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HerMoney with Jean Chatzky
EP 500: Andrew Ross Sorkin on Protecting Your Money If The Market Crashes
00:47:19
Could we be headed for another 1929-style crash?
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- [00:01]
A
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B
Every crisis is the function of leverage. Too much debt, that is the match that lights the fire. And right now there is the beginning of lots of leverage in the system around artificial intelligence. Consumers are taking on more credit than ever. And then on top of that there's this other layer that was very prominent feature of the 1920s was this idea that we wanted to democratize finance. We wanted the ordinary investor to be able to get in on the action more than ever before.
- [02:19]
C
Hey everyone. Welcome to Her Money. I'm Gene Chat Sky. I don't even need need to preamble this for all of you. Andrew Rossorkin is my guest today. Andrew's new book, 1929 Inside the Greatest Crash in Wall Street History and How it Shattered a Nation. It takes us deep into the lead up to the crash and what it meant for millions of Americans. It's not just a history lesson, it's a wake up call. Because as we head into the last quarter of 2025, he says some of the patterns from nearly a century ago are starting to feel a little too familiar. We are Going to take a very quick break. Pop quiz. Can you name all your financial accounts right now? 401k savings, credit card, mortgage, investments. My producer, Hayley thought she could until she started using Monarch and discovered a crypto account that she hadn't touched in years. With a couple hundred dollars just sitting there, that one surprise made her realize how easy it is to lose track of your money, feel organized and confident in your finances with Monarch, an all in one personal finance tool that brings your entire financial life together in one clean interface on your laptop or your phone. And right now, just for our listeners, Monarch is offering 50% off your first year with code hermoney@monarch.com Now Hailey uses Monarch to keep everything in one place, spending savings, investments, and even shared budgets. No more spreadsheets, no more surprises. Don't let financial opportunity slip through the cracks. Use code hermoney@monimal.com in your browser for half off your first year. That's 50% off your first year@monarch.com with code HERMONEY. Andrew Ross Sorkin. Welcome to Her Money.
- [04:17]
B
Oh, my goodness, it's so great to see you. I'm so excited to be here with you.
- [04:21]
C
I'm thrilled to have you. And I just want to start with the big fat elephant in the room. How likely is a downturn like we saw in 1929? And what is your best guess as to when that might happen?
- [04:35]
B
It's unfair because I only play an expert. I only play as an expert on tv. My sense and my hope is that we won't have a crash that leads to a Great Depression like 1929. But I do think it's almost impossible not to believe that we won't have some kind of crash that is more akin to what happened in 1999, which is to say that, you know, we had an enormous Internet bubble. It was an exciting technology. It's still with us today, obviously. But there was what some people would call a massive, massive correction. And I think when you look at what's happening today in our economy and a lot of the imbalances, but really the excitement in euphoria around artificial intelligence and all of the frankly indiscriminate spending that's going on in that space, which is similar to what was happening in the late 90s, it wouldn't be surprising to me if there was a big pullback at some sort. But the truth is, and you know this better than anybody, it's always paid much better to be a professional optimist than a professional. Cassandra.
- [05:39]
C
100%, you pulled one of my famous Hemingway lines out and put it in the book. How did you go bankrupt? Two ways, gradually, then suddenly. I loved it. Then I loved it when John Green riffed on it in the Fault of Our Stars. So how similar are we to 1929? And when you look at the data, and you look at more data than anyone I know, what else besides the massive spending on AI are you seeing in the numbers?
- [06:14]
B
Well, so there's a couple of things going on. One is there really is a sort of sense of euphoria around artificial intelligence, a sense that it's going to change everything. In the same way that in the 1920s there was technologies like automobiles and telecommunications and radio that people thought was going to change everything. And it did. But as a result, people way overspent. At the same time. I always think that every crisis is the function of leverage. Too much debt, that is the match that lights the fire. And right now there is the beginning of lots of leverage in the system around artificial intelligence. Consumers are taking on more credit than ever. So there's a number of things in that vein that I think are anxiety producing to some degree. And then on top of that, there's this other layer that's also very. That was very prominent feature of the 1920s was this idea that we wanted to democratize finance. We wanted the ordinary investor to be able to get in on the action more than ever before. And that's happening now in a completely new way around things like crypto and private equity and private credit and venture capital, all of which are going to be in our retirement plan soon and available at retail. And by the way, some of that crypto and meme coins, those are also super leveraged. I mean, I don't know if you've looked, there are option trading and other things that people are doing. You could be buying Bitcoin. 20 times leverage, 50 times leverage. There's some, some wild things going on out there.
