138: Your Year-End Money Checklist — Don't Ignore These

Interactive Transcript

spk_0 Hey everyone and welcome back to the Rich Habits Podcast, a top 10 business podcast on Spotify,

spk_0 brought to you by public.com. By the end of this episode, you'll know exactly what moves you

spk_0 need to make before December 31st to keep more money in your pocket, pay less in taxes,

spk_0 and set yourself up right for 2026. My name is Austin Hankwitz, I'm joined by my co-host Robert

spk_0 Croke. Robert is a seasoned entrepreneur with lifetime revenues over 300 million, and I'm a

spk_0 multi-millionaire in my late 20s with a background in finance and economics. As the show name might

spk_0 suggest every episode, we talk about rich habits as they relate to business, finance, and mindset.

spk_0 So Robert, walk us through what we're going to be talking about in today's episode.

spk_0 In this episode of the Rich Habits Podcast, we're talking about something that could literally save

spk_0 you thousands of dollars if you set it up correctly in the next few weeks. Think of it as your year

spk_0 and money checklist. Think of December 31st as your financial finish line, and if you cross it

spk_0 without making these three moves, you could be leaving so much money on the table. And we're not

spk_0 talking about vague advice like save more, budget better. We always talk about those things,

spk_0 but we're talking about more specific actionable moves that money savvy people make before the

spk_0 calendar year flips to 2026. Maxing out retirement accounts if you want to save on taxes, using up FSA

spk_0 funds before they disappear forever, making strategic charitable donations and doing a full financial

spk_0 review so you're not scrambling in January. That's right Robert. Most people spend weeks

spk_0 planning their new years eve and what they want to do or ring in the new year, but they won't spend

spk_0 a few hours mapping out some financial moves that could literally put thousands of dollars back

spk_0 into their pocket or save them from a massive tax bill come April. So some of the opportunities that

spk_0 we're talking about do expire on December 31st. So once that clock strikes midnight, those savings

spk_0 are gone forever. So you need to lock in, get some of these things done by the end of this episode.

spk_0 We're going to tell you exactly what you need to be doing before midnight December 31st, you can

spk_0 maximize wealth, minimize taxes and be a happy, happy person. So Robert, let's dig into the first

spk_0 one, retirement accounts. Number one is all about retirement contributions. And this one is huge

spk_0 because it's one of the few legal ways to reduce your taxable income yearly. If you haven't maxed out

spk_0 your pre-tax 401k or IRA, you've got until December 31st to make it happen. So you got to mark that down

spk_0 and stay on top of this. So let's break down some of the numbers. In 2025, you can contribute up to

spk_0 23,500 to your pre-tax 401k if you're under 50 and 31,000 if you're 50 or older. And for IRAs,

spk_0 the annual contribution limit is 7,000 and $8,000 again if you're over 50 years old. So now here's

spk_0 the key. Every dollar you put into a traditional 401k or traditional IRA reduces your taxable income

spk_0 dollar for dollar. That's the key here. So if you're in the 24% tax bracket and you contribute an extra

spk_0 $5,000 before December 31st, you just saved yourself $1,200 in taxes. So that's $1,200, you're not

spk_0 sending the IRS all because you're integrating rich habits before the end of the year.

spk_0 And here's what most people miss, right? You don't have to do this in a lump sum, right? So if

spk_0 you're behind on these contributions, talk to your HR department or your payroll provider and see

spk_0 if they can increase your contribution percentage for the last few paychecks of the year. Even if you're

spk_0 only getting an extra $1,000 or $3,000 into this account, that's real tax savings come tax time in

spk_0 April. Now here's an important note. This deadline of December 31st only really applies to these

spk_0 pre-tax 401ks and employer-sponsored retirement accounts for individual retirement accounts. Those

spk_0 traditional IRAs in this instance, you actually have until tax day of April 2026 to make some

spk_0 contributions for that 2025 tax year. But Robert, here's my perspective. I wouldn't wait because

spk_0 if you got the cash now, you should do it now as we think about January, New Year, New Me,

spk_0 here into some new routines, you might forget some unexpected expenses. You probably have a holiday

spk_0 spending hangover, right? So you're trying to recover from what happened between December 15th and

spk_0 January 1st. I don't think you're going to do a good job of, oh, I'll just make sure it gets

spk_0 done by tax time. Miss me with that. Let's instead get our money invested in the year of 2025,

spk_0 contributed compounding and working for us before so now I have to do one of these last minute

spk_0 Kobe Bryant's from downtown to try and get it in before our tax accounted is drilling us for more

spk_0 info. Yeah, we covered this last night in the Rich Habits Live and it really is, I feel like most

spk_0 people check out for the year and start that holiday party season like November 15th and then they

spk_0 run up the credit cards, they go do all these parties, they go travel around for the holiday,

spk_0 see family and friends do all of that. So the holiday hangover is real. But here's the plan.

