Rich Habits Podcast - Q&A: Buying Our First Business, Cash Flowing a Triplex, & Teaching Crypto to Kids...?

Starting point is 00:00:00 Hey everyone and welcome back to the Rich Habits Podcast question and answer addition. These are our Thursday episodes where Robert and I take your questions via Instagram DMs at Rich Habits Podcast or via email at richhabitspodcast at gmail.com and we answer them. We answer your questions as if we were in your shoes giving you our honest opinion about your situation. These episodes are off the dome. There's really no rhyme or reason as to what questions we pick, but we are excited about them nonetheless. right personal finance is personal everyone's situation is different life gets in the way life can be great life can be tragic sometimes and we are here to break it all down and try to give you guys that guidance that sense of calm to help you figure out what to do in your own current situation so if you have a question to ask us again email us at rich habits podcast at gmail dot com or dm us the question on

Starting point is 00:00:55 instagram at rich habits podcast now before we jump into our first question remember Remember, these Q&A episodes are brought to you by public.com, which means if you're looking for an online brokerage platform that was actually built during the century, you need to give public.com a try. On public, you can invest in almost anything. Stocks, bonds, options, cryptocurrencies, and more. And if you're like us and you keep an emergency fund, you should be taking advantage of that 4.1% APY offered by their high-yield cash account right now. Discover why NerdWallet gave public five stars for its ease of use and investment. selection. Fund your account in five minutes or less and earn up to $10,000 when you transfer your investments over to public. And for a limited time, public is offering a 1% match on all IRA

Starting point is 00:01:41 contributions. So if you're finally ready to invest towards your Roth IRA this year, do it on public and earn 1% match on all contributions. Paid for by public investing, full disclosures in the podcast description. So our first question comes from James A via email. James says, Hey guys, my name is James, and I'm in my mid-40s. I have a 401k and a rock. I'm looking to purchase cryptocurrency for some portfolio diversification. I currently use fidelity for my investing, and I'm pretty familiar with their platform. I would prefer to keep using their platform for crypto, but is there a benefit to having a separate platform or even a dedicated cryptocurrency wallet that I should be purchasing my cryptocurrency on? I also have two kids. One is 14 and the other

Starting point is 00:02:26 16 and I have them both set up on a Fidelity Youth Investing account so I can teach them how to invest. My older daughter has a job and she's putting in $20 a week into the S&P 500, which means she's learning all about dollar cost averaging in compound interest. But I guess my question really is, should I also be teaching my children about cryptocurrency? Is this something that they should be buying as well? What a great question from James. I'll let Robert kick this one off. Yeah, I love this question and I think it's two part.

Starting point is 00:02:54 let's talk about teaching the kids first. You're already teaching them financial literacy. You're getting them started very early on. So they know what V-O-O in the S&P 500 is. This is critical. What I would do in teaching them, just like you are in traditional finance, get them watching YouTube videos, get them understanding what is the blockchain,

Starting point is 00:03:15 what is the future of cryptocurrency, and why is it important? Cryptocurrency, like the Internet, is going to change the way we do things over the next 5, 10, 15 years, along with AI and everything else technology-wise. And I think it's important to have your children understanding what that means. So yes, I totally agree I would get them started right away. And it can be as simple as finding some good YouTube channels that you like,

Starting point is 00:03:41 have them watch some videos, you can select the videos and take a look so you know which ones are going to lead them down the right path and really show them the importance of blockchain for the future. Secondarily, fidelity, we like fidelity. I don't use fidelity. Millions of people do. I think it's a great platform. Yes, you can buy all your crypto there,

Starting point is 00:04:00 but you can also look at opening a public.com account. It is a great platform for buying and selling cryptocurrency, so you could think of that as well. Or Coinbase is probably one of the largest. So you just have to think about what are you most comfortable with? And if it's fidelity, stick with fidelity, do your thing. But always make sure that you're cross-referencing how much as a cost per trade so you understand what is the best way for the level of investing you're doing

Starting point is 00:04:28 platform-wise and which ones are best for you and as it relates to educating your children about cryptocurrency i like how robert sort of laid that out i would go about it in a way where you can sort of build upon their existing education right so you've already taught them a little bit about the stock market they understand the s and p 500 right it's a way to invest in the 500 largest most profitable companies in the United States. They understand that. They know, okay, I should own equity, have some ownership in these companies' profits.