- [07:42]
C
I have been watching the consumer debt numbers just like I was watching them in, in 2006, 2005. I started to get worried back then when I read this nugget that we own of our homes than we had in the past, that we had just started pulling equity out of our homes because it had gotten way too easy when it comes to consumer debt. Are we ever going to learn the lesson of taking our feet off the gas, taking our foot off the gas a little bit? There's this feeling in the air. And I think it was true in 1929 as well. And it was certainly true in 2008 that people believed that they couldn't lose and that is what got behind the borrowing. Do you sense that we're in that kind of mania again?
- [08:35]
B
I think that we unfortunately are in a bit of that mania. And there's a keeping up with the Joneses kind of mentality. Yolo, you only live once. I think social media feeds it with a lot of fomo fear of missing out. And I think there's a whole generation, by the way, that I don't want to say grew up during the pandemic, but that pandemic period actually, where a lot of people had a lot of cash because they weren't spending it on commuting to work and buying lunch and doing all of those things, and it sort of went to all sorts of other things. I think it's actually led people to extend themselves even more now than ever before. Also the sort of buy now, pay later, I call it buy now, pay never phenomenon that's taking place. We have more ability and facility to take on this kind of credit. And look, I think the lesson, whether whether it was the folks who were living through 1920s or those of us living through the 2000s, is humanity always wants more. We always want more. There is a semblance of greed among us. I hate to say it, but it's who we are.
- [09:46]
C
Do we ever feel as if we're on the verge of a crash? I mean, in light of that, always wanting more. My husband sent a note to our financial advisor actually yesterday. He copied me on it. He's like, this is just getting frothy. This is frothy. I'm getting worried we're closer to retirement than we were the last time that this happened. They're going to tell us to stay the course. I know that, but I want to have this conversation. And to me, that's him feeling like we're on the verge of a crash. And I'm pretty risk averse as well. So I always feel like we're on the verge of a crash. But I don't think that most people do.
- [10:30]
B
I don't think that most people do either. And I think even when they do and they see the market continuing to go higher, they say to themselves, again, they fear of missing out. I mean, I remember go back in 2003, four, five, every year there was a new article, new cover story somewhere saying that we were in a real estate bubble every year. And if you didn't buy a home in 2003, I know people who didn't own a home in 2003, who said, you know what? I'm going to wait a year because everybody's saying there's a bubble, it's going to pop, I'll buy in 2004. 2004 comes along, the market's up 10, 15%. The same article comes out again. They say, okay, I'll wait till 2005. They get to 2005 and they say to themselves, I think the train's leaving the station. If I don't get on the train now, I'm never going to get on the train. And of course that's always a problem. Timing is impossible, but timing is so important. So in the context of depending on what your time horizon is, you talk about this a lot on the pod and in your writing. If you are retiring or you actually do need the cash and you're worried about a crash, yeah, it might be worth having a rainy day fund that's available to you. I wouldn't suggest otherwise. On the flip side, if you have a 10, 20, 30 year time horizon, I like to believe that you will be better off in 30 years having stayed the course back in 1928, you'd appreciate the story. Charles Merrill, who ran Merrill lynch, told people to get out of the market. And he was right in a certain way, but actually very wrong in another way. Between the beginning of 1928 and September of 1929, the stock market went up 90%. So if you had listened to Charles Merrill, you would have not been the happiest camper. So this is why it's complicated. And even, by the way, interestingly, I think most people don't know this about 1929, the market dipped by 50%. You couldn't call it a dip, a crash. 50% by November 13th. But by the end of the year, the stock market was only down 17%. Now, the reason why so many people lost their homes and were effectively flushed out of the economy and scarred by this was they had taken on so much debt to buy stocks that when the market did go down by 50%, it wasn't that they just lost the equity value. It was that all of a sudden they owed 10 times that effectively to the banks.
- [12:56]
C
We focus, as you know, on people's personal economies on this show. We try to try to take what's happening up here and bring it down to a level where we can use this information to sort out our own lives and make some smart decisions about getting to the future that we want to get to. If you talk to many middle class Americans right now, they will tell you that it's rough out there, that they are looking at their health insurance premiums that are going to soar next year, that they've taken on too many of those buy now, pay later packages, that they lost their job and it's taking them a lot longer to get the next one, even if they did everything right, like go to a coding boot camp. Right. How do we put this into context? The fact that the market is over here going great guns, and yet there are so many people who are just not feeling it. And as a follow up, before you even answer, should those people be looking at putting their whatever money they have to work as a way to dig themselves out of this hole?
