Q&A: Separating From Active Duty, Buying Airbnbs To Lower My Taxes, & Living With My Girlfriend

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0:44Hey everyone and welcome back to the Rich Habits Podcast question and answer edition. These are our Thursday episodes where you guys ask us questions via Instagram DMs at richhabitspodcast or via email at richhabitspodcast at gmail.com and we answer them. We answer your questions as if we were in your shoes, living your life, doing your things. These are very fun episodes because a lot of this conversation is just right off the dome. There's no real scripting or planning. It's just we get some cool questions from you guys and we try and answer them in real time. Yeah, I love these episodes just because, like you said, it's off the dome.

1:19It's from our experience, what we know, what we believe is the right strategies for all of you. As we talk about on a constant basis, personal finance is personal, life gets in the way. And these episodes really help people see what everyone else is going through as well. So you get to see not only and maybe get your question answered, but also see what everyone else's trials and tribulations are along the way for themselves. So that is why these episodes are so incredibly insightful, but also fun for us to record. So with that being said, public.com is a wonderful investing platform for people who take their portfolios seriously.

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2:35Let me say that again. 1 % match on all IRA deposits, transfers, and 401k rollovers. Fund your account in five minutes or less at public.com front slash rich habits. Paid for by public investing and full disclosure in the podcast description. So our first question comes from Derek J. Derek says, hey guys, I've been loving the show. It's my routine to and from the office. I have a question. My girlfriend recently moved into my condo with me and we've divided the monthly mortgage payment and HOA accordingly. She's paying me$1 ,650 a month. Combined, we have just over half a million dollars invested in the stock market, crypto, and etc.

3:15And our 401ks together exceed$200 ,000. My question to you guys is should I reinvest the$1 ,650 a month she's paying me back into paying off the mortgage faster? Or maybe do I invest it somewhere in the markets? If I were to reinvest it back into the mortgage, I would save over$300 ,000 of interest throughout the life of the loan. Additionally, I would save nearly 18 years of mortgage payments? Derek, really great question. Totally hear you. I wish we knew what your actual interest rate was on your mortgage. We could have made a better suggestion here. But before we get into any of that, I just want to be crystal clear, Derek, this is your girlfriend, right?

3:52You guys are not fiance. You guys are not married. You guys are, there's nothing going on here. You guys are boyfriend and girlfriend. You guys are roommates. Your roommate is paying you $1 ,650 a month. And you talked about, we have half a million invested into the markets with our 401ks is exceeding$200 ,000, right? So like you're using a lot of we's and hours and togetherness vernacular. And until you guys are married, I want you guys to be using, I have this invested. She has that saved. I have this, you know, working for me, right? You guys are not together in the eyes of the law and in the eyes of the courts here.

4:25So I just want to make sure like, do not combine your incomes until you are married. Robert and I have seen it a hundred times. Boyfriend, girlfriend, we're in love. We've been dating for two and a half years. So we've been together to save on rent. Well, you know, nine months down the road, you know, we had a falling out and now they owe me this and I, hey, I was paying on that mortgage too. So you should sell that house and give me some of the equity. It's a terrible situation. So please, if you are getting paid$1 ,650 a month, use that money. However, you would use it if it was coming from a roommate, because that's all this person legally is to you.

5:00Robert, I'll let you take it from here as it relates to paying down the mortgage faster, how much they'd save and things of that nature. Yeah, I want to touch on the relationship part, though. You nailed it. You should not be looking at this as your funds are combined. You are boyfriend and girlfriend. So just to reiterate, I would even have a lease. I would have something that spells out what she gets for paying that amount in case anything down the road could come up and be said that you owe her money back or something. Because at the end of the day, when we're in love, we always want to believe it's forever.

5:31But until you're legally married, you have to look at it otherwise when it comes to money. Now, as far as paying down the mortgage, I look at it this way. Again, we don't know your interest rate, but let's assume your interest rate is 6.75%. Then I think it's okay if you wanted to pay extra mortgage payments to pay the mortgage down. But I also like the idea of taking that money, investing it into a basket of index funds and ETFs, getting that money built up further and further because this is your money. Remember, you have a roommate paying you rent for their portion of living there. It is not their portion of the mortgage because from what we know, you are not married.

