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Rich Habits Podcast
Q&A: When To Talk About Money While Dating, Driving Uber Full-Time, & Pensions
00:45:52
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- [00:00]
Austin
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- [00:05]
Robert
Show, you can Venmo that.
- [00:06]
Austin
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- [00:16]
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- [00:45]
Podcast Host
Hey everyone and welcome back to the Rich Habits Podcast Question and Answer Edition. These are our Thursday episodes where Robert and I answer your questions as if we were in your shoes. You ask us questions via Instagram DMS at Rich Habits Podcast or you can also ask us questions via email at rich habits podcastmail.com Again, just want to emphasize how grateful I am for all of your patience and flexibility as my dad died on July 8th. It has been a roller coaster of emotions. But we are back. We love doing the podcast. It makes me very happy. So I am excited to be here filming on July 14, 2025 for our Thursday episode coming up here in a couple days. With that being said, if you're a serious investor, you need to know about public.com and how you can use their platform to invest towards your financial future. On Public, you build a multi asset portfolio of stocks, bonds, options, crypto and more. And shout out to Bitcoin for hitting like $122,000 recently. That's a. That's a good something we'll talk about later. But that's not all. Public's artificial intelligence isn't just a feature that's built into the platform, it's woven into the entire experience. From portfolio insights to earnings call recaps, Public gives you smarter context at every touch point of your investing journey.
- [02:00]
Robert
And for a limited time, you can earn a 1% match on all IRA deposits, IRA transfers and 401k rollovers. Let me say that again. 1% match on all IRA deposits or transfers and 401k rollovers. Fund your account in 5 minutes or less at public.com rich habits paid for by Public Investing. Full disclosures in the podcast description also.
- [02:25]
Podcast Host
Want to, like, make sure people understand that if you have 1000-002000-00400,000, 800,000 of a 401k or a IRA or something hanging out somewhere else and you want to go Earn, earn a 1% match, you can have the exact same investments you invest in the ETFs and index funds we talk about. Roll it over into public and you get that 1% match again. That's on IRA deposits, transfers and 401k rollovers. So really, really exciting stuff. Now our first question is coming from Warp. W. I think this is a. I think this is a fake name to stay anonymous, which we appreciate, but Warp says. Good afternoon gentlemen. Thank you so much for your podcast. It's been a great help to me. I have a few questions as I feel like I'm fairly late in my investment journey because I don't have a lot of money in my 401k or my IRA that I can physically see. But I do have a pension. I've been working for the same company now for over 10 years and we have a pension plan. I'm in my late 30s, married and I have one child. I've been well off and I've had a pretty solid increases as it relates to my earnings over the last several years as I now earn $120,000 a year. With that being said, I only have $5,800 in my IRA, $9,500 in a 400. I do have $250,000 of equity in my home at a 2.6% interest rate. So here are my questions. With a good pension like the one I have from my job, should I even worry about contributing to my IRA at the moment, considering I have a HELOC of a $30,000 loan at a 7% interest rate and a car loan of $11,000 at 2 1/2%. So should I focus on paying down those debts or should I focus on getting my Roth IRA funded and invested? And then finally, can you further explain what it means? Base. I want to understand your perspective on that as it also relates to the savings portion. Robert, you want to kick this one off?
- [04:19]
Robert
Yeah, I do. Warp mentions that he has been well off and doing so great, but I have a problem with this because I feel like Warp really needs to focus on getting this Roth built up. We always talk about you shouldn't be out there doing a bunch of different things with your money till you have that base build up and you're making money while you sleep and in this instance, with that much income, I'm just shocked that Warp does not have more money put away, because when you think about late 30s and only 5.8k in an IRA, that is really, really low. And I want to see that get addressed first. Now, the HELOC is on the verge of being high interest, so we do have to pay attention to it. But I would rather see that IRA get maxed out every single month right now while still paying down the heloc, but not avoiding the Roth, because you need to get that retirement money built up. And then also, I think it's a little bit tricky in this situation because you do want to have that emergency fund. You want to have that set up. I think three, four months is fine in your instance because you have to get this bridge account and the Roth IRAs maxed out. That's my take on this. I really want to figure out and understand better why there's not more put away with such high earnings earnings. And that might be a spending problem because you don't have an earning problem. And that's something you need to address as well. And that could come by doing an honest budget to figure out why you're not putting away more money to all of these important investment structures within your portfolio.
