HerMoney with Jean Chatzky Episode: When to Pivot: Closing a Business, Reinventing a Career, and Selling Real Estate Release Date: May 2, 2025
Introduction
In this insightful episode of HerMoney with Jean Chatzky, host Jean engages with her audience through a live mailbag format, addressing two pressing financial questions from listeners Dawn and Karen. The discussions delve into the complexities of closing a business, reinvesting in a new career path, and making strategic real estate decisions. Jean offers compassionate, practical advice, enriched with expert tips and relevant financial strategies tailored specifically for women navigating unique financial challenges.
Dawn's Story: Closing Her Business and Navigating Financials
Transcript Highlights: [00:00] – [16:24]
Closing Her Gift Shop
Dawn, a listener from Joshua Tree, California, shares her difficult decision to close her five-year-old gift shop. Facing a 40% decline in sales and unprofitability this year, Dawn recognizes the financial strain of sustaining her business. She states:
"It's been unprofitable this year. It's negative, actually. Net profit this year, sales were down 40%, and I'm not hopeful about improvement in 2025." [03:39]
Jean commends Dawn for her tough decision, emphasizing the emotional and financial challenges of shutting down a business:
"Many people stick with it for far too long. So I give you a lot of credit for deciding that you're going to shut it down." [04:22]
Managing Debts and Liquidating Assets
Dawn outlines her financial obligations, including $2,700 on a business credit card and approximately $3,000 in tax obligations. She discusses her efforts to liquidate business assets through a Destash group and Facebook Marketplace, successfully reducing some of her debts:
"I've been selling down fixtures from Facebook Marketplace, and they're not traditional retail fixtures, which is actually working in my favor." [04:51]
Car Accident and Financial Implications
Adding to her financial juggling, Dawn recounts being rear-ended by an uninsured driver, leading to her car being totaled. She anticipates receiving around $3,200 from the insurance company but faces the immediate need for a new vehicle:
"I need a new car because I'm in a rural area. [...] I just can't go one more day without a car." [08:03]
Retirement Planning and Financial Strategy
At 61, Dawn is contemplating her retirement strategy, including when to start taking Social Security benefits. She currently has a modest 401(k) with $5,000 and savings of $9,000. Dawn is also considering tapping into her pension from a previous bank job, which is placed in an annuity.
Jean advises against withdrawing from her 401(k) or annuity prematurely, highlighting the significant benefits of delaying Social Security:
"For every year that you wait to take Social Security, you get an 8% bump in your benefits." [06:55]
Jean suggests that Dawn should prioritize finding employment to cover immediate needs and preserve her retirement funds for the future:
"Use the money that you're getting [from insurance] to put the down payment on a car and then just get yourself a low payment." [05:38]
Transitioning to Audiobook Narration
Dawn expresses her enthusiasm for returning to audiobook narration, a field she previously engaged in. With a demo recording scheduled and support from a coach, she is optimistic about replacing her income from the gift shop. Additionally, she considers applying for unemployment benefits due to the business closure:
"By the end of next month when this closes down, I will have a demo and start reaching out to publishers." [14:16]
Jean supports this pivot, encouraging Dawn to leverage her savings wisely while pursuing her passion:
"I think gearing the audiobook narration back up again sounds fun and exciting." [16:13]
Karen's Real Estate Dilemma: To Sell or Rent
Transcript Highlights: [16:24] – [39:20]
Background on Karen's Real Estate Holdings
Karen, a listener from Washington in the Pacific Northwest, presents a multifaceted real estate scenario. She and her husband purchased a second home in Denver during the pandemic, which has since appreciated significantly. Additionally, they own a primary residence in Washington:
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Denver Home
- Purchase Price: $604,000
- Current Value: $900,000
- Mortgage: $255,000 remaining
- Monthly Payment: $2,015
- Rent Revenue: $3,340 (netting approximately $1,325 monthly)
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Washington Home
- Purchase Price: $575,000
- Current Value: $600,000
- Mortgage: $2,600 monthly
- Interest Rate: 3.25% for both homes
Karen provides an overview of their financial landscape:
"Our combined gross income is about $160,000. I am right at about $70,000." [23:56]
The Decision Point: Sell or Continue Renting
Karen and her husband face the decision of whether to sell their Denver property or continue renting it out. The considerations include:
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Financial Gains vs. Emotional Ties
- Selling could free up equity (~$300,000) to invest in an $800,000 home in Washington, aligning with their desire for simplicity and enhancing their primary residence.