6:10She is not on the mortgage. So keep that in mind. We appreciate you saying we, we, we, but at this point it is you. So let's look at it that way. So I would say I would probably rather see you put the money building up your base, building up your investments, and just paying the normal payments on the house. But again, we don't know the interest rate to tell you what is the best way to do it. Yeah, just to give more context, too, right? I mean, the NASDAQ, for example, total return is up just over 10 % year to date. And we're filming this on July 21st, 2025, which means if you had used money to go pay down that mortgage, you would be essentially leaving some money on the table because the NASDAQ is up 10 % versus over one year period of time.

6:53Maybe your interest rate could be six and a half or 7%. Now, it's a couple percentage points, nothing crazy there. I totally hear you want to save$300 ,000 on interest. You have our permission. Assuming you have an interest rate that's in the high sixes, sevens, eights, things like that, like, yeah, pay it off. I mean, that's essentially what the markets do on an annualized basis anyway. But here's the kicker. These extra mortgage payments that you use to pay off the mortgage, once it's paid off, take that extra$1 ,650 a month or whatever it is and go invest it, right? We want you to be investing throughout this entire process.

7:23We don't want people to pause all of their investments to go pay off debt that is arguably, you know, not high interest debt at six or seven or 8%. Invest throughout the payoff process so you can continue to earn as the S &P and the NASDAQ trend higher throughout 2025. So our next question comes from Mike R. Mike says, hey, fellas, my name is Mike. I'm 40 years old and I've finally come into my own. I listen to you guys religiously and I love hearing your case by case breakdowns. so it'd be really cool to hear mine on the show. Well, Mike, you're listening to it, my friend. Here we go. Mike says, So up until 35 years old, I was a mess.

7:59I was working as a restaurant manager, living paycheck to paycheck, paying the bare minimums on my student loans. In my 20s, I actually was the worst and wasn't even paying anything toward the principal. Today, I owe$57 ,000, and my payments are going to be$1 ,134 a month, starting in a couple months. I work in construction, equipment sales, and I make about$120 ,000 a year. I have$44 ,000 in a high yield savings account,$25 ,000 in my checking account, and$89 ,000 in my 401k. So my question is, should I use this money to pay off my student loans? Do I keep my student loans around for the next 25 years that I owe them for?

8:37What do I do in this situation? Robert, I'm going to kick this one off. Mike, if I'm doing my math right here, my friend, between the$44 ,000 in your high yield savings account and the$25 ,000 in your checking account, you have $57 ,000 to pay off these student loans today. And the reason why I want to encourage you to do that is because one, you already have$90 ,000 invested, which is more than the$57 ,000 balance, right? So that's our main rule here, right? You don't want to go make a big lump sum payment to pay off a debt like this, unless you have the equivalent of already invested, which you do, right?

9:13So you have more than that$57 ,000 invested in your 401k here at$89 ,000. And then also, you now will be able to free up a$1 ,134 a month payment. That$1 ,134 a month is just over$13 ,000 a year. Assuming this $89 ,000 you have in your 401k is invested correctly, you invest from$40 ,000 to$67 ,000, let's say for example, this$1 ,134 a month, you're going to have$2.5 million in your nest egg by the time you're 67 years old. And that's by unlocking and investing, right, this$1 ,100 a month payment. If you're going to do this, please, please, please don't think, oh, I've got an extra$1 ,100 a month.

9:56I'm going to go buy a new car and have a new car payment, or I'm going to go, you know, rent this If you're going to do this, you use that extra$1 ,100 a month, and that goes straight to investing. You put it in a taxable brokerage account, use it to max out your Roth IRA. Maybe you now have some more monthly liquidity to contribute more to your 401k, depending on the investment options. But please, please, please, Mike, do not use this extra liquidity on a monthly basis to go backwards. I love this breakdown, and I think it's incredible that I want to back up for a second because the headline for this is late bloomer need catching up.

