98: Getting Rich, Not Looking Rich, in 2025

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0:57Hey everyone and welcome back to the Rich Habits Podcast brought to you by Public.com, a top 10 business podcast on Spotify. Let me be the first person to tell you, Happy New Year and welcome to 2025. My name is Austin Hankwitz and I'm joined by my co-host Robert Kroak. Robert is a seasoned entrepreneur in his 50s with lifetime revenues of over$300 million dollars 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.

1:32As the show name might suggest, every episode we talk about rich habits as they relate to business, finance, and mindset. However, we try and bring you two unique perspectives, one from an industry veteran, which is Robert, and the other myself, someone who's still in the process of building wealth and figuring it all out. So Robert, first off, happy new year, my friend. Yes, yes. I am so excited for this year and this episode. So let's go. Yeah. What are we going to be talking about in today's episode? In this episode of the Rich Habits podcast, we're going to bring back a favorite from 2024.

2:03Getting rich, not looking rich this new year. You all loved it when we did an episode like this to start off the year last year. So we're bringing it back with a twist. We are going to rapid fire six action items that you need to do immediately as we head into 2025 to set yourself up for success financially. We wanted this episode to sort of be a quick hit. Okay, new year, new me. I'm going to open up my podcast player on Spotify and I'm going to make a action item list of things that I need to add to my New Year's resolutions to make sure that I'm setting myself up for financial success in 2025.

2:39We're going to speak from the heart. We're going to hit you with some real action items here, some nuggets of information that we think you can go out and do today. This isn't some woo-woo. This isn't some crazy hypothetical stuff. These are super simple, one, two, three, rudimentary things that you need to start implementing in 2025 if you haven't already. Because, again, we're going to get rich in 2025. We're not going to act rich. We're not going to look rich. We're going to actually get rich in the new year. That gives me the goosebumps. Let's get into this. So the first action item is I want you to ask yourself this question.

3:12Did you go into credit card debt this holiday season for gifts or for travel? If the answer is yes, 2025 is the year to learn about what a sinking fund is and actually using it for planned expenses. So okay, let's take a step back. What is a sinking fund and how do I use it in 2025 for my planned expenses? Think about a sinking fund as a separate savings account for an upcoming planned expense. We all know that Christmas is on December 25th of every single year and we all know that we got to buy Christmas presents. So you know in January, February, March, and so on up until December 25th that you need to be setting aside a little bit of money to save for these planned expenses like Christmas.

3:55Another common planned expense, Robert, that I see people make a mistake on swiping the credit card for all the time are tires for their car, oil changes, and brakes. So you know you have these planned expenses coming up in 2025 if it's a travel vacation, if it's travel for the holidays, if it's gifts for next year's Christmas, or maybe it's something to do with your car or something to do with an upgrade on the home. We all have planned expenses for 2025. And so this is the year you actually start setting money aside every single paycheck inside your honest budget to begin to save for those planned expenses so that you don't go into high interest credit card debt, which is a terrible idea.

4:34And I think a couple of them you didn't mention, I don't think, is wedding season. So many people every year, they get caught off guard that their friends are getting married. They swipe it on the credit card. Then they're fighting for months and months to pay it back. Birthdays. You guys have to realize there's a huge difference between a sinking fund and an emergency fund. Because like Austin said, Christmas comes the same time every year. Just like the birthdays for the kids come the same time every year. And you have to be prepared for those because you want to avoid the cycle of running the credit card and then paying it down for months and months and doing it again for the holidays because that does not help you set yourself up for financial freedom.

5:14So I love this one to start out the episode. And for all of our women listening right now, another one I want to call out that might sneak up on you are the cosmetics and the beauty care, right? Every three or four months, women listening, I'm sure, go to the beauty salon. They pay the$400 or$500 for the blowout, the highlights, the anything. I don't really know what goes on over there, but I know it's expensive. That's what my girlfriends told me. And so you know you're doing this every three or four months. Don't act like it's going to catch you by surprise when you have this big bill come up at the end of it after that four-month period.