Starting point is 00:04:59 And then you say, well, there's other things that go up in value over time. There's real estate that goes up in value. And the reason that goes up in value is because of supply and demand. There are things like precious metals. That goes up in value because of perceived value, supply and demand, things like that. And there's other asset classes that continue to trend higher over time, right? Making sure they understand the difference between something that goes up. in value like an investment and then something that goes down in value like a depreciating asset like

Starting point is 00:05:26 a car or a camper or something like that a lawnmower and then you can begin to say okay there's another asset class out there called cryptocurrency that goes up in value over time specifically bitcoin it's been around for well over a decade now 15 years or something this bitcoin uses a technology called blockchain here's why it's important here's why it was invented here's how it's used in different types of scenarios and people perceive it to be valuable. And so this asset class, specifically Bitcoin has gone up in value X amount of percentage points over the last several years and is perceived and assumed to continue to go up in value as well. If you want your kids to be invested in cryptocurrency and partake in that, I think that's fine. The only worry or concern I have

Starting point is 00:06:11 is that cryptocurrency experiences very dramatic drawdowns, right? Bitcoin has drawn down by 50, 60, 70, 80% in a short period of time, several times in the past. And I would be worried that it would cause them to be jaded toward investing, where they say, oh, I invested once and I lost all my money, and I don't want to do this anymore. And then they have that as a bad experience they take with them for the rest of their life, whereas the S&P has pullbacks or the NASDAQ has pullbacks, but it's never a 60, 70, 80% pullback, right? So that's my only concern is that, you know, make sure they have the right mentality going into this if they are investing in cryptocurrency. But I think at the end of the day, what's most important is that your children are investing into the S&P 500, dollar cost averaging,

Starting point is 00:06:55 compound interest, doing all that fun stuff and setting aside 10, 15, 20% of your older daughter's monthly income from her job and getting that invested on a habitual basis as well. And I think the best way to look at all of this, and that was a great breakdown, is to understand that if you would have talked about 10 years ago, even, that you would be getting into a stranger's car to get a ride somewhere, or you'd have a stranger delivering your food to your home from a restaurant nearby, because then you've got someone you don't know touching and handling your food. As we progress more and more in the financial world, you're going to find that blockchain is incredibly critical for the future because we are becoming a more globalized economy.

Starting point is 00:07:39 Having blockchain involved in this and cryptocurrency is very important. We also will see a lot less friction with our money and costs associated with doing wires or doing transfers and all of this. So there's a lot to be learned about the importance of cryptocurrency in the blockchain. And so I think it's great that you're considering getting your kids involved and anyone out there that has children that are listening, getting them to understand why it's important, where it's going, because it will be part of school curriculum sooner than later. So it's important for everyone to get ahead of it. And the last point here, and this goes beyond cryptocurrency.

Starting point is 00:08:15 this can be anything. Literally just go to chat GPT and say, explain to my 14-year-old daughter how ABCXYZ works and, you know, give examples and explain it to them as if they were younger and like they're not as technical as, you know, adults might be. Like use artificial intelligence to your advantage. Again, beyond cryptocurrency to try and learn anything, learn a new language, learn a new skill, learn anything. These things are free resources. Our next question comes from Yosellon P. Yosellon says, Hi, Rich Habits team. I'll start by saying off, I really love your show. Since discovering the financial, independent, retire, early world, your platform has been incredibly informative

Starting point is 00:08:53 in discussing the nitty gritty. So here's my question. I own a Triplex in Kentucky. I purchased it in 2021 for $340,000 with a 30-year FHA loan at a 2.9% interest rate. It cash flows $700 a month after my mortgage and most of my expenses. I've lived there for two and a half years, but then I recently moved into my partner's home. We're not made. married and this took place in March of 2024. I'm now relocating completely to San Francisco and I've considered selling the Triplex within the next couple of years, possibly for around $400 to $425,000. I'd of course invest the proceeds in the stock market, likely the S&P 500. I'm drawn to the simplicity of passive investing and feel pretty uneasy about relying on a property manager from so far away.

Starting point is 00:09:38 Do you think that selling is the right move for me? As background, I'm 30 years old. I have $40,000 invested across all my other accounts. My job pays $120,000 a year. Robert, you want to kick this one off? I would love to. I think it's a bad time to sell it. Whenever I see someone that has equity and a low interest rate and assuming there is a decent capital appreciation on this property,

Starting point is 00:10:00 I just think it is a great addition to your wealth-building arsenal. I personally wouldn't sell it right now. The markets are a little bit suppressed. We don't know what area of Kentucky it's in. But assuming, like most markets, It's going to be a little bit down because it is a buyer's market. There is a lot of inventory out there right now. And people are not buying and people are not running up the prices like we've seen in the past.

Starting point is 00:10:24 So personally, I'd love to see you hold the property, keep it, hire a property manager, find somebody locally that can help you. Because with being only one property, I think it's pretty easy to manage from afar. I do it all the time. And I think you could even find someone that you know, maybe it's a local handyman or a friend of yours and say, hey, I'll give you $200 a month if you just collect the rent, do this, do that, keep the grass mode, whatever. So personally, I would keep it. I think it's a great move. You've done well with this property. You've got a very low mortgage rate. And I think it's great to hold it for the long term. And at least for a next couple of years if you can.