- [14:20]
B
I think it depends on, again, how much time you have, how much patience you have, and what kind of hate to say, I hate the phrase risk tolerance, but you know, how much risk you're prepared to pay and what kind of nest egg or rainy day fund you already have. I'm, for example, I've never been a crypto guy, by the way, maybe wrongly, at least thus far. There are people obviously who I've been investing in crypto, and that's been like a lottery ticket for a lot of people. Usually I tell people you need to avoid lottery tickets because usually in the lottery most people lose for whatever reason. If you bought into Bitcoin over the last decade, you were on the whole, a winner, a big winner, a shocking winner, actually. So I think, I don't want to say that the market is a way to dig yourself out of a hole, per se. That sounds like going to the casino and placing all your money down on the blackjack, you know, doubling down and sort of praying. And that doesn't seem like a great idea either. But I do think that people should generally, on the whole, again, if they have long time horizon, be in the market. That has been a winning formula for a very long time. But I recognize that a lot of people don't have the cash to even do it. And so that, that is actually the hardest part about this right now.
- [15:40]
C
Yeah, 100%. One of the most fascinating characters in your book is Evangeline Adams.
- [15:47]
B
I love Evangeline Adams.
- [15:49]
C
Evangeline Adams, an astrologer known as the stock market seer, famously said the Dow could climb to heaven. We don't turn to astrologers for financial advice. At least I don't turn to astrologers for financial advice. But we do have, we have that chairs. We have Jamie Dimon. We have, you know, we Have Buffett and Jamie Dimon just recently warned that the risk of a crash is higher than people think in moments like this. Who are you listening to? And how do we cut through the noise and focus on what matters?
- [16:28]
B
Oh, this one is so hard because Jamie, I think, look, I have great admiration for Jamie in part because he's been very cautious over all of his years, and he's often preaching caution, and he's preaching caution now, but by the way, he was preaching caution three and four years ago as well. And so if you listen to that caution, which I think is very valuable, you might have said, okay, I'm going to take my money out of the market or I'm going to put a little bit of extra over here. And if you have a lot of money, you can do that, and you can afford to do that. But if you hadn't been in the market these last four years, you would have a different opinion of this entire situation. So I think the important thing to do is to try to weigh a couple of different sort of Yodas or Evangeline Adams in your life, which is listen to a Jamie Dimon and try to understand what he's anxious about. But I also do think you need to listen, oddly enough, to folks like Jensen Huang, who runs Nvidia, or some of the folks who are involved in this technology who saw something that a lot of other people clearly didn't and have become very successful doing it. Now, one of the things is, as you become more and more successful, there's another character back in 1929 called Charlie Mitchell. They used to call him Sunshine Charlie, and he was a little bit like a Jensen Huang because he always was an optimist all the time. And as things got progressively higher, he didn't temper his optimism, he doubled down his optimism. So I think you just have to be careful about all these things. But I'm more in the Warren Buffett camp of what he tells his family members, which is buy these indexes and hopefully go about your day.
- [18:14]
C
Is that a product of having worked at the Times and CNBC for such a long time? I mean, when I was at Smart Money and Money, we were restricted. We were just not allowed to buy things. It was very hard to buy anything because you could be reporting on it the next week. And so 100%.
- [18:35]
B
So for me, I'm not allowed to buy individual stocks, and that's so that I can talk about these things independently. That's because I'm privy to inside information and all sorts of other things. So there's a lot of reasons that I do that. Having said that, the truth is that my Little S&P 500 Index mutual funds and other things have for the most part, outperformed most professional managers who do this for a living. So if you go back 20, 30 years that I've been doing this, it's not clear that had I been able to buy stocks individually that I would have outperformed everybody else. In fact, the truth is I probably wouldn't have.
- [19:16]
C
What do you think the lesson in that is for individual investors? I run an investing club with Karen Feineman for women. We teach investing to hundreds of women every other Monday night on zoom. And we know full well that many of the women in our club index funds, index funds, ETFs, that's what they're doing. But want to be able to participate in the conversation and that's why they come. So how do you think that individuals should be?