- [05:55]
Podcast Host
I love that breakdown. If I'm doing my math right, our friend Warp here is taking home about 90 to $100,000 a year, which is just around 8ish thousand dollars a month. So assuming you're taking home about $8,000 a month and that after, you know, your taxes, maybe some health insurance, maybe some pension stuff like, you should be in that ballpark, let's call it seven. Just to be conservative, you are in your late 30s, you're married, and you have one child. I would imagine that your household could probably run pretty well on about five to six thousand dollars a month of spending, right? You, your wife, and your one child, you can probably spend between 5,000 and $6,000 a month. And you guys are living in normal American life, right? With that being said, that now frees up another 1500-2000 that you should be able to set aside to save and invest. Now, to Robert's point, 100% agree. You need more money invested that's tied to your Social Security number and not to some company's ability to do a pension, right? Pensions are not guaranteed. Pensions are not, like, legally binding. Like, there's a lot of things with pensions that give me kind of a weird pit in my stomach where when it comes to My Roth ira, that's my money. I get to invest that money how I want it invested. I get to grow that money. I get to, you know, allocate that toward different funds or strategies. And I get to have that money grow for me tax free throughout my life and I get to reap the rewards tax free after I'm 59 and a half years old. The Warp, if I were in your situation here, I absolutely would start maxing out the Roth IRA, let's call it 580 something dollars a month I think is what it comes out to. So $584 a month, you get to max out your Roth IRA. Do the same thing for your wife, right? She's probably in her thirt. Well, you both now are maxing out your Roth IRAs. And by doing that, from age 40 to 65, assuming you've got this $5,800 already in your account and the money grows at about eight and a half percent per year on average, you're going to have $650,000 at 65, which means your wife will likely have about a half a million or more as well. That is how you all can just simply put away money into your Roth ira, have it invested correctly and grow for you over the next 25 years so you can retire with dignity. And to Robert' about the savings and the HELOC and the car payment, keep the car payment interest rates low, the HELOC, everything above the maxed out Roth IRA, right? So let's say you do that 583amonth and you still have 700amonth left over. That's the money you're going to throw at the heloc. And you want to, you know, get that paid down because it's at about that 7,8% interest rate as well. Not so high where it's alarming, right? That interest rate isn't terrible, but it's definitely not low interest debt. Low, low. Like your, your car loan is here at two and a half percent. And then to Robert's point as well, right? Having that savings, that three, four, five, six months. I think three months for you is perfect. You're making great money, you have one kid, you're married, your life seems pretty stable. So for you, that might be $15,000 sitting in a high yield savings account on public.com earning 4.1% and you're off to the races. There's a world, in my opinion, Robert, where Warp here is able to be, has his base built hundreds of thousands of dollars invested hundreds of thousands of equity in his home and this pension's doing its thing. By the time he's let's call it mid-40s, I world can absolutely exist just depending on to your ability warp to get the honest budget dialed in, be able to max out the Roth, be able to pay off some of this debt and really be intentional with your money. We talked about it Robert, on last week's episode the habits that allowed us to build our first million. And one of those habits that's really important for people to hone in on is being intentional with their money, especially as a high earner, right. If you're making a lot of money, you feel like you can kind of just get be willy nilly with it. Like it's always going to be there. And you're at that point warp where your your money, you know, you're making 120 a year, you're making some good money here and it and I'm sure you're, you're feeling as if you can't make any mistakes. And now maybe now in your late 30s, you're kind of looking back and saying, man, where'd all that money go? I need to be more intentional.
- [09:57]
Robert
I couldn't agree more of that take because I see every day and talk to people in the Rich Habits network every day that are high earners but don't have much to show for it because they always believe the money is going to be there and those big paychecks and bonuses are going to be there. So they live beyond their means. They're letting lifestyle creep get in the way. And I just love to get people just pounded in people's heads that if you get your money put away in your Roth, you get your ridge account set up and you have money making while you sleep, then you're always prepared. So I love your takeaway there to really get people to understand that if you make these good decisions for the long term and let compound interest work its magic, you'll be way better off than just always thinking the money is going to be there piling up for you to spend.
- [10:47]
Podcast Host
So our next question comes from Gian Gian says. Hey Rich Habits podcast team. First off, thank you for your amazing content. Your podcast has genuinely shifted the way I think. I'm 20 years old, currently in college studying business, but honestly, I've learned more practical and mindset shifting knowledge from your episodes than I have in any my classes. Right now I'm working at a shoe store while staying focused on building my financial foundation. I've saved up 8, $500 so far and just recently began investing. I currently have $300 a month being split up between spy, QQQ and Nvidia, most of it going into spy and QQQ. But starting next month, I plan to consistently invest $350 to $400 per month into those three names. On top of school and work, I also run a side hustle where I resell clothes, shoes and electronics. I know my numbers are but I've been super disciplined and intentional about shifting away from that consumer mindset. I'm thinking long term and building strong habits now to set myself up for the future. So here's my question. With $8,500 saved up right now, how would you suggest I allocate that money to maximize growth while staying smart about risk? What are other suggestions you might have for me as well? As a young man entering this new stage of his life, thanks again for all the value you share. Your podcast is part of the reason I'm thinking 10 years ahead instead of just 10 days.
