Rich Habits Podcast - 58: 3 Financial Strategies Everyone Must Know To Ensure a Happy Engagement & Marriage

Episode Date: April 1, 2024

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz share their three favorite financial strategies everyone must know to ensure a happy engagement and marriage. Specifically, we share how important it is to be on the same page about money, retirement, as well as setting your children up for financial independence. ---⭐ Download our FREE Budgeting Template – click here⭐ Earn 5.1% on your savings with a High-Yield Cash Account – click here⭐ Trade stocks, options, music royalties and crypto on Public – click here⭐ Automatically buy stock where you shop with Grifin – click here⭐ Protect your family with term life insurance from Suriance – click here⭐ Use code “Spotify” for 15% off our 4-module video course – click here⭐ Optimize your portfolio with Seeking Alpha – click here---👤 Explore everything Austin does – click here 👤 Explore everything Robert does – click here❓ Ask us questions for our Q&A episodes – @richhabitspodcast on Instagram📬 Inquire about working together – [e-mail]---Hankwitz Group LLC has an existing business relationship with NEOS Investment Management LLC. The opinions expressed are those of the author, and the author owns several NEOS ETFs.

Amazon presents Laura versus Fruitflies. Swarming your fruit and terrorizing your kitchen, these little freaks multiply at a rate that would make a rabbit say, yo. Chill. But Laura shopped on Amazon and saved on cleaning spray, countertop wipes, and fly traps. Hey, fruit flies, your baby boom ends here. Save the Everyday with Amazon. In this episode of the Rich Habits podcast, we'll be talking about the three things you need to be aware of and discuss with your partner before you get engaged.

It's wedding season right now. Spring is in the air. And we want to make sure we prepare all of you to do the right things financially and mindset wise prior to that lifelong commitment. If you're already married, these three tips still apply. So don't worry about that. And in this episode, we're going to be breaking down, number one, having conversations about. about money. Number two, having conversations about lifestyle and retirement. And number three, having conversations about setting your children up financially. This episode is a bit long, but we promise if you stick with us, you're going to learn a ton. I do know a lot of my friends right now are in the home stretch of getting engaged and married. So I'll definitely be sharing this episode with them. Talking about this stuff is really, really important. So with that being said, kick us off with the first strategy to ensure a happy engagement and healthy marriage.

Yes, I'm so excited about this episode because I just feel like it's that unknown gray area where so many people, when they're in love and euphoric, and it's that first year or two of the relationship, you just never have that important conversation, and that is being on the same page about money. And what does that mean? Having the difficult conversations, whether it's around prior debts, credit scores, where you're at. And many times I feel this conversation doesn't come up until you're so far along into the relationship that it's kind of too late where you didn't have those important conversations about your situation, their situation, and as far as what to do. Even myself when I got married, we had the

discussion, but things were never fully resolved. So I went into my marriage, my prior marriage, and she had student loan debt. She had consumer debt. She had all of these things. And essentially, when you get married, you become one. So you're taking on that responsibility with your spouse and your significant other. So it's just very, very important to have that conversation early and really have an understanding of both sides so you know going into the marriage that you're starting off in a good spot. And that, to me, is one of the most important things. So I think, Robert, having the conversation about debt, if it's existing debt, maybe past debt,

you've been able to pay off, it just shares with that partner of yours, One, who you are. Two, what you've done. And three, who you want to become as a now married unit. Now, I also know a lot of people are heading into marriage with student loan debt, which is why I think it's really important for us to kind of dig a little bit deeper on some solutions for student loan repayment. Now, I'm not sure if you guys saw this or not,

but Robert and I went to the White House last week to talk with the Biden-Harris administration about their plans on student loan repayment and potential forgiveness. and we learn more about what they dub the Save Plan, S-A-V-E. After doing a lot of research myself as someone who took out student loans and paid back my student loans, this is what I would call the most affordable income-driven student loan repayment plan. There are two components to think about with this plan. The first one being, think about it like this, if you're saddled with tens of thousands

of dollars of student loan debt, for example, the average teacher right now has $56,000 of student loan debt, and makes $38,000 a year. and you don't have the discretionary income to pay off that student loan debt aggressively, like you probably should, especially if it was high interest. By enrolling into the save plan, people are able to stay current on their loans without accruing high interest that compounds over time. And the second sort of component about this was if you borrowed $10,000 or less to go to maybe a community college to get an associate's degree, and you want to be a part of this plan, I believe the loan will get forgiven over 10 years.

