← So Money with Farnoosh Torabi
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- [00:00]
Farnoosh Torabi
Hey, I'm Ryan Reynolds. Recently I asked Mint Mobile's legal team if big wireless companies are allowed to raise prices due to inflation. They said yes. And then when I asked if raising prices technically violates those onerous two year contracts, they said, what the are you talking about, you insane Hollywood? So to recap, we're cutting the price of mint unlimited from $30 a month to just $15 a month. Give it a try@mintmobile.com Switch $45 upfront payment equivalent to $15 per month New customers on first three month plan only taxes and fees Extra speed slower above 40 gigabytes of details if you wear.
- [00:31]
Ryan Reynolds
Glasses, you know how hard it is to find the perfect pair. But step into a Warby Parker store and you'll see it doesn't have to be. Not only will you find a great selection of frames, you'll also meet helpful advisors and friendly optometrists. Yep, many Warby Parker locations also offer eye exams. So the next time you need glasses, sunglasses, contact lenses or a new prescription, you know where to look. To find a Warby Parker store near you or to book an eye examination, head over to warbyparker.com retail.
- [01:03]
Farnoosh Torabi
So many episodes 1779 Ask Farnoosh. You're listening to so MONEY with award winning money guru Farnoosh Torabi. Each day get a 30 minute dose of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh yourself looking for ways to save on gas or double your double coupons. Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life. Welcome to so money.
- [01:34]
Georgia Lee Hussey
If your partner or the family members who would like you to stay at home are willing to fund your retirement while you are doing this and fund your two days of daycare so that you can continue to support and invest in your well being and intellectual development, I would think about the employer benefits that you receive from the family at large.
- [01:55]
Farnoosh Torabi
Yes, welcome to Sew Money everybody. I'm Farnoosh Tarabi. We've got questions from our audience to answer today and joining me as co host is one of my favorites, Georgia Lee Hussey, certified financial Planner and founder of Modernist Financial. You just heard her share what I think is one of the best pieces of advice and a reframe we all need. For any of us listening who feel pressure to stay home, leave your careers, stay home and be the primary caregiver, you know how I feel about this, but Georgia does a great job of kind of showing us the economic value of parents who stay home and caregive and leave the workforce to do this. Stay tuned for more of that conversation. But first, let's talk about how the week's been going. I've had a pretty big week. I launched another podcast this week called the Montclair Pod, and over the weekend I'm going to drop our first two episodes in the so Money feed. I know not everyone lives near or around or in Montclair, New Jersey, but if you're Montclair Curious, as we've coined it, we hope that our podcast will be fun and informative. This is a show that I and a couple other Montclarians here in New Jersey and media pros decided to create because, look, local news is dying. And now more than ever, I think it's imperative for us to understand where our neighbors are coming from, to understand actually what's going on in our communities behind the scenes, how decisions get made, who are the stakeholders, how to create change within your community. And this is our effort to do that in a small way, but hopefully also a big way. We have big visions for the podcast. We hope that it inspires other community members in their towns, in their cities to start a podcast and make local news a thing again. I started in local news. I started at Money magazine and then I quickly went over to New York 1 News, where I was a business producer and reporter. I also wrote a column, if you remember living in New York back in the early 2000s. I wrote a column for AM New York, all about small businesses and eventually a personal finance column, which kind of launched my first book, you're so Money. Anyway, all this to say I've been having a lot of fun. It's still a lot of work. Fun can be also a lot of work, but it's good fun. And we launched well, yesterday actually. So if you're curious to learn about that podcast, it's called the Montclair Pod. I'll put the link in our show notes and over the weekend I'll be dropping it in the so Money feed. This week on so Money, we covered climate change under Trump and what we can do about it, as well as how to make the best money moves in what is looking to be a very uncertain year. Those two episodes aired this week. First was Climate Change Under Trump and Smart Ways to Spend, Save and Invest Sustainably, a conversation with Kara Perez, author of the book Green Money, and then on Wednesday, a conversation with financial therapist Asia Evans. We talked