Getting My Financial Life in Order

Summary

Summary of "Getting My Financial Life in Order" Episode of Jill on Money with Jill Schlesinger

Release Date: December 31, 2024

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I. Introduction

In the episode titled "Getting My Financial Life in Order," Jill Schlesinger, CFP®, hosts listeners through the end-of-year financial considerations and provides actionable advice to help them step into the new year with solid financial footing. Jill emphasizes the importance of completing tax loss harvesting and encourages listeners to engage with her services for personalized financial guidance. She promotes her “Jill on Money Live” service, highlighting the benefits of signing up before the end of the year to take advantage of the current rate.

Notable Quote:

• Jill Schlesinger [01:05]: "Any sort of tax loss harvesting, year-end calendar events that you are trying to execute, get them done right now, get it done early so you don't have to think about it later."

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II. Listener Interaction: Getting Financial Life in Order

The heart of the episode features a detailed conversation with Alex, a 37-year-old prosecutor from Virginia, who seeks guidance on organizing his financial life. Jill facilitates the discussion with the help of her co-host, Kristen, delving into Alex's financial situation and providing tailored advice.

A. Alex’s Background

Alex introduces himself as a single prosecutor with no children, earning an annual salary of $87,300. He acknowledges his tendency to avoid financial management but recognizes the need to take control to ensure long-term stability.

Notable Quotes:

• Alex [02:25]: "I've been trying to get my financial life in order. I'm kind of a person that sort of just avoids finances, but I don't spend a lot."
• Alex [02:45]: "Sure. I'm 37 years old and I'm single and I don't have any kids."

B. Retirement Planning

Alex discusses his retirement strategy, which includes a hybrid pension and a 457 savings plan. He reveals that at age 60, he would receive $2,227 per month from his pension, increasing to $2,593 at age 65. Additionally, he contributes 9% of his salary to his retirement plans, with 5% going specifically into the 457 plan.

Notable Quotes:

• Alex [03:01]: "87,300 a year."
• Alex [03:38]: "At 60, I'd be receiving 2,227 a month."
• Alex [05:05]: "My total is 9%. And then I believe I'm contributing 5% to the 457 of my salary."

Kristen advises Alex to consider converting his old 401(k) into a Roth IRA to optimize his retirement savings, explaining the tax implications and suggesting that he use his existing savings to cover the additional tax liability.

Notable Quote:

• Kristen [07:56]: "I think it's time for you to convert that old retirement plan into your Roth IRA."

C. Debt and Assets

Alex owns a home valued at approximately $320,000 with an outstanding mortgage principal of $203,000 at an interest rate of 3.875%. He also has $197,000 in law school debt, which is slated for full forgiveness under the public service student loan forgiveness plan in two years and ten months. His emergency savings amount to $62,000, although he acknowledges this was primarily due to uncertainty about financial management prior to engaging with resources like Jill's podcast.

Notable Quotes:

• Alex [06:01]: "I own."
• Alex [06:04]: "I have a house that's worth... $320 now, I guess around."
• Alex [06:46]: "Two years and 10 months."

D. Kristen’s Financial Advice

Kristen commends Alex on his proactive approach towards eliminating debt and encourages him to optimize his savings. She suggests maintaining an emergency fund of three to six months' expenses and recommends allocating excess savings into a brokerage account for additional investments. Kristen further advises Alex to consider converting his old 401(k) to a Roth IRA, explaining the benefits and tax considerations involved.

Notable Quotes:

• Kristen [07:10]: "And we have the pension building up bank account 62."
• Kristen [09:03]: "You're not going to get fired."
• Kristen [09:42]: "You could certainly have extra money and for you, your expenses are probably what, five grand a month, six grand a month?"

Alex expresses relief and excitement about nearing the end of his student loan obligations and appreciates the clarity provided by Kristen's advice.

Notable Quote:

• Alex [10:15]: "Yeah, I'm really looking forward to it."

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III. Conclusion

As the episode wraps up, Jill reiterates the availability of her team to assist listeners with both significant and minor financial decisions. She encourages listeners to reach out via the website for personalized support and reminds them of the value of uplifting others through financial empowerment.

Notable Quote:

• Jill Schlesinger [10:36]: "If you want some assistance in trying to figure out where to go next... Give us a Holler."

Jill also promotes subscribing to the podcast on various platforms and leaves listeners with an inspiring message about transforming their financial lives.

Notable Quote:

• Jill Schlesinger [11:21]: "Change your work, Change your wealth, change your life."

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Key Takeaways

1. End-of-Year Financial Actions: Jill emphasizes the importance of completing tax loss harvesting and other year-end financial tasks promptly to avoid last-minute stress.

2. Comprehensive Retirement Planning: Alex's case highlights the value of understanding and optimizing retirement plans, including pensions and 457 savings, and the potential benefits of converting traditional retirement accounts to Roth IRAs.

3. Debt Management: Successfully managing and anticipating the forgiveness of student loan debt can significantly impact one's financial health and future planning.

4. Emergency Savings: Maintaining a robust emergency fund is crucial, but Kristen advises balancing liquidity with potential investment opportunities to maximize financial growth.