So if you think you should be on an income-driven repayment plan, right, these are conversations you should have with your partner. Maybe they don't know how to tackle their student loan debt either. Like we've talked about here, being consistent and transparent and authentic with your partner is super important as it relates to marriage, engagement, and just having a healthy relationship. So definitely check out the safe plan and do what you can to learn more about it if it applies to you. Yeah, and I don't want to brush over the importance in the incredible time that Austin and I had at the White House. We got to sit in on some really great meetings about the save plan and what that means for people with student loan debt, the forgiveness, what it means for the economy. And that was really incredible.

We also had the opportunity to do these interviews and really dig deep on some questions around this, being able to get you the best information that is out there on everything that is related to personal finance and building wealth. So it was an incredible experience. And I didn't just want to gloss over like, hey, we were at the White House and we learned a lot because it was really, really great and we had a lot of fun. So Austin, I just wanted to touch on that. Go ahead and take us into the next point.

No, you're good. Totally. So, yeah, being on the same page as it relates to debt, right? Having that conversation about debt, like what Robert was just talking about, is super important. I think the second thing kind of stemming off of that is being on the same page about a monthly budget. A lot of couples, including my parents, when they were married, never made or stuck to a monthly budget. Knowing exactly how much money is coming in each month, how much is being allocated, to utilities, groceries, kids, soccer games, fun money, saving for the vacation. Everything you're doing is so, so important. You all need to be 100% on the same page about all the money

you're making and the money you're spending. Yeah, that's a great point. And I think it's probably from my experience, one of the biggest stressors that I hear from clients when I do these calls is the fact that someone in the relationship is just not paying attention to the budget and following along and doing it in a meaningful way to protect the couple's financial situation. So I think a key here is, again, getting back to those important conversations, is to have spending thresholds, just like I do in a company. And in the relationship side of this, have a dollar amount. Look at it as a situation where you say, okay, we're going to agree that any purchase over

$500 or $1,000, we're going to first discuss. And what that prevents is from constantly dealing with looking at your budget and not being in line because one person or both of you might be frivolously spending. He goes out and buys $2,000 worth of golf club. She goes out and buys whatever she's going to buy. Maybe it's a new purse that's $1,500 or $2,000. These are problems if you don't have that conversation. So I think a really good way to resolve that is having a spending threshold.

And at the end of the day, once you have that agreement, it takes all of the guesswork out of it because you have your money. He has his money. You have your together money. But at the end of the day, you're not asking for permission. You're just being able to stay within the budget and on the bigger purchases have that conversation. I think if couples all did this, everyone would be much happier because you just don't want to be in a situation where you feel like either you're putting in all the work and they're spending all the money. or you have different goals for retirement and financial freedom. So I think it's very important to really discuss these spending thresholds.

Speaking of retirement and financial freedom, that's going to be the third piece of this larger money conversation that we're having with our partners before or during marriage, right? Alignment on retirement investing. This one's really simple, but it's probably the most important because unless you all agree to prioritize your retirement investing, you're never actually going to do it.

Robert and I encourage folks to invest 15 to maybe 25% of their take-home pay every single month. If you're doing that, you're going to be just fine. And then, and only then, once that is already allocated, invested, you guys are rocking and rolling, then you start saving for their vacation. Then you start saving for the new car. Then you start saving for the new house, right? Put the money aside first. Once it's aside and invested, then you can begin spending the discretionary income for the fun stuff.