about how to navigate the emotions that we may be feeling this year and the practical strategies we can implement to untangle our money emotions and build healthier, stronger connection to our finances and make better choices with our money. As I mentioned, we have certified financial planner and founder of Modernist Financial, Georgia Lee Hussey. Here. We're going to be addressing your money questions including how to choose the right 529 plan for your kids education, how to figure out how much to contribute to meet your goals, and as I mentioned, how to decide whether or not to go back into the workforce or become a primary caregiver at home. Another question too, about how to find a job when most of your professional career has been entrepreneurial. You haven't worked in corporate. Before we get to that mailbag, just one quick announcement for those of you who are interested in coming to my New York City event Book to brand happening on March 7th. I'm hosting a live Ask Me Anything Info session on Thursday, January 30th. That's next week. I've got the link in our Show Notes. It's free to attend and we encourage you to come. If you've got any questions about this day long event in New York City, who you're going to meet, what you're going to eat, what you're going to learn, how should you dress, everything, we've got answers for that. And also if you've just got questions about your book proposal or your book plans, we're happy to help you there as well. That link is in our Show Notes. It's a zoom webinar. All you have to do is register to get the link and hope to see you there. All right, let's answer your questions. Georgia Lee Hussey, welcome back to SO Money. Happy New Year.
- [06:40]
Georgia Lee Hussey
Happy New Year to you dear. It's lovely to be here. I can't wait to talk to you about how do we navigate this new year together.
- [06:47]
Farnoosh Torabi
Yeah, we're so fortunate to have you. I have questions and the audience has questions, but I wanted to start off with some general broad strokes questions about how you are thinking about this year, especially as you are working with clients on their portfolios and conversation with colleagues. I've been reading more and more headlines about how analysts who are watching the US Markets closely are a little bit more bearish going into the next decade. While we've had some really hot returns over the last few years that they're saying we're entering a slower period of growth and I want to know what you think that means for some of us who are investing and we're closer to wanting to actually leverage those Investments. But first, tell me how you know it's a new year and obviously a special year. How are you looking at 2025 with everything going on around this year?
- [07:42]
Georgia Lee Hussey
Yeah. Every year as a firm, we choose a beautiful question to orient ourselves around. And the question we're asking this year is, is there a responsibility associated with wealth? And if yes, what could it be? And we hold some small group conversations around this, and then we're also working with our clients around that question in their strategy meetings this year.
- [08:09]
Farnoosh Torabi
What do you mean by responsibility?
- [08:10]
Georgia Lee Hussey
That's a great question. So that's usually where I start, is what do we mean by responsibility? If you go to our website, on our blog, Modernist University, which is our social impact arm of our wealth management firm, we have a guided conversation you can have with your people on this topic. But we start with basically some. What are the five words that come to mind when you say responsibility? What. What are yours?
- [08:34]
Farnoosh Torabi
Me.
- [08:35]
Georgia Lee Hussey
Yeah.
- [08:36]
Farnoosh Torabi
Well, there's responsibility to perhaps myself. Right. And my future, but also responsibility to other stakeholders in my life, my community. And that's subjective. I mean, I think for everybody that it depends on who you are orienting yourself towards, where you want to make an impact locally and globally. I really like this shift in thinking because it does force us to think more expansively about our money and the role that our money can play, the positive role our money can play in our lives when so much of what we read and what we feel sometimes is negative.
- [09:14]
Georgia Lee Hussey
Yes. Well, in a sense of scarcity and there's not enough. And so I find that talking about responsibility is important. I often come up with words like duty, loyalty. These ideas are really big. Right. And they can be positive. They can also be negative. They can feel like obligation in a way that is not very inspiring. So I think getting clear as we talk about our money stories, what is our money story around the idea of responsibility? And what is our money story around the responsibility of wealth specifically?
- [09:48]
Farnoosh Torabi
People don't think about money in these ways. We're just trying to get through the month.