spk_0 Log into your 401k account. Look at how much you've contributed year to date. If you're not maxed

spk_0 out, calculate how much more you can contribute before the end of the year than adjust your paycheck

spk_0 contributions immediately and please don't wait. That's a great breakdown Robert. I love that

spk_0 not just the show we're sharing some ideas, but we're giving them the step-by-step, right? That's

spk_0 exactly step-by-step what you need to do. So that was the first move to consider to try and save

spk_0 some taxes. Now let's walk into the second one here, which is your flexible savings account

spk_0 and your health savings account and using those strategically between now and the end of the year.

spk_0 These are your use it or lose it accounts, specifically the FSA or that flexible spending

spk_0 account. If you have one of these with your employer, you need to pay attention because this money

spk_0 literally disappears if you do not spend it by December 31st. So flexible spending accounts are

spk_0 pre-tax accounts that you fund throughout the year to pay for medical expenses. Seems pretty

spk_0 straightforward. The problem is most employers have a use it or lose it rule. So if you don't spend

spk_0 the full balance by that deadline, which in most cases are December 31st, that money goes back

spk_0 to your employer and is gone forever. Fun fact, not even that fun, just a fact. Americans

spk_0 forfeit over $400 million a year in these flexible spending account funds every year because they

spk_0 forget to spend the money. Literally insane, Robert. This is your money. It's taken out of your

spk_0 paycheck. You're just handing it straight back to your employer. So here's what you need to do

spk_0 right now. I need you to log in to that flexible spending account. Check the balance. If you've got

spk_0 $100, $500, maybe $1000 sitting in the account, you need to have a plan to spend it before the end

spk_0 of the year. Now the good news is these FSA funds can be spent on more than just doctor visits, right?

spk_0 You can use them for prescription medicines over the counter pain relievers, first aid supplies,

spk_0 sunscreen, contact lenses, glasses, like what I'm wearing on my face, dental work, maybe even some

spk_0 mental health services can get covered with this flexible spending account. So if you have a

spk_0 balance, you need to spend it, which means go stock up on the stuff you're going to buy anyway.

spk_0 And if you have a doctor's appointment that you know is going to come up, you need some dental

spk_0 work, you need to get your eyes checked. Sometimes you can prepay on those appointments in advance,

spk_0 so you're able to use this money before the end of the year. Now let's talk about health savings

spk_0 account. These are different. HSAs don't have a user that lose it rule, so your money rolls over

spk_0 a year after year and you can invest it just like a retirement account. So if you have an HSA,

spk_0 you don't need to panic, but if you have an FSA, you definitely have work to do and you need to

spk_0 make sure you get to those deadlines and spend that money. So here's a pro tip. Some employers offer

spk_0 a grace period into January or allow you to carry over a small amount, usually around $500,

spk_0 but be sure to check the specifics for your plans rules because you don't want to count on it,

spk_0 and lose that money. The safest move is to spend it before December 31st. That's a great pro tip,

spk_0 Robert. Now your action plan here, check that FSA balance today. If you got that money,

spk_0 make a list, eligible expenses, go spend it, go start buying sunscreen. You can always use

spk_0 more sunscreen. You're always going to need it. Don't let that money go to waste. Robert,

spk_0 speaking of not wasting money, I think it's really important that everyone understands this reality,

spk_0 that if you are not yet investing toward building a nest egg to have in retirement, you will be

spk_0 working for the rest of your life. The only way you will ever be able to stop trading time for money

spk_0 is to have portfolio income that is growing for you over time. The easiest way anyone could

spk_0 begin investing towards their future is on public.com. You know we love public and they make it

spk_0 incredibly simple to build a multi-asset portfolio, including ETFs, stock, bonds, crypto, options,

spk_0 and more. They also offer access to industry leading yields of up to 3.7% APY for your

spk_0 emergency funds. And for a limited time, you can earn a 1% match on all IRA deposits, IRA transfers

spk_0 and 401k rollovers. That's $1,000 of free money for every 100,000 that you rollover into their

spk_0 platform, which means if you're taking our advice here, you want to contribute a little bit here,

spk_0 save some taxes, go use public to do it, go get the free 1% match. We always talk about public,

spk_0 and I love it for you Austin, because your new account that you put together, that new portfolio

spk_0 of small caps has been crushing it. And I just really love to see all of what public has to offer,

spk_0 and you can fund your account in five minutes or less, head to public.com forward slash rich habits

spk_0 and claim your 1% match today. Paid for by public investing and full disclosure in the podcast

spk_0 description. I'll put a screenshot on screen here. The small cap portfolio that Robert's

spk_0 alluding to, we started building a little something in the rich habits network for fun. If you

spk_0 were a part of the rich habits network, you know what I'm talking about. If you don't know what

spk_0 the rich habits network is, go check it out in the link in the show notes below. It's up 18 and a half

spk_0 percent in the month of September, which is pretty exciting. So we went from 28, 29,000 to now

spk_0 just about 36. All right, Robert, let's now talk about the last financial money move people can make

spk_0 to save on taxes and put more in their pockets at the end of this year. Yes, number three is all

spk_0 about charitable giving. And before you tune out thinking this doesn't apply to you, stick with me

spk_0 here because even if you're not giving away huge sums of money, there are smart strategies here

spk_0 that can save you on taxes and help causes you care about most. So let's start with the basics.