Starting point is 00:11:02 Couldn't agree more, Robert. I just did the math behind the scenes here. If I did my math correctly, your monthly mortgage payment is between $1,500 and $1,700 a month on this triplex, which means now that you are in San Francisco, you could probably, depending on, you know, the condition, when it was built, the location, things like that, rent out each unit of this triplex for maybe $1,300, $1,500 a month, which means you are cash flowing much more than just $700 a month after mortgages and most expenses. Just assuming $1,200 a month on all three of these, you, units is $3,600 in total rent collected. Then let's say your monthly mortgage is $1,700. You now have $1,900 left. And then you start setting some money aside for occupancy, repairs, things of that

Starting point is 00:11:48 nature. You should be cash flowing well over $1,000, maybe $1,500, depending on the types of expenses you're saving for on a monthly basis. And just so we're on the same page, too, right? $1,500 a month times $12,000 a year of cash flow. That is awesome, right? That money can get reinvestensual. invested into maybe some, you know, this $40,000 that you have across your different accounts, like that can really help you move in the right direction. If it were me, and I were in your situation, I would try to work with a property manager that I trusted. That was not too expensive. That was able to ensure that I'm now cash flowing this thousand plus dollars a month. Now, if you do begin to run into issues and it is literally just the worst thing, being a long

Starting point is 00:12:30 distance landlord and you don't want this $18,000 a year of potential cash flow and you want to sell it. You could probably sell it for, again, let's say you sold it for this $425,000, which means that after closing costs and other types of fees associated with selling a home, you would take about $400,000 for yourself. You might owe about $320.20 on this home. You bought it in 2021 for $3.40, so I'm assuming about $20,000 of the principal's been paid down. So you'll net about $80,000, which is pretty cool. But again, I think you should really reconsider this cash flowing aspect just because this interest rate is so low and your monthly payment is so low compared to what it would be if you were to go buy something like that today. And for everyone else out there that's considering buying real

Starting point is 00:13:12 estate or maybe considering selling some real estate right now, keep in mind, owning real estate and building wealth with real estate as part of your portfolio, your diversity, is not just about cash flow. You have to understand the totality of the numbers. It's the cash flow. It's the tax benefits, if there are some. It is the capital appreciation. In many markets you'll find that let's say your cash flow is 6% return and the capital appreciation is 5% return in that market you're at 11% cash on cash return so keep that in mind don't just always look at the cash flow look at all the other benefits especially when you have a low cost mortgage like in this instance so our next question comes from Ryan S Ryan says hi Austin and Robert

Starting point is 00:13:58 first off I want to say thank you so much and I appreciate your show I have a one hour commute to and from work and I genuinely look forward to Monday and Thursday mornings just to listen and learn. I'm a big fan of you both. Thank you so much. My name is Ryan. My wife and I are in our early 30s, and we're happy to say that we have no debt or student loans. Both of us are W-2 employees. I earn approximately $200,000 a year. My wife earns around $100,000 a year, which means annually we make about $300,000 a year. We have a low-interest mortgage on our starter home, and our living expenses are quite minimal. We each invest 30% of our income into our 401ks, our Roth IRAs, cryptocurrency, ETFs, and some individual stocks, all strategies that we've learned from your show.

Starting point is 00:14:40 Thank you for the guidance. However, we're now interested in purchasing an existing business. It seems like every day I'm browsing Biz Buy Sell and LoopNet, but I'm not confident enough in identifying a good deal from a bad deal. While we have strong management and people's skills, we lack specific trade skills, so I'm unsure what type of business would best. suit us. My wife could leave her current job to manage the business full time. So my questions are, do you have any connections or recommendations for people or companies to help in the business buying process? And then two, do you think we're in a position to make this move or should we just continue with our current strategy? Ryan and Ryan's wife so excited for you guys. You guys are

Starting point is 00:15:17 crushing it. You're in your early 30s. You're making 200,000. She's making 100,000. You guys are investing 30% of your income. So let's call it $100,000 a year, if not close to it. You all will be multi-millionaires within the next 10 years tops. I mean, you guys are crushing it. So here's what I would do. I would not change anything. I would be in my early 30s. I would be making 300,000 a year as a unit. I would be investing up to, you know, again, that 100,000 that you're doing right now. I would continue to do that for the next 5, 10, 15 years and you're going to have millions of dollars to your name. See, here's the thing. The reason why Robert, for example, is so good at going out and buying a business or someone else, you know, it makes sense for them,

Starting point is 00:16:02 is because they have a unique experience, a unique perspective, a unique skill set that they could take and in a very specified period of time, 9, 12, 18, 24 months, be able to find a business, introduce, you know, what these skills are and turn that business around and really ramp it up if it's with marketing, if it's with processes, if it's with strategies, if it's locations, whatever, and then sell it for multiples more than what they bought it for, making a business venture very profitable. If you're someone who doesn't have that skill set, you're essentially just buying a cash flowing asset that pays you money on a monthly, quarterly, or annualized basis, and you have to figure out what numbers make the most sense for you versus your opportunity cost, just investing

Starting point is 00:16:44 in the markets, as well as the time and, you know, your wife's $100,000 salary that she'd be giving up. So that's the thing. If it were me and you guys were like semi-retired and you wanted to go buy a business to go have fun with and you and your wife go make core memories like I'm cool with that but in my opinion it doesn't seem like it's going to be a way for you to build wealth faster right I think the opportunity cost would be more by leaving your wife's 100,000 of your job and she's now working 40, 60, 80 hours a week on this business and you're working on the weekends because you're trying to figure out what the heck's going on and why did this customer leave me or what's going on with this specific supplier or it just seems to me like an unnecessary headache, unnecessary stress and you guys are

Starting point is 00:17:23 just rocking and rolling and you're going to be just fine. I really agree with everything Austin said. I'm going to take a little bit of a different take here. And that is you guys are crushing. You're making a lot of money. You guys are doing well. And there's an old saying that says something like entrepreneurs will quit a 40 hour a week job making great money to go out and work 80 hours a week for no money for years.