10:33Mike, welcome to the party. You're not late. You have plenty of years ahead to build wealth if you follow the plan that Austin laid out. I agree 100%. Get it paid off. Get it knocked out. It's been around long enough. This really kind of highlights what we say a lot that you can't out-invest high-interest debt. And so many people just keep kicking the can down the road on student loan debt, on credit card debt, and they never get to a point where they're fully moving forward because we always want the arbitrage of our money going in our favor, not someone else's. So welcome to the party. You've got plenty of time to really crush this and get back on track and get where you desire to be as long as you follow the plan laid out by Austin and stay consistent.

11:18Remember, when you pay this off, don't then all of a sudden think that$1 ,100 and some dollars is free money that you can go blow, act like those payments are still there and invest it consistently. And even further, auto-invest it. Set it up with public.com, get it auto-invested so you don't tinker around and think you can go buy stuff with this money and you will be perfectly fine in your wealth building journey. 100%. Public.com has their investment plans. You can set up some sort of auto invest where you're taking this$1 ,100 a month, getting it invested on public. They'll have a whole plan for you as how to invest it, the weightings, the different names and index funds.

11:57You're going to be just fine, Mike. You will be a multimillionaire in retirement if you follow this plan. So our next question comes from Eric G. Eric says, Hey Austin and Robert, thank you for your advice. It has helped me tremendously over the past year, which is why I started listening to your podcast. I've made some recent stock and crypto purchases based on names that you guys have mentioned on your show. Mainly Ethereum, XRP, the URA ETF, Palantir, Broadcom, Oklo, and Constellation Energy. However, some of these purchases were at or near their all-time highs, and now I'm concerned I got in too late.

12:33Can you guys give me some general frameworks to use as it relates to investing near or at all time highs for some companies and cryptocurrencies that exist? Robert, I'll let you kick this one off. Yeah, so I think this is a great question. And the way I look at it is this. When I was talking about Palantir is around six or seven dollars. And now I think it's at one hundred and fifty five dollars. So when you're looking at these high growth, secular growth trends and these stocks, these big tech companies that are on fire,

13:03they're usually going to be at all-time highs or close to it because they're growing so rapidly. And so are the stock prices. So I tend to not worry about it, especially with bigger companies that we believe for the long term are going to continue to grow like Palantir, like NVIDIA, like XRP in the crypto space, like Broadcom. So I don't care what the stock price is. I care about where I believe it's going in three to five years. So I wouldn't worry so much about buying at all time highs because a lot of times people when they're looking at stock purchases they want to find a deal and they look at the stock price and go oh it's cheap so that means it's going to go up more that is absolutely not true i have bought nvidia palantir microsoft micron all of these stocks amazon near or at all-time highs for years because i've been dollar cost averaging into these positions that's the way i look at it that is the best way to think about it because too many people think if a stock is cheap, that means it's a good deal.

14:05And that just doesn't make sense. Robert, I love what you just shared. And it really reminds me of a phrase that is near and dear to me, which is bears sound smart, bulls make money, right? Bullish investors are the ones that actually make the money while all the bearish investors are like, oh, I'm running for the hills, right? They sound smart in the moment, but they're not making any money. So to be optimistic about American capitalism and be invested in that secular growth trend that is America is likely a good idea. Now, I'm going to pull up a chart on screen right now. This was Robert's call out in last week's Rich Habits newsletter, and it does a really good job of illustrating how since 1989 through July of 2025 here, by purchasing the S &P 500 at all-time highs, your investment will have performed better than purchasing the S &P 500 at any other period of time, right?

14:57Not at all-time highs. So quite literally on a one, three, and five year period of time, you get a better return by buying at an all-time high versus buying at a pullback or any other time that existed. And the reason for that is, again, all-time highs are bullish. There's nothing bearish about an all-time high. Now sure, an all-time high is the last thing that happens before some sort of market correction or a pullback, but that's normally when bubbles and things like that. And I would argue that Broadcom and Palantir and some of these other names that you'd mentioned, yeah, they're up there right now.