5:45So if it's going to cost$400 and you get it done every four months, set aside$100 out of your monthly budget into a sinking fund. This can be in your high-yield savings account. I know with Wealthfront, you can have different categories, right? That's a pretty cool thing to consider with your sinking funds. But put this aside,$100 every month. So now when you go to the beauty salon and it's$400, you have the$400 of cash saved in your sinking fund to go pay for it. You don't have to swipe the credit card. Okay, let's go on to talking point number two. Did you invest in your 401k? If not, 2025 is the year you're going to do up to the match.

6:21You always hear us say match beats Roth beats taxable. We want you to match, get that free money and go up to the company match in the 401k. But then everything else above that, we want to see it go into the Roth until you get that maxed out. So, Austin, I think you explained this better than anyone on the Internet. Walk them through what this means and what is the best strategy. Yeah. So getting rich in 2025 includes investing. And we want to make sure that you all, if you have a 401k, like 78 % of Americans do, to invest up to the match by your company. We did a whole episode breaking down how the 401k works, the company match, what to select.

7:01It was episode 91 published on November 18th of 2024, how to conduct a portfolio performance review. So go listen to that if you're new around here. But essentially what we want you to do is invest up to the match to get the free money, because free money is free money. And then after you've done that match, call it 2%, 3%, 4%, take all the other money you have that you're taking home every single month and put it in that Roth IRA. We've talked about this account for years now. It's an awesome way that anyone can begin to build toward a tax-free retirement income. And once you make these contributions of$7 ,000 per year in 2025, you want to invest that money in the S &P 500.

7:39And then if you have any money left over, put that into a public.com taxable brokerage account in the same ETFs and index funds that we all know and love. So when it comes to investing in the 401k, if you get a match from your employer, you should be taking advantage of it in 2025 because it is free money, Robert. Yeah, Austin, you alluded to the Roth IRA. So let's further flush that out because we really want to make sure everyone understands to also do their best to max out that Roth IRA. For 2025, that's$7 ,000, the same as it was in 2024. And you have up until April 15th of 2025 to max out last year's fund.

8:18That's 100 % correct, Robert. We've talked about the sinking funds. We're getting a free match now from our employers in 2025. And in 2025, we're also maxing out our Roth IRA. We didn't max it out at 7 ,000 of contributions last year in 2024. We have until April 15th of this year to now go back and do that and max it out for 2025. It's in my opinion that the Roth IRA is the most powerful investing vehicle out there for any individual investor who wants to build a big, beautiful nest egg for their retirement because all the contributions grow tax-free, which means when you're 65 and you got a couple million dollars in there, you can take that money out, put it in your checking account, and not pay a dime in taxes on those profits.

8:57And you could be saying right now, Austin, I didn't max out my Roth IRA in 2024 because I couldn't afford to max it out. We have a solution for you. It's episode 70, finding an extra$2 ,000 a year to invest. We published that June 24 of 2024. Go back and listen to that one if you're new around here, where we help you find an extra couple thousand dollars in your budget every year to invest so that you can max out the Roth IRA. Those include shopping for new insurance policies, or maybe even switching your cell phone plan to visible wireless to save yourself$70,$80,$90 a month per phone line. So many people do not realize the beauty and the importance of the Roth IRA.

9:35I did a speaking engagement recently and I asked the entire audience, a small audience, it was like 30 people. I said, how many of you have a Roth IRA currently? The average age in the audience was 32 years old and the percentage of Roth IRA people was less than 20%. And I was shocked at this because for everyone listening and following along, or if you know someone who's working in their financial journey to try and become financially free, make sure you ask them and make sure you share this episode because it is so, so important to have that Roth IRA building wealth and be tax-free in retirement.