spk_0 If you itemize your deductions, charitable donations are tax deductible. That means if you donate

spk_0 $1,000 to a qualified charity and you're in a 24% tax bracket, you're saving $240 on your taxes

spk_0 while doing a really good thing. But here's the key. The donation has to be made by December 31st

spk_0 to count for the 2025 tax year. Most people think of charitable giving as writing a check to their

spk_0 favorite nonprofit and that works, but there are smarter ways to do this, especially if you're giving

spk_0 larger amounts. One strategy is donating appreciated stock instead of cash. Here's how that works.

spk_0 Let's say you bought stock and palantir a few years ago for a total of $1,000 and today it's worth

spk_0 $5,000. If you sell that stock and donate the cash, you're going to pay capital gains on the

spk_0 $4,000 of gain. But if you donate the stock directly to the charity, you get to deduct the full $5,000

spk_0 and never pay capital gains tax so the charity sells it tax-free. It's a win win for everyone.

spk_0 This is one of the most underutilized tax strategies out there. Most people have never heard of it.

spk_0 So make sure you're taking notes and taking actions here even if you're only donating small amounts.

spk_0 So if you've got stocks or ETFs sitting in a taxable brokerage account with big gains like most of

spk_0 you do the follow the show, donate those instead of your cash. You get the full deduction, you avoid

spk_0 the capital gains tax and the charity gets the same amount of money. Yeah, Robert, we had Steve

spk_0 Latham on the podcast. I think it was like a year or two ago, but he created the company DonateStock.com.

spk_0 So go check out DonateStock.com. We're not affiliated with them. It's just a great tool. If you want to

spk_0 donate your stock to a charity, they make it really seamless on how that happens there. So great strategy.

spk_0 Appreciate you calling that one out, Robert. Another strategy is actually bunching your donations.

spk_0 So let's say that you donate $5,000 a year to various charities, but you're not

spk_0 itemizing because your total deductions don't exceed the standard deduction. So instead of donating

spk_0 $5,000 this year and $5,000 next year, you could bunch the two years of donations into one, $10,000 total,

spk_0 let's say in the year of 2025. You can itemize this year, take the standard deduction next year and

spk_0 come out ahead on taxes. And if you're really strategic, you can use something called a donor

spk_0 advise fund. This is like a charitable savings account. You make a big donation to the fund.

spk_0 This year, for example, you get a big tax deduction now and then you can recommend grants to

spk_0 specific charities over time. Great way to bunch your donations together and still spread out

spk_0 your giving over a long period of time. So you get to enjoy the tax right off in one year,

spk_0 but you don't have to deploy all of that capital to the places you want to donate to in that same year.

spk_0 So it kind of spreads things out a little less pressure on you, but you still get the tax benefits.

spk_0 Yeah, I love these strategies and episodes like this because it really lays out a blueprint for people

spk_0 to help them understand better all of the things they can be doing with their money. And we always

spk_0 say it's not what you make, it's what you keep. And that's what this episode is all about.

spk_0 Getting the benefits, doing good things with your money with these charitable donations,

spk_0 but also really keeping more for you and retirement. And here's something that applies to people that are

spk_0 70 and a half or older and that is called a qualified charitable distribution or a QCD.

spk_0 So if you have a traditional IRA and you're required to take a distribution, you can donate up to

spk_0 $105,000 directly from your IRA to charity. That money never shows up as income, so you're not paying

spk_0 taxes on it. And this is huge for retirees who don't need the money from the required minimum

spk_0 distributions. So instead of taking the distribution, paying taxes and then donating the cash,

spk_0 you skip the tax step entirely and send it straight to the charity. So here's the plan. If you're

spk_0 going to donate this year, do it before December 31st. And if you're giving larger amounts,

spk_0 look into donating appreciated stock or setting up a donor advise fund. And if you're over 70 and a

spk_0 half, talk to your financial advisor and definitely check out the QCDs. Robert, building wealth isn't

spk_0 just about making more money. It's about being smart with the money you already have. And that

spk_0 means taking advantage of the tax breaks, employer match, and every opportunity that the system gives

spk_0 us, right? The government and your employer are basically offering you free money through retirement

spk_0 matches, tax deductions, pre-tax retirement accounts, all the stuff that we kind of know

