Q&A: How to Find Old 401(k)s, Driving a $57K Truck, & Graduating w/ $250K in Student Loan Debt

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0:40Like tea time you. Or this tea time you. Or even this tea time you. So did you hear about Dave? Or even tea time, tea time, tea time you. So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great. Hey, everyone, and welcome back to the Rich Habits Podcast, a top 10 business podcast on Spotify. My name is Austin Hankwitz. I'm joined by my co-host Robert Croak. And this episode is our question and answer edition, which means we take your questions from inside of our Rich Habits Network, from our email address, richhabitspodcast at gmail.com, or even via Instagram DM at richhabitspodcast.

1:23We've got a ton of really awesome questions. You guys are just eating up these Q &A episodes every single week, and we could not be more excited to be here to deliver another banger episode for you all on an awesome Thursday. Yes, but just a quick heads up. Interest rates are falling, but you can still lock in a 6 % or higher yield with a bond account at public.com. That's a pretty big deal because when rates drop, so can the interest you earn on your investment. A bond account from public.com allows you to lock in a 6 % or higher yield with a diversified portfolio of high yield and investment grade corporate bonds.

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2:39All investing involves risk. Visit public.com slash disclosures slash bond slash account for more information. All right, Robert, with that being said, I'm excited to jump into our first question from inside of the Rich Habits Network, and this one's coming from Leslie K. Leslie says, do you guys have any perspective on creating wealth while being smart about vacations at the same time? For example, have you ever thought about buying a vacation home and then renting it out when you're not using it? What are some ways that I can combine vacations and business travel? Robert, you're the real estate Airbnb kind of expert here.

3:12So I'll let you kick this one off. Leslie, great question. And just always understand that taxes in these situations are nuanced. You're going to hear a lot of fake gurus out there. They're going to tell you, you can just do it. You can write it all off. Don't do that. Make sure you understand the tax laws as it relates to your situation. Because we always say personal finance is personal. And I want to make sure you're careful. Where would I start? Pick an area. You have to understand your buy box. Number one, what are you looking to buy? What is the cost? What is the size? What market is it in?

3:46That is your buy box. Number two, figure out your funding. Are you personally funding this with cash? Are you using a special loan? Are you getting a conventional mortgage? What are you doing to purchase this vehicle? Because again, being a vacation rental, you need to define in your buy box what it is. That's very important. And then thirdly, I would say is make sure you use good tools because if you're buying a property, it's 500, 600, a million dollars. You want to make sure that you're using good tools. So one of the research tools we use is AirDNA. It's a good way to help you find the cops, the competitive numbers of other properties in that area similar to the one you're looking at.

4:26So just make sure you set yourself up by understanding your buy box, your funding, because a lot of people are like, oh, well, I'm, you know, approved for one point two million. That doesn't mean you need to spend the whole thing. Just make sure you understand those two things and then use really good tools. Now, once you have the property, then you're going to really want to dig in and do your research and make sure you understand all of the hacks to make it as profitable and passive as possible. So that's going to mean cameras, ring doorbells. It's going to mean you're going to need a good property manager unless you're going to do it yourself.

4:59You're going to want to make sure that you have a good cleaning crew that's handled and that is priced accordingly. All of these things are going to come into play because if you're doing short-term rental on this while you're not using it, there's going to be a lot of upkeep and a lot of daily maintenance to operate the business. And make sure you understand that before you get into it. I don't exactly have a perspective on this, but my friend Jacob bought a Airbnb cabin in the woods of, I think, Sevierville, Gatlinburg, Tennessee, stuff like that. And he doesn't exactly use it as a way to like vacation while also make money via Airbnb.

5:35He bought it specifically for Airbnb. I don't even think he vacations that much over there. But I know that some of the trials and tribulations that he went through in this process was, one, finding that good property manager. I think he's on property manager number three right now. And something I remember him sharing with me was that the struggle to find the property manager is too many people, in his experience, give the property manager autonomy over pricing, which then in his situation, they would like do surge pricing and then like lower the pricing, like all these other different things to try and like attract new people to stay there.

