Q&A: Buying a Second Home, Lofty Career Goals, & How to Handle Cash

0:00Robert Croak:When you want your spring break to feel like... And your kid's pool day to feel like... And your hotel bed to feel like... Ooh, and room service to feel like... Because at Hilton, hospitality feels like...

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1:10Robert Croak:You can ask us questions on Instagram at richhabitspodcast in the DMs or you can email us your questions at richhabitspodcast at gmail.com. We've got six awesome questions. Actually, all of these are from Instagram because I feel like we haven't give Instagram as much love as we should lately. So all these questions are coming from Instagram. If you've not yet followed our Instagram account or sent us a question, please consider doing so. Again, that is Rich Habits Podcast.

1:36Austin Hankwitz:Definitely. I love these episodes. And it is fun getting questions out of Instagram because we get them all over the place. We get them in emails. We get them at the Rich Habits Instagram. We get them in Spotify. So these episodes have really grown so much. And I love having the audience right there with us, answering the tough questions and just helping people because personal finance is personal and everyone has different financial issues. So it's awesome to get these questions.

2:03Robert Croak:I agree. I feel like our demographic for our show is so diverse. We've got people that are in the United States, some people that are out of the United States, some people that are in their 50s, 60s and 70s. I get DMs from people that are in their teens and early 20s. I mean, it is all over the place, and we're just so grateful that we have so much support from such an incredible audience. So, Robert, let's jump into the episode. But before we answer our first question, got to 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 generated assets, which allow you to turn any idea into an investable index using artificial intelligence.

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3:27Austin Hankwitz:We love public and paid for by public investing. Full disclosure in the podcast description. So Austin, let's get into it.

3:35Robert Croak:So our first question comes from Chris C on Instagram. This is a really good one. Chris says, hey guys, I love your podcast. Always clear and insightful advice for your listeners. Without going into too much depth about my personal finances, my wife and I, we have two daughters, dream of owning a vacation home in the next three to four years. I'm 37 years old and starting to do pretty well financially. We're maxing out our 401ks and contributing heavily to index funds and some cryptocurrency. As a general rule of thumb, what financial markers or milestones would you like to see for a family or anyone prior to purchasing a second home?

4:12Robert Croak:I know it's a broad question with many factors involved, but any rough idea would be really insightful. Robert, you want to kick this one off?

4:19Austin Hankwitz:Yeah, I would like to kick this off. This is a great question, and it really brings up the thought, don't put the cart ahead of the horse. So I would say just as a general rule in this situation with your ages, I would want to see you have at least$250K not to be touched by the purchase of this second home. Up and running and working in all the accounts that we talk about with the 401Ks, the traditional bridge account, and then whatever else you're doing to diversify into cryptocurrency or precious metals or whatever it may be. because I would hate for you to see maybe you have$150 ,000 saved and invested between all those accounts, and then you take 50 of it out or 100 of it out to go buy the second home.

4:59Austin Hankwitz:If you really have dreams of the second home, I would just try to delay them enough to where you can set aside and build a nest egg specifically for the second home without touching the 401ks or going into any consumer debt to buy the furniture for the second home or do any of that. That would be my take. And I think for me, I would like to see that bottom line, that threshold be somewhere between$250 ,000 and$500 ,000 of saved and invested cash flow that is building for your future before you go buy that dream home.

5:34Robert Croak:I think it's a great start. My framework is as follows. Whenever we go out and earn money and start investing that money, we are investing that money so that it can grow so much that our portfolio income can completely offset our monthly expenses. Therefore, we are financially free and have, you know, the opportunity to choose not to work. So that's like broad framework, easy. We all know why we're investing now. So to go buy a second home, you essentially are having to weigh the opportunity cost of investing more money on a monthly basis or using the money you would have invested to pay a mortgage on a second home, which is totally fine to go pay that mortgage on a second home.