- [09:53]
Georgia Lee Hussey
Yeah.
- [09:53]
Farnoosh Torabi
We're just trying to pay our bills. I know your clients are. They're privileged. But how can people who don't have the excess.
- [10:01]
Georgia Lee Hussey
Yes.
- [10:01]
Farnoosh Torabi
Start inheriting these ways of thinking?
- [10:04]
Georgia Lee Hussey
Yeah. In our last appointment or our last conversation in November, we actually talked on November 12th. That was when that came out about the five elements of wealth. So what we've been having people do is literally write down what are their assets in each element of wealth, because many wealthy people forget they have assets other than money. They forget about social capital. They forget about time. And I think many folks who maybe have less financial assets actually have significant wealth in these other categories. So I think expanding and opening up these definitions is by nature liberation oriented and creates a sense of possibility and choice that when things feel tough or small or scary, it can be hard to open up into a sense of possibility. And I know, for me, I need that sense of possibility in this moment because I'm a queer woman with an immigrant girlfriend in a sanctuary city. So there's a lot of sense of, oh, I want to feel positive about what's happening right now and. And aim for a North Star that is not negative.
- [11:17]
Farnoosh Torabi
So it sounds like what you're saying is that in order to think about your money and your wealth in terms of responsibility, the first step is to take inventory of these five areas of wealth, which includes the dollars and cents in your bank account, but it also means your relationships, your health, your skills.
- [11:39]
Georgia Lee Hussey
Yeah, that's huge.
- [11:41]
Farnoosh Torabi
And from there, you can start to see with more possibility how you can use your wealth to make impact and to be more responsible with your money, both in your life and in the lives of people that you want to support.
- [11:58]
Georgia Lee Hussey
Yep, exactly. And I. I think it's really important in the way that modernist works is that we don't define what the right answer is for anyone, but we create space for people, people to think critically about what they want their answer to be for themselves and their family. Because wherever we come from will define how we can move forward. It can be both limiting, but also create a great sense of possibility. And how we show up in our sort of ancestral lineage. Like reparations are incredibly important to me and essential to how I move through the world, which I can do in a ton of different ways. Where I shop, who I donate to, what kind of books I'm reading, the kind of culture I'm consuming. There's so many ways. And that, to me, is a responsibility to include folks who have been systematically disenfranchised because they're geniuses and brilliant and so inspiring. Like, go read some James Baldwin.
- [12:52]
Farnoosh Torabi
Really good move turning our attention to the stock market. Yeah, I know that you've been doing a lot of work with your clients as early as last year to prepare for this year and subsequent years, as many analysts are predicting slower growth in the US Stock market. Tell us why you think these are their predictions. And for those of us who are investing, specifically those I'm thinking in the audience that are nearing retirement or a life stage where they're going to start withdrawing on their gains and they want to preserve those gains. How should they be reorienting their portfolios or rethinking their portfolios? First, tell us why you think there is a growing body of thought around the markets not doing so hot in the next 10 years. Hey there Ryan Reynolds here. It's a new year and you know what that means. No, not the diet resolutions. A way for us all to try and do a little bit better than we did last year. And my resolution, unlike big wireless, is to not be a raging and raise the price of wireless on you every chance I get. Give it a try@mintmobile.com $45 upfront payment required equivalent to $15 per month new customers on first three month plan only taxes and fees, extra speed slower above 40 gigabytes on unlimited. See mintmobile.com for details.
- [14:14]
Ryan Reynolds
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- [14:46]
Farnoosh Torabi
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- [15:14]
Georgia Lee Hussey
My dad works in B2B marketing. He came by my school for Career day and said he was a big roas man. Then he told everyone how much he loved calculating his return on ad spend. My friends still laugh at me to this day.
- [15:28]
Farnoosh Torabi
Not everyone gets B2B, but with LinkedIn you'll be able to reach people who do get $100 credit on your next ad campaign. Go to LinkedIn.com results to claim your credit. That's LinkedIn.com results. Terms and conditions apply. LinkedIn the place to be to be.