Once you guys are on the same page and aligned on that type of strategy, for your retirement investing, things are going to get so much easier. Yeah, you hear Austin and I beating the dead horse when it comes to getting that first 100K invested. And this goes whether you're a single person, you're married, engaged, or whatever, is really understanding. And I deal with this on the front lines every day with all of the client calls I do and people that pay me to consult is so many people, and I see it daily in their 40s, in their 50s, that they have lived with lifestyle creep for so long that they know. never get around to actually stopping the migration of lifestyle creep and saving for retirement.

And you really have to understand the sooner you do that and you allow compound interest to work in your favor, then the better off you're going to be later. So it's so, so important. So I want to take us into our next point that really, really ties into all of this and puts a bow on it, especially if you're already married, is understanding a living will versus a last will and testament. So many people get it mixed up and don't realize they're two totally different things. So I'm going to cover the living will since that would kind of come first. And what a living will basically means is you want to spell out what you want your medical care to be and what you're

willing to do and the boundaries of it while you're still living. So that way your spouse knows exactly financially and medically what you expect and what you want to be done in that way. And then second, And secondarily, and you can have both, is your last will and testament. And what that means is it spells out where your assets go and to whom and how that breakdown occurs, whether you have the wife, the kids, the family, or whatever. And so there are two different things. And you can have both of them concurrently. And I believe they're very important and should be discussed early on in the engagement or the marriage. because you never know when something could happen and you don't want to wait until it's too late. I had that with my father and I had that with my grandmother where they didn't update their wills

frequently enough and then laws changed and things went awry when they did pass away. So just always make sure that you address these appropriately, especially as you're getting married or married and you're going into having kids. I think it's very important. All right, Robert. So we've just had our conversations about money, generally speaking. We've talked a little bit about debt. We've talked a little bit about budgeting, some spending thresholds, aligning on retirement and investing, and even what a living will might look like.

What is going to be the second strategy toward a happy, healthy marriage? Yes, this one aligns very well with number one, but is still equally important, and that is being on the same page long term for your goals and your lifestyle. I think one of the biggest issues that really hurt people in their financial journeys, especially couples, is being aligned to make sure that you don't fall victim to lifestyle creep and spending. Because when we talk about this on a regular basis, and if you don't have a defined budget and understanding of how much you're trying to put away a month, you're just guessing.

And so many couples are like, well, we have to live in this school district. We have to have this house. Well, Betty and Bill just got the new BMW. We have to have the new BMW. We have to have the new iPhone. and it just turns into this big hamster wheel of how do you ever set aside the money for retirement and start building towards financial freedom if you let lifestyle creep take over and you never stop that hamster wheel. I actually had a conversation. This was about a year ago, but it's very

relevant today with a friend of mine who is continually living beyond his means and was telling me how him and his wife had to have the new $1,800-It baby carriage. And he actually put it on a credit card. He financed an $1,800, whatever you call it, baby carriage that you walk your kid down the street in. And I was shocked. I was like, you couldn't take the old one from your prior kid or get one from somebody else or get one on Facebook marketplace? Absolutely not. And that's crazy to me that people will go further and further in debt to impress people that are already in debt probably more than them.

So it's wild out there how the lifestyle creep really sucks people in. Well, that's why we're talking about it here, Robert. That's why we're encouraging our listeners to talk about it as well, so they can be on the same page for that happy, healthy marriage. And the next point I want to talk about as well as we talk about these long-term goals and lifestyle is understanding and being on the same page about when and how aggressive we want to save for retirement. Knowing this is really, really important. I don't know if y'all watched the recent season of Love is Blind,

but Johnny was talking to Amy pretty early on in their sort of engagement, that he wants to retire before 65 years old, right? This is going to take a lot of discipline for both of them if they want to achieve that. But that's a conversation he had with her very early on saying, hey, listen, I don't want to slave away for the next 40 years of my life. I want to retire before 65. Here's what I want us to do so we can both achieve that, right? Being on the same page about like when we want to retire and how we want to spend our retirement

is really, really important because one, it keeps you motivated to say, okay, we're doing this. It's a very clear path to this type of retirement. I'm so excited we get to spend more time with the retirement. our kids, we get to not have to go to a job we hate, whatever it might be for you. But being on the same page as to win and how we're going to get there is not only going to be motivating, but inspiring. And it's going to keep you guys together and excited to achieve that goal. Eddie couple, whether you're just getting engaged, you've been engaged, you're ready for the wedding, or you've been married for 10 years, setting yourself up earlier is so much more rewarding.

