaps some cryptocurrency. But it's time for you guys to now focus a little bit more. Stock stuff versus the townhome. Because again, let's, let's pretend that maybe this was cash flowing about $18,000 a year considering that it's paid off that $18,000 a year. For you to get that $350,000 of equity out of this townhome, you'll need to have it cash flow for nearly 20 years. We know the stock market doubles every seven years. So I think it's a little bit better of an idea to have that rocking and rolling for you over there, especially if you're investing like us. I know my portfolio is up like 28 year to date right now and I'm sure Roberts is up. Long story short here. Ross, thanks again for being a new listener and we are rooting for you. Get rid of the townhome, Use it to get more aggressive in the stock market, you've got a great duplex, a great primary residence, and then when you guys need to dip your toes back into some real estate, you guys obviously know what you're doing. Do it then. But I think getting invested in the markets now is probably a good idea. Oh, Robert didn't even think about this part. Right. So we've got $350,000 compared to the existing 125. You are not going to go buy $350,000 on day one of the S&P 500. That is not what you're going to do. You are going to take about, I would say, three, six, maybe up to nine months if you're really conservative, dollar cost averaging this money into the markets. Right. Quite literally. I want you to set aside 50, 75, $100,000 a month and use that as your sort of schedule for dollar cost averaging into the markets. Because here's what you don't want to happen. Let's say $350,000 gets invested next day in the NASDAQ. NASDAQ's overheated and has a 5% pullback. Well, now you're over here looking like, these guys told me to put my 350 into the markets and I'm down 20 grand and I'm mad. Right. Don't do that. Right. That's how people get emotional and jaded toward investing. Ross, you're in a great situation where you can begin to dollar cost average 50, 75, a hundred thousand dollars a month of this, 350,000, depending on how conservative you want to be on that timing into the markets. So over the next, again, three, six, nine months, you now have all of it invested and it's all moving for you in the right direction.
- [28:19]
B
I don't have anything to add to that. That was perfect.
- [28:21]
A
So our next question comes from Dr. K.R. Dr. K.R. says. Morning, Rich habits gurus. Thank you for all your insights and support in helping us all build our financial wealth and independence. I think key points of being intentional with our life and financial choices are essential. This is a theme I bring to my patients daily and my family as it relates to building generational wealth and knowledge. My question is a little bit different, but hopefully it has value and can be answered on your podc. I'm married with two kids and I work full time as a physician. I have built a strong financial base with support of your insights and your podcast. Our next step in our financial investment journey is something you guys speak about, which is diversifying our portfolio in our Instance we want to begin including real estate. My wife and I have not done this before so it's new for us. Given I am a high income W2 earner, I'm trying to find ways to strategically keep more money from being taxed while also building more cash flow. We're thinking about opening an LLC short term rental and using the short term rental loophole to take advantage of paper losses through bonus depreciation and a cost segregation study. I file taxes jointly with my wife so we will meet the material participant requirement. What are your thoughts on this strategy? What are pitfalls that we should consider? What entry price point should we think about for a good roi? And what locations should we not even consider buying in? Thank you again for all of your insights. We very much appreciate it it sign Dr. K.R. i'll let Robert kick this one off, but before I do that, we talked about this with Carlton Dennis. He does a great job further explaining it and what the one big beautiful bill is now doing to make sure that you can really take advantage of this. So make sure you understand all of that. Listen to that episode and now let's jump to this question. So Robert, I'll let you kick it off.
- [30:04]
B
I think it's a great question, Dr. K.R. and you are absolutely heading in the right direction. I always say it's not what you make, it's what you keep and this is the strategy that will help you keep more. Now I think we need to back the train up a little bit. I strongly, strongly recommend anyone thinking about this strategy, all of you high earner W two employees out there, to be careful. I don't want you just jumping in, not knowing the rules, not knowing how it works. Is someone in the marriage a professional? Are they not? How do you take advantage of all this? Because now with everything changing for the better. Better for short term rentals for high income earners, you definitely need to get updated. So my goal in my opinion would be yes, you need this strategy in your world and it will change your life forever. As far as from building wealth and saving money on taxes because you're kind of winning in a bunch of different ways. But I don't want you to do it alone. So in the beginning I strongly suggest either you study a lot more or you pay a consultant to come in and help you activate the strategy and get it moving in the first year or two of your journey into short term rentals because it is a tremendous way to move forward and save money on taxes. But I don't think you should do it alone. Just because too many people make mistakes, they don't follow the rules. Then you end up owning and having to operate real estate that could end up being at a loss for you on a monthly basis. So great strategy, but I think you need to spend a little more time. You've got a few more months left in the year. Really dig in and learn. See if there's a way maybe your wife could be the real estate professional in the group to be able to get that hundred hours a year to be able to qualify and then just really dig into it. Find a consultant or someone that can help you and go from there to initiate this into your financial strategy.