Starting point is 00:17:43 And it happens all the time. So I would do this. Like in real estate, I would start small. Go find a business that you feel you can value add. You can put your point. processes in place to make it more valuable and make it more profitable. But instead of going all in and having the wife quitter job, buying the business and doing all of that, I would have both of you keep your jobs, making that money, stockpiling away for your

Starting point is 00:18:07 retirement. And I would look to buy a business or partner in a business where you buy it with an operational partner, maybe a current employee, maybe someone that you know that knows that field well. And then that way you can get your toes wet. you can learn what it's like to run a business and be able to get involved and hopefully profit and have another source of income without going all in and going backwards. I see it every day where someone's like, I'm going to be an entrepreneur. They've never done it before.

Starting point is 00:18:37 They don't know what it's like. They go all in. They give up the cushy job. And then they go for two, three, four years where they go backwards financially because they can't quite figure it out. So if you're going to buy a small business, keep looking, keep research. start small, find an operational partner, and when the small business starts making you guys more than your wife's salary of $100,000, then consider quitting the job, but I wouldn't do it right out of the gate. I love that perspective. Robert, I think a lot of people make that mistake where they're like, oh my gosh, I've got this really cool thing.

Starting point is 00:19:10 I'm going to go make a ton of money with it. I'm quitting my job. I'm selling the house. I'm going to put the kids and the dogs on eBay. I'm going all in on this idea that I have. And then that doesn't work, unfortunately, because 80% of small businesses fail within the first five years, and you become a statistic, and now you've got nothing to fall back on. And so that's what we want to avoid, especially, Ryan, as you and your wife are making $300,000 a year. Seriously, you guys are crushing it. You just do exactly what you're doing right now, and you will have more money than you can ever imagine in the coming five, 10, 15 years. And if then you want to say, I want to go, you know, maybe you have a passion about furniture, or maybe you're super passionate about that. baking or maybe really passionate about pressure washing. I have no idea what your passions are, Ryan. But if you're really passionate about something and you want to go start a business or buy a

Starting point is 00:19:57 business that's already in your passion, that would make sense. But don't do it until you've got a ton of money squirled away and you can sacrifice that $100,000 a year salary that your wife earns. So our next question comes from Nick A. Nick says, hey Austin and Robert. My name's Nick. And I've been listening to your podcast religiously for the last two years. You guys have made such a huge impact on my financial education. I'm 34. I make $120,000 per year. I started my Roth IRA and I've been maxing it out for the last couple of years. I also have a 401k that has about $30,000 in it and a bridge account with $15,000. I've been using strategies like strict budgeting and 0% interest rate credit cards to pay off high interest debt over the last year and I've paid off $10,000 of high

Starting point is 00:20:42 interest debt over the last 12 months. Nick, that's awesome. Love to hear it, man. We always tell people you can't out invest high interest debt and Nick is paying it off. Nick says we still have about $30,000 of car debt across our two cars and $20,000 in student loans with some of those student loans above 6% interest. However, we have a plan to pay off this high interest debt quickly while leaving our low interest debt around so we can stay invested and grow our wealth. Here's the real question I have. We bought a house in 2021 at a 2.75% interest rate. Our family grew much faster than we expected and to us a good school district is very important currently we live in a very bad school district in Nashville we want to move to a different area and a bigger house in the next few years before

Starting point is 00:21:28 our kids start school while maximizing all aspects of this move what strategies do you have for us for making sure that we make the best decision possible given our 2.75% mortgage on our house Robert you want to kick this one off yes I think it's a great situation that Nick is in families growing that's awesome upscaling the house is great as well the only thing i would consider and the key part of the question was in a few years i feel like what happens a lot of times when people say we're going to buy a new house in a few years they take their foot completely off the gas for all other strategies of investing for retirement and building wealth because they're solely focused on having money set aside for buying this bigger house and i think that's a huge mistake and a lot of

Starting point is 00:22:13 people make it. So in my opinion and in this instance, I would really stay super focused because where a lot of people get things wrong is, let's say you're putting away for this new house and it's going to be more expensive. You think you need $100,000 or $50,000 to go towards the down payment for said new house. It doesn't mean you can't still be investing that money over a time horizon of two, three, four years to maximize the gains you would make on that money because you and I see this every day, Austin, where people are like, I have this money for the house in five years in this high yield savings or this CD that's barely making any money. That is a mistake. So I think as long as Nick and company make sure that they understand and have that time horizon figured out

Starting point is 00:22:59 that they can make the right play because the other part of this is the 2.75% mortgage on the current house. That is really, really low. We might not see those rates again for many years. or if ever, so we have to take into consideration that as well. I know the school district is important, but don't plan so far ahead that you're giving up gains and growth in your financial situation right now. I love this perspective, Robert. Here's my thing. You have an asset with this 2.75% mortgage rate.

