Rich Habits Podcast - 74: Our Disagreements with Dave Ramsey

Episode Date: July 22, 2024

In this episode of the Rich Habits Podcast, Robert Croak and Austin Hankwitz share their three biggest disagreements with Dave Ramsey. Despite popular belief, we're aligned with Dave on a few things... don't have a mortgage in retirement, get rid of the high-interest car debt, etc. However, there are a few things we completely disagree with. In this episode, we dive into them and explain our side of the story and why we believe our perspective will help the average American reach financial freedom earlier. ---💥 Join 45,000+ other investors and subscribe to our weekly newsletter! The Rich Habits Newsletter is actionable and illustratively-focused. ---⚡️ Register for our free webinar to learn about pre-IPO & angel investing! We'll cover this strategy in-depth + show you how to invest alongside of us into these deals. ---Skip the waitlist and invest in blue-chip art for the very first time by signing up for Masterworks: https://www.masterworks.art/richhabitsPurchase shares in great masterpieces from artists like Pablo Picasso, Banksy, Andy Warhol, and more.See important Masterworks disclosures: https://masterworks.com/cd---⭐ 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⭐ Get a $35 bonus when you start saving & investing with Acorns – ⁠⁠⁠⁠⁠⁠⁠⁠⁠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.

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Find your advisor at IG Private Wealth.com. Hey everyone and welcome back to the Rich Habits podcast, a top 10 business podcast on Spotify. My name is Austin Hank Wits and I'm joined by my co-host Robert Croke. Robert is a seasoned entrepreneur in his 50s with lifetime revenues of over $300 million under his belt and I'm an entrepreneur in my late 20s with a background in finance and economics. Since quitting my full-time job in corporate finance a few years ago, I've built a seven-figure media business and actively advised some of the most well-known fintech companies around the world. As the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset.

However, we try and bring you two unique perspectives, one from an industry veteran, which is Robert and the other myself, someone who's still in the process of building wealth and figuring it all out. Robert, today's episode is a fun one, and I think our viewers might have a clue as to what it is by the title of it, but kick it off with what we're talking about in the episode. In this episode of the Rich Habits podcast, we're going to talk about our three biggest gripes with good old Dave Ramsey. Don't get us wrong. Dave Ramsey is a billionaire. And from one successful entrepreneur to another, we respect the hustle.

He's helped tens of millions of Americans get out of debt, but that's also part of the problem. So let's dive into it. Let's do it. I mean, don't get us wrong, right? Dave Ramsey, we respect the hustle. You're a billionaire. Your company does $4, $5, $700 million. hours a year. I mean, you're crushing it. We just have a couple pieces of feedback as it relates to your

message regarding financial independence and personal finance and things like that that we want to share. And we think our audience members need to know. That's what we think this episode is going to be really important. So Robert, kick us off with point number one that we disagree with Dave Ramsey on. Yes, all debt is bad debt. As you probably know, Dave Ramsey's biggest message to the world is get out of debt. reasoning for this is he believes our earned income at our jobs are our biggest wealth building tools. And if we're paying that earned income to the banks in the form of debt repayment every month, we can't take that money to enjoy it or invest it. So by paying off our debt, we now have more money every month freed up to allocate elsewhere. Now here's our problem. Not all debt is bad debt and the math doesn't always add up for Dave.

So, for example, he's going to tell you to work six, seven, eight jobs simultaneously and go to school part time instead of just taking out student loan debt to get a four-year degree in some sort of STEM-focused major, right? Now, I took on student loan debt and I did it responsibly and I've paid it back. Now, I didn't go into hundreds of thousands of student loan debt to get a degree in left-handed puppetry or underwater basket weaving. I took on about $30,000 of debt to get a degree in finance and economics, something that I could take to the marketplace and earn and build an awesome career out of, something I did do before I became an entrepreneur. This debt allowed me and my countless friends, right, I've got a friend that makes $300,000 a year at 30-something years old, early 30s because he's a lawyer and he went to the University of Tennessee and he got his degree and now he's working in big law, right? He's doing whatever. I've got all these friends that are clear examples of taking on student loan debt responsibly, doing it in a way that you're not going hundreds of thousands over a stupid degree, but tens of thousands for a very great degree. And then you pay it back.

And now you have this awesome career ahead of you, right? So that's the first example. The second one, Robert, is having a mortgage is not bad debt either, right? Dave's over here telling people that you should go out and buy a house in cash if you can afford it. But Robert and now are going to say, no, no, no, don't do that. Do not go out and buy a house in cash. That is not how you should be doing this, right? I was able to purchase a $280,000 starter home back in 2019.