- [19:50]
B
Well, look, the one thing I do over the years is even though I'm buying index funds and I said it's so hard to time things, I do think I've been decent about timing things over time. I've gotten it wrong. But I think if you're part of the conversation and you understand hopefully some of the cycles and where we are in cycles, you can allocate more into an index fund in particular moments and maybe sell out of an index fund and maybe move it in other places. I don't do that regularly at all, frankly. But you know, there have been times where I decided, you know what, I'm going to keep a little bit of cash on the sidelines. And then there's been moments where it looked like the market on a historical basis was dropping. And I thought to myself, okay, you know what, on a relative basis, this thing is off now 10, 20% compared to history. This is probably a better time to put that cash to work. In that way, I probably haven't been as good about selling when things have gotten higher than they should be.
- [20:49]
C
We are going to take a very quick break. When we come back, we'll talk about the human side of a potential crisis and the politics and policy that could prevent us from repeating history. Back in a sec. You've heard this story before. When I first moved to New York after college, I was so deep in credit card debt just trying to stay afloat. Every overdraft fee, every late payment, it all made getting ahead feel so out of reach. My younger self would have seriously benefited from chime. That's because with chime when you set up direct deposit, you can get paid two days early. You can access fee free overdraft up to $200 and skip the monthly maintenance fees altogether. Chime also gives you access to over 47,000 fee fee free ATMs. That's more than the top three national banks combined. And you get real time alerts that help you stay on top of your balance and your spending. Work on your financial goals through Chime today. Open an account in 2 minutes@chime.com hermoney that's chime.com hermoney Chime feels like progress. Chime is a financial technology company, not a bank. Banking services and debit card provided by the Bancor Bank NA or Stride Bank NA members FDIC Spot me eligibility requirements and overdraft limits apply. Timing depends on submission of payment file fees. Apply it out of network ATMs, bank ranking and number of ATMs according to U.S. news and World Report 2023 Chime checking account required you all know and love Katherine, our chief content officer here at Hermoney, and lately she's been raving about a small change she made to her morning routine, one that has actually stuck. She's starting her day with a simple habit that's helped her feel more energized, more focused, and honestly, just more balanced, especially as we head into the chaos of the holidays. It's called AG1, a scoop a day daily drink that blends 75 vitamins, minerals and probiotics into one easy step. Katherine loves that it replaces a whole lineup of supplements, supports her gut, health and immune system and actually tastes good. Want to give it a try? Head to drinkag1.comhermoney to get a free welcome kit, including a bottle of vitamin D and free AG1 travel packs when you first subscribe. That's drinkag1.com hermoney we are back with Andrew Ross Sorkin, author of the new book 1929. One of the things I think you do so beautifully in this book is beautiful. Bring real humanity to the people behind the numbers. They weren't all villains. Many of them were just caught up in something bigger than themselves. Why did you decide to tell the story this way?
- [23:48]
B
Look, I think a lot of people look at the world and at crises like this and have written books, by the way, about this period of time and other crises in the context of economic cycles and political structures and numbers and charts. But to me, every story is a human story. It's about people who make decisions, oftentimes bad decisions, and what are their motivations and what are their incentives? And if you can understand that, by the way, it's those people and their decisions that lead to these economic cycles. And so to me, if you can tell that story of who they are and you can feel it and you can understand it, you can also then start to understand everything else going on around it. It's a way into this remarkable period of time. And selfishly, I'd written this book, Too Big to fail, about the 2008 crisis. And after that, people used to ask me all the time, how does it compare to 1929? That's the famous crisis that everybody knows about. And yet I didn't know much more than anybody else. I think we all thought something very bad happened in 1929, and then the Great Depression happened. And I thought, who are the people? What are they doing? What were they saying? Who are they having affairs with? Why are they doing all of this? And that was the story that I set out to tell through really going back in archives all over the country, in fact, the world, to get letters and memos and diaries and transcripts and depositions and all sorts of material so you could actually be with these people really, for the first time.
- [25:18]
C
Were you surprised in the treasure trove of information that you were able to dig up, did you have a sense that it was there? Was it easier or harder than you thought it was going to be?
- [25:32]
B
So I had a head fake in this project, to be honest with you. Very early on, I landed on what I thought was a mother load of information around a character named Thomas Lamont who was running J.P. morgan. And I thought to myself, okay, good. This is amazing. Now I can do this. I'm sure every. All of my main characters, there's archives like this.
