186: What Do Rich People Buy LAST?

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0:33You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18+. Welcome back to the Rich Habits Podcast, a top 10 business podcast on Spotify brought to you by public.com. By the end of today's episode, you'll understand the four things broke people do first and rich people do last.

1:10My name is Austin Hankwitz. I'm joined by my co-host Robert Croak. Robert is a seasoned entrepreneur with lifetime revenues of over 300 million, and I'm a multimillionaire in my early 30s with a background in finance and economics. As the show name might suggest every episode, we talk about rich habits as they relate to business, finance, and mindset. So Robert, what are we talking about in today's episode? In today's episode, we're flipping the script on how most people think about wealth. Everyone assumes rich people just buy more, bigger houses, nicer cars, more stuff, but that's backwards.

1:43The real pattern, if you actually study how wealthy people spend, is about sequence, not quantity. Broke people try to buy status first, hoping that the wealth catches up later, and rich people buy status last after the wealth is already there, funded by money they don't need for anything else. So today, we're walking through four categories where this shows up most clearly, and in every single one, we're going to show you what broke spending looks like first and what rich spending looks like instead. This is going to be a fun episode, Robert. So quite literally, we're going to go through four different categories and say, this is what broke people tend to do.

2:19This is what rich people do. And these four categories are sort of the things that rich people buy last, right? So Robert, kick us off with category number one. Yes, let's start with what everyone sees first because it's the one you drive around in every day, your primary car. And here's what broke spending on a car looks like. You finance or lease something well above what your income comfortably supports because the car is doing a job that has nothing to do with getting you from point A to point B. It's signaling that you've made it even if you haven't. The average monthly payment on a new car right now as we film this in 2026 is$770.

2:58and it's an all-time high in total auto loan debt in this country just surpassed$1.7 trillion more than student loan debt nationwide. That's not a small number. That's tens of millions of people carrying a car payment around that's eating away at their ability to save or invest. And Austin, another part of this problem that really shocked me when we were doing the research and preparing for this episode is that 25 % of new car buyers right now are using 84-month loans. That's seven years, which we believe is financial suicide, given the interest rates and expected depreciation on those new cars.

3:39And as a reminder, the average new car in America depreciates over 42 % in the first five years. That is bonkers. And yeah, I mean, we did some research here. So here's some numbers for you. A new car loses around 20 % of its value in just one year. That first year you drive it off the lot, 20 % is gone. And by that year five that you're alluding to, Robert, around half. It's worth only half of what you originally paid for it. So broke spending on a car isn't just spending money you don't have. It's quite literally spending money you don't have on an asset that's actively going down in value by every single moment and mile you put on it.

4:19You're financing a depreciating asset with debt, which is the worst combination in personal finance. So let's not think about what rich people do, right? Rich people buy nice fancy cars last. They look pretty boring as a strategy in comparison. You drive something reliable. You drive something that's paid off, often well past the point where you could easily afford something nicer. Because the car itself isn't doing any signaling anymore. When a wealthy person does eventually buy a nicer car, it's usually with cash and it happens years after the net worth grows to such a large amount of money that it can absolutely support having something that's going to go down in value.

5:03The car is a reward for wealth that already exists. It's not a tool to project wealth that doesn't exist yet. I'll say it one more time. For wealthy people, a car is a reward for the wealth that already exists. It's not a tool to project wealth that doesn't exist yet. It's genuinely one of the last things on the list that a wealthy person's going out and buying. Not because rich people don't like nice cars. I like nice cars. But it's because by the time they buy a nice car, it doesn't move the needle on their finances as someone who isn't in the same situation. They go out, they buy the car, it goes down in value, and it negatively impacts that net worth too much.