It was a townhome, three bedroom, two and a half bath. And out of pocket for that house, down payment, closing costs, everything. I paid $10,455. That $280,000 house in the outskirts of Nashville is now worth $450,000. That's a $170,000 appreciation in value of this house that I wouldn't have been able to participate in if I didn't have Dave Ramsey's 25% down, 50% down, or go buy it in cash, right? That's not something I could have done. But because I did go into debt, I had a 3% interest rate and I put this $10,000 down to do it,

I got to participate in that wealth building that came with this house. And now that house is a rental property for me. And it produces cash flow every single month. Yeah, for me, Dave Ramsey's message of paying cash or don't buy it just doesn't make sense. my mother had that theory as well. And unfortunately, most people just are never going to have enough cash to be able to participate in owning a home and doing some of the things we're talking about. And it really doesn't make sense for me at all because the wealthiest people on earth have mortgages, car payments, and even payments on their mega yachts, even though they could pay for these

items 10 times over. The reason being, and you've heard Austin and I say this for over a year now, is that if you can borrow for less than what you can make with your money, you always borrow because you want the positive arbitrage going into your pocket and not elsewhere. So for example, Austin bought his home and was able to get a 3.3% interest rate on his mortgage. So the goal here would be to use as little of your own money as possible and that interest and arbitrage the rest by investing. And so by making 8, 9, 12% in the markets, Austin is actually, actually putting that 6 to 10% per year on the 250K mortgage that he hasn't paid off into his own

pocket because he's arbitraging the difference to himself. So the clear math on that is I borrowed $270,000 to buy my house. Since then, I have invested $270,000 of excess capital over the last four or five years now into the stock market. I chose to do that instead of paying off my house. That $270,000 invested into the stock market is now worth well over $400,000. Instead of paying off my mortgage early with this $270,000, I took that. I invested it, knowing that the market goes up over time. That money is now worth $400. And if I want to use that $400 to pay off the house, I could do that and have money left over, right? But if I just went and paid off the house, it's only worth what the house appreciates to. And I don't have any liquidity on that. The only way I can access that money is one,

if I sell the house completely, which sucks, I don't want to do that. I want to have the cash flow it affords me. Or two, I go into debt with a helock and now I've got like a monthly payment with that, right? So it's like, I understand where Dave Ramsey's coming from with like having some of your wealth go to these payments. But if you can have a payment, like a mortgage, right, an asset, something that goes up in value and you can kind of keep that on the side while also taking money and putting it elsewhere at this 8, 10, 12 percent like the markets do while you have a 3 percent interest right over here. It's just such a no-brainer, Robert. But it's just so important to understand if you can borrow the money for less than what you can make with it, you always borrow.

It's just that simple. Everyone does it. I mean, Robert Kiyosaki, he covered this very well-enrich-dad, poor dad. And it's really just important to understand this leverage mechanism when building wealth. That good debt is not a bad thing. And you want to be able to use this good debt along the way to build your wealth. Now, on the flip side, I will admit, my house that I'm in right now, be very bad. because interest rates went up, I have a 6.7% interest rate on this house, right?

Yep. My monthly payment on this mortgage is $2,500, and I owe about $320,000 to pay it off. So my $2,500 per month, and I pay that every month, so that's $30,000 a year I pay out of my pocket to live here. Now, if I had taken $320,000 to pay that off and I divide that into that $30,000, I'm getting a 9.4% return on my money by paying off my mortgage, right? Cash on cash return. That's all people need to be thinking about paying off their mortgage. Not because Uncle Dave is telling you to do it and you have a 2% interest rate or something. Think about the cash on cash return. So Robert, I will pay off

this mortgage early because I can get a guaranteed 9.5% which is again, 8, 9, 10% that we'd get in the markets anyway. This is going to be apples for apples. But if you do the same math with the first house I got at that lower interest rate, that return quickly dropped. to only four and a half percent. And I can think of a lot of better places to earn more than four and a half percent than paying off my mortgage early. I love doing the math on these equations because at the end of the day, our message is always clear with the Rich Habits podcast, and that is how can we break down these tough topics and help people understand how to make their money work as hard for them as they work to get it? And these strategies are the way to do it. So point number two, the second