- [15:47]
Georgia Lee Hussey
Philosophically, we want to own the whole stock market or the whole bond market because we know that there is zero evidence that you can pick and choose the right winners over the long run. And so building a portfolio that reinforces that philosophy is really important, especially when you have humans involved who really like sparkly things that are doing really well. We hate selling the winners. We actually want to do what is evidence wise is a bad idea. We want to buy more of the winners. We want to buy the high performing stocks, recently high performing stocks, which is not a great move. We want to ideally as investors sell the things that are doing well and buy the things that are doing poorly, which just emotionally is hard. Right. We want to do the thing that everybody's talking about and we want to avoid the thing everybody else is scared about. So we want to build systems and portfolios that support that move. We want to buy the whole market, but we want to be careful not to over by, let's say the US market, We don't want to over allocate ourselves to the things that have been doing very, very well. So if we have, let's say plan of owning 40% in US stock in a portfolio, but the market returned 25% in the US market last year. So the S P 500. So I now know that if I owned 40%, it's probably worth 45 or maybe even 50% of my portfolio because of just growth, natural growth idea is, is that if it's grown that much, we need to just, just structurally we need to sell the cream off the top and buy things that have gone down in value in that same period of time. So that's just structurally what we need to do.
- [17:38]
Farnoosh Torabi
If you don't have a Georgia Lee Hussey on your team and you're working with a robo advisor and you are auto rebalancing, can I assume that that's going to be done for you?
- [17:47]
Georgia Lee Hussey
You should be able to assume that, yes. You might want to go in and check. They're not going to sell all the time because it costs money. Sell. As an example, we rebalance quarterly clients portfolios. We've been rebalancing every month for the past nine months or so. We're not selling much most of the time, but we are carefully considering when there's a large deposit to a portfolio. We're being careful about what we're buying to make sure we're not buying more of a thing that's already done very well. The basic idea is this. If I have something that's returned 25% and my projected return for that asset class or that purchase is going to be 10% over the next 20 years, I know statistically I need a Down market to get back to my average of 10. A lot of the news we're hearing in the media is basically a common sense approach to investing that if something ends 25 at some point, you can't assume another 25% as a future return. So you need to assume that the things that have done well are not going to do well in the future. And that is just again, hard for us as humans to assume that because we like the sparkly things. Everybody loves to say, well, I bought Nvidia here and I bought Apple there and I bought Tesla there. The other thing we did at the end of last year is we made a large lot of stock donations for charitable giving because it allowed us to get rid of some of the cream off the top.
- [19:15]
Farnoosh Torabi
Yeah.
- [19:16]
Georgia Lee Hussey
And not pay cash for a charitable donation. So those are things we did. I would say in this new year we're very focused on bond allocation. We have a specific philosophy around how you buy bonds and that you buy really high quality and very short duration, which is what?
- [19:32]
Farnoosh Torabi
Can you give us some examples?
- [19:33]
Georgia Lee Hussey
So like usually US Treasuries are the highest quality bond you can buy. Or other international developed countries like Germany, France, these kinds of developed nations, because they're fairly stable, they have the ability to go out and tax to pay for their bond interest. We know the money is very likely to come back in the end. And then very short loans. A bond is just a loan you make to a government. That's all right. So if you have a corporation, do.
- [20:01]
Farnoosh Torabi
You like corporate bonds?
- [20:02]
Georgia Lee Hussey
It depends on what the market's offering right now. Sometimes there's a better yield on those. But we're only going for again, the very highest quality bonds. Because if you're going to take risk, do not do it in bonds. You will not get paid in the end. And I don't want to buy anything I'm not going to get paid on in the end. So if you want to take risk, don't buy high yield bonds, buy stock. Because we have much more reliable information on how that's going to give us a return for the risk that we take.