Starting point is 00:23:31 I mean, my goodness gracious, your monthly payment on that is probably less than $2,000. I mean, we literally just talked about this in a previous question where, you know, they've got this triplex and the monthly payment on it was probably $1,700. So, Nick, I don't know what your monthly payment is. Obviously, don't know what kind of house you're living in here. I would do everything I can to keep the house, use it as a rental, cash flow somehow, some way from that specific house, and then spend the next two, three, four years saving for a reasonably sized down payment to go buy a single family home in Franklin, Tennessee,

Starting point is 00:24:08 which is Williamson County, voted number one school district in Nashville. I'm on Zilla right now looking at a four-bedroom, three-bathroom house. That is 2,400 square feet sitting on a 6,000 square foot lot. That's listed for $600,000. I'm pretty positive that $600,000. Again, I live in Nashville, too. So that $600,000 is probably pretty close to the value of your own house right now. So, like, if you were to sell your home, I'm sure you could use the section 121 exclusion

Starting point is 00:24:36 to roll some profits into a down payment for the next one. But I'd hate to see you sell it. but just know that you can buy four plus bedroom homes in Franklin, Tennessee for $500,000, $700,000, which again, you live in Nashville, you've got money like that. You can definitely figure this out. I think there's a world where you can do both. You can keep it as a rental and you can go buy a home in the next two, three, four, five years.

Starting point is 00:24:59 Just make sure, to Robert's point, you're not forgetting about investing into the Roth, up to the match with the 401K. Like, don't turn off your investing to go focus on this. Do them simultaneously. This really brings up a video I did. I think it was a TikTok three years ago where I told people it was a bad investment to make their first real estate purchase a primary home. People came for me.

Starting point is 00:25:22 But this really illustrates why I said it. So many people will save up for years to buy the primary home while not investing in their future. And then take all that money, dump it into the home. That money is tied up in that home until the day you sell it. And even if you do have capital appreciation, and you love the home, you still have to consider you can't be housebroken, you shouldn't be house broke because you have to plan for the future. So you just want to make sure everyone understands that. We love real estate. Austin and I both own real estate. I will always own

Starting point is 00:25:55 real estate and buy more, but we just don't want people to sit on the sidelines because of a home purchase. I think it's a terrible strategy for building wealth. So listen up, folks. Time can be running out to lock in your 6% or higher yield at public.com. episode sponsor. You can lock in that 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 slash rich habits. So our next question comes from Connor J. Conner says, Hey, guys, I'm wondering what to do next. I'm about to turn 26 and I'm not sure about a few things.

Starting point is 00:26:38 I have $56,000 in my 401K. I have a Roth 401k that I've maxed out for the last two years that has $17,000 in it, $35,000 in my emergency fund, $90,000 in a money market account, and $30,000 in personal investments, which I must pat myself on the back because I've experienced a 96% return because of your podcast. Happy to hear it, Connor. That's amazing. Connor says, I've no debt and I live in an apartment. Should I be looking to buy a duplex or a triplex so I can own some property, do some house hacking,

Starting point is 00:27:08 and things of that nature, considering my aid, or do I wait on that considering the high interest rates? How do I know if I buy a property that it will actually produce good cash flow? I live in Utah, so I'm thinking about $750,000 or so is going to be my price for a duplex or a triplex. Should I be instead looking to buy a business? I just don't know what to do with this $90,000 sitting in a money market account. Robert, I'll let you kick this one off.

Starting point is 00:27:35 Connor, I love the way you're thinking. you've got a lot of your bases covered, and here is my take on your situation. I think you should go buy a triplex. I don't know if it needs to be $750,000. You didn't tell us what part of Utah, so it's hard for us to really flush that out. But you have to look at it this way and make sure you understand the numbers. What is the total ownership cost of that property going to be? Write that down for everyone that's considering buying property.

Starting point is 00:28:02 Total ownership cost. So many people look at a property and go, oh, my payments, X, Y, Z, I've got homeowners insurance. I might have an HOA, a little bit of PMI on taxes. That's not total ownership cost. You have to think about, you know, lawn care. You have to think about pool care. If there's a pool, you have to think about driveway maintenance. If you have an HOA, there's a lot more that goes into ownership and what people talk about. So once you do that math and you understand the total ownership amount, then you can start doing the math backwards. If you get a triplex, what is the average rent. You can look that up on Zillow in that area. If the average rent, let's say, is

Starting point is 00:28:42 $1,500 per month and you're going to live in one unit and collect $3,000 from the other two units, that means you're going to be left with around $2,300 in payment for the unit you live in. So this math could be favorable unless right now your rent is substantially lower. So you want to consider because what you don't want to do, we love the ownership side, and we like that you're trying to get into the real estate game. We want you to do that. But we want to make sure you're not jumping from $1,500 in rent in a little tiny apartment to a triplex where all of a sudden you're going to be on the hook for maybe $3,500.