disagreement we have with Dave Ramsey, kind of piggybacking back on this idea of paying off your house early, is net worth millionaire status is not what it's all cracked up to be. Now, don't get me wrong. If you are a net worth millionaire, you should definitely be proud of yourself. You've done something right. But the way that Dave Ramsey encourages people to reach that net worth millionaire status is where we have a disagreement with. He tells you to pay off your primary residence as fast as you can and then invest 15% of your income toward your retirement accounts via a 401k. This is cool if you want to retire at 70, but I don't want to do that and we don't want that for any of you. So think about it like this, right? Let's pretend. And I've heard these people

call into his show all the time saying this and he's kind of like backed into a corner like, oh gosh, I don't know what to tell you, right? Let's pretend you're in your mid-40s. You did what he said. You've been listening to him for a while and you paid off your house, right? And now it's worth $600,000. And let's say you're in your mid-40s, maybe early 50s, and you've got $600,000 in your 401k. And you're a net worth millionaire, right? You've got $1.2, $1.3 million of net worth. And you can afford to, theoretically, retire as this millionaire status, but you can't. Because you can't touch the retirement money in your 401K for another 10 or 15 years despite

being a millionaire on paper. So you're sort of stuck in the rat race of, dang, I got to work still for the next 10 to 15 years at a job that I might not like that much, but you're still a millionaire. So it's like, oh, I'm a millionaire. Look at me, but it's like, okay, but can you retire? Can you access that money? Is that money that can pay for your daily, monthly living expenses? No, it's not. And this $600,000 that you use to pay off your house for $400,000, whatever your mortgage was when you bought it, that money could have been invested elsewhere in earning you income, but instead you used it for it to pay off a house that just goes up in value that you can't access any of that money. So, Robert, I just,

can talk about this one in circles here, but walk us through your thoughts. Yeah, I was going to say we could definitely spend hours on this, but this is why Austin and I have talked about building a bridge account for so long. We don't want our listeners to find themselves because you're smart and you're definitely going to have the money when you're older in a place where you have hundreds of thousands of dollars in an account you can't touch and hundreds of thousands in a primary residence that isn't producing any sort of cash flow. I'd much rather you have a mortgage of $2,2500 a month, assuming you bought the house when interest rates were lower and keep that while building up the bridge account to $3,000, $500,000 and building your 401k over the coming

decade compared to using all of your disposable income to get rid of a single $2,000 monthly expense by paying off your mortgage early. Now, that might have been confusing, so think about it this way. If your mortgage balance is 400K and you scrimp and save for the next 8 to 10 years to pay that balance off with cash, only to get rid of a $2,000 monthly payment, you need to seriously reconsider the math. $2,000 a month is $24,000 a year in cash outlay you're saving by paying off your mortgage early. But on the flip side, $400K invested in the stock market will produce roughly $40k a year in cash. in your portfolio income. So would you rather have 24k in savings or 40k in income? I'll choose the 40k every single time. Not to mention, Robert, if you don't touch that $400,000 for seven years, you now magically have $800,000 because that is how compound interest works. And that quickly

turns into $1.6 million after another seven years. Your house does not do that. I do not care about my net worth per se, I care if my investments are making me more in portfolio income than I spend every month, because if that's the case, I am financially free. And if I have access to that money, right, it's in an account like a bridge account that we've talked about here. I can touch, withdraw, do whatever with that money without paying penalties and fees like a 401k. I have the flexibility and I have the option to retire early, to take a couple years off, do what I want. I don't have to wait until I'm 60, 65 years old before I can begin to enjoy the fruits of my labor throughout my 30, 40 year career. Yeah, I love it. And this is just a great episode to really

kind of debunk some of these things that we believe are incorrect. Because the last thing I want to see is people finally retire, but then they don't have the income to be able to pay their bills. And then they end up having to sell their primary home to pull that equity out and be able to live off of it. That's why this is a better mouse trap for people. moving forward. You know, what I don't want this episode to be is I don't want people to say, oh, okay, I just won't invest to my retirement accounts. No, you definitely should. We talk about the Roth IRA all the time. We want you to get the match with the 401k. It's free money. We don't want you over investing, right? A lot of people make the mistake of I'm going to max out my 401k. I've got like

$3 million into it. I'm in my early 50s. Look at me. It's like, nice. You have $3 million you cannot touch for 10 years. Like, yeah, sucks, dude. And then you go take a 401k loan because you think that's the solution because you're not interest back to yourself but then you know maybe you got to change jobs or something happens and i have to pay all that money back at once because that's just the terms of the loan so there are just so many things that people get wrong because of a dave ramsie isum or a specific thing that he says or does or wants or encourages you to do and we just think it's really important for you to think holistically about your finances right of course we don't want you to have a mortgage when you're retired like that sucks right I hope you pay off your house eventually. Like, we don't want you to have a car payment when you're 72.

