39: Our 3 Tips If You're Starting from Scratch in 2024

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0:35He loved people, but he also loved peace and quiet. So he cooked up KFC's$4.99 chicken pot pie. Warm, flaky, with savory sauce and vegetables. It's a tender, chicken-filled excuse to get some time to yourself and step away from decking the halls. Whatever that means. The Colonel lived, so we could chicken. KFC's Chicken Pot Pie. The best$4.99 you'll spend this season. Prices and participation may vary. Supplies last. Taxes, tips, and fees extra. Hey, everyone, and welcome back to the Rich Habits Podcast, a top five business podcast on Spotify. My name is Austin Hankwitz, and as always, I'm joined by my co-host, Robert Croak.

1:10Robert is a seasoned entrepreneur in his 50s with more than 200 million in company exits 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 advise some of the most well-known fintech companies around the world. As the show name might suggest, every single 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.

1:50Robert, what are we going to be talking about in today's episode? In this episode, we're going to share our three best tips for all of you starting from scratch. If that's savings, investing, owning real estate, all of the above, we hope this episode can be a beacon of hope and guidance towards a wealthy retirement. Robert and I go live every Thursday night on TikTok, right? So whenever we do that, we get that hand-to-hand combat with all of the hundreds, if not thousands of you that are live with us at that moment. Questions, perspectives, comments, hot takes, it's all in the comment section.

2:25And Robert, what inspired this episode is, I don't know if I remember, but we had four different people ask us, hey, I'm in my 40s. I'm needing to start. I'm a little late bloomer. What do I do? Or, hey, I'm in my 50s. I'm 54 trying to do this. Or, hey, my wife and I just got married and we're ready to start. All of these questions coming in from people all across their age demographics trying to start from scratch. And so like, wait a second, Robert, let's break it down for the people. I love it. I love it. Yeah, so number one, get an honest and complete picture of my total financial situation.

2:56The key word here is honest. We want you to really, really break it down so you know where you stand. If I'm starting from scratch right now, as someone who is in my 50s, the absolute first thing I'm doing is sitting down with all of my accounts. My bank accounts, my credit cards, my investments, my bills, my insurance policies, all of the receipts that are floating around on my desk. And I'm going to map out exactly where I stand. This is so, so critical. How much is in the bank accounts? How much is owed on the credit cards? How much is owed from this bill, that bill? Be honest and write down every detail.

3:33Think budget on steroids. If you've never written one before, there's a free budget template in our show notes for you to grab right now. And this is important because far too many people, especially midway through their financial journeys, just don't have a clue where they are. You don't retire comfortably by stumbling into it. That's why we always preach to have a plan and consistently stick to the plan. That's exactly right. I'm writing down every account balance, every bill owed. I'm also writing down how much I'm making as well as how much I'm spending per month. You can't control your financial future if you don't know how much money is coming into your bank account and how much money is leaving your bank account every single month.

4:18Now, the goal of the first step is to begin to find that wiggle room so we can deploy it toward investing strategies, which we'll talk about here in a little bit. But you'll never find that wiggle room unless you're looking for it. You need to make a habit out of this. It's important to find that wiggle room, take advantage of it, and do that consistently. Know exactly how much is coming in, how much is going out, and identify the wiggle room. Yeah, you'd be shocked, Austin, of all the people that I talk to on a monthly basis for Croke Capital and also my personal brand through Money Mindset. Of how many people when I first start out the conversation and say, what is your debt to income?

4:53Do you have your budget you can share with me? Et cetera, et cetera. And 80 % of those people just haven't even taken that first step. And it really is all about understanding where the money's coming from and where it's going. So you can understand your net result to be able to move forward with a plan for retirement and building wealth. And for those of you who might be saying, I don't have the wiggle room. I've tried this. There is no wiggle room. That's okay. That's fine. Go listen to some of our older episodes where we talk about side hustles, right? If you joined our TikTok live last night, I talked about how my girlfriend earned$400 last month walking dogs around our neighborhood.

5:31And this month, and I guess in 2024, her new side hustle is doing liquor sampling. She's like sampling liquors at liquor stores and handing them out to people making$30 an hour. Money is everywhere. I'm telling you guys, you just have to look for it. You just have to want to look for it because so many people in the private and the public lives talk about their hardship or the cutbacks at their company. guess what? There's not a single door in America you can't walk out of and go find a job within hours because trust me, every small business owner is struggling finding staff right now. And you have to understand and look at money as buckets.