- [20:34]
Farnoosh Torabi
Yeah. With interest rates not tempering, I think we were hoping that by now we would see a world where mortgage rates would be like below 6%. They're really being stubborn. And it's not clear if the Fed will continue its rate drop campaign, at least for the first half of this year. That also impacts not just our investments, but our plans. Right. To buy a home, to buy a car. Talk a little bit about what you're seeing in the debt market and the credit market. And any advice for those who are looking to leverage credit for their finances this year?
- [21:12]
Georgia Lee Hussey
Yeah, I will say a lot of the fund planning that we put in place for our high net worth clients in the low interest rate market, like those are just gone. We're not doing adjustable rate mortgages anymore. We're not doing HELOCs with quite as much glee as we might have in the past. So now it's more about can you cash flow this debt? And if you cannot cash flow it, do not hold it. A lot more of, oh no, I don't think it makes sense to do that remodel right now. Or it does make sense to do that remodel, but only if we end up getting distributions from your business of this amount.
- [21:49]
Farnoosh Torabi
And when you say cash flow, you mean like you can pay that back? You can in a short period. Exactly.
- [21:54]
Georgia Lee Hussey
Or whatever. The vow. So a lot of clients, we will end up, almost all of our clients hold a mortgage. Because if you do the analysis, we talked about this on a post earlier this year. For most high net worth people, high income people, they are able to deduct their mortgage interest because they have other itemized deductions to add to the pot. So we will say, okay, you have a $750,000 mortgage, but you also have a portfolio with 3 million in it. So we're just pulling cash off the top of that portfolio to pay this interest. And the interest is actually with the deduction is still cheaper. If I'm going to grow at 8 and a half percent over here, but I'm paying after tax 4%. That's still a bit better deal. I would rather do that. But I'm not doing that with the same glee as I did when it was three. You know, we were paying an effective rate of one and a half.
- [22:45]
Farnoosh Torabi
Yeah, right.
- [22:46]
Georgia Lee Hussey
So it's all about can you cash flow it. If I'm talking to friends who are probably more in the sort of normal people's decision making sphere, I'm just like, well, if you can't afford that 600 car payment, then you need to buy a cheaper car. Maybe it's time. If your mortgage feels too expensive or your property taxes feel too expensive, maybe it's time to get a roommate. Maybe it's time to clean out the garage and sell a bunch of stuff on consignment. I think there's a sense that it's time to husband our resources well, maybe that steward our resources in this moment and prepare for potential volatility because the stock market's been booming since 2008, and no one thought that was going to happen.
- [23:34]
Farnoosh Torabi
Having Cash right now is so important. Yeah, Cash is queen. Cash is queer.
- [23:40]
Georgia Lee Hussey
Cash is a big old drag queen, and you best treat her well.
- [23:45]
Farnoosh Torabi
Let's get to our mailbag. We have two questions from our audience, but they're quite meaty. And so, you know, I want to spend some time helping out Aw and then also helping out Irene. Let me first read through their questions. So AW wrote in. She says, hey, Farnoosh, happy 10th anniversary. Can you believe it, Georgia? It's been 10 years. She's one of our OG listeners, and she wants advice around her career. So she's a new mom and she's a business owner. She opened a restaurant one week before the pandemic began.
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Georgia Lee Hussey
Oh, goodness.
- [24:19]
Farnoosh Torabi
And it survived. Can you believe it?
- [24:22]
Georgia Lee Hussey
That's amazing.
- [24:22]
Farnoosh Torabi
It's not only surviving, it's thriving to the point where her husband has actually left his career to join this venture. And he is now part business owner in this restaurant, and he's very passionate about it. She actually is feeling like she wants to go back into corporate and find something stable because she's smart. She knows that running a business has risk, even though they've been successful during some of the hardest years to run a restaurant. But she is kind of itching to go somewhere where there's more of a safety net. She's thinking tech, and she wants to do this because not only is it more secure, but there's health insurance. So she's on maternity leave and she's wondering, when I get off maternity leave, how can I reenter the workforce? She lives in the bay area. She's 40. She has no corporate job experience. But she's always been a business owner, and I want to say that's worth something. When you're on those interviews, she's like, look, Farnoosh, we make enough at the restaurant. But I have free time now, and I'd love to save 100% of my paycheck plus get those health benefits. The problem is I don't know where to start. She is a self described workaholic, and she's confident that if given the opportunity, she could be a great asset to a company. But she's struggling to even get an interview.