6:15Robert Croak:Just make sure that you're still investing 15 to 20 percent of that take home pay toward your retirement. So that's going to be my general rule of thumb. If you can afford a mortgage on a second home while also investing 15 % to 25 % of your take-home pay, that includes 401k, that includes Roth IRA, that includes HSA, things of that nature. Things are going to grow in your retirement accounts. If 15 % to 20 % of your monthly take-home pay is getting invested just fine and you still have money left over to afford a mortgage on a second home, rock and roll, have fun. You deserve it. you're rich, right?

6:50Robert Croak:You figured it out. Now, there's two ways that you can afford that second mortgage. The first way is you have such a large down payment on that mortgage that the monthly payment of it is very small, or you just make a ton of money. Either way, it seems like you're doing very well financially. So maybe it's the second, maybe it's a mix of the both. But that is my like, I would not buy a second home at the expense of like pulling back on my retirement investments. Like that's, that's the black and white line for me there, right? I want to make sure I'm still doing 15 to 20 % of my take-home pays getting invested.

7:21Robert Croak:You mentioned you're maxing out the 401ks, index funds, Bitcoin, rock and roll that way. If you can afford 15 to 20%, and that's a very consistent, easy marker to hit every single month while still being able to afford a second mortgage, this dream home mortgage, then rock and roll. You deserve it. Congratulations, Chris.

7:39Austin Hankwitz:I think that's an incredible breakdown. And I really like the tactical part of you're not buying the second home in lieu of investing that 15 or 20 % every single month. So I really love how you put it as an either or, because you've got to keep investing. And if you have money on top of it, and you really want the dream home, then I really like that breakdown.

7:58Robert Croak:Yeah, I think, you know, it kind of reminds us of the freedom number concept we've talked about a lot, which is like, how much money do you need invested by a specific age, growing at eight and a half, nine and a half percent per year adjusted for inflation to have a two or three million dollar nest egg by the time you're 65. And for some people, you know, this is called, I think, coast fire, where they like invest a lot of money, you know, by their 30s or 40s, call it 500, 700, a million dollars. And they stop investing completely because they know that money is going to double every seven years.

8:31Robert Croak:So they'll have millions in retirement. Maybe Chris and his family are doing a coast fire thing. Maybe they, to your point, Robert, have hundreds, if not, you know, well over a million invested now when they're ready to kind of maybe take the gas off. Like there's a lot of different ways to think about it. But at the end of the day, Chris, I would not stop investing. I think that's the biggest key to long term success from a wealth building perspective.

8:53Austin Hankwitz:And I want to add one more thing to that, because with talking to my doctors a lot lately and doing a lot of research on longevity, we are going to live longer with all of the modern medicines and technologies. So everyone listening to this podcast, please realize what worked 20, 30 years ago isn't going to work 20, 30 years from now. So you really want to get ahead of this and make sure you're building up those retirement accounts. Because assuming if we live 20, 30 years longer than we normally would in the past, we have to prepare for that and really adjust our savings rates and investment rates to prepare better for the future.

9:30Robert Croak:So our next question comes from Alice S. on Instagram. Alice says, Hi, Robert Austin. My name is Alice. I moved to the U.S. two years ago, and I'm 27 years old. I have$30 ,000 in savings and I work as an office administrator earning$3 ,000 per month. After rent and groceries, I'm able to save about$1 ,500 every month. I'd really like your guidance on where to start investing my$30 ,000 for long-term growth. I don't have any debt and my employer also offers a 401k. I recently completed my associate's degree and plan to attend university in fall of 2026. Before moving to the United States, I earned a bachelor's degree and have five years of accounting experience in my home country.

10:10Robert Croak:I'm currently rebuilding my career here with the goal of returning to accounting and long term I hope to become a CFO. I'd really appreciate any advice or direction you can share. Thank you for the great content. You've been a big inspiration. Thank you so much for the kind words Alice. So here's my perspective. You want to go be a CFO. That means that you are accounting. That is your thing. You're a CPA. You've been doing accounting for several years if not decades to go be a CFO. You mentioned you've got a a associate's degree and you want to go back to school in fall of 2026. You also mentioned you have a bachelor's degree and you have five years of accounting experience.