- [12:05]
Robert
Let's go.
- [12:06]
Podcast Host
John what an awesome, awesome listener. Shout out to this incredible human being. That's so exciting. I would max out the Roth IRA as soon as you possibly can. If that means taking $7,000 of this 8,500 that you have saved up, dropping it into your Roth IRA and maybe dollar cost averaging it all into the S&P 500, the NASDAQ 100, maybe even Nvidia. Right? That could be in there too. Maybe iBit, right? Bitcoin. Have some exposure to that. Having those three or four names in your Roth IRA and getting them invested within the next depending on the size. I just you could put it all in on one day and just invest it and let it go. I'm not mad at that because you are going to have it for a very long time. Maybe want to break it up into a couple of weeks, a couple of months. I'm not mad at it. But what's most important than trying to strategically, you know, dollar cost average into the market? Any which way is that you are investing into the market, right? You're not overthinking it. You're not having analysis paralysis. You're getting your money invested. You're riding the wave and that money will double every seven years, assuming a 10% return in the markets. Right? I know this sounds craz, but because you are so young and the stock market grows exponentially. If you invested $8,500 today and it grew at 10% per year over the next however many, let's call it 50 years or so, your money would be worth just over $1 million adjusted for inflation. So like, that's how important it is to get invested as quickly as possible. Do not worry about the, you know, oh, I got to have all this money sitting in a savings account because I want to make sure that in case something like, like savings is important. If you want to put a thousand of this 8500 in savings, get that $7000 invested and growing for you at 20 years old, your 65 year old self will thank you so, so much.
- [13:52]
Robert
I love this takeaway and it reminds me of a story from my youth. When I was 21 years old, my 20 year old girlfriend got hit by a motorcycle and it didn't do a lot of damage, it broke her leg and it was pretty tragic. But she received a check in the settlement of around $10,000. So at, at only 21 years old, I had her go meet with Tim Croak who now runs Croak Capital, and he talked to her and he said, look, if you invest this $10,000 right now, get it out of your hands. She really wanted to buy this convertible, this Chrysler convertible. If he would have been able to talk her into doing that, she would have had over a million dollars in retirement with that initial investment without adding any more money. But instead she bought the convertible and a few years later that convertible was basically rendered useless and she had some fun with it. And to this day, I spoke to her a few years ago, she never got to the million dollar mark in her investment portfolios. So it really illustrates time is on your side. Gian. You've already won the battle because you're thinking about investing and you're doing investments at 20 years old. A lot of people don't really start investing till 25, 35 or even 45 years old. So I love the fact that you're ahead of the game, you're thinking about how to do it and you're following along with the Rich Habits podcast in the Rich Habits Network to get you ahead of the game and keep you ahead. So we really appreciate this question.
- [15:15]
Podcast Host
So our next question comes from Raphael M. Rafael says the reason I'm reaching out is to ask for your opinion on a mortgage question I have. We are based in Australia and our current fixed mortgage rate is 2.2%. However, it's expiring next month. We've been offered the following options. A variable rate at 5.44%, a one year fixed rate at 5.29% or a two year fixed rate at 5.19%. We have 26 years and two months remaining on the loan. It was originally a 30 year loan term. Our home's value has increased by about 900,000 Australian dollars in just over three years, which is really great. But the remaining loan balance is 1.1 million Australian dollars. We're leaning toward the variable rate as we believe interest rates will likely continue to, to fall over the coming months. But I'd love to hear your thoughts or if you have any strategic recommendations for a situation like ours. Robert, you go first.
- [16:12]
Robert
All right, so Rafael, great question. It's a unique situation because it is Australia. In the United States, we of course get a fixed rate for 20, 30, 15, whatever years we do. And so we have that advantage. But in your situation, I personally would either go for the one year fixed rate or the two year fixed rate. And here's why. I don't like variable rates rates because you don't have any control of where they're going unless they're a capped rate. So that's why fixed rates just come into play and I think are much more safe. And in your instance with Australia, these are going to readjust every single year. So I would do the one year rate because without knowing what the economic conditions are going to be in a year from now, you want to always be optimizing as much as you can to keep your rate as low as possible. And that is why I like the fact, because the 1 and 2 are so close, it's very nominal in the amount you would save if you went with the two. But I think the upside of going with the one year rate could be greater if the overall markets get better in real estate. That would be my opinion for this particular situation.