Starting point is 00:29:19 Because that's a big jump. And again, we don't want real estate ownership to prevent you from also doing the monthly investing in dollar cost averaging and staying consistent. That's how I would approach it. So you can figure out not how much you can buy, but how much you should. by based on the comparables, the total ownership cost, and what your current expenses are. I love that breakdown, Robert. I really want to encourage Connor to get his base built. I'm looking at this money pile, right? So, $56,000 in the 401K, another $17,000 sitting in a other Roth, 401k he has.

Starting point is 00:29:56 So let's call it $75,000 in an emergency fund, which is a little too big. So let's trim that down to maybe 20, so that $15,000 can get investment. So now we're at about 90 and then 30,000 in personal investment. So yeah, I guess he's got the base built, 120,000 invested here. But I don't know. I just, I think that at the moment, I would much rather see that 90,000 added to the existing 120. So you now have 200,000 that let's say now you're 30 years old and that 200,000 invested correctly over the next 4, 5, 6 years turns into 400,000. Now just think about the type of flexibility you'll have when it comes to finally buying that duplex or the triplex.

Starting point is 00:30:35 you'll be able to either put a little bit more down. Maybe you can do something that's maybe that was out of your price range before or maybe take a deal that cash flows even more. I guess what I'm trying to say is I really like the foundation you've built for yourself, but people make the mistake of going all in on real estate too quickly at a too young of age, thinking that there's some sort of shot clock that you have to own a home or you have to have real estate to be an adult or anything like that. Right now, it is cheaper to rent than it is to buy.

Starting point is 00:31:04 Mortgage rates are insanely high, 7%, 8%, 9% depending on your credit. So just make sure that you're going about this in a responsible manner, knowing that you don't need to have a property in your 20s to be happy and to build wealth over your life. Now, do we want people to own property? Absolutely. But we want them to do it in a responsible way. Bravo. I think who knows what the math is, but probably 60 to 70% of households making over $100,000 a year. year our house broke and living paycheck to paycheck because they buy too much house with too many

Starting point is 00:31:40 expenses because at the end of the day you want to be in the right neighborhood for your kids you want to be in the right school district but you don't have to always buy the house based on what you can buy you should base it on what is comfortable for you so you can continue to invest because so many people forget about that in the house buying process it will go this is the house we're buying and that's going to wipe out all of our extra money so now we're not going to be investing anytime soon. Terrible recipe for building wealth. That is why I'm always telling people it's okay to rent.

Starting point is 00:32:13 It's okay to lose the mindset of needing the big fancy home in the big fancy cars because at the end of the day, you want to make sure you're consistent in your wealth building journey through your 20s and 30s, more importantly than your 40s and 50s because you have to set yourself up better now so you can let compounding do the work. because a lot of what people don't understand, the toughest years of your career financially are not when you're in your 20s and 30s. It is when you're in your 40s and 50s,

Starting point is 00:32:42 because then you have kids, you have parents, you have older siblings that might need care. All of that is a drain on your finances, and that is why you need to set yourself up as early as possible, and it starts with not being house broke. So our next question comes from Alicia D on Instagram. Alicia says, I feel like I'm on the opposite side of the spectrum from a lot of the situations that you guys read on these Q&A episodes.

Starting point is 00:33:09 I was financially successful, but I had an unfortunate series of events that took place over the last couple years, and I've lost a lot of money. At the moment, I'm working two jobs, bringing in roughly $450 a week. I have three children. I have $2,100 in my savings, $150 invested on Robin Hood, $120 invested on Funrise, and my current bills are $600 on $600 on. month for rent, $90 for weekly babysitting, $90 a month for my phone, $75 for weekly groceries, and my credit score is about $500. I would really like to not only increase my credit score, but be able to live on my own again. Any advice you guys can share for me to start building wealth would be very much appreciated.

Starting point is 00:33:51 Alicia, I am so sorry to hear about your situation, but if you did it in the past and you were able to get yourself into an awesome situation before, I'm determined and hopeful you can do it again, right? There is nothing that you are not capable of. You just have to have some people, you know, hold your hand along the way, and we're here to provide as much guidance that we possibly can. So you're 27 years old. You mentioned that you're working two jobs, bringing in roughly $450 a week. That is not enough. So, Alicia, two jobs, $450 a week. I don't know how many hours you're working, but you need to be working 50, 60, 70 hour weeks. The math here tells me you might be working 25 to 35 hours a week and maybe there's a situation with the kids that is,

Starting point is 00:34:35 you know, causing that to happen. But if you are going to get out of this, your income is going to be the tool that helps you. Having a big income, let's call it $1,000 or $1,500 a week, $1,500 a week, right, by working crazy like a mad person. That's what's going to allow you now to buffer up your savings, get a deposit for an apartment, maybe pay off some lingering bills, maybe get in a better situation when it comes to your monthly expenses and your groceries. And finally, you mentioned moving out from your family. So there's a lot that can happen by getting your monthly income back up. And again, $450 a week working two jobs.