5:41Robert, I still drive right now a 2021 Toyota 4Runner. It is September 2026. I bought this car summer of 2021. So I'm a multimillionaire driving a five-year-old Toyota. Like that's quite literally what I am. And I enjoy it. It's got 50 ,000 miles on it. It's my dream car. I'm very happy to have it. I love my Toyota 4Runner. But before I had this 4Runner, Robert, and I think I've shared this story with people in the past, it was a different situation. You know, I had just graduated college in 2018. I just started working downtown Nashville in finance. I was making about $65 ,000 a year. And I said, you know what?

6:14I can afford to buy something flashy, something nicer, something that I just deserve, right? I didn't deserve it. But so I went out and I bought. And I think if you guys are car enthusiasts listening, you might agree with me. I thought it was a pretty cool car. It was a 2000, maybe 16, 17 Lexus IS 250 F Sport. It looked awesome. It was a really cool car. Like I really enjoyed it. But the monthly payment was$440 a month. The insurance was$275 a month. And the tires in the car were two different widths. So the back tires were wider than the front tires. So I couldn't rotate the tires, you know, as easily.

6:53So I was going through tires like crazy. So that was an added expense. Long story short, Robert, what happened and I had this car for, you know, 12, 18 months and I zoomed out and I said, wait a second, all of my money is going toward this car at a 6-7 % interest rate. I'm not maxing out my Roth IRA like I should be because I've got this high car payment. Let me pump the brakes, pun intended, and switch things up. So I sold the car and then I used that plus savings I had to go buy a 2003 Lexus ES330 that had literally 80 something thousand miles on it. Got very lucky. Bought it from an older individual that bought it new.

7:31Back seats weren't even sat in. It was pretty cool. And I paid like$7 ,000 cash for it. So it's like, it's one of those things that makes you realize, and I drove that car, by the way, until summer of 2021, when I upgraded to this 4Runner and I still drive this 4Runner today. But it's one of those lessons, Robert, that's like people make the mistake of having a cool car and trying to project, you know, maybe some wealth that they don't have with their car purchase. And I know, Robert, you got some cool stats to share too around how much people spend, you know, when it comes to some of these payments and things, but it's just, it's the easiest mistake to make is I can afford a cool new car.

8:04And I justified it to myself, Robert, as I was commuting to downtown Nashville every day. I was in my car in that traffic for at least two hours a day. If I'm going to spend two hours a day, I'm going to, I'm going to enjoy sitting in that car for two hours a day. And that's how I justified it. But then I'm thinking, why, why not just have a normal, decent car, which was this Lexus ES350 2003. It was older, but it was comfy. It was fine. It worked for me. The radio was kind of weird, but whatever. I was wearing my AirPods anyway. But I'd rather have that plus maxing out my Roth IRA and having an emergency fund and coming in and living my life from a place of strength versus trying to project wealth onto people that I didn't have.

8:47Yeah, I love that story about the Lexus and all of that. And it just really rings true to what we're doing here with the Rich Habits Podcast and the Rich Habits Network because we're trying to help people understand with our 30-year age gap how so many of these financial practices and mindsets just can go from generation to generation if you understand the why of it. Because so many people don't consider the total ownership cost of the car any more than they do the house that they can't afford. And also broke people just always believe that they deserve it, even though they've done nothing to set themselves up financially.

9:24And it always brings me back to a really cool story that I don't even know if you know, Austin, 2010, right at the height of silly bands, I had always wanted an Aston Martin DB9. We were in New York for the silly band show. There was one literally two blocks away that popped up in my search. I walked over there. I looked at it. I loved it. I test drove it in the middle of winter and I bought it on the spot. Everyone on my team was like, you are making more money than anyone. Why would you buy a used car? And they didn't understand by making that decision of my dream car and it only being a year old with 2000 miles, I saved$85 ,000 in depreciation off the sticker price.

10:06So this is a really important part about this episode of getting people to understand, to do the math and make sure you're not living beyond your means with your car purchase like you are your house purchase. Yeah. And I think too, it's not just the depreciation, but it's the fact that like you're buying too much car, right? You mentioned$770 a month is the average new car price right now, or rather the monthly payment, 84 months, seven years, all the depreciation. It just doesn't make any sense. So Robert, now walk us through the second category of things that rich people buy last. Definitely.