- [17:21]
Podcast Host
Yeah. I really wanted to emphasize how small the outcome difference here is. Right. So for example, right. You talked about the variable rate at 5.0.44%, the one year rate at 5.29 and the two year rate at 5.19%. And so we're talking about 20 basis points, 25 basis points between the variable rate and the two year fixed, which on a loan of 1.1 million Australian dollars is about 2000, $2,500 a year. Now I'm not saying that $2,500 a year, right. Let's call it 200 bucks a month is not a lot of money. 200amonth is a lot of money for a lot of people. However, you live in a house that has appreciated by $900,000 in three years and you have a loan balance of 1.1. So you live in a 2 million dollar house. If you make the wrong choice here by trying to time the interest rates on your mortgage and try and figure this stuff out, you're really going to be out 200 bucks a month. I don't think that is life changing money for you at this point in your wealth building journey. So I don't think it's worth like stressing over or burning some crazy brain calories or keeping you up at night. I mean, what I'm trying to say here is that, that if you want to go with the one year fix, which is probably what I would do, go for it. And if the variable rate would have been lower by 20 basis points because it keeps like, don't beat yourself up for it, right? We're talking about a couple hundred bucks a month until you can refinance at a lower rate again. Now on the flip side, with the variable rate, rates could go up. I'm looking at Australia's mortgage rates right now and rates went up from March to April. They went up from 5.97 to 5.99. So they did go up marginally there, but they went up. And so I don't know what's going to happen in Australia's mortgage scene and how that, how that works behind the scenes there. But what I do think is having a fixed interest rate for that one year period of time at 5.29% sounds like a pretty good deal. And if one year goes by and now you could maybe refinance it somewhere in the fours or maybe in the low fours or even high threes, go do that. That's fine. It's totally cool.
- [19:21]
Robert
I love when people are thinking like this and really digging into their finances. But my main takeaway that you touched and you do this a lot and very well is getting people to understand, what are those brain calories that you call them? What is the ROI on those brain calories? Because I do see some people that are just in the minutia so much over maybe their credit card points or they're trying to optimize their loan, their mortgage amount and all of that. And many times that the outcome, good or bad, is so small that it probably isn't worth worrying about and burning those brain calories because it's not making a meaningful difference one way or the other financially. So I like that takeaway you had on that particular point.
- [20:06]
Podcast Host
So our next question comes from Ben D. Ben says, hey guys, My name is Ben, I live in Jacksonville, Florida. I had a quick question regarding long term aka retirement account investing compared to more midterm 10 to 20 years type investing. I grew up listening to Dave Ramsey, so I understand long term investing and the beauty of compound interest. I'm 24 years old and I just opened a Roth IRA as well as I'm about to be eligible for a 3% match with my company, my understanding is that I can't access this money until I'm 59 and a half. What is the strategy with regards to investing and being able to access funds before that age? I understand that time is one of the most important aspects when it comes to building your wealth via compound interest, but I was wondering what a good route could be giving me accessibility or use of my money before essentially 60 years old. Hopefully this question makes sense and I'd love to hear a response from you guys. Thanks so much for all you do. Good question Ben. Whenever we think about investing, especially at, let's call it, you know, 24, 25 years old, you have 40 years ahead of you until you are 65. During that 40 year period of time, you can easily extrapolate how much money you will have invested assuming you invest the same amount of money every month month. And if you assume a 8 and a half, 9% inflation adjusted annualized return, you can easily computate what your nest egg will become over that 40 year period of time. If that nest egg is massive and it's bigger than you think, then essentially there will be a day, maybe in 10, 15, 20, 25 years from now, you can stop contributing and your investments will still keep growing for you and it will, you know, hit a, what's it called here, like max velocity and you will just continue to grow wealth over a long period of time because you have so much invested at such a young age. We want people to experience that. And when people are ready to experience that, we encourage them to look into the idea of opening what we call a bridge account. So what a bridge account is, is it's a normal taxable brokerage account that you can open up on public, Robinhood, Schwab, Fidelity, anywhere, Vanguard you want, doesn't matter, we prefer public. But you can open up this bridge account, you can deposit funds into it, you can invest money over however long you want. And what's cool about this is there's no fees or penalties for taking profits out of that account and using that money to retire early or bridge you from your maybe late 40s to early 50s into your early 60s when you can finally start tapping into this nest egg without the penalties and fees. Now, to answer your question, technically you can take money out of your Roth IRA without penalties and fees. We do not think anyone should do that. We want you to stay invested, right? Keep building wealth. But you technically can take out your principal without penalties and fees. But don't do that. Keep your money invested and grow it over a long period of time. But maybe, Robert, you can talk more about why we think the bridge account is so important and where it fits in someone's financial wealth building journey.