Starting point is 00:35:11 I don't know your specific situation because you didn't tell us more. But if I'm working two jobs, I'm working 30 to 40 hours a week at each job, which means at 15 bucks an hour. Let's say 70 hours get worked. It's $1,050 top line. Call it $800 a week after taxes. That doubles your income immediately, which could really help push you in the right direction. The next thing I would want you to do is you do not need to be investing.

Starting point is 00:35:35 You are in crisis mode. This is not investing mode, right? You invest after you've got your financial foundation built and you're in a good routine. Right now, it seems like you're really struggling to make ends meet. So if I were you, I would get out of the Robin Hood. I'd get out of the fund rise and any other investments you have and use that money to care for your family. You mentioned you have $2,100 in savings.

Starting point is 00:35:54 Maybe that $2,100 needs to be used to be used to be. pay off old credit cards that have caused your credit score to be at 500. You mentioned you want to increase your credit score, figure out why it's that low if it's unpaid bills or expenses or credit cards, whatever's going on there. And then, of course, either settle them, make sure you get that settlement in writing or pay them off or figure out whatever it has to go on behind the scenes to ensure that that, you know, black eye of sorts is off your credit report. Then you start building your credit.

Starting point is 00:36:21 You've got a good credit score now. You're making $3,000, $5,000 a month in income. and now we're back to a place where we're moving in the right direction. Robert, what did I miss and what advice do you have for Alicia? Yeah, I mean, this is a tough situation. Three kids living with the family. I get it. But at the end of the day, she has two things going for her.

Starting point is 00:36:41 Age, young, so she can work around the clock if need be to get out of this situation. A family for support to help her to keep the child care costs down. But I would say two things are what I would add. Number one, I would take, like Austin said, the money out of Robin Hood and Fundrise. I would go to the bank with $200 or $300 and I would open a guaranteed credit card. That is the fastest way you can get your credit built back up. And that's what I would do because if you get that guaranteed credit card, it's going to start reporting right away because right now with a 500 credit score,

Starting point is 00:37:15 you're not going to qualify for a traditional credit card. Secondarily, I would look online for someone that has a service. you can buy a service very inexpensively to help you get all of the bad credit items that you can remove from your credit report as soon as possible. That would help. And then number three, something that could help you along the way to get that income up. Look for an online side hustle. If you're any good online and you're good around a computer, find a side hustle where you can make $100, $200, $300 extra a week from home so you can spend time with your children, but also So get the income up.

Starting point is 00:37:53 Something Austin and I have been saying for years is for people that are struggling. You either have an income problem, a spending problem, or both. And you're in this scenario right now. You're living frugally somewhat, but you're not making nearly enough money. And that needs to get changed right away. And Alicia, we've been talking about Tripoli as a place for people to work for a while now. Research tells me, and again, I don't know the specifics here, so please take this with a grain of salt. Research, though, says you can make about $14 an hour starting out as just a crew member.

Starting point is 00:38:25 You must be at least 16 years old. Have a friendly, enthusiastic attitude, passion for helping people. They have tuition assistance. So if you want to go back to school or go to school, they have 100% coverage for select degrees up to $5,250 a year. You get free food. They have medical, dental, and vision insurance. They also have 401K matching. Chipotle, they're doing pretty good for their service members.

Starting point is 00:38:48 They're crew members here, and you can work your way up to become a service manager. making $20 to $25 an hour. I really, really firmly believe there's a world where you can make between $14 and $18 an hour, go work 30, 40, 50 hours a week on that specific job. And then because Robert called out your age being 27, you have nothing but green grass and blue skies ahead of you. It just comes down to, again, leaning on the family to watch over the kids as often as possible while you are away at working and being in a season of your life,

Starting point is 00:39:17 realizing that this isn't going to be your reality forever. You are not going to be working 80 hours a week, two jobs for the rest of your life. This might be a six-month or a nine-month or a 12-month season where you're trying to claw your way out of some of this debt, pay off some of these old bills, beef up a savings account from 2,000 to 10,000 to 20,000, right? But get yourself in a situation where you see light at the end of the tunnel. You have a plan and you have a clear goal to achieve, right? That's all you have to do and then go lock in on that for the next six, nine, 12 months. and we promise there's going to be a world where you fast forward one year, two years, three years from now,

Starting point is 00:39:54 and your reality is completely different. You are going to have a ton of your emergency fund. You're going to be investing. Your kids are going to be successful in school. They're going to have everything they need. Like, you are going to be an awesome mom. And we know you're doing that already. You're working so hard. So we're rooting for you, Alicia. And thank you so much for listening to the show. So our last question comes from Kanathi M on Instagram. Canathi says, I'm 31 years old. I'm a woman earning about 120. thousand a year. I have saved up $102,000 and I recently started investing in the S&P 500 and in gold. I have a Roth IRA. I'm planning to buy a house, but I'm conflicted if I should buy a condo or a