- [25:53]
C
And.
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B
And actually, I went back to the archivist and I told her what I was trying to do. And she said, you're not going to be able to do this. This doesn't exist. There's not an archive or two or three that you can just go mine. It's just not available to you. And I took that as a personal challenge. And she wasn't wrong in that there really weren't one or two or three places. It turned out to be this sort of mystery of a puzzle that I was trying to piece together in this sort of very complicated way. So it. One of the reasons this project took as long as it did, it took eight years was just the difficulty and challenge of finding the kind of granular detail that could get you in the room and make you feel like you really were there, and so you could understand their characters and their motivations and, frankly, their insecurities. A lot of times I feel like people at the top are being driven by something to prove they're trying to fill some kind of hole. Money is oftentimes just a proxy for something else, 100%. And I felt that a lot of the time I spent was trying to understand these people as people, so that by the time you could see them making these decisions, even the bad decisions, the decisions that seemed irrational in the moment, there was some rationality to it because you understood where it came from.
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C
You write that aside from people like Richard Whitney and Albert Wiggin, most of the major financial players didn't necessarily do anything worse than what most people in their shoes would have done, that the markets are messy, and, as you're saying, the greed often cancels out greed, and sometimes that's how we get to fair prices. As you look at the litany of characters in this book, who are the ones that you want us to learn from most, and what lessons do you want us to take away?
- [27:41]
B
So there were people who made terrible decisions and immoral decisions, but as you were describing, there were no rules back then. There was no sec, There was no insider trading. It was a true battle of wits, wits against wits. And what's so interesting about that is whoever's buying a stock thinks that they're smarter than the person selling the stock. And whoever's selling the stock thinks that they're smarter than the person buying the stock. And so a lot of the sort of manipulation that was going on, even back then, when there were no rules, was a function of the fact that people thought that was just another way to outwit the other side, if you will. I think the characters that matter are people like Charlie Mitchell. He ran a bank called National City, becomes Citigroup. He really developed modern credit. Called himself Sunshine Charlie. And he. He was somebody who was. He said, I wanted to sell stocks like they were neckties, take the mystery out of all of this. But he never really relented in that optimism. And there's a question mark about sort of whether that optimism was therefore misplaced. And I think his own personal story, he ultimately gets arrested. I won't tell you what happens after because it's just fascinating. Does something with his wife that gets himself into a lot of trouble. And I think a lot of people have different views of what. Charlie Mitchell, he was really the Jamie Dimon of his time. He was that famous on cover magazines. And, and then the other person that I actually think is of two people are fascinating characters that we can learn from. One was Carter Glass. A lot of people may know Carter because Carter Glass was a senator in Virginia, created the Glass Steagall Bill, which broke up the banks in 1933. He was the Elizabeth Warren of his time and he was the Cassandra in the room. He was the one saying, in fact, he was saying Mitchellism, Charlie Mitchell was going to ruin America. All the speculation, everybody going crazy. And how do you tamp down that speculation? And that's a very interesting question. Even today, if you're the Federal Reserve or you're a policymaker, you know, if you think AI is going too crazy, how do you tamp that down without tipping over the economy?
- [29:41]
C
Do you think our current system has the guardrails in place to prevent something, an occurrence like we saw in 1929, or are there other policies that you would tee up if you were running Washington right now?
- [29:58]
B
So if I was running Washington right now, the thing that has me most worried about what's taking place in the stock market today is the emergence of these new financial instruments that I mentioned earlier around crypto and private equity and venture capital, all of those things. I think anytime the new products emerge, and I'm not against innovation in finance, I think we. It would be great to have access to more of these kinds of things as well. It's that it has to come with transparency. Just five years ago, there was this amazing. You talked about SPAC boom, blank check boom. And invariably people thought that was a lottery ticket. And it was like a lottery ticket because most people lost and very few people won. And that was because the incentives were not aligned, the transparency wasn't there. People did not really understand who was collecting the fees and what was happening. And here we have a whole new boom taking place in these new structures that effectively are taking the guardrails down around things like transparency, taking private assets that have no disclosure requirements and effectively putting them in the public markets with leverage, no less. So I think those are the things people are going to be buying. Some of these instruments, they look like stocks in a way. You can buy them any day. But the truth is, if you read the rules, if you read the fine print, in some cases you can't sell them on any day. If too many people try to sell them at one time, you actually can get locked up and have to wait to sell them. So there's a whole bunch of new things happening that I don't think the public is Fully educated about yet.