6:08And sometimes they'd lower the pricing so much where Jacob would lose money that month on the Airbnb. And so just, again, I don't know much about this. I'm not doing this. I don't have any perspective. But Leslie, as you are sort of going through the reps and figuring this out, make sure that you are taking notes and taking action as it relates to kind of the trials and tribulations that both Robert's gone through, what I've seen my friends gone through. So when you do actually execute upon these ideas, not only do you have all the notes and everything you need to do it correctly, but you're also maybe surrounding yourself and getting plugged into people in your community or people in the communities that you're buying this property in that are also sort of doing this vacation rental arbitrage investment idea that you've kind of come up with here.

6:50I guess I'm trying to get at is it takes a lot of research, a lot of patience, and don't go into this blindly, right? Because that's how people lose 50, 80, 100, $150 ,000. I think they can make it rich quick on Airbnb. Also, with that being said, Leslie, want to remind you, this is for you a way to do vacation and maybe make a little bit of money. This is not just make money. So think about it that way, right? Balance the sort of ideology between I want to buy this so that I can go on vacation as much as I can. I can enjoy this property as my own. And maybe some of the money I make while renting it out can offset those expenses incurred.

7:28And I want to add one more thing that you sparked in my brain, and that is use a localized expert. So many of the fake gurus out there tell you you can do it all from the web and you don't have to visit the property. You don't ever have to go. that's ridiculous. Use a localized expert because they will know what is going on with the area regulations. Is there anything in the works that they're gonna take away short-term rental rights in this area? Is the HOA getting ready to change the rules the next quarter to where it's not allowed anymore? You need to be ahead of this. So you don't buy something, start enjoying the benefits of it, and then it gets taken away.

8:04And then you either have to sell it or turn it into a long-term rental in which then it might not pencil out numbers-wise. So just make sure you do your research. If you're not sure about something and you're part of the Rich Habits Network, DM me, put a question in the Q &A, and we'll make sure to help you. Our next question comes from Vaughn P. Vaughn says, hey everyone, how's it going? I could use some guidance on a challenge I'm facing with my old 401k accounts. Over the years, I've had a bit of history of job hopping, and now I'm trying to track down and access the 401ks from my previous employers.

8:36I'm not sure the best way to backtrack through these jobs and connect with the right people or institutions to get this all sorted out. Has anyone ever had experience with tracking down multiple old 401ks? If so, what steps did you take and are there any tools or resources that have helped you streamline the process? Any advice or tips would be very much appreciated. So, Vaughn, I only have one instance where I had to go find an old 401k. I worked for a healthcare company before I became a podcaster with Robert here. and I worked there for about three years. I contributed to my 401k while I was working there, so I obviously knew where the money was and how to get it and transfer it into my Roth.

9:15However, I'm doing a little bit of Google searching here for you, Vaughn, and there's a couple tips that have popped up for me that I think you could really, really use. The first one being, search the Form 5500 directory. So all employers that provide 401k plans to their employees are required to fill out a Form 5500 every year with a DOL. So a simple search of the DOL's 5500 database may be able to provide you with additional contact information. And then the second tip, which was pretty interesting, and this could be especially easy if you use things like TurboTax or you kind of keep your taxes with you, is just look at your old W-2 forms, your tax forms, right?

9:57Because in your tax form, it's going to say, did you contribute to a 401k plan, right? And did you take that money and use it to offset your taxable income. If that's the case, you now know, one, you contributed to a 401k, and two, what employer you worked at when you were contributing there. And so if you're able to pull up those different tax forms in the past, Vaughn, that could be a really great place to start. If you use TurboTax, for example, I know they've got a ton of sort of directories and sort of a library there of all your tax forms over the years, at least that's what it is for me.