spk_0 and are familiar with, but we're not exactly sure as to how strategically and tactically apply

spk_0 this information. That's what this episode just did. And if you use them and you do it right before

spk_0 December 31st, you could potentially save thousands of dollars. Remember wealthy people aren't wealthy

spk_0 because they make all the right investment picks or because they got lucky. They're wealthy because

spk_0 they're intentional with their money. They make smart choices consistently and they don't leave

spk_0 money on the table. That is one of the biggest messages Austin and I put out in these podcasts

spk_0 every single week is to give you guys the blueprint, all the options so you can take advantage of all

spk_0 of this just like we do and just like all the other wealthy people that we work with. So go prove to

spk_0 yourself that you're serious about building wealth. Take action on these three moves before December

spk_0 31st and your future self and your family will definitely thank you. All right, Robert. I love

spk_0 these breakdowns, these episodes I think are really helpful. And you know, it's not that we're

spk_0 sharing some crazy tax loop holes that Elon Musk uses, right? I'm not doing that. But what we are

spk_0 doing is we're just making sure people have full information, right? If they want to have some

spk_0 larger 401k contributions because they're in a big tax bracket and they're really trying to pull

spk_0 that down, here's what you can do. If you have an FSA with your employer and you didn't really know,

spk_0 it was user-illusible. Now hopefully you do. Maybe you want to, you know, you're sitting on $60,000

spk_0 of capital gains on a stock your grandfather gave you. Well, if you donate it, you could probably

spk_0 use that as a wonderful way to support a cause you love as well as offset some taxable income.

spk_0 There's a lot of different bits and pieces to not just building wealth, but preserving it and using

spk_0 it for purposeful things in our lives. And I hope this episode helps a lot of people come to those

spk_0 conclusions. Yeah, definitely. I love that recap because you know, I do all these one-on-one calls

spk_0 to help people and and give them guidance and education. And I'm always shocked by how many

spk_0 of financial advisors and people out there that are wealth advisors don't teach people anything.

spk_0 They just say, here's what we're going to do, but they don't give them all of the advantages that

spk_0 we share and we try to educate people on with this podcast. So episodes like this can literally

spk_0 change the trajectory of someone's life and financial life and family's life because they're

spk_0 taking advantage of what's already out there and easy for them to implement into their portfolios.

spk_0 All right, Robert. Now before we jump into the Q&A section of this episode, investors,

spk_0 I'll need to listen up. If you've been itching for some in-person events in 2025, you are in

spk_0 luck. Our awesome partners over at Blossom Social are hosting their third annual investor social

spk_0 tour where hundreds of DIY investors across North America meet up in person for an evening of food,

spk_0 drinks, networking, education, and fun. And they're hitting seven cities still this year, including

spk_0 LA, Vancouver, Calgary, Chicago, Montreal, and Toronto hosted at the Roger Center for the

spk_0 baseball fans. Yes, where the blue jays play. And New York hosted at the Nasdaq Center in Times Square.

spk_0 So you guys know how much we love Blossom as an online social network and they're all about

spk_0 connecting investors online. Well, now's your chance to see what the community is all about in real

spk_0 life at these events. So make sure to check it out. And Robert, I'm on the website right now. I'm

spk_0 seeing Chicago and Los Angeles are the last two stops still available. New York is still available.

spk_0 It's actually happening tomorrow, October 3rd, but it's sold out. So nothing to do there. But you

spk_0 can go visit the SIBO in Chicago, which is where that's taking place. And then the LA peer hotel or

spk_0 La Pierre hotel, whatever that is, and Los Angeles on October 15th is is still taking place. So

spk_0 you've not run out of time. If you still want to go get some tickets, they put those up for the

spk_0 15% coupon code, Rich Habits 15, all uppercase one word, one code there. Go use that at checkout.

spk_0 Link in the show notes below or visit blossomsocial.com forward slash 2025 investor tour, which we can

spk_0 make some Robert, but our schedules are just a little too busy for running around the other

spk_0 country like this. All right, Robert, let's jump into our first question coming from Jared C on

spk_0 Instagram. Jared says, hi, Robert Noston. I'm reaching out for help for three months. I've been

spk_0 researching different business types to purchase as a side hustle with the potential to expand and grow.

spk_0 Among the most successful are vending machines, ATMs, car washes, and laundry businesses. I'm considering

spk_0 buying a vending machine business listed on Biz Buy Cell. The business has six machines at four

spk_0 different locations, and they currently do not profit share with those locations. It is priced

spk_0 at $21,000. I've researched the cost of buying new machines, and they range between three to eight

spk_0 thousand that said the asking price of 21,000 seems high for older dated machines to me.

spk_0 So here's my question. Can you please give me some of your advice on how to assess the business

spk_0 and make sure that this is a fair asking price? I have deliberately not contacted the seller,

spk_0 so I might hear from you too first. Love your show. Grateful for your help. Keep killing it, Jared.