Starting point is 00:40:31 townhome. The condo I want to buy is $200,000, which means I would put probably $40,000 in my savings down on the down payment and then invest the rest in stocks. However, I realize that condos appreciate very differently than other types of real estate. If I bought a town home, I would have to put all of my savings down as a down payment, but I do also recognize that they would appreciate more than condos. I'm really conflicted between the two of these. Please give me your advice. Robert, what's your perspective on buying a townhome versus a condo and then the appreciation related and then also, of course, take into account the down payment difference. You're on the right track. Buying the condo, I'm not a fan of condos unless you want to be in a

Starting point is 00:41:12 condo on a beach somewhere and even that's difficult because HOA's and the fees associated can be very, very high. Counthouse I'm okay with, but I would rather just love to see it 31 years old. Go house hack. Buy a duplex, buy a triplex, use the Fannie Mae 5% down mortgage. You're obviously serious about your investing. So if you were to buy a duplex or a triplex, live in one unit for one to two years, take that 5% down so the rest of your money stays invested. You would be in a much better place, in my opinion financially, because then you actually own the property outright. it's your property. You have the upside appreciation. You have the 5% down with the Fannie Mae mortgage. So there's just a lot of advantages to buying that and not having the HOAs and all of the condo

Starting point is 00:42:01 association fees. And it's your property to do what you wish and you don't have to paint certain colors or do any of the things that some of these associations require. That's what I would do. I think that's a great perspective. If I were to choose between a condo and a townhome, I would choose the townhome. I've heard horror stories about condos, especially to Robert's point, right, if you're at a beach or, you know, you're somewhere where, hey guys, we have to now go replace this and because you're a condo, you have to now pay for this. So it's a one-time fee of $2,000, like give us your money or we're going to sue you. Or it's, you know, H-OAs that go up every year or insurance that goes up every year, right? It just condos to me aren't that attractive

Starting point is 00:42:40 and to your point they do appreciate much differently than townhomes. I'll also say townhomes tend to be inside of neighborhoods where condos can be really anywhere and i would much rather be in a neighborhood than just like anywhere but again condos might have a nice view somewhere like you know there's a reason of condos there but yeah in my opinion i would do the townhome if i had to choose between the two of them however robert's advice as it relates to house hacking is always preferred if you can house hack which you definitely have enough money set aside to do you can find a duplex a triplex or a quadplex You can use the 5% Fannie Mae down payment mortgage, which allows you to borrow up to $1.3 million to buy some sort of multifamily at, again, that 5% down range.

Starting point is 00:43:22 Assuming you have decent credit and a good debt-to-income ratio, we always encourage people to do that. With that being said, everyone, thank you so much for tuning in to this week's episode of the Rich Habits Podcast Question and Answer Edition. If you're new around here, a couple things to call out. The first thing is we have a newsletter. 60,000 people read it every Thursday morning, which means. means it probably was published before this episode even went live.

Starting point is 00:43:45 It is called the Rich Habits Newsletter. Robert and I talk about all the big market-moving headlines and try and give you some perspective as to what we think is going on behind the scenes. We also have the Rich Habits Network. This is our community for our biggest fans. We have well over 650 people that are a part of the Rich Habits Network, and this is an opportunity for Robert and I to connect with them on a weekly basis via two hour-long weekly live streams that take place every Tuesday night.

Starting point is 00:44:12 We also present pre-IPO investment opportunities. We've had a couple, actually, and just in the last month that we've, I think we've raised like north of $700-something,000 that was invested into a couple of these opportunities through the Rich Habits Network community. So we're so thrilled to be able to unlock this private investment startup pre-IPO asset class to the masses. And then, of course, as always, we have tons of free resources. in the show notes. If it's the Rich Habits real estate hacks, if it's the honest budget,

Starting point is 00:44:42 if it's the 2025 financial planning workbook, all of it is downloadable for free in the show notes below. And for all of you that find value in our podcasts, the easiest way you can support us and it's completely free. Give us that five-star review. Share it with a friend. Everyone knows someone who needs to up the game in their financial literacy, maybe help with their mindset. maybe they're a business owner that's struggling a little bit. So share with a friend. It doesn't cost you anything. It helps us grow.

Starting point is 00:45:11 And it's just really good for everyone. And we appreciate all of you coming back each and every week, supporting the podcast, keeping us at the top of the charts. And hopefully we're providing a ton of value for each and every one of you. We're so thrilled to have over 200,000 people subscribe to us now on Spotify. Over 100,000 weekly listeners. We are just incredibly humbled and excited that all of you come back. every single week to listen to our show.

Starting point is 00:45:37 And with that being said, thank you so much for tuning into this week's episode. And we will... Are you one of those media strategy people clicking through slides, scrolling spreadsheets? Yes? Good. This is for you. Because on Spotify, there's an audience that's different.

Starting point is 00:45:50 Locked in. Loyal, invested. They're called fans. Fans don't just listen to music. They feel seen by it, like it belongs to them. So when your brand shows up on Spotify, that's who you're talking to. And you're right next to artists like me.

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Rich Habits Podcast - Q&A: Buying Our First Business, Cash Flowing a Triplex, & Teaching Crypto to Kids...?

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