10:27So it should be a very, very easy search. Yeah, the only thing I have to add to that, Vaughn, is you can go to the National Registry of Unclaimed Benefits. You can go in there, you can type in your social security number and it'll pop up in your state if you have anything that's outstanding that you haven't collected yet or migrated yet. And then there's another way that's an app that's out there that I looked up and it's called Meat Beagle, just like the dog. And that is another one. It's a paid service, but I'm sure the costs are pretty nominal considering what they do. Those are two ways that I know of.

11:00Meat Beagle I've never used, but the unclaimed search I have done and it has worked very, very well for myself and clients of mine. That's all I can really add to this one. To the point of the unclaimed benefits, my dad actually went to that website and like typed in his information and he was given like$850 because something to do with a refund on some old like car insurance he never picked up. I don't know. So, I mean, I think I even have like, you know, maybe 30 or 40 bucks in there. I haven't gone through the process of claiming it because it is kind of a big process. But if you've not yet tried to claim old benefits or, you know, claim some money that's due to you, you should definitely, if you're Vaughn or not listening right now, go check out these websites because it is pretty cool.

11:41It's like a little treasure hunt. Yeah. When my mother passed away, I was told about it through my lawyer and this was years and years ago. I went there and I think I got like$2 ,800 in things that were expired, that were just laying around that she never collected. So it was quite interesting. It's a really great resource. So our next question comes from Chuck C. Chuck says, Hi, Austin and Robert. I have a question that I have been thinking about for a long time, and I still can't make a decision. I'd love to hear your thoughts. My parents gave me all of their savings of$700 ,000 and let me invest it for them.

12:14They are retired and have yearly income of$17 ,000. They don't have any debt and currently live in their owned house, which is worth$200 ,000. However, they do want to live closer to me as I live in California, but houses here are very expensive, so it's impossible to swap their current house for one in California. So here are a couple options that we have been considering. One, we could rent a place, which would be$2 ,500 to$3 ,000 a month in rent. I could pay the rent while investing the$700 ,000 into conservative and cash flow options like SPYI. Two, I could buy a property with cash, but that would use all of the$700 ,000.

12:50I would also need to pay about$20 ,000 a year for insurance, property taxes, and upkeep. Or option number three, we could buy the property with a mortgage. However, that would eat into some of the$700 ,000 as the down payment, but I could invest the delta and make a little bit of cash flow to help pay for some of that. I think option one is the best from a cash flow perspective, but would love to hear your thoughts. Robert, you want to kick this one off? Yeah, I think 100%, Chuck, it's number one for the win. I mean, just doing basic math, if you invest the 700K, get them a nice place for$2 ,500 to$3 ,000, the$700 ,000, let's say at 10 % is going to make you$70 ,000 a year.

13:31And even at$3 ,000 a month, you're at$36 ,000 a year in rent. So you're going to be building and building. Now, you're not going to be able to have them live off the 4 % rule. that's for sure but that's okay because i would hate to see you tie up all of that money in a property buying at the top of the market potentially where you are in california and then find yourself stuck in that situation i like number one the best i think for the long term you know if the markets are ripping and you make 12 14 a year you're using you know some of that money to pay for their expenses i think it's better than you coming out of pocket or worse using all of the money and paying cash for a house because then you have zero wiggle room because all the cash is tied up.

14:16And the only way to get it is either sell the house or do a HELOC. I don't like those options in this situation. So for me, it's number one for the win. I agree. And before I even think about, you know, selling a$200 ,000 house, which you didn't mention what you do with that money. So we're really talking about a potential$900 ,000 here because I don't even have a house and then also live near you guys. So before you do any of that, though, really want to encourage you or they want to remind you, plane tickets are pretty affordable. They could keep the$200 ,000 house. You can have your parents come out and fly out every other week if you wanted to, every single week if you wanted to, and you would still be saving a lot of money here.

14:53You have the whole$700 ,000 invested, right? You can pay for some of the plane tickets with that interest earned there. And there's a ton of different ways that you could arrange this, where they don't live in California, but they're still seeing the kids, their grandkids, they're hanging out with you guys. They're staying away for three or four or five days at a time. Just don't forget that plane tickets exist. Now, if they really do want to live in California with you, I agree with Robert here. I think option one's the best way to go. Of course, no one wants to have a rent payment in retirement.