- [25:44]
Georgia Lee Hussey
Interesting.
- [25:45]
Farnoosh Torabi
She also wants to be remote. I think something's got to give here, you know, especially when you're dipping your toe in a new industry. And so I think plan for a little bit longer of a job search Runway than typical. I mean it might take you all year, but I would invest more in just networking and relationship building. You live in the Bay Area, there have to be meetups, right?
- [26:10]
Georgia Lee Hussey
Yes.
- [26:10]
Farnoosh Torabi
One other thing you could do is you could do a certificate program or a night class or something that just gets you in the community. My husband, when he was transitioning to New York from Pennsylvania at the beginning of his career, he's always worked in tech. But to kind of be competitive in the New York City market, there are certain skills that were just non negotiable. Right. You needed them. So he took a certificate program. And I'm not kidding, all of his jobs since then have been sourced through people he met in this certificate program. And similarly, my brother studied economics, now he works in tech, runs his own business, took a certificate program and it sort of shortcutted his career path towards where he really wanted to be. So that's my biggest piece of advice. What would you suggest to our friend in the audience? Aw, yes.
- [27:08]
Georgia Lee Hussey
When our clients are also managing a career transition, we will often ask them to basically create a little bucket for the career transition investment. So that could be often. Career coaches, our clients have had a lot of success hiring a career coach. It's also somebody to talk with and have accountability with. This person sounds like a hard worker. And so that kind of support could be very impactful because there'd be some guidance is there as well. I totally agree with you. Back to the ideas of wealth, relationships and social capital are essential to our career trajectories and our skill building. And then also maybe this is because my background is as an artist, but I love a self made internship. I would, I did a bunch of them back in the day and I did one when I got into financial planning and I basically crafted an internship and then found some smaller firms I would liked and I just pitched it to the CEO and I had my one internship for nine months and that was great. They paid me, it was two to three days a week. It added something to my resume. I got to see how a small firm operated which was incredibly helpful when I decided to start my own firm. But it also built me relationships in the community. So I would, if you have the flexibility of time, that can be another way to build relationships. And I would also think about maybe there's an organization that is whether it's women in tech or whatever, your particular interest is maybe doing some volunteering because again you're going to meet people who are in your industry and who probably have decision making.
- [28:49]
Farnoosh Torabi
If you are relying on LinkedIn and job posting sites to get ahead like that is just not even people with. I have lots of experience, have beautiful resumes. They're having a really hard time sort of cracking the code and getting through online. What I said earlier about her entrepreneurial skills, I think, you know, starting a business, she sounds like a fantastic project manager, right? Somebody who can see the big picture, can organize, can delegate, can execute within tech firms. They need project managers. So it's less about having the tech knowledge or the software knowledge or it's more about, are you a people person? Can you keep people accountable? Can you. Are you a taskmaster? That might be. And the hours are better too. It sounds to me that she's not looking to sort of find a high six figure job here, even though maybe sf, you know, that's there are more opportunities there for that because the cost of living is high. But I think she's looking for more of a job that mostly just gives her consistency and benefits and that recurring paycheck to bank. So. So, yeah, I love the idea of an internship that you create. Shadowing. These are not investments of money, but more investments of your time. And I think it will help you to fast track your goals.
- [30:16]
Georgia Lee Hussey
Absolutely.