If you look at Austin and I here in the Rich Habits podcast, it's so awesome, us having this 30-year age difference because we're at two different points in our lives. And I have 30 years to look back of all the mistakes and all the great things I did to set myself up financially. So we can really discuss the now, the future, and me going back those 30 years and thinking through all the good and the bad and the ugly that has happened. And I think it's just so important because we talk about delayed gratification quite a bit. And delayed gratification does not mean when you're Austin's age, you don't have fun, you don't travel, you don't have nice things. But what it does mean is, from Austin's age to my age, is figuring out how to carve out enough money to make sure that you have a

plan. If you have a plan and you stick to that plan, you can still have fun. You can still enjoy life along the way. But trust me, it's way better to set yourself up for the future and know that you're not going to be grinding away and be a Walmart greeter at 74 years old because you did the right things earlier in life. It's so important. And that leads me to something that I think we should also talk about coming back and thinking about my marriage and what I've heard from some of my family and other people. And that is, how do you handle money when it comes to extended family and maybe them wanting a piece of the pie? And what that's meant for me because I've had a decent amount of wealth for a very long time is always trying to figure out with extended family and sometimes even friends that are close

friends of what is the right and the wrong thing to do here? For me, I've been on the wrong side of extended family and friends of loaning them money. I don't do it anymore. I lost a very dear friend of mine that I'd known since I was 10 years old. He needed to borrow $65,000 to save his restaurant from a tax deal. I made that commitment to him and I had like three hours to get the money together and help him. I did it. After two years of him paying me back, he stopped paying and then it was a situation we ended up in court. I used to help a former extended family member with their home. It was in some disarray as far as finances around taxes. I helped them. They never paid me back. So my general rule is I'm not a bank. I don't loan people money. And if you decide to loan family money,

look at it as not a loan that you're giving it to them. You're more than welcome to put in a contract, have it documented, have it legal of how they're supposed to pay you back, but emotionally look at it as a gift because in most instances, they're not going to pay you back and it's going to cause a rift between you and them. So it's better off if you understand that in the beginning because it's likely that they won't pay you back. So just keep that in mind and have the conversation with your significant other of what it looks like and how that looks around money for extended family and even friends because, you know, your wife or your husband might not know your best friend from college that you're about to lend $30,000 to who's probably not going to pay it back.

And that affects your marriage and your financial situation as well. So just have that conversation as part of this bigger picture. There's more to life than finding the perfect car. But finding the perfect car can help you get the most out of life. Like the SUV that handles everything from drop off to off road. and the car that hulls groceries and hockey teams, or the van that's gone from just practical to practically family. Whatever you want, wherever you're going, start your search at autotrater.ca, Canada's car marketplace.

Yeah, I wouldn't say it's likely that people's extended family won't pay it back, I know everyone's situation's different, but I do agree with the perspective of you should never loan anyone, even if it's your extended family, money because the borrower is slave to the lender. And if that is your extended family, like your mother-in-law or your brother-in-law or whatever that might look like, and they want $20,000 and you loan them that money, Thanksgiving dinner is going to be really weird, you know? Easter is going to be really weird.

Christmas has just got a different feeling to it. So I'm right there with you. I'm in the bucket of if someone needs money, I am a generous person. I'd be more than happy to give them the money. but I'm not going to loan someone money. I've actually, you know, over the last couple of years, I've given my family a lot of money. And it's never alone. It's always just like, here's the money, here's what it looks like.