spk_0 Yes, Jared. Here's what you got to do, my friend. In my experience, vending machine businesses are

spk_0 valued at one year's total top line revenue. So the 21,000 has nothing to do with the age of the

spk_0 machines, how new or how old they are, or anything like that, or how many locations, how many machines

spk_0 it only has to do. In my opinion, I don't know anything about this business beyond we just told

spk_0 me in this Instagram DM. All it has to do is with the fact that this company likely generates about

spk_0 $21,000 a year of revenue. That's revenue. That's not profit. Think about margins of anywhere between

spk_0 25 to 50% depending on the types of candies and sodas and your gas to run around and do this and

spk_0 to pay people things like that. How do I know if it's a good business or not? I would ask for some

spk_0 financials. I would also, if I were you, I would spend a Saturday visiting one or two of those

spk_0 machines and just hanging out for two or three hours at each one doing some diligence to see if people

spk_0 are actually going up to them, how quickly they sell out what types of candies they're selling,

spk_0 how fast or how much you can buy at a Sam's Club or a Costco or an Amazon. What do those margins

spk_0 begin to shape up as? And sometimes if the seller is a nice person, they're going to tell you everything

spk_0 they do. They'll give you the whole blueprint. They'll say, yeah, this machine's been kind of tricky,

spk_0 but you know, for example, I had a friend who had a lot of vending machines here in Nashville and

spk_0 they had a vending machine in the boys dormitory at Vanderbilt University. And he crushed it with

spk_0 honey buns. He's like, these guys eat honey buns like it's nothing. I mean, they're going through

spk_0 so many honey buns. I got to restock every two days. And so he's like, so that's the thing we're doing.

spk_0 Every vending machine owner has like a plan. They know it sells right in it. So,

spk_0 topped with them, let them know that you're interested. Let them know you're always

spk_0 negotiate the price. Ask them why 21,000 is it last year's revenue? Like what are the margins?

spk_0 Like really walk through the numbers here, but understand like, okay, if I'm spending 21,000

spk_0 dollars this year to buy this vending machine route, how much of that is going to turn into profit

spk_0 in my pocket, likely anywhere between six to seven thousand maybe closer to five depending on the

spk_0 margins? And then you got to think, okay, how long is that going to be for me to completely get a

spk_0 return on my investment? And what's the opportunity cost of not putting that 21,000 into something like

spk_0 the stock market? That's up 15% this year or gold. That's up 45% this year or you know, whatever

spk_0 else the opportunity cost to want to benchmark that against. Austin, I think that was an incredible

spk_0 breakdown and I just want to add a couple things. Don't worry so much about the age of the machines,

spk_0 worry about the actual numbers. You're spot on. You want to get three years of financials and

spk_0 here's why. Not so much because of the profit. You want to find out at the locations and placement

spk_0 of these machines are solid and if they're pretty straightforward as far as consistent with their

spk_0 sales. Because what you don't want to find is when you place the machines five years ago, sales have

spk_0 dropped off every single year in the locations or some of the locations because the value for you

spk_0 is finding a vending route or anyone that's looking at this type of business that has really good

spk_0 route stop. So the locations of all the machines are constantly selling well. Now to talk about

spk_0 profits, let's say that this route does 21,000 a year. Austin is spot on. You need to understand the

spk_0 opportunity cost because all the fake gurus on the internet are going to tell you, oh my business

spk_0 does 500,000 a year. What you bring in means nothing. It's what you take home. Net to you is the

spk_0 most important part and if you bring home $7,000 a year on this $21,000 investment, which is

spk_0 probably spot on, you have to understand and deduce, is it worth it for my time to manage, pick up,

spk_0 gas, wear and tear time and everything to be able to keep an eye on these machines and do all the

spk_0 work. You have to decide because only you know if that is worth it for your time or if you think you

spk_0 can update the machines, have better selection and keep growing it that's a different matter. But

spk_0 that's what I would look at is three years of financial, is it growing, is it stable and is it

spk_0 worth your time for the amount of profit you're going to get from those sales? Last thing I'd share

spk_0 is in my experience with vending machines because I've been a lot of research on them and I've

spk_0 I've worked with people who've done this and they can work very well if you do it right. But my

spk_0 experience for this to be successful long term, you have to be very handy because turns out vending

spk_0 machines break all the time and if you are not someone who's handy, this is not going to work out for

spk_0 you, Jared. Literally like these things will break and you got to figure it out and there's now

spk_0 a lot of people out in this world that are making YouTube tutorials about how to fix a specific,

spk_0 vending machine that you bought from Japan, like there is people that are going to show you on

spk_0 YouTube how to change the oil in your Honda Civic, right? So it's like you got to be able to

spk_0 troubleshoot, you got to be able to be handy and figure the stuff out. So our next question comes