5. Personalized Financial Guidance: Engaging with financial experts like Jill and Kristen can provide clarity and tailored strategies to navigate complex financial landscapes.

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This episode serves as an insightful guide for listeners aiming to organize their financial lives, offering practical advice through real-life scenarios and expert analysis. Whether you're near career completion like Alex or navigating your own financial challenges, "Getting My Financial Life in Order" provides valuable strategies to achieve financial well-being in the coming year.

Transcript

[Jill Schlesinger]

What is Dax, are you tracking all.

[Dax]

Our cars on Carvana Value Tracker on all our devices? Yes, Kristen. Yes, I am.

[Kristen]

Well, I've been looking for my phone for.

[Dax]

In Dax's domain we see all. So we always know what our cars are worth.

[Alex]

All of them?

[Dax]

All of them. Value surge trucks up 3.9%.

[Jill Schlesinger]

That's a great offer.

[Dax]

I know. Sell.

[Kristen]

Sell.

[Dax]

Track your car's value with Carvana Value Tracker.

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[Jill Schlesinger]

Welcome to the Jill on Money show. It's Tuesday, December 31st. Happy almost new Year, everyone. I know that you're looking forward to it. We are as well. But with just one day to go, wanna remind you that any sort of tax loss harvesting year end calendar events that you are trying to execute, get them done right now, get it done early so, so you don't have to think about it later. For everyone else, you probably have already done your tax loss harvesting. That's great. But you might have some questions that are bubbling up. You might need some guidance. Maybe you need some help drafting those resolutions, which you know I hate. But anyway, maybe you need some help thinking about your planning and your priorities. We are here for you. Go to our website, jillonmoney.com, click the contact Us button, write us that note and if you want to join us live, you know, check that box all. Also while you're on the website, this is it. This is your last day to sign up for our service called Jill on Money Live. At the current rate, Jill on Money Live entitles you to four quarterly live webinars for the next 12 months. Bonus content, the back catalog. And it will cost you $35 if you sign up today. If it's tomorrow or the day after tomorrow, it's gonna cost you more. So you might as well sign up today. Doesn't that make more sense? I think so. All right, let's get the program started. Listener Alex from Virginia will be our last interaction with a listener for 2024.

[Alex]

So I had a few questions. I've been trying to get my financial life in order. I'm kind of a person that sort of just avoids finances, but I don't spend a lot. So I think I'm in somewhat healthy condition, even though I haven't been paying a lot of attention to it. And now I'm trying to get better at it.

[Kristen]

Okay, so tell us about yourself. How old are you, Alex?

[Alex]

Sure. I'm 37 years old and I'm single and I don't have any kids.

[Kristen]

You work right now?

[Alex]

Yes, I'm a prosecutor.

[Kristen]

We know because everyone watches Law and Order knows exactly what a prosecutor does. How much do you earn as a prosecutor?

[Alex]

87,300 a year.

[Kristen]

Okay. And do you have a retirement plan?

[Alex]

Yes, I've got this very confusing hybrid plan. It's like. I guess part of it is like a pension, and then the other part is savings in a 457.

[Kristen]

Okay, so tell me about the pension. How does it work?

[Alex]

Yeah, so the pension has a formula that I was able to go on and figure out, and I was able to figure out what I would get if I retired at 60 and 65.

[Kristen]

Tell me at 60 what the formula tells you.

[Alex]

Yeah, at 60, I'd be receiving 2,227amonth.

[Kristen]

Okay. And at 65.

[Alex]

At 65, it would be 2,593amonth.

[Kristen]

And I presume because, you know, you're an employee, a municipal employee, that this also from. At age 60, you get health care until 65, or do you get it for life?

[Alex]

That I have not looked into.

[Kristen]

Okay, I bet you do. Do you think you're going to be a lifer, though? I mean, that's a long time to be in a tough job.

[Alex]

I really don't know exactly what else I do.

[Kristen]

You'd sell out for a big client or, you know, you work for a big firm and make piles of money and be. You would be robbed of your.

[Jill Schlesinger]

Of your humanity.

[Kristen]

But you would make a lot of money. That's really the alternative, right?

[Alex]

No, probably not. I mean, I think. I think the only thing that would take me out is if I got a judgeship.

[Jill Schlesinger]

So, yes, I see you in robes right now.

[Kristen]

That's fantastic. And that would be also part of a. That would also be a pension system. So I actually.

[Alex]

Same system, yeah.

[Kristen]

Okay, so how much are you contributing to the 457?

[Alex]

So my total is 9%. And then I believe I'm contributing 5% to the 457 of my salary.

[Kristen]

Okay, that's good. And so with your contribution at 9%, how's the cash flow? You know, 87 grand a year.

[Alex]

It's good. I, I feel like I'm able to cover my expenses and plus like a little bit extra.

[Kristen]

What's the extra you figure?

[Alex]

Probably. I mean it varies month to month, but maybe like a thousand, like between seven hundred and a thousand.

[Kristen]

That's great. You mean you have like extra in savings, a 700 to a thousand a month usually.

[Alex]

Well, I'm not like really factoring in like when I go on vacation and how that brings it back down.

