Q&A: Unemployed MBA Grad, Starting a Fitness Business & Paid-Off Truck
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How do Austin and Robert introduce the Q&A format and how can listeners submit questions?
Hey everyone and welcome back to the Rich Habits Podcast question and answer edition brought to you by public.com. These are Thursday episodes where every Thursday we put ourselves in your shoes, pretend we're going through whatever you're going through and answer your questions. You can ask us questions on Instagram at richhabitspodcast, or you can email us questions at richhabitspodcast at gmail.com. We've got, I don't know, Robert, another 100 questions coming at us via email this last week and another 200 in the Instagram DMs. So if your questions have not yet been answered, please don't lose patience with us. We're trying to get back to everyone, do everything we can. And I'm excited for this episode, Robert.
Let's just jump right in, man. Let's do it. it so our first question comes from nick d nick says hey i'm 30 and i paid off my house and my truck this year wow nick let's go dude nick says i make 75 000 a year and i have 18 000 in a six month cd paying four percent i also have four thousand dollars in a high yield savings account i keep four thousand in my checking my roth 401k has 125 000 and my roth ira has 15 000 which by the way holy smokes All that at 30 years old, plus the paid off house and the truck. I don't know what you're doing here, Nick, but you're making some good money and you're making some good money decisions. So this is awesome. Nick says, my question is, I'd like to tear down my house and build a new one.
I'm currently saving by moving my money into my Roth IRA every year and then pull the principal out once I hit a certain number. Is there a different account I should be using instead? Thanks again. I really appreciate the podcast. Good question, Nick. So first off, I'll answer your question directly. You should be using a different account. You should treat your Roth IRA as your retirement account, an account that you're only contributing money to and investing through and building, right? Because remember, all the profits in this account are tax-free. They'll never be taxed by the federal government. So what's taking place now inside this Roth IRA, these contributions of $7,500 a year get invested, they compound, and yes, you can pull your principal out penalty-free, tax-free.
You can do that, but that's not a good wealth building strategy. We want people to contribute money to this Roth IRA. Robert and I believe it's the best, most powerful wealth building tool that's given to us as investors. us citizens here is to contribute to this roth ira let it compound and grow tax-free do not be using the roth ira as this kind of piggy bank if you want to use a piggy bank just do your high yield savings account you can earn interest in that high yield savings account of three or four percent i guess depending on what the feds got going on and that's how you can really piggy bank and have your number that you want to hit and pull it out and whatever you want to do there right
Robert, I'll let you give your take, but I want to hear your perspective on having a paid-off house and then tearing it down to build another one. I mean, you do a lot of real estate. What is this?
Yeah, I think it's bad timing, honestly, because he's doing so well right now. And the way I look at it is... Let's say they tear down the house, that costs 20 grand. Then they build a new house and let's say it's 500 grand. And you do a construction to permanent loan to build the house, prep the land, get all the things done. And that down payment is 10 to 20%, which is pretty traditional. You put yourself in harm's way to where all of a sudden all that money that Nick's got saved up and doing well and all of that goes bye-bye. Because then all of a sudden he's doing great and it seems like he's on top of things. But then if you have to come out of pocket $100,000 to build this home and furnish the new home and do all of these things, all of these hidden costs, Nick's going to be going backwards for a very, very long time.
Should I withdraw Roth IRA contributions to tear down my paid-off house and build a new one?
And I don't like to see that because in this situation, Austin, you and I talk about building the base of that $100,000.
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Chapters
4 chapters
1
How do Austin and Robert introduce the Q&A format and how can listeners submit questions?
0:00–3:47
2
Should I withdraw Roth IRA contributions to tear down my paid-off house and build a new one?
3:47–12:31
3
What are the financial risks of demolishing a paid-off home and financing new construction?
12:31–29:38
4
How should a fitness coach set up an LLC, business bank account, payroll and marketing?
29:38–37:30
Speakers
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