10:46Robert Croak:So I'm thinking you didn't mention this, but I'm assuming you're going for like a Mac program, a master's in accounting program. We had something like that at the University of Tennessee. I think it's like an 18 month program. So I call it like three or four semesters there. So maybe that's what you're doing here. So you can go become a CPA. I think it's a great idea. I hope that's what you're doing. Maybe I hope you're not just going back to school to go back to school. You asked about how to invest the$30 ,000, max out the Roth IRA, index funds and ETFs, start up the bridge account on public.com, index funds and ETFs.

11:15Robert Croak:But more specifically, I would also ensure you've got about$10 ,000 to $15 ,000 of this$30 ,000 sitting in an emergency fund because with school, maybe you got to go buy some coursework. Maybe there's something you got to go on a weird trip for. There's things that could pop up. And the last thing we want you to do, Alice, is to have to swipe that credit card and go into high interest debt when you have the cash right here. It'd be a really cool situation if in 18 months from now you have your master's degree in accounting. You can go work at a accounting firm. After a short period of time, you get your certified public accountant, a CPA designation.

11:49Robert Croak:Then you can start making 80, 90, 100, 150 ,000 a year. Work your way up from there to be a CFO. I think that's sort of where you're going. But if you are not going back for like a Mac program, really encourage you, and we talked about this recently on the show, to weigh your options of what you're going back to school for and how much debt you're going into, and if that job's still going to be here in five or 10 years with the rise of AI. I would argue that CPAs and accountants and tax strategists are going to be needed for a very long time. So I think that's a fine career. I still pay my accountant a whole lot of money.

12:21Robert Croak:AI hasn't replaced him yet, although I'm sure his business is turbocharged with AI, which is really cool. But just make sure if you are not going back for accounting for some reason here, make sure whatever you're going back for, you're being very, very intentional with what you're studying.

12:35Austin Hankwitz:The only thing I can really add to that, Austin, that was a really thorough breakdown would be I love that she's thinking long term. I want to become a CFO because that is a long term strategy. You're not going to get this degree, have two years experience as a CPA and get a CFO job. So you might have to take a couple positions within companies throughout the next five or 10 years to build up that resume, show people what you can do, and really have something to look back at to build up to that CFO role. So I really like how you're thinking long term and you're putting all the building blocks in place.

13:09Austin Hankwitz:And like Austin said, I think the$30 ,000, exactly what he laid out, is a perfect plan.

13:14Robert Croak:Also, you moved to the United States. Welcome. So cool that you're here and you're crushing it and we're rooting for you. That's awesome. Congratulations. And it's awesome how much money you're saving every month to$1 ,500. That's incredible. So our next question comes from Jace L. Jace says, hi, my name's Jace. I'm 18 years old and was just in a car accident. And I'm going to receive$750 ,000 to a million for my pain and suffering. What would you do to guarantee future success? Robert, you want to start this one off?

13:42Austin Hankwitz:I would love to start this one off. I would say the first thing, Jace L., would be don't tell everyone. Please, please don't tell your friends, your family, your cousins. Don't tell everyone you have all this money because they're going to find a way to relieve you of it. They're going to need loans. They're going to want you to invest in a business. They're going to do all these things. At 18 years old, even if you invest 80 % of it and do stupid things with the other 20%, you will be a multi, multimillionaire by the time you're 55 or 60 years old if you do it right. What does that look like?

14:17Austin Hankwitz:Well, first and foremost, with that amount of money, you're going to want to sit down with a financial advisor, someone that can really lay the groundwork. You're going to want to get your Roth IRA set up right away, your traditional brokerage account set up right away. You're going to want to get a high-yield savings account for your emergency fund, and you're going to keep your mouth shut. Because the problem is, if you don't have a plan with this money, you're going to leak it away. You're going to buy a new car. Then you're going to want to jet ski. Then in two years, you're going to go, oh, I'm going to go invest in this duplex with Billy.