- [23:07]
Robert
Yeah, I think the bridge account is probably one of the most important, important tools as part of our message on how people can build wealth and retire comfortably. Because so many people don't understand you can have a 401k and you can have equity in your house and still be broke leading up to retirement. Because to get the equity out of the house, you got to sell the house. And to get any money out of the 401k you have to endure penalties. So that is why we don't like to see people borrow from their future. So, so let's say you have a 401k and you have the Roth and you have equity in your home, but you don't have money growing that is available to you along the way. That is why we love the bridge account. Because if you're building the bridge account concurrently with the Roth and potentially the 401k, you always have accessible money without penalty or any concerns. If you want to go buy the boat, if you want to remodel the house, if you want to build a man cave, whatever the dream is, it comes from that bridge account rather than robbing from your future in the retirement account. Because the goal for us is to have everyone have both. That way you're never going to be, we call it, you're a net worth millionaire, but you're broke because you can't access the money. That is why the bridge account is so beautiful. Because you always have access. You have no penalties, you have full autonomy over that account. And as it grows, you can use it as you wish without dipping into retirement. That is it. Super important. I love that it is such a big part of our message here at Rich Habits because I think it is critical to keep people on the right path pre retirement and earlier on so they have accessible money without the fears of taking it away from their retirement.
- [24:59]
Podcast Host
I couldn't have said it better myself. Right. I think there's a lot of people out there that were told yep, just invest towards your 401k and you're going to be just fine. And they do that, which is great. We want people to be investing in their 401k, assuming it's invested correctly. But now they're in their early 50s, they've got 2 1/2 million dollars in this 401k. Technically speaking, they could retire, but they can't tap into this money for another 5, 6, 7, 8 years and now they're forced working until they can tap into this money without paying, you know, penalties and fees to the tun 1015 plus percent which no one should be doing that. So really great breakdown there by Robert and great question by Ben.
- [25:36]
Robert
So before we get into our next question, let's hear from our sponsor, Public. You can lock in a 6% or higher yield with a bond account, 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.
- [26:00]
Podcast Host
Next question comes from Sean L. Sean says, Morning fellas. First, I'd like to thank you for your podcast. I've listened to every episode and made some updates to my investing strategies. I'm now contributing more to my tfsa, which is similar to the Roth accounts that you guys have, and I've opened up a taxable account to buy a little bit of cryptocurrency. So I've got some money growing for me that's not in a retirement account and I couldn't be more excited. Now I have a question that's a little different but I think equally financial to other questions I've heard you answer. I'm currently single and a thought that comes up is as I think about getting into a more serious relationship in the future. How do I navigate talking about finances with people that I'm dating? I'm in a pretty decent shape financially, but I'm not super rich or wealthy yet, but I plan to be. So my question is how do I approach these conversations before getting married while also dating while also not scaring them away while without getting too serious? Again, I appreciate all you do and the advice you give us is awesome. Robert, I'll let you kick this one off.
- [27:00]
Robert
Wow. This is a very difficult question to answer, but I'm going to do my best. I think it's an incredible conversation that everyone needs to have and it is all about timing. When you meet somebody and start dating, you're going to be able to get clues on their situation financially. And I'm not saying everyone in a relationship needs to be the breadwinner. Not everyone needs to make a lot of money, nor do they have to have the the same financial aspirations. But you do need to clarify because you don't want to be in a relationship. You meet somebody, you never have the difficult conversation, ever. You get married and you find out they have student loan debt, they have a ton of credit card debt, they have bad credit, they just don't understand budgeting or any of those things because it will be a financial drain on you for life. So I think somewhere in the middle is the perfect storm. You meet somebody, it's going well, you're asking questions along the way, so you're kind of building up your understanding of their thoughts financially and where they want to be and where they're headed. And then you can have the harder conversation once you get a few months in, maybe things are getting a little more seriously. Maybe you're considering moving in together. That's when you need to have the conversation before it's too late. Because we do live in a society right now. It's very prevalent in social media through Instagram and TikTok and all over the place where you see all of this content being built around, you know, the man should pay for everything. Women and men both having unrealistic expectations of what their partner should be providing. So you just need to make sure you're getting into a relationship where you're both on the same page about money now and money in the future. Because I believe that most divorces do happen because of money related to unrealistic expectations. And if you have the conversation and the understanding early on, I think you.