- Emotional attachment to the Denver home and fear of missing out on its prime location post-retirement.
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Capital Gains Tax Implications
- Potential capital gains if they hold onto the Denver property beyond the primary residence exclusion window.
- Significant improvements ($100,000) have been made, which can offset some of the capital gains.
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Tenant Relations and Direct Sales
- Tenants are interested in purchasing the Denver home, presenting an opportunity to avoid realtor fees.
- Ensuring the sale price reflects fair market value to maximize financial benefits.
Karen articulates her concerns:
"We're facing a decision point where we might be subject to capital gains taxes and we're trying to decide do we end our Pacific Northwest adventure early and go back home." [20:59]
Jean's Expert Advice
Jean navigates Karen through her options with a focus on maximizing financial benefits while aligning with personal values:
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Opportunity Cost and Investment Potential
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Jean highlights the opportunity cost of keeping $300,000 tied in Denver real estate versus investing it elsewhere with potential returns:
"If you took the money out of the home in Denver and you invested it, you would be making a lot more." [28:37]
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Market Considerations
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Current real estate market volatility in Denver suggests potential risks in holding onto the property long-term.
"There is a chance that you could hold onto this home in Denver and the price of that home could go down." [30:30]
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Alignment with Lifestyle Goals
- Emphasizing Karen and her husband's preference for simplicity and reduced responsibilities, Jean leans towards selling the Denver home to enhance their primary residence and align with their lifestyle aspirations.
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Tax Strategies
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Leveraging home improvements to offset capital gains and encouraging timely selling to minimize tax liabilities.
"You definitely want to avoid that if you can." [38:08]
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Final Recommendations
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Jean advises a thorough pros and cons analysis, consulting with local realtors to ensure fair market pricing, and considering the long-term benefits of investing freed-up equity.
"I think what your heart wants to do is to actually sell this place." [31:52] "You definitely want to avoid [capital gains taxes] if you can." [38:08]
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Karen responds positively to Jean's guidance, feeling excited about the potential for financial freedom and alignment with her and her husband's values:
"It does. I like that. That makes me really excited." [35:23]
Conclusion
This episode of HerMoney with Jean Chatzky offers invaluable insights for women facing pivotal financial decisions. Dawn's narrative underscores the importance of recognizing when to pivot from an unprofitable venture while strategically managing debts and planning for retirement. Meanwhile, Karen's real estate dilemma highlights the critical balance between emotional ties and financial pragmatism, emphasizing the significance of opportunity costs and tax implications in property investments.
Jean Chatzky expertly navigates these conversations, providing tailored advice that empowers her listeners to make informed, confident financial decisions. Whether it's closing a business, reinventing a career, or making strategic real estate moves, this episode serves as a comprehensive guide for women striving to build secure and fulfilling financial lives.
Notable Quotes
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Jean Chatzky:
- "For every year that you wait to take Social Security, you get an 8% bump in your benefits." [06:55]
- "I think what your heart wants to do is to actually sell this place." [31:52]
- "You definitely want to avoid that if you can." [38:08]
-
Dawn:
- "It's been unprofitable this year. It's negative, actually. Net profit this year, sales were down 40%, and I'm not hopeful about improvement in 2025." [03:39]
- "I need a new car because I'm in a rural area." [08:03]
- "I will have a demo and start reaching out to publishers." [14:16]
-
Karen:
- "We're facing a decision point where we might be subject to capital gains taxes and we're trying to decide do we end our Pacific Northwest adventure early and go back home." [20:59]
- "We're comfortable living kind of a more modest lifestyle and really kind of putting our money towards experiences." [23:56]
- "I think we definitely should pull out a legal pad and do the pros and cons list." [36:09]
Further Engagement
If you found this episode helpful, consider subscribing to the HerMoney newsletter at HerMoney.com/subscribe for the latest updates on investing, budgeting, and making money. Additionally, explore Jean Chatzky's programs—Finance Fix and Investing Fix—designed to deepen your financial knowledge and boost your financial confidence.
For more episodes and financial advice tailored specifically for women, subscribe to HerMoney on your preferred podcast platform and join the conversation towards building a secure and empowered financial future.