Like, that sucks, right? But we also want you to be making the right decisions while you still have time on your side, assuming you're in your 20s, 30s, 40s, or even 50s, right? A lot of people make the mistake, Robert, of saying, I'm going to have all this money in retirement. And then they look around. They're like, well, it's in my retirement account, but I can't touch it. And so that's our big thing that we want people to realize here.

Robert, what is our third big disagreement here with Dave Ramsey? Yes. Number three is Bitcoin is a scam. Dave Ramsey believes it's a scam. He put it all over the internet. He put it on his YouTube channel. And we obviously disagree with this. Is Bitcoin volatile? Yes. Is Bitcoin magic internet money? It might be. But no matter what it is, you can't argue with the fact that Bitcoin since its inception has experienced a 102% compounded annual growth rate. I'm up 46% on my Bitcoin alone this year. And I have every intention. to hold for the foreseeable future. I believe Bitcoin should live inside of a well-diversified portfolio for everyone, making up 5 to 15% of someone's invested capital. And I'm excited to see Bitcoin eclipse 100K for the first time over the coming months.

And I think we're going to get there finally. And it's going to be really good times in the crypto market. I am very optimistic in where Bitcoin's going over the next couple years, several years, couple decades, right? I am right there with you. got hundreds of thousands of dollars in cryptocurrency. Definitely overindexed from a net worth perspective, but that's just because I got in pretty early. But at the end of the day, Robert, I couldn't agree more. And not to mention Bitcoin,

there are now Bitcoin ETFs, right? We hosted Jay Jacobs on the show just a few months ago to talk about what BlackRock is doing with Bitcoin and their ETF strategy. So to say all this stuff's a scam, I just, I can't agree with it. I mean, you know, Dave's also the type of guy that says that he doesn't hold gold. He thinks gold's bad. And like, don't get me wrong. I'm not a gold bug. I don't have a lot of gold in my portfolio. But, you know, she's also. Did you have a little bit of gold in a well-diversified portfolio? Sure, right? I think at the end of the day, Dave will rather tell you to put your money into international

stocks that have gone sideways or down over the last 10, 20, 30 years because it has a long track record, right? Then to put yourself into a new asset class like cryptocurrency new, right? It's been around for 15 years. I just don't see it, man. And if that means I'm a trailblazer, if that means that I bought into a scam, right, I'll take my hundreds of thousands of dollars in profit and I will admit that I bought into a scam. Well, and I think too a lot of it is that we see in the markets and Dave's not the only one is that a lot of times when people are late to the party or they're unsure about something, then they spread fear. Because if they don't understand it and they don't get it, then to them it has to be a scam or if they were late to investing in it themselves.

We see that a lot in AI. We see that a lot in big tech. We see it in humanoid robotics where people are fighting back that that's the future of the workforce. And I do believe we're trailblazers because we are here to provide our audience with up to date knowledge on all topics of personal investing and what to do and how to do it. And I think that is what makes us different and so good is because we are independent thinkers that are trying to help all of our audience reach financial freedom like we are. and just to be able to help them guide these waters in understanding all of these topics. And don't get us wrong. There are absolutely scams that happen in cryptocurrency. There are rug pulls.

There are scammers. There are all these things just like Enron and all the other scam stocks that happened over the decades, right? There are always bad actors. And no matter what asset class you're talking about, people will try and scam and connive and do bad things with money because people are greedy and it sucks. and people get unfortunately tied into those schemes and it sucks. I totally get it. NFTs are a great example of this.

That was such a crazy experience in 2022 with these stupid NFTs. That stuff, I'm right there with you. Scam, stupid, it sucks. But Bitcoin or Ethereum or ChainLink? You know, some of these cryptocurrencies that have been around for over a decade now, I'm just like, no, I think they're cool. I'm good. I'm good with taking the risk here.

So I don't want people to misconstrue us endorsing cryptocurrency. as a whole when we are very well aware that there are rug pulls and scammers and all that stuff happens, we get that. And that's why my portfolio is literally three cryptocurrencies. I know Roberts is a little bit larger than that. But we don't want people to think that we're endorsing, you know, these crazy things that do happen. We are definitely cognizant of it. We are saying that Bitcoin alone, Bitcoin is a scam, aka what Dave says, is wrong. And I think it really speaks to what our overall message is, and that is having diversification throughout your investing portfolio. whether it's cryptocurrency or it's real estate or it's ETFs that we talk about or individual stocks.

