How to Build Wealth on Less Than $60K a Year + Investing for Retirement Income (ft. Nick Maggiulli)

**Scott Galloway** (0:00)
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**Scott Galloway** (2:19)
Welcome to Prof G on Personal Finance, a special episode where we're joined by Nick Maggiulli, the Chief Operating Officer for Ritholtz Wealth Management and author of the blog of Dollars and Data. Together, we'll discuss how to build wealth at every stage of life, from saving on a modest income to investing for retirement to navigating today's housing market. Nick, ready to get into it?

**Nick Maggiulli** (2:37)
Yeah, let's do it.

**Scott Galloway** (2:39)
All right, question number one. Our first question comes from a listener who texted the Office Hours hotline. Everyone talks about how to be rich, but no one talks about how to be poor. How would you save for retirement if making under $60,000 a year?
How would you structure your debt payments like student loans, credit, and mortgage? Nick, thoughts?

**Nick Maggiulli** (2:56)
I think the first thing you got to do is make sure you're making the minimum payments. I think you don't make those and you start getting late fees, all those types of things. So as long as your minimum payments are taken care of, you have your emergency fund. So the first two things, after that, you rank order everything from highest to lowest return, or you can say highest interest rate to lowest interest rate. Then every extra dollar after your minimum payment, you then put into the highest return thing. So credit cards, 18-24 percent is where you're getting charged on that. Every dollar you pay off your credit card debt, you're basically earning an 18-24 percent guaranteed return. There's no place you're going to get a guaranteed return of 18-24 percent. So you're going to attack your credit cards first, then you're probably going to go down the line and you're going to find, oh, my student loans are 8 percent, my mortgage is, I don't know, 7 percent, six and a half right now in the markets today. So it's like you start going down the list, you pay off your credit card debt, then you attack your student loans, then you attack your mortgage. In terms of retirement savings, I say conservatively a diversified portfolio should get 5 percent a year. So of the ones listed, that's the bottom of the list. So if I were going through, I would be attacking all the debt stuff, and then I do the retirement savings at the end. So that's how I look at it is like return per dollar invested, and I think you have to attack the higher interest rate things first before you start going down the chain.

**Scott Galloway** (4:19)
Yeah, that just makes a lot of sense. And the only couple of wrinkles I would add is also see if there's a way to elegantly refinance some of that debt to lower interest rates, whether it's some institutions like SoFi, if you go to a quote unquote went to an elite institution, will refinance your student debt at a lower interest rate, are the ways to transfer your credit card balance and lower interest rates, refi your mortgage, like how do you bring your interest rate cost down? But Nick's absolutely right that the best investment is getting rid of debt that's at a rate that you probably can't match in the markets. The only thing I would add is once you get your debt under control, there is some good debt. I would argue that a decent mortgage is, that's good debt, it's tax deductible, it's fairly low interest usually, usually you can do better in the market.