6:08If you go out and find that side hustle right now, let's say your current job is okay and you guys are treading water, but you're getting all your bills paid. Go get that side hustle. Take that 300 a month and put it away and get started on your investment journey rather than bemoaning your bad luck. I love it. Now, Robert, hit us with point number two. Point number two, overcoming analysis paralysis. I'm not smiling because it's funny. I'm not being coy. It's just one of those things that in my journey and doing what I do as a financial educator, this is one of my kind of favorite topics because so many people suffer with it.

6:45And I feel that I'm really good at helping them take that first step forward of losing analysis paralysis and getting start. As all of you know, this podcast isn't just about business and finance, but it's also about mindset because mindset and behavior are the most important factors in building wealth. It's 20 % head knowledge and 80 % mindset and behavior. I promise you, if you can learn that and understand that how to get out of your own way with your mindset issues, you will thrive. So if you find yourself now in a mental rut because you feel discouraged and left behind, we're here to tell you that that's okay and it's never too late to get started.

7:28Just for a couple examples here for the people who are in their 40s and 50s that might, I don't know, I'm getting kind of old. I'm getting up there. It's too late for me. Listen, Ray Kroc started McDonald's when he was 52 years old. Our own Robert Croke had his largest success at 43 years old with the creation of Silly Bands. Harlan Sanders was 62 years old when he founded Kentucky Fried Chicken. We preach all of the time that you're one meeting, one phone call, and one habit away from a totally different financial life. Yes, that is an amazing illustration. And thank you for including me along with those incredible people.

8:03We share these stories because we want our listeners to understand you too can have a life-changing inspiration no matter what your age is that can alter your financial career forever. Time to jump into point number three right after we take this break. Okay, let's go on to number three, actually building wealth through investing. All right, so just to give the quick summary, we've talked about creating the bird's eye view financial picture. We've talked about finding that wiggle room in your budget every month so you can begin investing. We've talked about overcoming analysis paralysis and other mindset struggles.

8:40It's time we get into the fun stuff, the actual investing. So this is going to be incredibly simple for everyone listening, but I need you to hear me when I say this. The number in your investment account is supposed to go up, it's supposed to go down, and it's not always going to be green. You need to completely understand that before we get started because if you don't, you are not going to make it. Investing is a long-term strategy and there's no reason for you to have knee-jerk reactions of the ups and the downs of whatever the headline news is in the market that day that's impacting your portfolio.

9:13So if you understand that, now we can move forward. Step one, find, earn, obtain, do whatever you gotta do each month, but get your hands on$300. I know$300 doesn't really sound like a lot, but in this example, let's assume you're 40 years old and you plan to retire around 65, that$300 per month turns into$560 ,000 tax-free in retirement. So here's how we're gonna get there. Step two, go to wealthfront.com or schwab.com. We've got the websites linked below in the show notes. Don't worry, we got you covered here. Now open up an account called a Roth Individual Retirement Account. These websites are gonna ask you for your bank account information, your address, your social security number, the whole bit.

10:01And it's all good because banks are fine, secure, data's good, don't sweat it. Now step number three is, once you've gone to these accounts, you've opened it up, I need you to automate the$300 per month deposit and immediately invest it into the S &P 500 using the acronym in the search bar, VOO. Now, if you're using wealthfront.com, they're gonna automatically do this for you, so you just have to deposit it and it's all gonna be taken care of. But to remind you now,$300 per month invested over 25 years is$560 ,000 in retirement tax-free because we use the Roth individual retirement account. Now, let's pretend you had$400 a month, $750 ,000.

10:43Maybe you have$500 a month that you can find to get your hands on. $950 ,000 tax-free in retirement. How can you get your hands on an extra$500 a month? Where can you find that? What subscriptions can you cancel? What side hustles can you do? Because the math tells us those are million-dollar decisions at this point. I love it. So there you have it. The step-by-step playbook for what we would do if we were in our 30s, 40s, or 50s and starting from scratch. I hope all of you now have a better understanding. You can now see where you are. You feel a beacon of excitement and hope. And you know what the playbook is once you have the money and you're ready to start investing in, seriously, the most important part here.