We want to see people diversified enough that if any one given sector were to really dump hard or go into a downward spiral that you're going to be protected and you're going to be okay. And that's just really important is that diversification. Well, Robert, speaking of adding diversification to your portfolio, here's something interesting. New Deloitte data has found that 58% of well, Wealth managers' clients consider their art collections as part of their overall estate planning strategy, and UBS released a report that nearly 40% of ultra-high net worth collectors are allocating 30% of their entire wealth to artwork.

Well, I guess it's a good thing that we're partnered with Masterworks, then, isn't it? We're not saying that any of you need to allocate 30%. We're not saying that any of you need to allocate 30% of your wealth to art, investing, of course. but we love, love, love diversification on this show. And Masterworks currently has over 950,000 users and nearly $1 billion in assets under management for a reason, because diversification into art makes a lot of sense for a lot of people that diversify in their portfolios.

Yeah, 100%. I mean, both Robert and I have invested with Masterworks, and I've personally been a user of the platform for many years now. I remember I became a user of Masterworks in 2018, Robert. I was sitting at my desk at my 9 to 5 job and I saw them. He popped up as an ad somewhere and I was like, oh, this is cool. And so I opened my account of Masterworks in 2018 and now we are here six years later having them sponsor our podcast. Now, since inception, they've had 23 exits, each of them individually delivering a profit and not counting works that are still in holding.

They've distributed over $55 million in proceeds back to their investors. Masterworks gives you a chance to invest in shares of multi-million dollar painting. by artists like Banksy, Bosquiat, and more. In honor of the relationship they have with Rich Habits, they let our subscribers skip the wait list by going to Masterworks.org's.com, front slash rich habits. That's Masterworks.org's.combe, front slash rich habits, which is also shown in the show notes of this episode.

As with any investment, past performance is not indicative of future returns. Investing involves risk. Important Regulation A disclosures can be found at masterworks.com front slash CD. Robert, I just logged into my Masterworks account. I'm up 27%. How cool is that?

I mean, sure, stocks rock and enroll in, sure. Divident stocks do in the things. Yeah, crypto's all over the place. Yeah, and I'm also up here on Masterworks up over 25% in my account. I just think it's really important to have that diversification, you know? I love clicking buttons and making money.

It is definitely one of my favorite pastimes. So our first question in our question and answer section of the podcast, which, by the way, if you have a question for us, You can ask it at rich habits podcast at gmail.com or send us a DM on our now verified Instagram account, Rich Habits Podcast. Yep, got the blue check mark. Comes from Justin W. Justin says, I love the podcast.

A friend put me on about a month ago and I started from the very beginning and I've listened to every single episode now. My wife and I are teachers and we took another teaching job in another part of the state of Texas. We'll be selling our home and we're going to walk away with $250,000 of proceeds. We want to buy another house, but we've not yet found one that we like, so we're going to be renting for the next year. However, I want to maximize our sitting money. My wife is taking a pay cut, and we move to an expensive part of the state right outside of Austin. So, here's my question. Do I dump the money into something like an SPY, or do I put it in a high-yield savings account?

My wife is worried that if the market turns and the S&P 500 drops, we would lose a significant amount of our money and not have all $250,000 to put toward our ferreys. home in the coming year. Thanks for any advice and your help. Good question, Justin. I agree with your wife. I probably would not put $250,000 into a volatile asset, assuming you are only going to be there for nine or 12 months, right? I think that you should absolutely put it into something like a T-bill on public.com paying 5.1, 5.4%, whatever it is there. That's going to be a super easy $13,000 a year for you here by just having this money parked and sitting there. About $1,000 a month in passive interest. income because you parked your money and you're keeping velocity with it, right? You're doing it correctly. Now, if you said that you're going to be renting for two or three years, then I would say

probably a good idea to split it down the middle, put someone some T bills, put someone like an SPYI and then ride the wave there, kind of have that income come in. It'll offset some volatility by up to, what is it, 12 or 13 percent. So you shouldn't be fine. But since you said it's such a short period of time, like maybe you guys find that dream home in seven months. You cut your lease down early. you go take now your proceeds and you go buy that house. I agree with your wife in this instance. But Robert, what's your perspective on the question? Yeah, I love it.