spk_0 from Abby. Abby says, hi, I'm a single income single family household here in the Bay Area. I'm

spk_0 40 and currently carrying $50,000 of debt. I recently enrolled in a program called AmeriCorps that

spk_0 negotiates with creditors on my behalf to reduce interest and balances. It's a four year plan

spk_0 and while it does hurt my credit in the short term, I felt like it was the best option given our

spk_0 situation. I own a home, live mostly paycheck to paycheck and run a small health and wellness

spk_0 side hustle to cover household necessities. Looking back, I wish I'd been able to invest earlier,

spk_0 but right now my focus is becoming debt free. I really enjoy your podcast. It motivates me to get

spk_0 my financial life on track. Do you think enrolling in a program like this was a reasonable move for someone

spk_0 in my situation? Do you have any advice or perspective? That would be great. I also have already

spk_0 taken a HELOC out of my home. We are single income because my oldest child has health issues requiring

spk_0 one parent to be home all the time. Abby, I am so sorry to hear about your oldest child's health

spk_0 issues. It just puts in perspective like nothing in this world is more important than our health.

spk_0 It really is. I mean, you can have all the money in the world, but if you have all the fame and

spk_0 fortune and all the cool things that people idolize in this world, but if you do not have your

spk_0 health, you have nothing. I'm just so sorry to hear that you're going through that, Abby.

spk_0 So here's what you enrolled in. To my understanding, these sort of like credit card debt,

spk_0 consolidation, negotiation programs, what they're doing is, let's say you've got this $50,000

spk_0 or credit card debt. Amira Corpus is going to say, okay, you pay us $500 a month every month for

spk_0 the next four years for a grant or a lot of $24,000. This $24,000 is yes, lower than the $50,000

spk_0 update you have. And then with that $24,000, they will one take a fee for themselves to do this.

spk_0 And then two, what they're going to do is they're going to then go to these credit card

spk_0 issuers and they're going to negotiate your debt, your defaulted debt credit card debt.

spk_0 And hopefully they're going to say, okay, we're going to give you, you know, let's say $20,000 to

spk_0 completely wipe out Abby's $50,000 of debt. And they're going to say, no, we want more,

spk_0 we want less, whatever. But let's say $20,000 of this $24 is going to be used to settle these credit

spk_0 cards, which is, yeah, that's $30,000 less of the credit card debt you had. But here's the thing,

spk_0 though, you're paying into this for four years, $24,000, which in my opinion is like, you know,

spk_0 what I rather just take that money and try and settle it myself, what I rather just say, hey,

spk_0 you know, credit card issuers jumping a creek, I don't care what you're doing. You're not going to

spk_0 get it until it's 10 cents on the dollar, right? 5,000 is what I'm going to settle for. Like,

spk_0 there's a lot of different ways to think about this. I've Abby never been in your situation. So I

spk_0 can't tell you exactly how to handle this. But what I've heard about these AmeriCorpses and like debt

spk_0 consolidation negotiation companies are not great things because what you're doing essentially is

spk_0 paying just as much in some cases to them over this period of time. And they are essentially

spk_0 pocketing and arbitraging a massive difference between what you could have settled for. So let's say

spk_0 5,000, right? 10 cents on the dollar versus what you actually ended up paying them, which is, you know,

spk_0 net to them, you know, 24,000 out of your pocket. So it's a really tricky situation. Unfortunately,

spk_0 there's a lot of misinformation and miscommunication online about how these work. Some people think

spk_0 like, oh, I'm just going to consolidate my credit card debt. It's going to be great. Whatever it's

spk_0 all done. But in actuality, your credit still goes to crap because you're not paying your credit

spk_0 cards anymore. You now have paid 24 something thousand dollars out of pocket when an actuality maybe

spk_0 could have done this yourself for 5,000, right? That's a 19,000 dollar difference. Right? There's all

spk_0 these little things that could have happened. You've already enrolled in it. I have no idea what this

spk_0 means for you when it comes to like obligation to pay and the four-year stuff, things like that.

spk_0 But here's what you need to do regardless. I need you to get on an honest budget. I need you to

spk_0 live on as little as you possibly can. And I know you've got this, this health and wellness

spk_0 side hustle. And maybe it's making money. But the 10 to 15 hours a week that you're using to try and

spk_0 build the side hustle to try and make some money. I want you to compute and calculate what that

spk_0 means on an hourly ROI on your time. And if it's $8 or $10 or $12 an hour on your time to try and

spk_0 make revenue for this business, pause, go throw boxes at Walmart or Target or go flip burgers at

spk_0 Burger King or McDonald's or give chicken to people at Chick-fil-A for $15, $18 an hour and have

spk_0 that locked in versus fingers crossed. I can try and make some money with my side hustle because this

spk_0 isn't a, I'm going to try and have a side hustle time. You guys are in desperation mode and you need

spk_0 to put yourselves in a situation where you can earn as much money definitively. Right? Trading time

spk_0 with working hourly versus like, oh, if I only work a couple more hours on the side hustle, I might

spk_0 get another sale. That's an incredible breakdown. And Abby is in a difficult situation. She's not alone.