- [28:56]
Podcast Host
Can avoid this to piggyback on that. Not being on the same page financially in the moment with your significant other is not a reason to break up. It's not a reason to throw away the relationship, especially if you've been together for 6, 9, 12, 18, 24 months. But it is a kick in the butt to say, okay, we are on way different spectrums here and it's not because of anyone's fault, right? School never taught us this stuff. Maybe, you know, Sean over here is a super nerd like me and he loves understanding this stuff. And Sean's significant other was never taught anything about money like Sean. You can't get mad at them for not knowing, but what you can do is offer to teach them. And if it doesn't want to come from you because they think that's a weird dynamic. Give them this podcast. There's a ton of other free resources online that I'm sure that, you know, you listen to or you read or you've, you know, taken advantage of over the years that have helped you become so financially literate. Offer those resources to them. The problems occur when they don't want to learn and they don't want to change. So if you have this very clear trajectory for yourself and your money and your future, your career, you know your worth in the way that you want to trend as a human from that perspective, and they're going an opposite direction. Well, now you guys have a values problem. You know, again, it's not because they don't know in the beginning. It's because they truly don't care to learn, and it's not something that they care about. It's a character trait values problem that you guys are going in separate directions. Now, that might be a reason to break up with somebody, but because they don't understand in the short term, that's not a big deal. Everyone doesn't understand anything in the short term until someone teaches it to them. Just like what Robert and I are obviously trying to do with this podcast. The other thing I would say is definitely be guarded as you build your wealth, but do not be so mysterious that it somehow makes you seem like you're Bruce Wayne or something. Right? Like, have the conversations and be open to having those conversations, but don't treat money conversation as taboo. I think that is something that my fiance and I did very well, is we talked about money pretty openly because it shouldn't be a taboo subject. Right. Talked about our credit scores, and yeah, I just got this cool credit card on these. Like, I got these points racking up. I'm really excited about it. Oh, nice. Dang. What's your credit score? I had no idea. Yeah, it's. It's this. I've been working at it for so long. Oh, no, it's only like this because I had this weird thing happen a while ago, but I learned from the experience, and now I'm trying to build it back up. Like, just have the conversations. Don't let money subjects be so taboo in your relationship. And if you guys can get on the same page with money, like, the world is yours for the taking, 100%.
- [31:31]
Robert
And it's really all about having the mature conversation. Because, like I said, I illustrated earlier, it's okay if one person is the breadwinner as long as both people have the conversation of the expectations. And I think where a lot of people get things wrong is they don't have the understanding, like Austin alluded to, of how money and wealth building actually works. And so, because I hear it all the time, where people think that rich people just spend money frivolously and that poor people watch their money a lot more. And it's actually the opposite. Most broke people just don't really budget and have a future planned out for their money and where they're going financially, whereas people that are on top of it generally budget well, tend to be frugal and really care about their future and making sure they're building in the right direction. So I think it's a great question. Definitely want to have the conversation sooner than later so you're both on the same page and then you can reevaluate on how to move forward from there.
- [32:29]
Podcast Host
And something else that you need to take very seriously. Do not combine your finances until you are married. Married. Right? You guys do not have a joint checking account as boyfriend, girlfriend. You guys do not go buy a house together as boyfriend, girlfriend. You all do not combine finances until you are legally married in the state of whatever state you are living in. Because there's been just so much mess that we have read in these emails of people saying, oh, I've got this mortgage with this ex boyfriend who ended up being a deadbeat and all these crazy things, and now I got to figure out it's gone. My credit score. Just don't combine your finances. Take it one day at a time. And the last thing here really to think about, too, is if you are a woman with a lot of money, if you're a man with a lot of money, if you're the person who's super financially literate listening to this podcast and you're out there dating and trying to figure it all out. I've got a friend that's in a similar situation and they're trying to figure it out right now, too. You can pick up pretty quickly the type of people are around for your money versus around for you. Just be special, smart. You. You can pick that up pretty quickly.
- [33:29]
Robert
Man, we could go on forever with this question, but let's move on to the next one.
- [33:33]
Podcast Host
Well, this is coming from Uriel O. Uriel O. Says hi, Austin and Robert. My name is Uriel and I have been listening to your podcast for the last two years. Thank you so much for listening, Uriel. You all have been crucial and key to my financial outlook, and I cannot express my gratitude enough. I wanted to Reach out because my wife and I are in a season where we wanted to choose the optimal route for our next investment. We have our three months of emergency funds set aside. We do the up to the match with our 401k, we max out our Roth IRAs, we've got some money in a bridge account, so we're doing everything right. But the situation here is that we currently own a duplex and we rent out the other side. It cash flows about 1500 dollars a month and my wife and I are interested in buying another duplex in the next three years or so. So we could keep our current duplex and then rent out both units and now we'd have three units making us money money. Now my question is this. Should we put the surplus money that we are saving for a down payment in a high yield savings account or put it in the stock market and weather the volatility and tax implications? Robert, I'll let you kick this one off.