And I love the train of thought. And I think you covered it perfectly because it's such a short amount of time. And we could see some volatility in the markets in Q3 and Q4. You know, it might make the most sense to do exactly that. Go get those T bills or get it into high yield savings, make it around 5%. You're going to be fully liquid there. And just have that additional income on your money. without the volatility of the markets because, you know, when we talk about these ETFs and stocks and

different vehicles that we like, we're talking long-term investment strategies. We're not talking short-term in a few months because you could be on the bad side of some volatility in those few months and then you'd be scorned over that investment. So I think you're on the right track and I think, Austin, you covered it perfectly. Yeah, I think, Robert, what's so important about this too is broke people react, wealthy people, forecast. And I think that is, what our friend Justin here is really trying to figure out. He's trying to forecast. He's trying to figure out, you know, how do I ensure my money has velocity and not say, uh, well, I put it here and now it's down and now I got to react to this volatility. I don't know what to do, right? He's trying to

forecast in a very smart way. And what's that saying, Robert? Happy wife. Happy life. Your wife is right. Go to her, say, baby, you're so smart. I agree with you. We're going to do exactly what you say. We're going to put it in this T-bill. It's going to be awesome. We're going to make a thousand a month in it. I'm all here for it, Justin. So congrats on the process. seeds of your house. Really, really excited you guys are now doing these different jobs in the state of Texas and we wish you guys the best and a safe move across the state. Now our next question comes from Tyler E. Tyler says, hey guys, my name's Ty. I'm 24 years old and I live at home with my parents in Virginia. I currently make $100,000 a year as a mechanical engineer. Since graduating three years ago,

I've been aggressively saving for my future and I have $200,000 in investments and savings across various retirement and taxable brokerage accounts. Wow, that's incredible. Here's my question. Where do you draw the line on golden handcuffs, i.e. a job that pays well versus a job that you actually enjoy doing. After working for several years, I've come to realize that I am not passionate about engineering work anymore. But instead, I found that I am a lot more interested in science. The only problem is, if I were to pivot to a job in science and go into like biology research, for example, I would likely be taking a pretty big pay cut with the average. salary being 60,000 versus my 100,000 right now. And that is even after spending time and money

going back to school for at least another two years to get my master's degree. I just feel like this might be a poor financial decision. However, I've sacrificed and invested a lot of time into accruing the space of savings and investments over the past several years. I would just hate to see my investment rate drop off because I'm making less money. But at the same time, I feel like I'm too young to be starting down a career path that I genuinely do not enjoy. So I feel like I'm trapped right now. I got the golden handcuffs. What do you guys think I should do? I love this question and I'll take it first. Tyler, congratulations. I love where your brain is at and what you're thinking. And unfortunately, I'm going to go kind of against where you think I'm going to go. At 24 years old, you have forever

ahead of you. I love exactly what you're thinking, but here's what I would do. I would keep the job. I would keep stockpiling the money to get yourself way, way ahead of the curve for your financial future in retirement. And in the meantime, start taking the classes, start learning the new skill set, start setting yourself up. So then that way, when you make the pivot, you're already going to be up and running. And you'll have the drop off in the wage, but you won't have the drop off in the time of going to school or whatever to make the new wage and do the new career. In my opinion, I would try to do it for five to six more years. You're 30 years old. You have a lifetime ahead of you. then you'll be set up to be a multi-millionaire already by 30 at this rate of savings and investing.

Then you can pivot to the career that you enjoy more for the rest of your life and get out of those golden handcuffs. I was going to say the exact same thing, except in a little bit more harsh manner. I was going to say suck it up, Buttercup. I mean, you're 24 making 100K a year. Like, cry me a river, dude. There are so many people that would die to be in your situation. And I am so proud of you for sacrificing, living at home. I mean, you are so laser focused on holding your base financially.

And we want to give you all the flowers for that. Like, we're super proud of you. But as someone who's 28, I remember what I was doing when I was 24. And so what I'm trying to tell you is that you're young. You don't have children. You're not married. Like, this is when you grind face and you make 37 or 47 Tyler love 24 Tyler, right? This is the time you maybe live at home for their 12 to 18 months.

Then what interest rates come down, you know, money put a down payment on your first house maybe it's a duplex or a triplex you house hack that eventually you're able to move on to a primary residence because you found yourself a wife and you want to grow a family now at late 20s early 30s you know have an awesome rental property that's cashler a couple thousand you've got seven 800 900000 dollars invested you know you're a millionaire at this point all because you're like okay i'm going to grind face when i'm in my 20s and then i want to do the the happiness in my 30s And I really, really think that that is a playbook. A lot of people in their 20s should follow.