11:26The account's going to be red and it's going to be green. But we promise over the long term, it's going to be green. So just stick with it. Now, before we jump into the question and answer segment, let us introduce this episode's advertiser. The highs, the lows, the soaring spirits, and the gut punches. The stock market's volatility has been a good reminder of why we always diversify our portfolios. New data from UBS shows private assets like fine art can be especially valuable when looking for low correlation as they have historically moved independent of stocks. Bloomberg reports as equities cratered in 2022, art prices increased along with the highest total sales ever for major auction houses.

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13:26It's very easy to understand. And they have a really, really great customer service. So if you do want to begin diversifying, the market's up, what, 17, 18, 19 % right now, which just seems like what Masterworks is doing, and even right that 35 % just this year, we like them. Go check them out. Go click the show notes below if you're curious. If it's night for you, that's totally fine too. But major shout out to Masterworks because they do support the podcast and we really appreciate that. All right, Robert, let's jump into the question and answer segment, starting with a question from MJ on Instagram.

13:55MJ says, my wife has$60 ,000 in credit card debt. Collectively, we take home$105 ,000 per year after taxes, and we're trying to figure out if she should lease a car. Now, my wife is driving a car that we own outright, and it's worth about$12 ,000. But we're thinking about selling the car and then taking that$12 ,000 and using it to pay off some of this credit card debt. If we got a lease, it would be an additional monthly payment. What are your thoughts? Wow. That is a hell of a question, MJ, and a very sticky situation. So my first take seeing this question would be, I think it's a great idea to sell the car, put the 12K immediately towards the credit card debt if you're going to do that.

14:37The second part of this answer is if you're going to lease a car, hopefully you're going to lease a car that's within your means. Because remember, even putting that 12 ,000 in there, you still have 48K more of credit card debt. So I don't want to see you use this excuse of, oh, we're leasing, so let's lease a more expensive car because you want to keep it relative to where you are in your financial journey right now. So I would hope if you find a lease that has a low rate and that you can get in with no money down, that you keep that payment reasonable and don't buy more car than you need. In that instance, I think it's a good idea to use the 12K towards the credit card debt.

15:17That's a good perspective. I think I might take the opposite side, but before I even mention that, I wanna mention here to MJ, in your Instagram DM, you said, my wife has$60 ,000 in credit card debt. My wife has this car. No, you all are married. You also have that debt. We have$60 ,000 in credit card debt. We own this car, right? We are a couple. We're a unit. We are married. You all are a team here. And I don't know how the credit card debt came to be, but maybe it came to be because you guys weren't on the same page financially. I don't know. So get on the same page, sit down with her and talk through some of the things we just shared in this episode.

15:55So I'm in the mindset of how do I keep as much of my monthly income, my monthly $105 ,000 per year income and use that income to pay off the credit card debt. It's not a bad idea. I'm definitely not disagreeing with Robert to say to sell the car for$12 ,000 and take that as a good big shovel head start toward the 60K. But I mean,$60 ,000 in credit card debt, how do I know they're actually going to take all$12 ,000 of that, right? It's like, keep the car. You guys make$105 ,000 a year after taxes, why don't you figure out a way to set aside$2 ,000 per month, $24 ,000 per year, and use that now to pay off this credit card debt?

16:33Perhaps there's a world where you can do some sort of debt consolidation loan. We'll have a link in the show notes below of a debt consolidation loan marketplace that we all check out and use here at the Rich Habits Podcast. But I think at the end of the day, what really is important for you all to understand is you're not going to get past this$60 ,000 unless you're on the same team and on the same page. and it doesn't matter if you sell the car, if you lease, if you sell your house. If you guys aren't on the same page, it's not going to work. This is a great illustration that you brought up and it really comes back to a TikTok I did a while back about the fact that so many couples fall in love, they're gleefully ready to get married and they never have the tough conversations.