15:24I get that because your parents right now have a$200 ,000 sort of house that's paid for. So they don't have these unexpected increases in rent or little fines here and there that they could expect to incur whenever they are renting, but they also now aren't close to you with that house. So being able to move close to you, have rent of$2 ,500, $3 ,000, maybe a little bit more, have them be in a nice area, that could be a really advantageous way to hang out for the next couple years. And maybe they do keep the$200 ,000 house and rent for a little bit, and maybe they move back eventually. Do they really want to be in California till they die.

16:02I don't know what's going on here, but I do know that spending$700 ,000 in cash all on a house while also having to come up with 20 grand a year with property taxes and things like that is not a very good idea. I really agree here that renting a place is probably the best move. And then perhaps eventually if there's a world where they could get a condo or maybe there's a small area somewhere in California that they're able to just buy or who knows, right? That could be a long-term goal, but it seems like renting right now is the best option. And I have one more wrinkle to put into this. We don't know what your current living situation is, but California has become very favorable to ADUs.

16:40And so keep in mind, you might live in a jurisdiction, and if your yard is big enough, or you could move and add an ADU for your parents, then you would be in a really really great situation because you could probably build the adu and get it all up to code and beautiful for your parents for about 200k in california and then they'd be right in your side yard but while not being in your primary home this could be another great opportunity for anyone that's looking to have like a mother-in-law suite or the parents to live with them so take a look at additional dwelling units because it could be a great option for you in your area.

17:19So our next question comes from Jen. Jen says, Hey, Austin and Robert, I had a meeting with a financial planner and they told me it's more important to pay off my student loans than buy a house right now. I owe$108 ,000 on my student loans and I make$80 ,000 a year. My partner makes$55 ,000 a year. I feel like my student loans will never get paid off fast. I want to know your opinion and advice on this for your next podcast episode. Also, thank you all so much for providing me with so much guidance. I'm a first generation American and my father had a hard time trusting any government due to what he went through.

17:50He always kept money in cash. I've been translating your podcast for him. He has now opened a high yield savings account and is investing. He is incredibly grateful for you both. Well, Jen, that is so cool to hear for your dad. Thank you so much for translating and just humbled that people like you exist to share our podcast with anyone who's interested in learning about personal finance and investing. So as it relates to paying off the student loans before you buy a house. Oh gosh, that's a tough one, right? So let's kind of take a step back. Robert and I both agree that you should not pay off your student loans before you start investing.

18:25Investing is different than buying a house, don't get me wrong, but I'm a full-fledged believer that having your 30, 40, 50, 100, 150 ,000 in student loans, it's okay to pay on those while also investing in your Roth IRA because chances are that student loan is at 4%, 5 % interest. And that Roth IRA, this year, it's up 20%. Last year, it was up 28%. I mean, 10, 12, 15 % is what to expect in the markets. So it's totally cool in Robert and I's opinion to invest while paying off your student loans. Now, buying a house, in my opinion, is a little bit of a different story. Because I think that two things one, renting right now is cheaper than the monthly mortgage rate.

19:06We know this, that's a fact, you got a red fin, you go to whatever the data is the average rent right now in America is like$1 ,850,$1 ,900. The average mortgage in America right now is about$2 ,100,$2 ,200. So renting right now is cheaper than paying a mortgage. And when it comes to buying a house and getting that mortgage, you have to have that 5, 10, 15, 20 % down payment. And if the median house right now, let's call it as$400 ,000, we're talking about a 40, 50, 60,$80 ,000 down payment. I would much rather see you take 40, 60, 80,$108 ,000 and not put that down on a house, but free yourself of the student loan payments, which right now I'd assume are about$1 ,100 to$1 ,200 a month of payments for you.