- [34:38]
Robert
This is a great question and I'm really happy that you thought through this part of it because a lot of times when people are saving for a down payment on a property, they'll just let it sit in a checking account because it's earmarked for that property. Huge mistake. You at the very minimum want to have it in the High Yield Savings on public.com or in the stock market. Here's how I would make that distinction. I would say if this property is on your list to buy in three years, I would get the money invested into some of the low cost ETFs we talk about because volatility will come into play but you'll have enough time for it to work itself out. Now if you're going to buy this property in a year or less, I would keep it in a High Yield Savings account. So it's there and it's ready. And no short term volatility is going to play around with your money and have a negative impact on your ability to purchase this next property. And then not part of the question, but I want to talk about it just for a second is also make sure you explore all the best options for how to finance this property because in most instances, especially because it's going to cash flow, you want to keep as much of your cash to yourself, invested in the markets in crypto and other things rather than burying yourself in the property. So make sure you explore what is the best mortgage type for that purchase at that time.
- [36:02]
Podcast Host
I think that's a great breakdown and some great advice. In my opinion. My General rule of thumb is if the purchase you're saving for is 18 to 24 months away is, it's probably too close to try and time the market with, you know, oh, it's in 18 months, I gotta have this money. You know, we all saw what happened in April because of the Trump tariff tantrum. Before that, we saw what happened with the yen carry trade and I think it was August of 24, right? The markets can move up and down by 10, 15, 20% in a very short period of time. Now they of course, always bounce back over a long period of time, but you don't wanna get caught in one of those moves. And oh my God, my $50,000 down payment is now only 38,000 because the market's messed up, right? So I guess what I'm trying to say here is if I were in your shoes, I would probably keep the money invested for 12, 18 months and then after that I'd start to slowly peel it off. If you've got some profits, pay some taxes on your profits, that's no problem. And then make sure that your money's ready to be deployed into this down payment for this awesome duplex that you want to buy. That's, that's so exciting. You guys are going to have up to three units now earning awesome money, cash flow of 1500amonth on your existing duplex. You guys are rock stars. 18,000 a year in cash flow, Robert, how cool is that?
- [37:20]
Robert
Very, very cool. And you know, we talk about real estate a lot because I think everyone should own real estate in their portfolio. But it's not just about cash flow. It's about capital appreciation, it's about tax benefits, it's about write offs. There are a lot of advantages to owning real estate and these guys are crushing it it. And I love these kind of questions because I feel like they've got a plan, they're sticking with the plan and they're executing the plan. And that just makes life so much better. When you can wake up and then down the road, you're in your 30s, 40s, 50s, 60s, you're all set and you're not waking up with anxiety over money. That is one of the best feelings on earth.
- [37:59]
Podcast Host
So our final question comes from Vinnie M on Instagram. Vinnie says, hey guys, I'm 58, I have no formal education and I drive Uber for a living. Living. My concern is that robo taxis will eventually take my job. I also have a whole life IUL, a $500,000 policy with that, with a $110,000 cash value. My concern with this policy is right Now I'm paying $310 a month in premiums, and I'm also paying $1300 per month for the IUL. But if my income goes away, I won't be able to afford the premiums in a few years as they go up annually by 10%. Should I just get out of the whole life insurance IUL and invest the cash value into something else? My wife makes about $90,000 a year, and we're using Uber to fund my IUL and her IUL at 58. What is your best advice in finding a side hustle? Can I go to school? Do I take some training classes so in 10 years, I'm not broke? P.S. we purchased our home in Las Vegas. Our mortgage is 1300amonth. We owe 170,000 on our home. But I would just like to know any advice that you guys have. Vinnie, I would not beat yourself up. You are 58 years young, man. You've got so much life ahead of you, and we are so excited for you. So here's the deal. When it comes to Iuls, you've probably heard Robert and I talk about them. I think it's episode 26 that we did with George Camel. It's a wonderful breakdown of how these Iuls and whole life insurance policies are just ripping you apart with fees. They're scamming everybody. They're just. They're not good products. Life insurance is good. You should have term life insurance, but you should not mix your life insurance with your investing. That is, that's not a thing you should go invest. And you should have term life insurance. So separate those two. So in this situation, you have $110,000 of cash value. If I were you, I would try and figure out what your policy's cash surrender value would be. Now it's that 110,000, minus any fees or surrender fees essentially that they decide to take from you for surrendering your policy. You can then take that 110,000 or 100,000 or whatever is left from it. Should be around that range. About 10% or so is what those fees come out to be. So let's call it a hundred thousand dollars. You can then take that money, use it to begin ma out your Roth ira. Maybe you have a traditional ira. Maybe you've got some rollover IRA stuff from a old work job or who knows? But get that money invested right. You want to make sure you're on the right side of robo taxis. Go put some money in Tesla, if you'd like. The most important thing to do here is to make sure that you are invested in this theme, that is artificial intelligence. And you can do that by easily investing into Vooqqq, VGT, VUG, VTI, some of these ETFs and index funds that have massive exposure to AI as companies continue to adopt this technology. Now as it relates to what your career could begin to shape up as. Maybe there's a world where you become someone making 15, 18, 19 an hour at a Chipotle or a Buc EE's or a Target or, you know, I think there's a world where you fast forward 10 years and sure, you started at a modest hourly wage, but that manager position could very well be in your future in three, four, five years where you're now making 85, 95, $110,000 as some regional manager of four targets or two Chipotle's or a Buc EE's. Like, do not worry about having the no education and just driving for Uber thinking that that's what you're going to do for the rest of your life. You are so young, you have so much to look forward to. And I'm sure as someone who, you know, you've been driving for a while now, Vinnie, I'm sure you've talked to some great people. Think about your your so right. Are you a good communicator? Are you personable? Maybe you really, really love, you know, researching new strategies or problem solving different, you know, things. And I guess I'm trying to get at here is there's a lot to look forward to still at 58 years old and you're going to be just fine.