10:11It's so important. It's only$583 a month to max it out, and you don't have to max it out to still get the same benefits. We just like to make sure everyone understands the important of the Roth IRA. Now, the next point we want to make is tax refunds. If you were someone who received a big four, five, six,$7 ,000 tax refund in April, maybe you got that refund because of some crazy tax credits, or maybe you just had a child, or maybe something with your accountant that we're not privy to, but it might also be because your employer is withholding too much of your salary every year for taxes. This was happening to me when I was working at my nine to five job, I'd always get this tax refund of like two or$3 ,000.

10:53And I thought it was great because it was like this way for me to, you know, expect a little bit of a bonus in April. But in actuality, it was a bad idea because I would much rather have that two to$300 per month deposited to my checking account so that I can go out and invest it or go out and pay off debt or go out and, you know, save for something interesting and important to me rather than letting the government hang on to it for a whole year, you know, interest free for no reason. 2025, we're not doing that this year. We're going to call our HR department at our work and we're going to tell them to change our withholding down a little bit so that our paychecks are a couple hundred dollars more every single month.

11:31It's a tax form. I promise it's a lot easier than it sounds. It's really, you know, not that intimidating. Just give them a call. They'd be happy to do it. That's what happened to me. But this is a big one that people forget about in the new year, Robert, because for whatever reason, some people don't mind having a big tax refund, but it's just not a good idea. Yeah. Well, they're not looking at it the way you are. You're very, very good with your money and you're very good at automating your investments, which is what we're always preaching to everyone and trying to get them to do. And I think people by nature love seeing that lump sum in their checking account all of a sudden, and they just don't know what to do with it.

12:02And in this instance, I think most people are going to go blow that two, three,$4 ,000 right away on something they don't need to impress people they don't like, rather than having the extra$200,$300 in each paycheck, which then if they had their investments automated, would give them more money each month to grow their own wealth. So I totally agree with you on this 100%. And I think it's a great strategy that most people don't know about and certainly no one talks about. So I love that. And I hope everyone listening shares that hack with friends and family because it is a great strategy. All I'm saying, Robert, is$200 a month invested for 40 years is$2.3 million.

12:43So you're leaving millions of dollars on the table by getting these big refunds from the IRS come tax season, and then you're blowing it on something that doesn't make sense. Get your withholding straight, take that extra$200,$300 a month, and invest it in the markets and set yourself up to be rich, not look rich in 2025. And another hack that is really, really great for this episode is, and no one really talks about this either is freezing your credit. I've been doing it for years and years, and I'm sure it has saved me a lot of time and anguish because it is nearly impossible for someone to steal your identity.

13:17The good thing about freezing your credit report is it helps you from identity theft and opening fraudulent accounts is almost impossible. So it's really easy to do. You can do it online. If you have a card with your local bank, you can go to them online or in person and say, hey, I want to freeze my credit report. And basically what it does, it prevents someone from trying to open credit cards and other revolving credit type accounts under your name, because wherever they file for it, even if they have your personal information, the credit report is frozen. So the company they're trying to issue it with has to call you to get verification.

13:54You filled out the app. And so it really takes a big, big portion of that worry out of the equation. I love it. People don't talk about it enough. And it has saved me so many times over the years when people have tried to mess with my personal identity. Yeah, Robert, you know, it costs a lot of money is when someone steals your identity and they go out and they open up these credit cards, they get these auto loans or maybe these personal loans and whatever else. And now you got to go hunt it all down. You got to close the cards. I mean, it is a nightmare. Make sure that does not happen to you in 2025.

14:28Go and freeze your credit. It doesn't affect your credit score and it lasts until you lift the freeze from it itself and it is completely free. So here's a couple ways that you can go freeze your credit. Just a little FYI here, there are three major credit bureaus. What this means is like if someone was going to go open up a credit card in your name, it would go through one of these three. So if you freeze all three of them, then this won't happen to you. It's called Equifax, Experian, and TransUnion. You can visit Equifax's website and create a MyEquifax account to manage the freeze. You can go to Experian's freeze center on their website to place, remove, or temporarily lift a freeze on your credit report.