- [31:55]
A
And speaking of consultants or people that can help you, my friend Michael Elefante does help people do this. He's done this for hundreds of people. It's called Be Enbinvestor Academy.com. i'll link it out in the show notes below. Michael's a friend, I trust him. He's got 7, 8, 9 Airbnbs himself. I've known him for half a decade. He does a very good job at this. He has a whole team. I think they're reasonably priced for what they do. But again, do all your own research. Find someone that works for you. Make sure that you are working with people you trust. Make sure you're doing your own thing here, but always want to be a resource for you guys if we can be helpful. The only pitfall I want to call out about this is that people make the mistake of thinking, oh know, my Airbnb is just going to pay for itself. I've got close friends that bought Airbnbs in 2021, 2022. It never cash flowed. They're losing 4, 5, 6, $700 a month. They have been since then. They can't sell it because everyone else is realizing they're not working in that area. And so the markets are flooded with these things and it's just, you gotta be careful. So do not think this is a foolproof, easy way to lower my taxes and make some free money. Because it's not not. You have to work with a professional, you have to work with an expert. You got to work with people that know how to do this and make sure that you're working with the right cost segregation study type company. I've done this before in the past. It's worked for me and I was able to bonus depreciate and it worked out great. It was a little bit less than I was expecting, to be quite honest with you. So just make sure that you're going into this with a level head, open eyes, clear expectations, and you're not thinking, oh, it's going to make it so I don't pay any in taxes and I'm going to be rich and it's going to be a little loophole and I'll be fine. It's like, sure, that's what they try and tell you online, but that's not reality. And that's what we're here to tell you is like, this does work great for a lot of people if you can figure out how to do it consistently. But it is very easy to mess up and lose money on if you're not doing it right. So we're not trying to Deter you here, Dr. KR, but want to make sure that you have all the right information, tools, resources to make an educated decision with your money. So our final question comes from Adrian H. Adrian says, hey, Robert Noston. First off, thank you so much for all the time and energy you guys put into this podcast. My dad is getting close to his retirement and age. I'm in my early 30s and your show has brought so many great conversations between him and I. We love listening and talking about the takeaways we have from it. It's been a great resource for the both of us and has added a new dynamic to our father, daughter relationship. So thanks for that. Here's my question. My husband and I own a business. We set aside a percentage of our revenue each month for tax purposes. At the end of this year, we will have $35,000 set aside for taxes. After visiting with my tax preparer, we will only need to have about $21,000 set aside. Knowing this should a high yield savings account still be the way that we park this money or since there's a decent margin of about $14,000 here, should we invest that instead into the s and P500 or the NASDAQ where if we did see some losses, we'd be able to absorb that pretty well. We have some good working capital, we have a good nest egg and we have a line of credit needed for the business if it's necessary. We're in our early 30s. We have $56,000 invested in our base accounts for retirement. Retirement with another $120,000 in rental home equity. Thank you so much for your insights. Robert, you wanna kick this one off?