- [41:48]
Robert
That's a great takeaway. And this question and this whole scenario really pisses me off because every single day and everyone that's followed us for years knows that I can't stand Iuls and the people that sell them. It's just one of those things where no one should ever make more money with your money than you. You earned it, you invested it, trusting this person. And with IULs, there's two problems I have that are very, very dramatic. Number one is why are the fees so high? The commissions and FEES on an IUL generally in the first 10 years of your money being put in are greater than 50%, which is unheard of. And then number two, if it really was an investment strategy, why is it that you can't pause your investments and let your money still grow like you can in a traditional brokerage account? With ETFs and mutual funds and stocks, your money goes away when you stop paying. So to me, I don't think it should be legal to call Iuls an investment strategy, because they're just not. Now, let's talk about your second act. You're 58 years old, you have a ton of time left. You could literally go out tomorrow, get into a trade school, and in one year be a licensed electrician, plumber, solar repair person, or any one of those that does not take a 4 year degree. And you could get yourself to 100k within a couple years by going into one of these fields that are highly sought after, that are short on labor. Right now, plumbers are at a massive shortage nationwide. Electricians, the same. Get into a field where you can go to a trade school in 58 years old and by the time you're 59 or 60, you're up and running and can have high earnings for five or 10 more years and really set yourself up financially. And like Austin said, get rid of the iul, find out what the surrender value is, get it invested in real investments, and stop paying all the fees and commissions that it takes to own these Iuls.
- [43:56]
Podcast Host
Now, here's something else, right? You mentioned your wife makes 90,000 a year and you're using your Uber money to fund your IUL and her iul, which means you're using your Uber money to invest about sixteen hundred dollars a month is what I'm seeing. I love that. Keep doing the Uber, keep making the 1600amonth, assuming it's like a good hourly, you know, ROI on your time, but live off of her income, and then use this Uber money to build up that nest egg. So here's the math for you, right? From 58 to 70, if you are investing $1600 a month, that is $415,000 in this nest egg for you. Especially if you do it with a Roth IRA or something, right? Tax free, that is. You know, that's growing at about 8 1/2% here, so it's adjusted for inflation, right? You have about 400 grand in this nest egg. I mean, there's a world where you guys can absolutely retire just fine. You have 170,000 on your house. You'll have your house paid off when you're ready to truly retire here. And, and you're going to be fine, Vinnie. So do not think about going broke. You're not going to go broke, but it's very smart now that you're looking ahead and you're thinking about these things. So now's the time to act right? If you waited another five or ten years, things could be in a different situation. But you're still young, you've got a good, you know, 10, 15 years of investing and earning potential ahead of you and we're rooting for you.
- [45:11]
Robert
You guys, what a great episode. It feels so good to be here with you and just, you know, we had a little bit of some bumpiness to deal with and I'm glad you're back and excited to keep moving forward with everything we're doing here. And just remember everyone, we have new Friday episodes coming up. We're super excited. They start August 1st and we can't wait to share what these are going to look like for you guys. So, so thank you all for all the incredible support, all the five star reviews following us along and all of you that have used the seven day free trial to join the Rich Habits Network. Come in and kick the tires. We appreciate you and just wow, what a great bunch of questions and an awesome episode.
- [45:54]
Podcast Host
Robert. I am so excited about these new Friday episodes. All about the headlines and happenings as it relates to you and your money. It's going to be an awesome addition to our weekly lineup here of episodes of the Rich Habits Podcast again starting starting Friday, August 1st. Put on your notifications if you're watching us on YouTube, if you are watching us on Spotify, wherever you are right now, just make sure you hit the plus button, the subscribe button, the I want to be part of the club button, right? We actually have 200,000 of you who are subscribed to us on Spotify, which is absolutely incredible. And again, thank you all so much for your patience as I had to deal with the passing of my father on July 8th. With that being said, we look forward to seeing you guys on Monday. Thanks everyone and have a great rest of your week.