I'm not who I was when I was 24. I'm older now and I'm a little bit tired. And, you know, yeah, I'm still 28. But it's like, there's going to be a time where I have a child and I want to have a family. And these obligations that are personal are going to pull me away from the opportunity of making money in my career. And that happens to everyone as we get older. But you have found yourself, Tyler, in a really good situation. And I really want to encourage you to stick it out to what Robert said, try the night class.

Maybe you can do some part-time stuff. Maybe you get a cool internship on the weekends at your local marine biologist or whatever's got going on there, right? You can still kind of explore this stuff while putting yourself and setting yourself up for financial success in your 30s, 40s, and 50s. At this rate, you're going to retire late 30s and really be able to spend time doing what you love. Yeah, that was great. And you can tell that the caffeine is kicked in with Austin because you were on a really good tear there. So that was awesome. Now, Robert, speaking of doing things that we love and growing a family and all that fun stuff,

as you know, my girlfriend and I are on this personal finance journey together, and I got to admit, she's a better budgeter than I am. You know, something she's really started doing that leveled up her budgeting, though, was figuring out the specific days of the month that her subscriptions are supposed to hit her checking account so she can get ahead of them from a spending perspective. Well, you know, Austin, that reminds me of the app, Monarch Money. They're an all in one personal finance app that not only has a built-in manager for your recurring subscription expenses, but they help you track your net worth, keep tabs on your spending,

and there's even a cash flow forecaster that will show you what you spent during the month and how that might impact next month's savings. Now, before we had this episode filmed, I actually logged into my Monarch Money app to track my own net worth, and I showed Robert here how it works. We both really like the app. It's a top-rated all-in-one personal finance app, and it gives you this comprehensive view of all your accounts, investments, transactions, and more. You can create custom budgets, track your progress toward financial goals, and you can collaborate with your partner, like what I'm doing with my girlfriend. And now you get an extended 30-day free trial when you go to monarchmoney.com forward slash habits.

We always say how important it is for you to be tracking your investments, and it's never been easier with monarch money. investments, budgeting, cash flow, subscriptions, and everything in between. There's a huge amount of people that use Monarch money to manage their finances as a couple, too. My friend Jeff is saving for a car with his significant other with Monarch, and it's also great for saving for a house, large investments, or whatever you're building towards. So check them out at Monarchmoney.com slash habits. That's M-O-N-A-R-C-H-M-O-N-E-Y.com slash Habit. for your extended 30-day free trial. We appreciate them supporting the show and our listeners.

Robert, this is the app that Tyler needs to be using, right? Yeah. We've got all his investments. Go check out Monarch Money, Tyler. I think you're going to like it, man. Go get you a 30-day free trial at monarchmoney.com slash habits. Our last question comes from David. Hello, Robert Nosson.

I found your podcast earlier this year, and I finally cut up on all the episodes, and I have become a lifelong listener and massive fan of the show. Thanks for making such a amazing. amazing content. I have two, hopefully, simple questions that I'm hoping you can answer for me. The first one's this. Currently, my wife and I both withhold taxes when we get our paychecks. Doesn't make sense to not withhold anything and put that extra money in a high yield savings account to have some velocity with it. Or is there something I'm missing here? Because right now

it's just sitting in a checking account. Let's answer these one by one, Robert. Quickly, yeah. I mean, yeah, put it in a high-yield savings account. For example, Robert and I, we both have to pay quarterly taxes, annual taxes with our sort of small businesses here. I withhold money that I pay myself as an entrepreneur and I put it in a high-yield savings account through public.com so I can make that 5%, 5.5% and a half percent with their T-bills. So that's what I do and I think it's a great idea here for you, David. But Robert, do you have anything to add? No, I agree totally. So many people just pull the tax money aside and let it sit in their savings or checking accounts making zero money. And even if you pay quarterly or yearly, it's best to have that velocity on the money while you're waiting to pay the

tax man because so many small business owners get in trouble because they don't pull the money aside at all. And then when the tax bill comes at the end of the year, they have that, oh, shit moment and they have to go scramble to get the money. So I love the fact that you're pulling it aside, but I would definitely agree with Austin to get that into the high yield savings. Now, the second question from David is this. My company offers an employee stock purchase plan at a 15% discount with a two-year lookback. I am currently able to afford to max it out, but I was wondering if there's any drawbacks to this.