10:39The second category is the biggest purchase most people will ever make, and it's their house. Broke spending on a house means stretching to the absolute maximum the bank will approve you for because a bigger, nicer house and a better zip code is one of the most visible status signals there is. And a huge number of people are doing exactly this. Recent data shows that 18 million homeowners in this country are what the industry calls house poor, spending more than 30 % of their monthly income on housing costs alone. And nearly half of those households are severely burdened, meaning the housing isn't just tight, it's actively squeezing out everything else.

11:19So when housing eats that much of your paycheck, there's nothing left to automate into investments, nothing left for that emergency fund we talk about, and nothing left for people to be able to build wealth over time because the house has become the ceiling of their entire financial life. And that is a huge no-no. So rich spending now, the opposite side of that is spending on a house that is well below what they technically can qualify for. They keep housing costs as a manageable slice of their income rather than the main event. The upgrade, if it does happen, when it does happen, comes after the income supporting it already exists.

12:01Sometimes years after because there was never any urgency to move once the current house wasn't holding anything back. Now, a lot of wealthy people stay in sort of the starter home longer than they need to, especially after they can afford to leave because the house was never the goal. The goal was always what the house frees up, the capital, that margin in their budget that keeps compounding somewhere else instead of getting locked into the square footage. Robert, we've talked about this before too. I purchased a home in 2019 for$279 ,000 and I still have that house, right? It's a normal 1400 square foot townhome.

12:41The bedroom I'm in right now is one of those bedrooms. I convert it to a podcast studio office, right? But it's like the monthly payment is like 1500 bucks on this thing. It's the interest rate is 3.3%. And it's not that I can't afford more. I'm I absolutely can I make a ton of money. But it's that like, okay, I'll just go buy a house that makes sense for me when I'm ready, when my life supports it when everything like when I'm actually don't need to live in such a starter home anymore. And like, technically, yeah, I've been in this starter home now for like, you know, six, seven, eight years, whatever.

13:12But at the end of the day, it's not that I need to go impress anyone. It's not that I have to go be or do something that I'm not. It's just because I've been able to keep my monthly payment so low by not having a mortgage that's four, five,$6 ,000, which is very normal here in Nashville and Franklin and Brentwood, because you're buying homes that are 800, 900, 1 million plus dollars. I've had a lower monthly mortgage payment, which has allowed me to invest a ton, a ton, a ton of money in my retirement accounts and the stock market, everything that's meaningful to me. So now I think I've mentioned, I am building a new home and I am ready to take that next step, but I was able to make that decision from a place of strength.

13:50I've got a ton of money invested. I've got a ton of income now that can support what that payment's going to be. I've been able to save a lot of money for a nice down payment that's going to be, you know, suitable for what I'm looking for and what I'm trying to achieve. I wasn't rushing into, oh my gosh, I've got to go buy this new home or do this thing or take a move, whatever. Like the mentality you want to have when it comes to housing is live normally, live modestly, live in a place that makes you feel good. But it's not so much about the square footage. It's not so much about the perfect neighborhood.

14:26It's the other things that you do that make your house a home. It's the people that live in that home with you. It's the actions you take. It's how you treat that home. It's how you decorate the home or it's how you, you know, treat it like a home. You don't have to be or have 4 ,000, 5 ,000 square feet to have a home. You can have 2 ,000 square feet, 3 ,000 square feet, whatever, whatever makes sense for you and your family and your situation. And it's the people you spend time with inside that home that make it so special. It's not the size of the home or how many square feet, how many bedrooms, whatever it might be.

14:59You're not trying to impress people with your home. You're just trying to live. It's a place that you can put your head at night and keep rain from off your body when it's raining outside. Yeah, but I also think you really practice what you preach just like I do. my first home my first property was a four unit apartment a fourplex they call it and i lived in the largest nicest unit and rented the other three units i did that for years and i could have afforded to go out and buy you know a really nice single family home to start but i was always having this fear of i want to build my wealth right and make sure it lasts for decades and decades because i don't ever want to go broke and that is why i think it's really smart for both of us because even today right now, so many people put the cart ahead of the horse.