spk_0 A lot of people end up in this place where they're further and further in credit card debt. She's

spk_0 got the heat lock on top of it, which compounds this because she can't use that to pay off the 50k

spk_0 because I'm assuming the heat lock has already been spent. So it's a tricky situation and I agree with

spk_0 you 100% Austin. If you're not making more than what you could make at a regular job with your

spk_0 side hustle and you're expending all of this time and energy, I would pause it. I would go figure out

spk_0 a way to get as much money as I can immediately to be able to get rid of this debt. And then I would

spk_0 also look at the bylaws and the terms and conditions of America Corps contract that you have with

spk_0 them and see if there's a way out. And for any of you that are in this situation, exhaust all efforts

spk_0 first before you pay someone else to help you with your problems because the fees are normally

spk_0 egregious. You could go to chat GPT for free right now and say chat GPT. I have high interest credit

spk_0 card debt. Can you write a letter for me that would be highly effective with my credit card companies

spk_0 to help me settle for a much lower amount than what I owe and what are the five bullet points

spk_0 that I should include in this letter. That right there would take you five minutes and it will guide

spk_0 you legally of the best ways to try and settle these debts on your own so you're not paying someone

spk_0 else to settle the debts. All the information you need to fix this is out there. You just need to do

spk_0 the work and then also reevaluate do a budget like Austin said because obviously you're living

spk_0 beyond your means and spending more than you make and that is a recipe for long term disaster.

spk_0 So I hope that helps. Our final question comes from Savannah on Instagram. Savannah says hi.

spk_0 My name is Savannah. I'm a new grad occupational therapist with my grace period ending soon. So any

spk_0 student loan advice would be greatly appreciated. I'm currently on the income based repayment plan

spk_0 which means I will pay 10% of my discretionary income every month for the next 20 years and then

spk_0 any balance after that is forgiven but taxable. So the big question I'm unsure if I should try and

spk_0 pay my student loans off as soon as possible or pay the minimum amount on my payment plan. I have

spk_0 $176,000 of student loans. I pay $400 a month in my car payment. I've got four and a half years left

spk_0 on that and then $500 a month on rent. My salary is $100,000 a year. 21,000 of that is at a 9%

spk_0 interest rate. 59,000 at an 8%, 54,000 at a 7%, 35,000 at a 6% and then 7,000 at a 4% interest rate.

spk_0 Love your podcast. Any advice appreciated? Just a girl in health care. Try not to feel too

spk_0 overwhelmed. Thank you for your advice. Well, Savannah, thank you for working in health care.

spk_0 We need more people like you. You are absolutely crushing it as a occupational therapist. I've got

spk_0 a couple of friends that are doing that as well and making 100K. You are just you're doing it girl.

spk_0 So congratulations. You deserve that salary. Here's what I would do. You got $100,000 a year

spk_0 after taxes 80,000 a year. Let's call it $6500 a month that you're taking home after taxes

spk_0 to your bank account. So 500 that goes to rent. 400 that goes to your car. Now we have $5600 left.

spk_0 I would take anywhere between 35 and 45, $100 every single month and use it to start investing.

spk_0 I want to get as much money as I possibly can invested before I start paying off the student

spk_0 loan debt aggressively. That's our rule of thumb is like, we want you to be out of student loan debt.

spk_0 We want you to pay back what you borrowed. We think that's what people do. I did that.

spk_0 You pay off your student loans. But don't do it until you have the same amount or more invested

spk_0 in the stock market. So making 100,000 a year with $500 a month in rent and $400 car payment,

spk_0 okay, perfect. So you got $5600 bucks. Take $3600 of that every single month. So leaving

spk_0 you an extra $2,000 to live on beyond what you just shared with us. That's $43,000 a year that

spk_0 you can start investing. Do that for three years, four years. Now you've got $130,000, $50,000,

spk_0 $70,000 and you're still in your mid 20s. You're doing the slow pay bank plan, whatever. And now you

spk_0 can say, okay, cool. I've got $150, 170, $200,000 invested in my Roth IRA, my bridge account,

spk_0 whatever you want to do there. Now I'm going to start to pay off the student loans. Maybe you're

spk_0 five years later, you're now making 160,000 a year, 150,000 a year. So now I got a little bit more

spk_0 wiggle room in your budget. There's a lot of different ways to think about this. I believe you

spk_0 should pay them back. I believe you should pay them back after you have the same amount or more

spk_0 invested in the markets and growing for you. Watch the episode we made talking about every dollar

spk_0 invested in your 20s turns into $70 in retirement. So if $3600 a month that you're investing turns

spk_0 into a quarter million in retirement, put that in perspective. Robert, what should take?