Even if I sell immediately when it invests, I would get a minimum 15% gain, although short-term capital gains taxes would suck, but it does feel like free money. What do you guys think? Austin, do you want to take this one first? Yeah, you know, I think at the end of the day, if you love your company and you work at a company

who has a long track record of beating the market every year or, you know, sustained, call it 7, 10, 12, 15% stock price appreciation every single year, go for it, right? If you work like at an Amazon or a Google or, you know, what are these awesome companies? But if your company and you sort of look at that five or 10 year stock price history and it's kind of all over the place and you're like, I don't know what's going on here. Maybe your money can be used elsewhere better. I guess what I'm trying to say, Robert, is if David here is working at a company whose stock price does not consistently go up every year and he puts thousands, if not tens of thousands, of dollars into this employee stock purchase plan, even with a two-year employee look-back period,

and it comes with unwanted volatility, it might not be a great idea. But on the flip side, if the two-year look-back period is dramatically lower than maybe where your stock price is today, and the stock price has shown over a long period of time going up until the right, then, yeah, man, go for it. Be my guest. And don't worry about short-term capital gains. I mean, you're making 15% profit regardless. Well, you mentioned the Navidia story earlier. and they had a similar situation to this, and, you know, they made a lot of millionaires out of their employees with this very similar lookback period. So I think it really is just dependent on your current situation and the company's last three to five years of performance to be able to help you best decide which way to go here. I think either way is fine. It's all going to depend on the company, but we don't have that information to fully flush out this answer.

But I think either way could be a good strategy depending on the company's past. I think that's a great answer to that question, Robert. Robert, remind the people why we're so excited about the rich habits newsletter. Just because we've been building behind the scenes so many things for the rich habits community and we're finally ready to launch and we started with the newsletter. And I believe in the coming months, the rich habits network and the rich habits newsletter will be preeminent. The best in the country or close to it. There's a lot of great newsletters and community. out there. But I'm really excited about it because I just feel that we have really hit the nail on the head of what the people want. You have all shown your voices and you've all shown your belief in us by constantly going back to the podcast every single week, watching all the

episodes, engaging with us in the DMs. And it really just makes us excited for the future. And it really started with the newsletter and it now moves forward into the offerings that we will be presenting in the coming weeks. The Rich Habits newsletter, in my humble opinion, to your point, Robert, is exactly that it is that perfect culmination of actionable insights, market news, and, you know, sort of this sophisticated information that you're not going to get from headlines at CNBC. You're not going to get from headlines at the Wall Street Journal. I mean, this is Robert and I putting our heads together and talking about information very visually focused, right? We never want this to be like a report or an analysis.

We want this to be fine and engaging. And the information we're sharing here, again, it's actionable. And it's not the stuff you're going to see elsewhere, which is why we're really proud of it. That's why our open rates are 51, 52%. I mean, tell me a newsletter that's got that, right? It's insane. 45,000 people are already subscribed. We've added 5,000 email subscribers since we launched this newsletter about six weeks ago.

So people are coming in in droves. They're sharing it with their friends. We're really, really excited about that. And something else we've talked about on the newsletter is, is the webinar that's coming up, Robert, on August 8th at 4 p.m. Eastern Time. Robert and I are going to be hosting our pre-IPO slash angel investing webinar, but we're going to share with you exactly how to invest into these privately held startups, pre-IPO companies, and walk you through not just the basics,

but a lot of the intricate details of how Robert and I have been so successful with this sort of investment strategy, as well as invite you to invest alongside of us into some really cool deals. So it's a free webinar. It'll be about an hour, maybe an hour and a half long. It's on a Thursday evening. We think you guys are going to be able to make it. We've already got over 400 people signed up. We only have 1,000 seats.

And every single time we host these webinars, Robert, we sell out. So, I mean, people come. It's so funny. It'll be a couple hundred people. And in the last, like, three days before it starts, they'd all just pile in at the last time. Right. So don't be one of those people. Reserve your free spot right now.

Again, there's a link in the show notes below. And it's going to be a lot of fun. And as always, we appreciate each of the time. and every one of you following along every week. Make sure you give that five-star review if you find value from what we provide. Share with a friend. You might have a friend that's starting a business

or just getting into investing or struggling with mindset. Share with them and maybe it changes their life a little bit because they get a few nuggets from us each and every week like you do. And we just appreciate all of you each and every week following along. Thanks, everyone. When a country's productivity cycle is broken,

people feel it in their paychecks, their communities, their futures. What does this mean for individuals, communities, and businesses across the country? Join business leaders, policymakers, and influencers for CGs' national series on the Canadian Standard of Living, Productivity and Innovation. Learn what's driving Canada's productivity decline and discover actionable solutions to reverse it. And have a great start to your week.