15:45Every time they start making more money, they upgrade their lifestyle, which is the cars, the homes, everything else. And they never give themselves a breather in that wealth building journey to actually set aside enough money to build real wealth for later on. And so like, if you think about it right now, Austin, even for me in Ohio, I'm not there very often, but I have a home in Ohio that's very modest. It has a nice view. It has a nice big yard, but it is fully paid for. It's been paid off for, I think, 16 years, 15 years. It used to be a rental. Now I use it for when I spend time in Ohio and I could easily upgrade and go get a million dollar home in Ohio.

16:24But why? I'm only there two, three, four weeks out of the year. I don't need all of that. So I think that's the key component of this is people need to understand, stop living beyond your means in always letting lifestyle creep, rob yourself of the opportunity to build real wealth. Cannot agree more. A house is awesome and it's definitely needed. You need a place to spend time to sleep, right? Like you need that, but that should not make up 30, 40, 50 % of your take-home pay. You should figure out a situation that aligns with your ability to have it make up 20, 25%, maybe less than that, 15. I don't know, it makes sense for you there, but not half of your take-home pay.

17:08We don't want people to be house poor. Wealthy people look at their home not as this big old expense they have coming out every single month. They look at this and say, wait, I'm going to live comfortably and modestly until I can't afford to then make that big move sometime else in the future. So Robert, bring us now into category number three of things that wealthy people buy last. Yeah, this one is my favorite because it's pretty funny how much of an epidemic this is in society, and that is luxury goods. This category really covers everything from designer bags to luxury watches to high-end jewelry.

17:43Anything you wear or carry that's built to be noticed. You all know what I'm talking about. And the broke spending here is buying the item specifically because of what it signals. The logo, the recognizable design, the price tag other people can infer just looking at it. It's a purchase made to be seen often before the income exists to comfortably absorb it. And the thing about these purchases, they're the purest form of spending to look rich than actually being rich. Because unlike a car or a house, there's zero utility for these purchases and you're paying entirely for the signal to others. and I think it is just tragic that people do this.

18:25I could tell you stories upon stories of people that I know that have gone broke multiple times, but they always have the Gucci watch and the Louis Vuitton shoes and all this stuff and they just don't understand. Wealthy people don't live like this. Yeah, no, that's a very popular one, especially one that we see on the internet all the time. And so as we kind of flip that on its head and think about how rich people approach that, they buy the goods for sure, but it's more a quiet purchase. The purchase gets funded entirely by disposable income, not by debt, right? Money that was never earmarked for investing or saving in the first place, which means it doesn't compete with anything else in their existing financial plan.

19:03Buying this luxury good becomes a reward rather than a strategy. There's a pattern here that I think is pretty interesting, Robert. A lot of genuinely wealthy people buy fewer of these items than you would expect, and that's because they could not afford them. Not that, but because the signal stopped mattering once the wealth was real. You don't need a Rolex to tell people you've made it when your net worth already speaks for itself. I know I've been given some antidotes here, but I'll give another one. I'm worth millions of dollars, Robert. I don't have a Rolex watch. The most expensive watch I have is a Tissot that Ireland got me that was like 300 bucks and I love it.

19:37It's engraved. It's beautiful. It's fun. But it's just like the wealthier I get, the more I realize that like it's goofy. You don't have to project anything to anybody. It's not that like having nice things is bad. I certainly strive to have nice things, but you can tell, like I had a friend and I'm not going to name names, but I had a friend back in like 2022, 2023, that guy was making 80K a year. He was doing well. He was solid, you know, call it for his mid to late twenties there. But I remember I saw him out one night and he was wearing a Rolex and it was like a Datejust or one of these really cool Rolexes.