19:47And then could you imagine how much extra wealth you could build now that you have an extra$1 ,200 a month to invest? So if you have to have the student loans paid off, which we all know is going to be the case, I would like to see it paid off in my opinion before you go buy a house, but not before you start investing. You should start investing. Do not delay that. Every dollar that you can invest in your 20s is going to 4, 5, 6, 7x by retirement age at 65. And then finally here, what I want to encourage you to check out is the save plan. Robert and I were invited to the White House back in March to learn more about the Biden-Harris administration's save plan.

20:25It's a really interesting way to go about a little bit of student loan relief in the beginning if you feel like you're drowning right now. But in order, what I want you to do is build up a$5 ,000 emergency fund. Once you've done that, I want you to start investing into your Roth IRA. You don't have to max it out every year, but I'd like to see that. And then if you want to put any extra cash now to these student loans, I would do it that way. Unfortunately, it seems like your student loans are going to be around for a while at$108 ,000. But the good news is you and your partner make $135 ,000 a year, which means you could probably pay this off in three or four years if you're pretty steadfast about it.

21:02I'm going to go a little bit different route, but I think that's a mic drop moment for Austin, but I'm going to add a little bit more of color to this. So Jen, here's what I would tell the financial advisor. Don't do either. I don't want you to pay off the student loans and I don't want you to buy a house. I think they're both mistakes right now. Here's why. You've got an election coming up. You've got the save plan that's in the works. There's other talks of loan forgiveness for college students. All of that is kind of the ace in the hole that might come and you might get relief on this$108 ,000 debt.

21:33Once you pay it, I doubt you'll ever get it back because it's already paid off and there's not going to be a mechanism to give you your money back. It just wouldn't work. So in my opinion, and I agree 100 % with Austin, I would get your base built. That's all we can ever tell you. You're young. Get the base built so your money is working hard for you. You guys are good earners, so you don't have to worry about digging and scratching to make these payments. And like Austin alluded to, the markets are at 15, 20 % right now, whereas these student loans are at 5, 6%, probably, maybe 4. So that positive arbitrage of your money should go into your pocket and not Uncle Sam's.

22:11I promise you, you'll thank us a few years down the road. You want to get that base built so you've got the emergency fund and you get going and keep making the payments on the student loans. maybe add some additional payments but don't pay them off and let time and compound interest do its job for you i promise you you'll be in a lot better shape 10 20 years down the road and then the last thing i would say is if you're going to still look at a property maybe you're willing to put it off for one or two years so you can get that base built up look at buying a duplex a triplex or a quadplex have you guys house hacked for like two years because then you'll have that property up and running, making you money and giving you tax benefits all while you're still getting into a place that you own without sinking all of your capital into a primary home.

23:02And you can do this with the Fannie Mae 5 % down mortgage as long as you live in it. And that would be a great way for you to keep your money working for you and only put 5 % down on a property. I think that's a great plan. And the only thing I want to add is to set the expectation that that building your$100 ,000 base on average takes seven and a half years. So don't feel bad if you don't have 100K invested in two years like Robert alluded to. We know you guys are earning a lot of money, but give yourself some slack. You're in your 20s, go on vacation, enjoy yourself. There's a lot to be excited about.

23:32But what an awesome question. And again, Jen, thank you so much for sharing the podcast with your family. All right, folks, listen up. Time could be running out to lock in a 6 % or higher yield at public.com. You can lock in this 6 % or higher yield at public.com with a bond account. But remember, your yield is not locked in until the time of purchase, so you might want to act fast. Lock in a 6 % or higher yield with a diversified portfolio of high-yield and investment-grade corporate bonds, only at public.com forward slash rich habits. So our next question comes from Macy K. Macy says, Hi Austin and Robert.

24:07My boyfriend, who listens to your podcast religiously, sent me some of your episodes and it's really made me interested in investing. Also, when I was a kid, I was obsessed with silly bands. So I thought who better to trust than Robert. I'm 22 years old and currently a senior in college. I'm going to graduate with no student loan debt because my dad has generously had enough to pay for my tuition, but I plan to go to optometry school afterwards. I've saved up about$13 ,500 and that's sitting in a high yield savings account. I make$920 a month for my on-campus job and I have a 792 FICO credit score.