15:08Or you can go to the TransUnion service center to freeze your credit report on their website. This will take you 20 minutes and we promise you it's going to save you so much headache. And don't just do this for yourself, Do this for your spouse, anyone, even your kids, if they're over the age of 18, if they have credit cards or loans or anything out in their name, make sure you freeze their credit so that people can't go out and take it from them. This is a lifesaver, Robert. And if you're fearful of doing it on your own, you can check out companies like Aura and LifeLock and they'll do all the work for you.

15:40They give you monitoring right in an app. I don't do that because I felt confident enough in doing it myself. It took a couple phone calls and a couple emails, but there are companies that will handle it for you. This is not a paid endorsement. We're just trying to give you all the hacks to protect yourself because the bigger you become, the more wealthy you become, the more people are going to target you. And we just want to make sure as scams get more and more prevalent in society that you know how to work around them. I couldn't have said it better myself. Now, before we jump into our last point, I want to recap.

16:12We're using sinking funds in 2025. We're investing up to the match of our 401k in 2025. We're maxing out the Roth IRA in 2025. We're adjusting our withholdings with our salary so we can make those millions and invest that money versus getting that big tax refund in April. We're also going to go out and freeze our credits so people can't steal our identity. These are super easy, actionable things that anyone can do really just in a weekend if you kind of put your mind to it. It's pretty simple here. So now that we've recapped that, the last thing, the last big point is to actually make financial goals.

16:46We talk about, it feels good, Robert, to talk about cool things and it feels good to invest. It feels good to, you know, look and do a little bit of research, but you're not actually doing the thing by talking about the thing. You're not doing the thing by learning about the thing. You're not doing the thing by watching a podcast about the thing. You're doing the thing when you actually go do the thing. And the thing in this situation is actually making financial goals and building a plan around those goals that will allow you to hit them. So, Robert, I want you to walk through a couple of financial goals that I think is going to allow people to not only make a plan around them, but, you know, pretty easy to hit here.

17:24Yeah, I think it's really just all about sitting down with pen and pad, like you said, on a weekend and really just charting out what do you want? Are you trying to remodel a bathroom? Are you trying to get passive income? Are you trying to get over some proverbial hump? We always talk about the$100 ,000 base. And then from that, the blueprint is all provided for you. You could literally go through our podcast episodes, pick the ones that are relevant to your financial journey, and then exercise all the information that's in those episodes. So for me, one of the number one things I wanna see people do is be consistent.

18:01Too many people jump in, they get$1 ,000,$500, or they get excited about an investment, they invest and then they stop investing for months and years, then they jump in again. We wanna see you be automated as much as possible. Whether it's$50 a week,$100 a week,$1 ,000 a week, it does not matter, but we wanna see you automate those investments. And that starts by opening that public.com account, getting your bank account linked up to it. Get those automated investments started, whether it's in the ETFs we talk about, cryptos, whatever it is that works for your risk tolerance. That's number one.

18:35Number two, because we're talking about beginning of the year, is looking at and rebalancing the portfolios. I want to hear your take on this one for sure, because it's so important to look at your performance for the past year and then really break it down and say, okay, what worked, what didn't work, and what changes am I going to make for 2025? And then number three is auditing your honest budget. And like Austin mentioned earlier, That means everything to do with in your budget, the honest budget is having the doggy treats in there, having the nail salon appointments in there, having the new golf clubs.

19:12We all know many of you bought a new putter or a new driver this year and you forget to put that in your budget. All of this comes down to having a real budget of what you actually spend so you can automate those investments and put yourself in a better position. I'm right there with you, Robert. And back to the rebalancing of the portfolio, just want to, again, encourage people to listen to episode 91, how to conduct a portfolio performance review. It was an absolute fan favorite. So go listen to that if you haven't already. It gives you a little bit of instruction step by step on how to approach rebalancing.