20:11And I was like, whoa. And I was like, dude, how did you like, I know you don't have money like that. How did you, what, what happened? It's like, Oh, I got it on like layaway. You know, I got it from this place over at the mall. You know, I got this payment every month, but it's totally worth it. It's going to be awesome. It's a Rolex, all this stuff. And I'm just like, dude, that is corny. What are we doing here? Why are you trying to project something that you're not like, I don't know. I just think, I just think it's a disingenuous. I think it is so rampant in society because we live in this comparison-based world because of Instagram and TikTok and everything else.

20:42And, you know, I could talk about this topic for hours because so many people get it wrong. They think as soon as you get money, you're supposed to go out and buy all of these things and they just have it backwards. I would rather go to sleep at night knowing that I have millions and millions of dollars put away making me money while I sleep rather than worrying about having the right bag or the right wallet or the right shoes or the right belt buckle to impress people when I'm out and about. And it just drives me nuts that I can't hammer it home enough to people. We want you to have nice things.

21:16I love nice things. I have cool watches. I have cool cars. I have cool furniture, art, all of the above, but you have to build the financial freedom first. So many people come for me in content when I tell them don't do this. And they're like, well, what's wrong with doing both? It's okay. hey, buy whatever you want. Buy the Rolex, buy the Lambo. I don't care if you already have built your wealth, but you shouldn't be doing it first when you're not financially stable at the point of that purchase. Could not agree more. It's cool to own a Rolex or have luxury goods. And I'm sure my friend would agree with me that buying and doing those things from a place of strength is probably better, definitely better than trying to buy a Rolex or a belt or a necklace or something that's like projecting maybe that you are someone you're not or have things maybe than that you really don't.

22:08So I don't know. It's just, it's one of those things, Robert, where it's more of a self-reflection and more of like a maturity that I think people have to go through. And I have a really close friend named Daniel Isles. He's got a wonderful business. He just posted on his Instagram that he had his first$5 million month with his business, right? Really, really cool guy. In that video, he was wearing a black shirt, black pants, cowboy boots, like one ring on his finger and a watch. And it all looked completely normal and fine. But I guarantee you, Robert, and this is like the thing that once you start like leveling up, like I guarantee his shirt was probably pretty expensive, his pants are, and I saw the watch he had was a Richard Milley, right?

22:50So like it was definitely like on the more expensive side, but it wasn't flashy. And I think that's what the most like biggest observation i've made over the years when like wealthy people when they go out and they buy these luxury goods like mark zuckerberg you know i know he like wears the same outfit every single day but he wears these t-shirts that are like 300 bucks a piece but they don't have big gucci logos on them and louis vuitton logo it's just it's just quiet wealth it's quiet wealth and i think the more you have the more you realize i don't want to be the loudest guy the loudest girl or the loudest person in the room here with what with what i'm wearing or what I'm portraying or trying to be.

23:25And I don't want to be that person. I think that that's going to really resonate with our listeners, the more money they build and the more their portfolios compound. Yeah. Wealth is quiet and rich is loud. That saying goes back for as long as time exists. And I think you're spot on there that we're just here to tell people, build wealth first. You can buy all the cool stuff later, but don't do it in reverse. That's it. Bingo. Now, Robert, before we jump to our fourth and final point here, Gotta give a shout out to public.com, the investing platform for those who take it seriously. On public, you can build a multi-asset portfolio of stocks, bonds, options, cryptocurrency, and now they've got generated assets, which allow you to turn any idea into an investable index using artificial intelligence.

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24:43That's public.com slash rich habits. Paid for by public investing, full disclosure in the podcast description. All right, Robert, so let's now get into the fourth category of things that rich people buy last. This one drives me nuts and I feel like we talk about this more times, especially during wedding season, than we probably should every single year and is vacation and experiences. This is the fourth and final category and this is the one that most people don't think about as a purchase at all because it doesn't leave behind an object. It's a vacation or an experience or a wedding, whatever it may be.