- [31:26]
C
No. And that's why this move to put private equity, private credit, crypto into 401ks has me incredibly worried. I mean, right now, we have employers essentially standing between that happening. Right. The employers are the guards, and they have to allow these things into their particular plans. But I agree with you. I think it's. I think it's fairly inevitable that we're going to see it. How do you suggest that people get the information that they need to make good decisions?
- [32:00]
B
Well, look, my hope is that there will be rules. I'm not hopeful in this moment. Actually, there'll be new rules, but I think when these things come to the marketplace, the SEC needs to push really hard on different kinds of disclosure rules and different kinds of auditing procedures. You know, a lot of these private funds have what's called a nav, effectively a valuation. Who's doing the valuation? Typically, it's the manager of the fund. In the future, I think you're going to want to have third parties, for example, doing some of those things. And so I think we're going to need some new rules around these instruments so that they don't become a problem. And you're right. From the context of the retirement programs, it is the employers right now that are keeping these things from happening, partially because I think they're worried about the liability issues. And maybe that will. That will protect us, but it will probably only protect us for so long because I imagine some of the financial firms will be the first to start allowing their employees to participate in these things because they're going to have an incentive to do that, because these funds will be their clients.
- [33:05]
C
All right, I want to end this conversation on a hopeful note. What's the silver lining in looking back this far? Does understanding the past give you greater clarity as far as the future?
- [33:19]
B
It does, and I'll tell you why. Because even though we had a crash in 1929, and even though we had a crash in 1999, and even though we had a Crash in 2008, things invariably have gotten better every single time. I remember reporting this is 20, 25 years ago. Every time there'd be a headline around a war, for example, or a missile would go off or something like this, the stock market would drop. Doesn't happen anymore. One of the reasons doesn't happen anymore is because after these headlines, that typically meant that the stock market would drop. The truth was we all learned that they were buying opportunities, that over time, things get better. And I like to believe, I want to believe that is the case. I actually am very excited about AI and new technologies. And so I do have optimism about our economic future. And in truth, I have optimism about our more broad future. I've got three kids, so I have to.
- [34:18]
C
Absolutely. I've got two of my own and I have, yes, a very optimistic viewpoint for them as well. Andrew, thank you for this. Thank you for the conversation. Thanks for writing the book. I'm sure that our listeners are going to dig right in. We appreciate it.
- [34:35]
B
Thank you.
- [34:36]
C
And we'll be right back. Is your wireless bill still way too high? If so, it might be time to rethink what you're really paying for and what you're not. At Mint Mobile, their favorite word is no. No contracts, no monthly bills, no overages, no hidden fees, no bs. Mint is changing the game with premium wireless starting at just $15 a month. Every plan includes unlimited talk and text and high speed data, all delivered on the nation's largest 5G network. You can even keep your own phone and number. So switching is seamless, just better service, fewer headaches and a lot more savings. Ready to say yes to saying no? Make the switch now@mintmobile.com hermoney that's mintmobile.com hermoney upfront payment of $45 required, equivalent to $15 a month limited time new customer offer for first three months only. Speeds may slow above 35 gigabytes on unlimited plan taxes and fees extra. See Mint Mobile for details. Today we are diving into a topic that might not be the most glamorous part of your financial life, but it's absolutely one of the most important, and that's insurance. If you have ever wondered if you have too much insurance or not enough or maybe just the wrong kind, then this segment is for you. Because insurance is not just about policies and premiums. It's about making sure that everything that you have worked so hard for stays protected, no matter what life throws your way. Joining me to tackle some of your questions is HerMoney's editor in chief, Katherine Tuggle. Katherine, nice to see you. Hey, Jean.
- [36:32]
D
I have to say, I love that we're talking about this today because it's one of those topics that people tend to push to the back burner. We've heard that so many times, you know, until something goes wrong, which of course, then it's too late. But we've seen that a few small changes or updates can really make such a big difference. And our questions today are from listeners who are navigating major life milestones. They might be selling A home, retiring, traveling more, or really just shifting how they spend and live.