- [35:11]
B
Yeah, I do. I love the fact that you guys are thinking ahead and doing it right, putting aside the taxes necessary because too many small business owners go through the year, they're spending the money like it's theirs. They're not setting this money aside for repairs or new equipment or taxes or all the things that come along with running a small business. I do like that you're doing that, but I don't know that I would let it just sit in the high yield savings savings. I like the fact that you're, you're doing that, but I would say any overage that you have above and beyond the taxes that you set aside, but also the money you have, so you have a cash reserve. I don't know what yours is in your business. Maybe it's two, three months of expenses that I would love to see that into those ETFs and index funds that we talk about like Voo and QQQ, because you want to maximize your gains. And always remember and look at it that if it's in a traditional brokerage account account, you can take that money anytime you want out of that account and use it if you need it. So we're just always here to give you as much of a blueprint as we can of how we handle our money with all of our small businesses to make sure that it's not just sitting around either in a checking account or in a high yield savings account. I see so many business owners that I'll go through things with them and they'll be like, Yeah, I have 180,000 sitting in my cash account. I'm like, why? Well, in case for a rainy day. Well, the rainy day can still be be a traditional brokerage account, a high yield savings account. It could be in crypto somewhere else where you're earning more rather than just letting it sit there. So love where your head's at. I would get that money invested, especially the overage, as long as you have enough cash on hand for the day to day business expenses for a couple, two, three months.
- [36:51]
A
My personal experience with this is I pay hundreds of thousands of dollars a year in taxes. Right now I think I've got 175,000 sitting in a high yield savings account account that I have to pay to the irs. I earn a couple hundred bucks a month on it. It's kind of cool. I am not investing that because I know I owe that money. Right. But if it was materially higher than what I knew I owed, then that difference, yeah, I probably would invest it. So in your situation of this $14,000 difference. Yeah, I mean, if you want to take 10,000 of that 14 and say, I trust my tax preparer I think I can project where our business will be by the end of the year. Therefore, I'm going to take $10,000 that we had set aside for taxes, make sure that doing all the right things with that from a, you know, owing taxes on that money perspective, and then realize it as, you know, personal income so you can go invest it or do whatever you want with it. Totally cool with me. But the problems that people get into is one, they don't save enough for taxes, and so it's like a whole headache at the end of the year. Or two, maybe they invest all of the tax savings they had, which if I had done that during, you know, I had to obviously pay the IRS in April. Well, in April, the Trump tariff tantrum happened and the markets went down by 20%. So that would have been a terrible timing. Just know this, you don't have to perfect, perfectly optimize every last penny of your entire life. It doesn't have to be so perfectly, perfectly perfect where it's the most perfect thing in this perfect world. That's not, that's no one's reality. Right. We're all gonna leave money on the table some way, somehow, somewhere. But by having it in a high yield savings account, by being strategic with, you know, how often you deploy it and all those different things, that's how you can make a best judgment, educated guess as to what to do. In Hindsight, it's always 2020, we're always gonna done something different. But by making sure it's at least working yield savings account, like, you're covering your bases and you should feel good about that.
- [38:40]
B
Yeah, I can't really add anything to that. And I don't think I could restate your perfect, perfect, perfect, but it's so true. People think they can optimize every penny. Even Austin and I, we leave things on the table, things slip through the cracks from time to time. Nothing is ever going to be a perfect plan. But the more effort you make in your plan for your business, your personal finance and your wealth, build, building, the better off you're going to be. Because I promise you this, a lot of people that are not listening to this podcast are not paying attention to their money and they're not serious about retiring financially free, being able to drink those mimosas on the beach and being able to enjoy life. So we appreciate each and every one of you that follows along every week, gives us those five star reviews, shares the podcast with a friend. Everyone out there listening right now now has someone that needs a little bit of a help needs some nudging. So share with them and let them learn from everything we're putting out each and every week.
- [39:39]
A
Yes, if you learned something on this episode, please consider giving us a five star review. If you learned something on this episode that you think someone else should know, please share this episode with a friend. You guys are our marketing strategy. Make sure you are subscribed on Spotify. Make sure you're subscribed on YouTube or Apple Podcast. Wherever you're listening to the show right now or watching the show right now, please make sure you've got the those notifications turned on. With that being said, everyone, thank you so much for tuning in to this week's episode of the Rich Habits Podcast, and we will see you next week. You say you'll never join the Navy, that you never track storms brewing in the Atlantic and skydiving could never be.
- [40:41]
B
Part of your commute.
- [40:43]
A
You'd never climb Mount Fuji on a port visit, or fly so fast you break the sound barrier. Joining the Navy sounds crazy. Saying never actually is. Start your journey@navy.com, america's Navy forged by the sea Organizador de viajes de expedia vivies paratenertu propio opinions expedia vivimos paraviajar.