14:45Austin Hankwitz:Don't do those things. Put this money away and pretend it doesn't exist. Do not level up your lifestyle every step of the way, because if you do, in five to 10 years, this money will be down to nothing, and you'll regret it because it's really hard in life to ever have$1 million all at once. And if you play it right at 18 years old, you'll be a very wealthy person later on if you do nothing else right the rest of your career.

15:10Robert Croak:Yeah, that's incredible advice, Robert. I think, and maybe you disagree, but I really think this is important. This might be the perfect time where it's okay to pay a 1 % to 1.5 % management fee to a financial advisor to really keep your head straight. We always talk about, oh, just invest the money on your own. You don't have to go pay a fee to an advisor, just put it in the S &P 500, which is true, but you're 18 years old. I'm not going to assume that you have a background in finance. You understand the stock market. You're young. I remember when I was 18, like if you gave me a million dollars, oh my goodness, man, I'd be gone in a heartbeat.

15:48Robert Croak:So like, Jace, this is a wonderful opportunity to find a financial advisor that's going to take you under their wing and really teach you how to build wealth with this money. They're going to put you in index funds like the S &P 500, the NASDAQ, the Dow Jones Industrial Average. You might hear some chatter about international, maybe a little bit of chatter about bonds as well. That's all good. That's all fine. Just literally your goal here is to not lose the money by the time you're 30. because to Robert's point, your buddy Billy is going to hit you up and say, dude, let's go buy a car wash. Or dude, I just saw you could get it.

16:25Robert Croak:They got these vape ATMs now at these bars and they're making all this money. I just saw this guy make a video about it. They're making 60K a month. Let's go spend 100 grand. Forget it. Don't do any of that stuff. Jace, you will be so, so rich in your 30s, 40s, 50s, and 60s if you play your cards right here. And this is one of those scenarios where you need to have experts in your corner that are gonna be able to teach you and guide you. And those experts do charge a fee, but that's okay in this situation, in my opinion. It's okay to pay a small fee knowing they're gonna keep all your money if you do what they say versus lose a majority of it if the emotions of a teenager take over.

17:03Robert Croak:So that's my big takeaway. I'm really sorry to hear about the car accident you were in. I could not imagine how much pain and suffering you might be going through in order to receive so much money. So again, I'm really sorry I had to go through that. But hopefully some of this money is going to help you get around that and move in the right direction.

17:17Austin Hankwitz:I love that takeaway, Austin. And I think it's smart because, as I stated, take the yoke off of your brain, your shoulders, the stress of that much money, and put it in the hands of a trusted advisor. And I want to tell one quick story because it is very relative. My girlfriend, many, many years ago, this would have been probably 35 years ago, she got in a car accident. She received$45 ,000 in her settlement, and we went and met with Tim Croak from Croak Capital. And he said, don't touch this money. Don't do anything dumb with it. Do this, and by the time you retire, you'll have a million bucks.

17:54Austin Hankwitz:She went and bought a Cordoba convertible, spent all the money on this car. It lasted about five years, and it was a very depreciating asset and worth nothing. And she never invested any of the money. So don't do that. For anyone getting these big chunks of cash if something terrible happens, realize it that at least the money, the pain and suffering can set you up for future success if you do the right things. So, Jace, we wish you the best. And we're sorry you went through that, but so happy. And hopefully you listen to what we're saying.

18:24Robert Croak:Yeah, I want to linger on this a bit longer. Money magnifies people. If you were a jerk, Jace, your whole life, now that you have this much money, you're going to be even a bigger jerk. If you were a very nice person and you are a nice person, all this money will make you even nicer. But it also helps you understand the motives of people around you. And sometimes those people that show you who they really are are your family. I'm not saying that your cousin or your aunts and uncles or your parents or your brothers or sisters or anyone like that are bad people. But this is your money. This is not their money.