17:11And this might be one of those cases where MJ and his wife did not have this conversation because of the fact that he's saying, my wife, my wife, my wife, instead of we. So Austin, that is a key is for everyone to understand if you're going to get married and you're going to tie that knot, you have to have those difficult conversations prior to make sure you're both on the same page for the long-term financially. Such a key. Our next question comes from Kristen S. Kristen says, I have$100 ,000 in a high yield savings account on Wealthfront making 5%. I have a mortgage at 2.75 % and I have$10 ,000 in student loans at 1.7%.

17:52Is it silly of me to pay extra on these debts? Wow. Kristen S. Yes. Don't you dare, dare, dare pay extra payments on those debts. You are an incredible situation and you're already positive arbitraging your money with your high yield savings account. And if you start paying down those debts. I'm going to find your address. If you pay extra payments and we're going to come toilet paper your house. Do not do that. You are in a great position. Now, the one thing I would change is I would get some of that money out of the high yield savings because that's a lot just to be making 5%. I would make sure you have your Roth IRA set up.

18:30I would make sure you're investing in some of the VOOs and QQQ we talk about. And also maybe look at some treasury bills and some crypto because you have to make sure you're optimizing your positive arbitrage and your investment gains with your money. And although we appreciate you having the high yield savings account, there are better ways to diversify and get higher yields on your money. Robert said it best. I have nothing to add here. So yes, do that. Our last question comes from Sarah B. Sarah says, I love the podcast. Sarah, we love that you listen to the podcast. Thank you so much. Sarah says she works in healthcare and doesn't really know much about finance.

19:07She's investing toward her 403B up to the company match and maxing out the Roth IRA every single year by investing into VOO. She says though that she has some extra money and is trying to figure out if she needs to put it in a normal taxable brokerage account or do something else with it. Not really sure. Thanks so much. Good question, Sarah. Okay. So as everyone knows, we sort of have a system here of investing, right? The first thing we want to do in that system is invest toward the 401k company match. If we can get free money on our money and immediate return, let's do it, right? Let's get some free money.

19:40Once we're investing and got the company match, let's now max out that Roth individual retirement account that we talked about in this episode, right? $300 a month over 25 years in the Roth IRA is$560 ,000. $500 a month is a million dollars over 25 years. So we want to be investing that, right? So by maxing out the Roth IRA, we're setting ourselves up for success. But in Sarah's case, she has now more than just the 3 % and the maxed out. She's got some extra funds on the sides. So she's trying to figure out what the game plan is here. Okay. So Sarah, what to be thinking about as well is in your 401k, we talk about autonomy.

20:14If your 401k is stuck in some silly retirement strategy that some rich hedge fund suit wearing guys that smoke cigars on the weekends put you in that's underperforming the stock market, then maybe it's not a good idea to take that extra funds and put it back into the 401k. Because if it's underperforming the stock market now, then it probably will continue to underperform into the future. So to your question, yes, it's probably a better idea to put that money into a normal taxable brokerage account like you can on public.com, deposit that money into the account, and then invest it maybe even beyond VOO.

20:50Maybe you want to invest it into VGT or QQQ for some diversification. That's what I would do with it, especially if I don't have autonomy. But if you do have the autonomy on the 401k and you are literally selecting VOO and you're doing the same performance and life is good, then put it over there. That's the same thing. You're good. Yeah, I agree with Austin. We talk about diversity a lot and diversifying your investments is very important. We love VOO. I would add some QQQ, like he said, maybe some VGT, VTI, Moat, or even AIQ. But also look at treasury bills, look at cryptocurrency and really just get yourself diversified so you're not really attached to just one platform in one sector of the market.

21:32And I think that's a great way for you to look at not having all of your eggs in one basket and making sure that you're set up for really good growth in the future. Thank you so much, Sarah, Kristen, and MJ for your questions. And to everyone listening right now, I really, really hope that if you are starting from scratch, you now feel like you have a plan. You feel like you are starting from authority, a place of authority and confidence and knowledge, right? But again, it's only 20 % head knowledge. It's 80 % mindset and behavior. So now that you have the plan, you have to stick to the plan and keep repping out the plan so you too can retire comfortably.

22:09I love it. And thank you all again for joining us on this wonderful journey with the Rich Habits podcast each and every week. If you love the podcast, share with a friend, leave us a five star review and help keep us at the top of the charts here, giving all the great information that we can week in and week out to all of you. Thanks, everyone. And have a great start to your week.