I love you. I care for you. And I don't want any of it back. And so I totally agree if you make that mental switch and being on the same page with your partner about how we get approached and how we think about money and giving money versus borrowing money versus family and money, just have that conversation because to what Robert was saying, if you and your spouse are on completely different sides of the aisle here, where spouse does want to loan some money to someone or, you know, whatever that might be,

or you want to loan money, whatever it might be there, that's just going to cause a riff in their relationship, at least until something happens with this situation. Yeah, I love it. And this is great that we're covering these because I feel like these are the dark hallows of these long hallways and closed doors that relationships just don't ever have this conversation. And it's so important to do it. And the earlier you do it, the better. So you're not finding yourselves two, three, five, ten years in and dealing with this, especially as you build wealth. Because if you're the person in that group or that extended family that has the most money, guess what? You're going to be the target for the constant asks and you just have to be

prepared of how to handle it. 100%. Well, with that being said, Robert, we've talked about having the early conversations about money. We've talked now about long-term goals, retirement, kind of how we approach loaning money, gifting money. But let's now talk about that third topic you mentioned, which was setting your children up for financial freedom. I do know a lot of couples are having children. Children is a very, very important topic to cover in marriage. So children and money combined is probably even more important. So kick us off with what setting your children up financially might look like. Yeah, I think, you know, we talk about the 529 plan. We talk about building credit, potentially a custodial investment account. So I think we should start out with the 529 plan. And Austin,

give me your example because I really like the story you tell of how you did it. And then we can go into further kind of these kids college funds and all that and how it works. Yeah. So the 529 plan or 529 plan that people know it as is essentially a kids college fund that is tax exempt if you spend the money on education. Now the tax exempt side of the equation comes from. It's not just a savings account, but it's an investment account. So me personally, I'm investing $150 a month toward a $529 plan for my nieces and nephews, and that $150 a month over the next 18 years will turn into, assuming the stock market continues to do what it normally does, about $90,000. And so the tax-exempt side of that is, well, I'd argue about $70,000 of that $90,000 was compound

interest, right? That was the sort of interest gained on the account because it's an investment. And I won't have to pay taxes on those profits assuming I spend those profits on education. That could be tuition, room and board, books, whatever it might be. Now, for those of you saying, well, what if my kid doesn't want to go to college at 18 years old? Well, that's cool. You can actually roll over $35,000 of the $529 plans balance into that child's Roth individual retirement account, the Roth IRA. And if you keep that $35,000 in that kid's account invested into the S&P 500, making about an inflation adjusted 9% per year from age 18 to 65, that 35,000 grows into 2.3 million by 65 years old. So when we talk about generational wealth and setting our kids up financially, this is probably the best way

every single parent can begin to move closer toward that goal with their children. Yeah, I love talking about this strategy just because, you know, I remember when I was growing up and, you know, my parents didn't really do much for me. We didn't have much, but I did get a couple of those eye bonds or whatever they were that never really grew and weren't worth much, but it was something. So I love talking about strategies that young couples or couples that have teens can do to set their children up and give them a better chance of financial freedom when they do turn 18. And one of my favorite ways to do that in helping them build credit at any age is making them authorized users on your credit cards. Most credit

card companies, but not all, report this to the credit bureau. So make sure you check with your credit card suppliers. But adding them onto your credit cards as an authorized user, you can set them up so, so well financially because the day they turn 18 and they want to get that car or they want I get a motorcycle or go buy that van and travel the world, you don't have to be a co-signer because you've already built their credit up prior to them becoming 18 years old and going out on their own. I think this is such an incredible, incredible wealth building and leverage strategy to help them ahead of the curve because I know for Austin and I both of us, when we turned 18, we started with a guaranteed credit card because we had no established credit. And guaranteed credit cards

are totally fine, but man, what a powerful tool. If you have kids, add them on to your credit cards now. And when they turn 18, they already have a 700 or a 750 credit score. It's just so, so powerful. Yeah, actually, I was even worse than that, Robert. Guaranteed, I think for me, it was called a secured credit card. I didn't get my first one until 23 years old because my parents didn't teach me about credit. I didn't know about credit. I wasn't an authorized user on anything. I had a 620 credit score. Like, I was nothing when I was 23. And that's, because my parents didn't know better, but I will certainly know better for my children. And now my credit scores in the 800. So it worked out well, but it's a really, really good thing to call out