[Kristen]

But yeah, you're going, you're living large. Come on. Prosecutors party like rock stars because they know if they get in trouble, they got someone to call, which is good. So how much money do you have in the bank? Just a safe emergency reserve.

[Alex]

Total total I have in the bank is 62 right now.

[Kristen]

Okay, that's great. Do you own or rent?

[Alex]

I own.

[Kristen]

Tell me about that. What's it worth?

[Alex]

Yeah, so I have a house that's worth. I just looked it up recently. $320 now, I guess around. My outstanding principal is currently 203 and I've got an interest rate of 3.875.

[Kristen]

Okay, great. Do you have any other issues that are floating around? So debt, school debt, law school debt.

[Alex]

So I have a lot of law school debt, but I'm on the public service student loan forgiveness plan and so I've got 197, but in two years and 10 months it's going to be completely gone.

[Jill Schlesinger]

Two years and 10 months.

[Kristen]

That's like you are really seeing the finish line right now.

[Alex]

Yeah, I'm pretty excited about that. It's one of the reasons why I've started like figuring all this stuff out.

[Kristen]

That's great. All right, so that's your big debt.

[Jill Schlesinger]

Any other debt?

[Kristen]

So we got the mortgage, we have the student loan that's going to be forgiven. Car debt or anything like that.

[Alex]

No other debt.

[Kristen]

Okay. And what about any other assets? So we have the money that's in the 457 plan.

[Alex]

How much is in there now and the 457? It's 58.

[Kristen]

And we have the pension building up bank account 62. Any non retirement investments?

[Alex]

I don't have any non retirement investments. I also have a previous 401k that has a little under 17.

[Kristen]

So the old 401k, where is that.

[Alex]

Held so that's still with my previous employer. And that was actually one of the questions that I had on, like sort of the best move to make with that.

[Kristen]

You're in the 22% tax bracket, you got a big deduction still. You are putting 9% away. I think it's time for you to convert that old retirement plan into your Roth ira.

[Alex]

Where's the Roth Held Vanguard?

[Kristen]

Okay, so what you do is you call up Vanguard and you say, here's what I got. I got this old plan, this old 401k, and I want to convert it and move it into my Roth ira. They'll help you do this. What's going to happen is that 17,000 you said there was.

[Alex]

Yeah.

[Kristen]

Is now going to pop into your taxable income for this year. You'll owe more in taxes next year, but just use the money that's in the bank. Okay? Now, do you have a notion around keeping that money at that $62,000? I mean, that's a lot for you. You don't spend that much money. So does it give you some comfort to have that money in the bank?

[Alex]

I mean, I'd like an emergency fund that, that has, like you said, the, the three to. You say the three to six months. But really the reason all that's in the bank account is because, you know, prior to me reading a few investment books and listening to your podcast, I had no idea what to do with it.

[Kristen]

Oh well, better to do nothing than something. And there's something wrong. I mean, you could have just, you know, done something wacky. So, I mean, look, how long have you been doing this work?

[Alex]

I've been doing it for seven years.

[Kristen]

You're not going to get fired. Okay? And so I think that having living expenses of six months is plenty if you want to, you know, sort of top up a little bit, you could also open up a brokerage account. You really could. And you could use that and let's call it your supplemental retirement or, you know, you don't have kids now, but you know, things happen and life changes and whatever. But you could certainly have extra money and for you, your expenses are probably what, five grand a month, six grand a month?

[Alex]

Maybe between. Between three and four.

[Kristen]

That's it.

[Alex]

Yeah.

[Kristen]

All right, let's say four. So you really only need, I mean, you could probably just keep 30 grand in the bank and why not use that other 30 grand to fund a non retirement investment account and I think you'd be just totally perfect. And then you're putting your 9% in you're putting your money into your Roth IRA. You're putting money into your brokera count. You don't have to do much more than that. I think that that's great. And man, I mean, what a relief it's going to be to get that official forgiveness done. Holy smokes.

[Alex]

Yeah, I'm really looking forward to it.

[Kristen]

Was that part of your decision for going into public service, or did you, did you not know you were even going to do that?

[Alex]

I knew when I went to law school that I wanted to go into public service, and the, and then the public service plan just made it actually possible.

[Kristen]

I'm so impressed. It's great.

[Jill Schlesinger]

If you want some assistance in trying to figure out where to go next, maybe you're making a big decision about a home purchase. Maybe you're making a decision about whether or not to take a job. Something like that. A big thing. We can help you out. We can also help with the little things, but the big things, that kind of jazzes me. Give us a Holler. Go to jillonmoney.com, click the contact Us button. Let us know if we can help you out. You can subscribe to us on the Odysee app or wherever you find your favorite podcasts. Don't forget to lift someone up. Change your work, Change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

[Morning Meditation Host]

The new year is here, and it's the perfect time to kickstart your meditation practice. The Morning Meditation for Women podcast has short daily guided meditations that will help you start your day with intention and focus and make it so easy to get you into the habit. Imagine feeling so much more calm and confident in 2025. Follow and listen to Morning Meditation for Women on the free Odyssey app or wherever you get your podcasts.