19:42But at the end of the day, Robert hit the nail on the head. You want to make sure that you are performing up next to the benchmarks like the S &P 500, like the Dow Jones, like the NASDAQ, things like that. And then finally, to Robert's point about auditing your honest budget. I mean, that's the entire reason we do this is to find that 15 to 25 % margin every month in your budget so that you can invest. And again, Robert, we're not investing for fun. We're investing because we don't want to trade time for money anymore. We're investing so that one day our portfolio can be so big that it can supplement our lifestyle in perpetuity.

20:20So don't feel like we're telling you to do these things with no end goal in sight. 2025, it's a new year. It's time to start making these new financial goals if that's getting $40 ,000 invested in the markets this year. I know that was a big one for some of my friends for 2024 to get$40 ,000 invested. We talk about building the base. Maybe this is the year, where some of our listeners hit that$100 ,000 base built, which means they're invested all that money into index funds and ETFs that we talk about. Or maybe this is the year where someone buys their first house or someone's able to go out and buy their first rental property.

20:53Maybe this is the year that someone's able to finally pay off that high interest credit card debt. No matter what your financial goal is, auditing your honest budget to understand where that margin is every single month, automating your investments, which means you're deploying that margin into the markets, and then rebalancing that portfolio on a semi-annual or annual basis will allow you to hit those goals year after year after year. We are getting rich in 2025. 2025 is the year you get rich. You're actually going to do it. You're going to sit down and you're going to do these six things that Robert and I just laid out.

21:25And I want to also just like linger on this kind of mindset topic because we do talk about, you know, finance, business and mindset here. And this is the mindset of like making these massive improvements, Robert, to your life. If that's relationally, or if that's physically, you know, you're working out a lot. Maybe it's emotionally talking to a counselor, or maybe again, financially, what we're just talking about here, massive improvements to your life. Those things do not happen overnight or in this one big swoop. They happen because you do small things consistently over a long period of time, small things that most people take for granted.

22:04Average is broke. Average is sad. Average is credit card debt. Average is all these things that we don't want to be. I don't want to be average. But by doing what seems average, right, by contributing to my Roth IRA or by following a budget or by freezing my credit or by using a sinking fund, what seems like a normal average rudimentary approach, taking these small steps toward financial freedom every day, every week, every month, every year will allow me as an investor to reach it much faster than my peers, even if they don't reach it at all, because I am doing these small things every day and they compound, right?

22:42How could I compound days on themselves so that I can have this big, and we're talking about compound interest, right? You do a couple things very completely and smartly every single day for weeks, months, and years. That's a lot of compounding, Robert. This is probably one of the most important conversations we've had this year for our listeners. And it really does come down to the small, consistent things you do over a long period of time make all the difference because of compounding in your life, not just your financial life, but your entire life. Quality habits make you a better person, make you healthier, make you be more financially sound.

23:18And I love this conversation and I hope everyone finds five people to share this episode with because it's so, so important. These little things compounding over time are what give you the quality of life that everyone dreams of, but might think that it's not for them. And guess what? It is for you if you follow along and take action on these items. And to that point, if you are new around here and someone sent you this episode, and this is the first time you're seeing Robert and myself, how's it going? Glad you joined us. Can't wait to have you stick around in 2025. We talk about investing, personal finance, entrepreneurship mindset all the time.

23:55And yeah, this was a great episode, Robert. I'm super proud of the stuff we talked about here because it's not crazy things that are really hard to understand. These are action items. These are things that people can write down to your point and get done on a Saturday or a Sunday. Yeah. None of this is rocket science and investing and building wealth and building an authentic, meaningful life is not rocket science. Most people just need a little bit of a nudge and that's what we're here for. Give you the playbook, nudge you every single week in the community or the podcast and really help you figure it out for yourself because as you always say, Austin, personal finance is personal and that's why I love that I get to wake up every day and do this with you because we are changing lives all around the world and it's just the most fulfilling job I could ever have.