for children, especially in their teens, late teens, call it 16, 17, 18 to help them begin to know what credit is, why it's important and how to use it in the future responsibly. And another powerful tool that I'd like to hear your thoughts on is a custodial investment account. This is something that a lot more parents are doing now, but it's just so incredibly powerful. And these three tips alone can change the course of entire generations of families if anyone listening just follows these three tips. Because if you're setting the youth up for success later, we're all hearing about inflation. Homes are too expensive. Gen Zers can't do anything moving forward financially because everything is so expensive. Well, guess what? You could set up the next generation just

with these three things and very little money ahead of time while they're five years old, 10 years old, 12 years old, rather than waiting till they're 18 and having the conversation or worse, not helping them at all. So Austin, touch a little bit on custodial investment accounts and what that means for our listeners. So I'm sure a lot of you listening right now that have children that might be call it 14, 15, 16, 17 years old. I mean, they might be having a job. I was working when I was 15-16. I was a lifeguard. I was mowing lawns. You know, I was doing a lot of things that allowed me to earn income, both from a W-2 perspective and some side hustles back in the day. But as it relates to W-2, if you have a child who is earning income, they're paying taxes on the income, it's a whole thing.

That child can theoretically have a custodial Roth individual retirement account. Now, what you have to do there is you can go to Vanguard, M1 finance, whatever maybe fidelity, whatever kind of platform you want to use there, but open up on behalf of your child, a custodial Roth IRA, only again, if they're actually earning W2 income that they're paying taxes on. You can't do this if they're not earning W2 income that they're paying taxes on. But if they do, open up the account, maybe say, hey, listen, I'm going to take $100 for you this paycheck and I'm going to put it into this account with you. And then this can be an opportunity to teach them about the stock market, teach them about investing. Maybe they love Nike or maybe they love playing Call of Duty or maybe they

love playing Roblox, right? These are all publicly traded companies that they can invest their money into that kind of come back to a wait a second. I love playing Roblox or I love playing Call of Duty or I love wearing my Nike shoes. I get to now own equity in the company behind that specific activity I love. Even if it's like a small amount of money, but just get them started to understand what investing means for them and get them rocket and roll it in the right direction for that Roth IRA, they can get a little bit more aggressive with it as they get older, of course, but just opening the account and having that first conversation is so, so important. Yeah, and one of the things very few people talk about is what makes this really powerful is that if you own a company.

So let's say you have these children that are 12 or 14 years old, you own a company. You could do this custodial account, have them on payroll with the company, and then have that payroll go into this custodial account, and then it prevents you from paying taxes on that. payroll amount for this equation and this strategy. So that's also another powerful way to implement this and save yourself some tax dollars. And they don't have to have this super important job. If they're in your social media or they're sweeping the floor, opening mail, or just helping you organize on weekends, that still could be W2, put them on payroll work that could go against this custodial account. So there's a lot of ways to not only save money,

for your company, but set your kids up on this. And it's just such a great strategy. Robert, this episode has been really, really powerful. I think because one, hopefully I'll be getting married here, or engaged first, right? Pretty soon. But we know a lot of people who are engaged, they're married, they're excited for their futures, and being able to have these conversations about money, including debt, including retirement, including budgeting, having conversations about lifestyle and retirement, understanding where you wanted to go, how we're spending. our money, how we're comparing ourselves, or maybe not comparing ourselves to the Joneses. And then most importantly, having conversations about setting our children up financially is so

important. It's only going to set up their entire relationships for success in the long run. So this episode, I think, was super, super impactful. And if you know someone who recently got engaged, maybe they're newly wed, or something of that nature, maybe they're having some money issues in their existing marriage, send this episode to that. Let them know that you hear them, you care about them and you're excited for their financial future. With that being said, Robert, before we jump in to everyone's favorite section of the podcast, question, and answer, let's take a moment to hear from this episode sponsor. Yes, this episode of the Rich Habits podcast is brought to you by NEOS investments.