15:29Totally agree. But I'd also argue in the next three, five, seven, 10 years, they're going to be much, much higher because they're very much part of this new technology that is called artificial intelligence. So I really appreciate Eric G for chiming in here, trying to ask a little bit more about frameworks as it relates to buying at an all-time high versus buying at a pullback. To give you the short and sweet, it's totally fine to buy at an all-time high, assuming you have a long enough investment horizon, right? You can see on screen, it's one, three, five year investment horizon, not one, three, five month investment horizon, right?

16:03That's what's important. 100%. And I just want to add one more thing to that. And that is when you're looking at a chart and you're studying a stock and studying a company, I'm not saying buy it an all time high. If this is some brand new penny stock that they're promoting to death to try and pump it and dump it, that's different. When you see a hockey stick chart and it's some brand new penny stock, I don't do that. That is not what we're talking about. We're talking about established tried and true companies that have been building for years, that have beautiful books, beautiful future plans that look really good for that sector that we are investing in like AI, like nuclear right now, like precious metals, all of the above.

16:45So I hope that helps everyone listening. So our next question comes from Brendan B. Brendan says, Austin and Robert, I've been interested in financial knowledge and retiring early since I was in high school. I have sought out for information on this topic over the years through many avenues and your podcast stands in a league of its own. Well done and thank you for what you do. Brendan, thank you so much, my friend. We appreciate the kind words. My name is Brendan. I'm 33 years old, serving as an officer in the United States Air Force, and I'm approaching a large decision point in my career. Should I separate from active duty military when my contract is up in three years, or do I extend and sign a new contract?

17:21I have six more years to reach a full active duty retirement, which is 20 years of service, or I could move to the private sector, earn an annual income starting around$150 ,000, and this salary would grow to about$250 ,000 to$300 ,000 over the next five or six years. Currently, I make around$130 ,000 a year and would likely not make more than$150 ,000 if I stay active duty. However, an active duty retirement would mean at 42 years old, I would collect a pension of$52 ,000 a year with an annual cost of living adjustment of about two to two and a half percent. I would also have access to TRICARE health and dental insurance for myself and my family.

17:59I know this is not a simple question, but it's one that military members discuss frequently. It's very hard to analyze the best financial position versus a commitment to service of your country. Thank you both for your time and what you all do. Well, first off, Brendan, thank you so much for your service. We appreciate it very much. Robert, do you want to kick this one off? I do. And Brandon, I like what you're saying here. And it is very difficult because on one hand, you get the pension, you stay in for six or seven more years, but the side I'm leaning towards, and that is version two, option two, is getting out in the private sector, making more money because Austin and I ran some math simulations.

18:35And we believe that for the long term into retirement and beyond that you would be better off getting out, taking the extra earned capital that you would make in income and investing that versus staying in, getting the pension and having kind of that lower income and lack of acceleration in income in the coming five, seven, 10 years. So I think our takeaway, at least from my perspective is you would be better off financially in the private sector because you'd be making more money and be able to invest it more as long as you stay consistent. But also, in my opinion, and not trying to be morbid or weird about it, but you would be safer in the private sector, in my opinion, as well.

19:16I lost a very dear friend the last week of his retirement in the armed forces by friendly fire a few years back. It really, really was upsetting to me because he gave 25 years of his life to the service. And so I think getting out of the private sector, make them more money and putting yourself in a safer position is the way I would go. I really respect that answer. Let's unpack some math. You had mentioned that at 42 years old that you would collect a pension of$52 ,000 a year and you'd have that go up by about 2 % per year for the rest of your life. Okay, so what is$52 ,000 a year equivalent to?

19:52You would need to have$1.3 million invested in the stock market, earning, you know, 6, 8, 10 % per year to be able to take advantage of the 4 % rule, which we've talked about many times on this show, which would pay out about$52 ,000 a year. Essentially, how you can value your pension is by$1.3 million. And that$1.3 million equates to that$52 ,000 a year in income. So now it's like, okay, you're 33. How do you get to$1.3 million in your lifetime? Well, we ran some numbers for you. And by looking at this math, you're going to have about$400 ,000 to$500 ,000 more by going private sector over this, let's call it five, six, seven year period of time that you can now take and invest and let grow for you.