- [37:00]
C
Yeah, amazing. This is what we used to at Smart Money magazine call a real life story. It was the kind of thing people would bring into story meetings, thinking, oh God, this is going to be a snooze fest. And instead everybody would just be be wrapped with attention because everybody deals with this stuff at some time or another. So thanks for pulling these questions from our listeners. Thanks to our listeners who submitted them. Our friends at Nationwide are sponsoring this segment and they helped us dig into some of these questions with resources for how to save and what kind of insurance policies actually make sense for you. So let's a look take jump on in.
- [37:42]
D
Absolutely. Our first question says, hi, Jean, my husband and I are resizing our property now that the kids are out of the house. And I'm just realizing that our homeowner's coverage hasn't been updated in years. What should we be paying attention to when adjusting coverage for a smaller home? Are there common things that people overlook or that just need to be adjusted, like liability or personal property limits? Thanks so much, Stacy.
- [38:08]
C
Well, first off, congratulations, Stacy, on doing this resizing. It's a huge step, honestly. It's one that gives you a chance to reset a lot of things, including your insurance. And I say this having just gone through something similar in my own life. When you move, don't just copy and paste your old homeowner's policy into your new place. I want you to look into whether your coverage reflects what it would actually cost to rebuild your home today, not what you could sell it for on Zillow. Okay? It's a difference if you aren't already insured for replacement cost coverage. Talk to your insurance agent about that and use those words, replacement cost coverage. Building materials only seem to have gone up in price in recent years. And I say that as someone who renovated an apartment and a house, and this is important right now. Nationwide's latest homeowner survey found that 51% of homeowners have completed a major renovation in the past two years, but more than half have not upped updated their insurance after. So if your resize also involved any upgrades or remodeling, don't forget to make sure that your coverage actually reflects those changes. All right, now let's talk about your stuff. Because it moved with you, I would take a few minutes to do a quick home inventory. Make a video on your phone while you're doing a walkthrough, look at your phone, furniture and your electronics and your jewelry and your art, all of it. And then make sure that your personal property coverage matches what you own now. And make sure that you check those special limits for valuables like silver, which has gone up so much in price or collectibles. Another big one that people forget about is liability coverage. If your new home is going to be the gathering spot for family dinners, weekends with grandkids, maybe you like the idea of a new puppy running around. Make sure your liability limits are strong. This is a great time to consider an umbrella policy which adds an extra. It looks, looks like an umbrella adds an extra layer of protection over your home and your auto insurance. And it can be a real comfort once you've built up your savings. And finally, watch out for for common coverage gaps. These are the things that catch many homeowners by surprise. For example, water backup coverage helps if water or sewage backs up into your home. And service line coverage protects the buried utility lines that are running from the street to your house, which, by the way, you are actually responsible for, not the city or the county. And you can usually add on both of those things for a pretty small cost. A company like Nationwide can bundle all of this. Your home, your water backup, your service line, your umbrella coverage, so that you get the protection that fits your needs without paying for more than you need.
- [41:36]
D
Amazing.
- [41:37]
C
Thank you, Jean.
- [41:38]
D
Our next question comes to us from Jenny. She writes, over the years we've collected a few pieces of jewelry, some art, and we have a set of sterling silver that belonged to my grandmother that is worth a lot more than I realized. At what point should someone look beyond standard homeowners coverage and consider something more?
- [41:58]
C
I love this question. It's one of those things that we all forget about until we realize how much our stuff is actually worth. Catherine, I know you have your grandmother's silver. I have my grandmother's silver. I have an art collection that has definitely grown a little bit over the years. I tend to buy things that I like, but some of them are worth something anyway. Here's the thing that people don't realize. Standard homeowners insurance only covers valuables up to a certain limit. And it's often a lot lower than you'd expect. Sometimes just a couple thousand dollars for jewelry or silverware, which is a problem if it's stolen or damaged. So if you have items that you would really want to replace, place, or pass down someday, then I think it's worth taking a closer look at what you are actually covered for. First step is taking some photos and getting appraisals for things that matter most. Then ask your agent about adding extra coverage just for those pieces. You can handle this in a couple of ways. If you have just a few special pieces, you you can do what's called schedule them. That's what the insurance folks will call it. You can schedule those items individually. That means that your insurance company lists each one on your policy by name and by value. Or if you have a bunch of valuable items, you can add what's called a valuables rider. Think of this like an extra layer of protection that covers entire categories, like all your jewelry or all your artwork, instead of listing each item one by one. And either of these can help fill the gap that a standard homeowner's policy sometimes leaves. It even protects against things like losing a ring at the beach or damage that isn't otherwise covered. With Nationwide, this type of coverage is called Valuables plus, and it could be a fit for your situation. So yeah, I would say that the bottom line here is that it's if this is something that you'd be heartbroken to lose, then it's definitely time to make sure that it's covered.