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Click that text box and ask us a question about investing, ETFs, tax efficiency, passive income, whatever you want to know. And we will ask that question to them on that episode. So be sure to click below and check that. one out. Now, Robert, our first question for this episode comes from Ben L. Ben says, I really enjoy your show. With all the great information you provide, I'm still perplexed on what the next step and my investment progression should be. I'm 49 years old. I live in Oklahoma City and I have two rental properties. One rental property is just outside of Austin, Texas. It's totally paid off and worth about $350,000. It's currently cash flowing $1,700 a month. We also have one in Charlotte, North Carolina. We owe about

$62,000 on that one, and it's worth about $250,000. That one cash flows out about $600 a month. And then, of course, we have a primary residence with about $200,000 of equity in it. So I have some, quote-unquote, dead money, and I'm honestly not quite sure what to do. I've toyed around with the idea of getting a he lock, but I don't know if the financial climate right now with high interest rates is right for me. Also, do I use the HELOC to take out a conventional loan in another rental or use it to buy one in cash? My family also enjoys going to the lake, so I've thought about investing into a lake property that we could use and then rent it out as well, but I just don't know where to start. I'm kind of analysis paralysis at the moment, so if you have an idea for how I can get my equity to work for me,

I'm all ears. Any guidance is much appreciated. Ben, I love this question, and I love that you've provided so much specificity to help us really dig in and give a great answer. So we're going to have a little fun with this one. Yes, you have a ton of equity built into these properties. I love the HELOC idea, but here's what I would do. I would combine everything that you just discussed. I would probably use the HELOC. I would find that lake house somewhere where you enjoy, somewhere that you're familiar with and you visited over the years. And I would buy it because lakefront properties, they're not making any more. of them and they generally have a higher appreciation rate than just a traditional home and a

traditional neighborhood. So what that does is it gives you a really, really potentially profitable rental added to your portfolio, but then it gives you a place that you can have meaningful fun over the years and the decades with your family. So I love that strategy. Go out, get some money out of one of those properties, pull it out, use it as the down payment, maybe the renovation cost and get that lakefront property, have a blast, have that high capital appreciation, and just really enjoy it for years to come because I've never met anyone, including myself, that has lost money on a lakehouse. So are you saying maybe like, because I'm looking at this, probably about $500,000 of total equity to play with, take out a key lock against that kind of loose

equity there, or maybe a couple just, I guess, depending on how all the numbers crunch out, use that to get a down payment on the lakehouse and then perhaps even use the cash flow of about $2,300 a month that he's already making to pay for the mortgage of the lakehouse. Or the lakehouse pays for itself by being a rental, a short-term rental when they're not using it. So let's say you want to use it two weekends a month, but you have a rental on a lakehouse that is very, very busy with short-term rental. you could be quite cash flow positive depending on the lake and the nightly rental rates. I just know that back where I'm from, there's a lot of smaller lakes around Michigan

where you can buy a really nice lake front house, let's say for $300,000, sometimes less, put $50,000 into it and have a really great appreciating cash flowing rental property, but that you get to enjoy as well. So yes, that is exactly what I'm saying I would do in Ben's situation. Very cool, very cool. I like that. Also, Ben, I think something to consider. And really, you know, you live in Oklahoma City and you've got two rental properties that aren't in your city. So if things go wrong, I'm curious how the property manager, how you guys kind of go about that. If you do, though, want to continue making passive income with this $300,000 that you've got in a totally paid off house now in, I think you said Austin, Texas, you could sell it. Take that, let's call it, $300, $350,000, park it inside of SPYI or QQQQI, those covered call ETFs we talk about, and those would pay you against that $300,000 about $3,200 to $3,600 a month. That would also be tax-free because of the return of capital sort of strategy they use.