20:37And we know the rule of 72 tells us that the stock market doubles in value every seven years. So this four or$500 ,000 that you have invested will turn into 800 ,000 to a million by the time you are 40. And then by the time you're 47, it'll turn into about 1.6 to$2 million, which is way more than enough to have that$52 ,000 a year pension. And then the$2 million will double again to 4 million by the time you're 54. And then by the time you're 61, it'll be 8 million, right? Like this money will grow exponentially. Your$52 ,000 a year will not. And I could be mistaken here, but I would argue that when you die, which you will die when dies, when you die, your spouse, your children, they might not get this$52 ,000 a year pension, but they will get a$4 million inheritance from their father, right?

21:28And so like, that's how we think about this. That's the kind of framework we used when thinking about staying active versus trying to like, you know, get out and then do this private sector stuff versus this pension. The math is going to take a little longer, right? Because you're not going to immediately have the 52 ,000 a year at 42. It'll be closer to 47, 48 years old, but it will grow much more over your lifetime than the 52 ,000 will that you'll get at 42. That was a great breakdown, Austin. Really, really appreciate that. But before we get into our next question, let's hear from our sponsor, public.com.

22:02Listen up, folks. You can lock in a 6 % or higher yield with a bond account on public. But remember, your yield isn't 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 Ross C. Ross says, Austin and Robert, I've recently started listening to your podcast after a close friend of mine would not stop talking about the two of you. And to say the least, I now understand why. You two bring such a clear, consistent, and easy to understand approach when it comes to investing.

22:38That being said, I have a question with regards to how I can make my money work for me and bring my family more financial freedom. My wife and I own a duplex, a townhome, and our primary residence. Our combined annual income is$150 ,000 a year. We have two kids who are four and one years old. Our duplex is worth$730 ,000, and we owe$250 ,000 on it. Our townhome is worth$400 ,000, and we own it outright. And our primary residence is worth$750 ,000, and we owe$560 ,000. Our 401k, 403b, Roth IRA, and crypto Roth IRA combined are worth roughly$125 ,000. So my question is, would it be wise to sell the townhome since it's already paid off, use that money to either put more money in the markets, or do we go out and buy another investment property, or maybe we use that money to pay down our primary residence mortgage and recast it?

23:33What strategies should we be considering right now with our current situation? Ross, I think you guys have done a tremendous job getting where you are, but I do believe you're very heavy in real estate, whereas I'd like to see you migrate some money into a more diversified overall portfolio. I love where you're at. Don't get me wrong. I love real estate. I own a lot myself. So I would lean towards selling the townhome, taking that$400 ,000, getting it invested into more of what we talk about every day. Love to see you have some precious metals. Have you build a bigger base when it comes to the ETFs and index funds we love?

24:12Maybe add some more into the crypto space and keep the rest of the real estate the way it is. And we would just love to see you be more diversified because we don't ever want to see anyone be all in on one sector because you never know what can happen. If you think back to 2009 and 10 with real estate, many, many people got wiped out. That is why we love diversification. That is my take on this. Congrats on everything you've built already. I'm not taking away from that, but I would sell the townhome, get that money working, have it be easy, easy money working for you while you sleep. That is the play I would make.

24:48I agree. I think getting rid of the townhome, taking your, let's call it$350-ish thousand dollars that you're going to have after, you know, some fees and some stuff like that. And Ross, when you go and sell this townhome, let's say you profit$350 ,000 after everything is said and done, you can take advantage of the section 121 exclusion, which will allow you and your wife, you guys are married couples filing jointly here, to realize up to$500 ,000 of capital gains tax free. So now you're looking at$350 ,000. You owe nothing to the IRS. You get that money working for you and across both your Roth IRAs.

25:28Make sure that you're rocking and rolling with those 401k, 4-3-Bs, assuming that you're going up to the match and you're getting all the right things invested, things like that. But you're going to have probably$300 ,000 still to get deployed there, which means that you're going to open up an account on public.com. We call this the taxable brokerage account, the bridge account, right? And you're going to park that into the index funds in ETFs that we've talked about. VOO, QQQ, VGT, VTI, AIQ, SPYI. To Robert's point, some precious metals, perhaps some cryptocurrency. But it's time for you guys to now focus a little bit more on the stock stuff versus the townhome.