spk_0 I think you're spot on and I love this strategy because if you look at the real math,

spk_0 if her payment plan is based on 10% of her net income and she nets $80,000 a year. So she has to

spk_0 pay $8,000 a year for these payments collectively with these high interest rates. If she gets ahead of

spk_0 this, gets her base built, gets that $120,000, $150,000 saved and put away, it's going to make more

spk_0 than she has to pay out just by growing and compounding on itself. So it's going to leave her net

spk_0 positive on these payments that she has to make for the student loan debt. So and I'm also a big fan

spk_0 with student loan debt and I get a lot of guff for this but I'm a big fan of kicking the can down

spk_0 the road because there is a world where we might see a real new program that says, hey, moving forward

spk_0 in 2026, 2027, we're no longer going to allow these egregious 8, 9% interest rates on student loan debt.

spk_0 So we're going to let people roll it all up and it's going to be 4% interest which then is going to

spk_0 knock down your growing balance with a lower interest rate. So I love your strategy there, Austin.

spk_0 And I think she can become net positive doing this strategy but also she's letting compounding do

spk_0 its job to help her have a baseline of that 100k plus that we like people to have.

spk_0 Yeah, I had a friend who's PT and she makes like 150,000 a year. She's like late 20s or early 30s.

spk_0 No money ever invested because all she was trying to do is every spare dollar she had, she was like

spk_0 trying to pay off the student loans, they have the student loans. And then I think it was like 18

spk_0 months ago to years ago. I sat her down and I explained to her that like, hey, you're 27 or 28 or 26,

spk_0 I was like, listen, do this. I think at the time it's called a save plan where you can like defer your

spk_0 student loans for 12 months and like interest doesn't accrue or something like that. But like during

spk_0 that 12 month period of time you were paying a thousand a month to your student loans, take that

spk_0 thousand and go put it in your Roth IRA and then let that grow. And she did and now her Roth IRAs

spk_0 in the tens of thousands that she wouldn't have had beforehand because she was just trying to focus

spk_0 on paying off the student loans. And you know, she would have finally paid them off by the time

spk_0 she was 40, which is like, congrats. She paid off anything in her case about 220,000 dollars of

spk_0 student loans. But it's like, what if you took that same 220 and after tax dollars that would have

spk_0 hit your bank account and put it in a stock market over the same 20 year period of time. So you just

spk_0 got to be smart with the stuff Savannah. We're proud of you. You're doing great. Just be smart,

spk_0 be smart, be smart. Everybody, thank you so much for tuning into this week's episode of the Rich

spk_0 App is podcast. It was an absolute blast. Walking you all through the three major things to do with

spk_0 your retirement accounts, your donations, your FSA, your HSA, all the fun stuff. If you learn

spk_0 something, please consider sharing this with a friend. Please consider giving us a five star review

spk_0 on Spotify on Apple. If you've not yet subscribed to the show, hit the subscribe button on Spotify,

spk_0 Apple, YouTube, there's like half of you that listen to the show that don't even subscribe,

spk_0 which is crazy to us. So please consider subscribing. Thank you for coming back. And if you want more

spk_0 access to Robert and myself, consider joining the Rich Habits Network. This is our community for

spk_0 our biggest fans. Robert, every Tuesday night, we're in there on a Zoom call, having a two hour

spk_0 conversation via Zoom, we're called our weekly live stream, opening up our playbook, sharing our

spk_0 portfolios, giving you all the deepest insights and updates as it relates to what we're doing with

spk_0 our money. You were also unlocking investment opportunities. You guys can invest alongside of us into

spk_0 some really cool pre IPO companies. And it comes with eight hours of video coursework talking about

spk_0 retirement, investing, real estate, buying businesses, analyzing stocks, all the fun stuff. So be sure to

spk_0 go check out the Rich Habits Network. Seven day free trial is still in the show notes below.

spk_0 Yeah, I love the network. And I think anyone looking to level up, if you follow us on Instagram or

spk_0 YouTube or you watch the show and you find value, the network is definitely for you because we do

spk_0 everything that we do here every single week on the podcast in the community and in the network.

spk_0 But it's on steroids. It's completely just way deeper. A lot more great information plus the

spk_0 community has grown and there's so many incredibly smart people in the community. So it's a great place

spk_0 to be if you're leveling up and you're at a place where you can dedicate the time to actually get in

spk_0 there, check out the modules, join the calls, take notes and really help yourself because we all have

spk_0 blind spots and weaknesses when it comes to building wealth. And we're here to change that by providing

spk_0 as much value as we can every single week. So thank you for stopping by. Thanks everyone and have a great

spk_0 start to your week.

138: Your Year-End Money Checklist — Don't Ignore These

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