So if you do want a little bit more cash flow and a little bit more flexibility with your investments, being able to buy or sell something, that could be another alternative to consider, assuming now, only assuming you don't want to be a landlord from another state. Yeah, and it also that brings into play that philosophy, sell the one property, buy the lakehouse, do a 1031 exchange, you're not paying the capital gains on it, depending on the situation. So that's another alternate. So great question, Ben. Yeah, I love it. Those are my thoughts. And enjoy and send us some pictures someday when you get the lakehouse set up. Sounds good, Ben. Our next question comes from Ryan Kay. Ryan says I'm a public school teacher in the great state of

Wisconsin. I'm 37 years old and I've been contributing to my pension now since I was 24 years old. My wife is also a public school teacher in the great state of Wisconsin. And since listening to your podcast, we've begun contributing $150 every month to our Roth IRAs and we're investing it into the index funds you all talk about. So here's my question. Despite the fact that we're already doing our pensions, should we still keep investing into the Roth IRAs? How do they sort of fit into the equation here? All right, Ryan, the reason why Robert and I all always encourage people to be investing toward the Roth IRAs is because they have autonomy over that investment. Your pension, unless you've got some crazy pension that I've never heard of,

I don't think you're able to choose the specific stocks and ETFs that that money is invested into. I think it's kind of just pulled together in a large fund with a bunch of other people, and they use that to just generate income any which way they want. So the reason why, again, is because we're able to have autonomy. I can choose to invest into QQQVGT, VTI, VLO, whatever I want to invest into in different funds that outperform the markets, fingers crossed, over time. So, yes, you should always be investing into your Roth IRA. I would even consider maxing out your Roth IRA if you're able to do that. I think that's about $5.50 a month right now.

You're about $150. So obviously, I know you're a teacher. Maybe there's a world where you could carve out a little bit more of your income to do that. But I think you're doing a really great thing of kind of balancing both, right? you have the pension, that's the sort of guaranteed retirement, guaranteed, quote unquote. And then you have the actual retirement that's guaranteed, which is your Roth IRA, money that you are taking, investing for yourself, and putting into the markets for your future. And Ryan, just so we're on the same page, this $150 a month that you're going to be contributing

toward your Roth IRA, let's say from 37 to $67, is going to be worth $510,000 at the age of $67 tax-free. right that's $510,000 just from 150 bucks a month for the next 30 years like that's what we're talking about here that's guaranteed income in your retirement you have to worry about a pension or the government shutting down or whoever's managing your pension to mess up this is taking control of your money and you mentioned your wife is doing this too well combined now that's over a million dollars in retirement between the two of you there's a lot to be excited about and we are rooting for you again everyone this was a very powerful episode thank you for following along the rich habits podcast each and every week, sharing it with a friend, giving us these wonderful five-star reviews.

We're so excited to continue growing the rich habits company, podcast community, and all the great stuff we're working on. And we thank each and every one of you for joining us every week. Everyone do not forget tomorrow, April 2nd at 4 p.m. Eastern Time. Robert and I are hosting another webinar. We've got literally a thousand people already signed up to attend and it's all about building an investment portfolio from scratch. We're going to be talking about how we approach it personally, what we're personally invested into, how we diversify our portfolios,

the strategies we use for passive income, everything in between. This webinar is going to be the secret sauce that's going to take you over the edge with your investing. We cannot wait to see you all there. Last webinar, we had, I think, Robert, like 2,200 people watched the replay. There's like 900 comments and questions. I mean, you all are super engaged in these,

so we can't wait to host another one with you. of course, we're going to be joined by the Wall Street veterans at Nios Funds. We have Troy and Garrett hopping in to give us their perspective on how they think people should also be building investment portfolios from scratch given their 30 plus years of Wall Street investing experience. So again, there's going to be a link below in the show notes to check that one out. And with that being said, everyone, thanks so much for hanging out with us on this episode of the Rich Habits podcast. And we will see you tomorrow, April 2nd at 4 p.m. Eastern Time.