- [44:18]
D
Amazing. That's such good advice. Our next question today comes to us from Sharon. She writes, hi Jean, I have loved your retirement content recently and I feel good about what we have saved and invested, but I still have questions about protection. Insurance has always left me worried that I might be either overinsured or underinsured without realizing it. As my wife and I look at the next stage of life, a smaller home, fewer cars, more travel, and hopefully grandkids visiting often and possibly driving our cars, what is the best way to make sure we're protected but not overpaying? Is there a checklist for people in our situation?
- [44:56]
C
Again, great question. You are speaking my love language when you say things like prepared but not paranoid. So many people feel exactly the way that you do. They are confident about what they've saved and invested, but they're not quite sure sure about the insurance and protection piece. And the truth is, just like your finances, when your life changes, your coverage should probably change too. Once the kids are out of the house and you have maybe a smaller home and fewer cars and hopefully a little more time for travel. That's a really good time for an insurance checkup because a quick call with an agent can make sure that you are not paying for things that you don't need, but that you also have the right safety nets in place to make sure that you have the things that you do need. So let's Start with your homeowner's insurance itself. Make sure it reflects what it would cost to actually rebuild your home today. As I said earlier, the cost of building materials has just gone up and up, so you really have to make sure that you are insured for that rather than the appraised value of the home. Then take a look around. Jot down what you own all the furniture, electronics, antiques, jewelry. If you have family heirlooms that have gone up in value, consider adding that extra coverage for valuables that we talked about before. This is usually pretty simple and it can cover standard things that homeowners insurance might not. And then we should talk about that liability coverage, the protection that kicks in if someone gets hurt on your property or into an accident. This is a great stage of life to think about adding an umbrella policy. We also talked about that before. That can give you an extra layer of security over your home and your car, especially if you have grandkids or guests that'll be visiting often and specifically for that. Auto Insurance if you're driving less these days, ask your agent about what's called usage based pricing. This can actually tailor your premium to how much you're behind the wheel. And if you're the one burning up the highways to visit grandkids out of state. Roadside assistance is one of those small add ons that can really save the day. I know I have used it more than once. Lastly, make sure you're getting all the discounts that you qualify for. Things like bundling home and auto, adding safety features, installing smart home sensors, all of these things can bring your costs down. Bottom line, you don't necessarily need more insurance, but you need the right insurance. And a company like our sponsor Nationwide can help you package everything home, auto, umbrella, roadside valuables into one place plant that fits your life today. Thank you guys for the great questions. They were really thoughtful. And thank you Katherine for talking through it with me.
- [48:08]
D
Thanks Jean. Really interesting stuff.
- [48:11]
C
If you love today's episode, please take a moment to leave us a five star review on Apple Podcast. Your feedback means the world to me and if you're ready to keep the Money conversation going, HerMoney has three amazing programs designed to help you feel more confident and in control of your money. There's Finance Fix. It's our four week coaching program that helps you rethink your spending, find hidden savings and make smarter choices for the future. Our Pre Retirement Program runs for six weeks and walks you through building a retirement strategy that's personalized for your next chapter. Finally, there's Investing Fix, our investing club for Women. It meets every other week on Zoom. It is a supportive space to learn, ask questions, grow your investing confidence and build your portfolio. And your first month is absolutely free. These programs are truly helping level the playing field for women financially. I'd love for you to join us. Her money is produced by Haley Pascalides and our music is provided by Video Helper. Thanks so much for listening and we'll talk soon. Are you the one keeping everything together in your family? But maybe you're secretly or not so secretly falling apart? Dude, you are not alone. We have been there too. I'm Joanne. And I'm Bri and we're the hosts of the no Guilt Mom Podcast. If your to do list never ends, your kids depend on you for everything and you're constantly putting your own needs last. Or if you're the go to parent but you're starting to feel burnt out and resentful, we're here to help. Each week we give you practical strategies from parenting and psychology experts and from our own real mom experience to help you take back time, energy and joy so you can stop feeling like you're the family martyr and start leading as a confident, guilt free role model. Subscribe to the no Guilt Mom Podcast and let's help you ditch the overwhelm and actually enjoy your family again. Listen now wherever you get your favorite podcasts.