- [30:18]
Farnoosh Torabi
All right, good luck. Aw. And let us know how we can continue to keep you on track. And thanks for listening to the show. And finally, here we have a question from Irene, who first starts by letting us know. Because I asked our audience, I said, hey, if this show has impacted your life in any positive way, I want to know. I want to feature it on so Money. Whether it's I read it out loud for our audience or you're actually going to be on the show with me. And we have some people already lined up, people from the audience who've listened to your advice, Georgia, and have really taken it to not just heart, but have actually taken action. So Irene started listening in 2019 after transitioning from working in the nonprofit space to her first, what she calls big girl job. And since then, she's paid off over a hundred thousand dollars in student loans.
- [31:05]
Georgia Lee Hussey
Wow.
- [31:06]
Farnoosh Torabi
Let's just. Just like sit with that for a second.
- [31:08]
Georgia Lee Hussey
I'm done.
- [31:09]
Farnoosh Torabi
Since 2019, she's done that. Incredible. By the way, making 55,000.
- [31:15]
Georgia Lee Hussey
Wow.
- [31:16]
Farnoosh Torabi
That's impressive at the time when she transitioned to that big girl job. She's probably making more now. And yes, she's more than tripled her income by negotiating and changing employers. So she's making six figures now. She's grown her investments from, oh, my God, what? 8,000 to $400,000.
- [31:36]
Georgia Lee Hussey
Whoa. That's amazing.
- [31:38]
Farnoosh Torabi
What?
- [31:39]
Georgia Lee Hussey
Yeah. Makes Irene.
- [31:41]
Farnoosh Torabi
Please. I would be impressed with reality, babe.
- [31:44]
Georgia Lee Hussey
That's amaz.
- [31:44]
Farnoosh Torabi
Amazing to take advice from Irene.
- [31:47]
Georgia Lee Hussey
All right.
- [31:49]
Farnoosh Torabi
She survived a layoff and actually got a job making more than the one that let her go.
- [31:56]
Georgia Lee Hussey
Wow.
- [31:57]
Farnoosh Torabi
She's grown her emergency fund to five month savings in a high yield savings account. She's again more than tripled her income. And she had a baby a month ago, which she says it's not a financial achievement. Although I would disagree. I think we don't give motherhood enough credit and parenthood in general. Just the skills you inherit that do translate very well into the workforce. And when I became a parent, I feel like I was just starting my career in some ways and built. Just grew and grew and grew. Her question is this. But first of all, Irene, I want to have you on the show. This is like exceptional. I want to know exactly what you did. The people need to know. So a couple questions Irene has for us. First of all, because she's Irene and she's a go getter and she's starting early, she wants to know what kind of 529 plan to open for her newborn. She lives in Illinois, but she hears she can open one in any state. She's correct. So how do I calculate how much to contribute?
- [33:03]
Georgia Lee Hussey
Good question. I think as in any good financial goal, we gotta figure out what we're aiming for. So this is an important goal to get very clear about because I've noticed that as their kids get older, there's a lot of internal and societal pressure to take on more and more the cost of college. And I think having clarity going into that goal about how much you're planning to fund. So the child also can hear as they get older, what they need to plan on is really important. For example, a lot of our clients will say, okay, we want to pay for a half of a four year state school. That number you can go out there. There's a fabulous calculator from the federal government that both the Obama and Biden administrations have forced through that allows you to see the real cost of an education at a particular school. So you could look at a state school in Illinois, take that average cost, say, I'm going to pay for 50% of it, throw it into a 529 calculator, which I'm sure whichever one you choose will have a calculator on their site and that'll tell you how much to save in a 529. It will be less than you need to save in a taxable account because of the gorgeous tax benefits of a 529. If they get any other money from grants, scholarships, other family members, that's fantastic. If they decide they want to go to a private school, great. But at least you know what you can afford. And you can help them calculate what they would need to produce in some other kind of income source to be able to make that dream happen.
- [34:34]
Farnoosh Torabi
Mm. Keep an eye on the cost of college inflation.
- [34:38]
Georgia Lee Hussey
Yes. Because I started with include that in there.
- [34:42]
Farnoosh Torabi
Yeah.
- [34:42]
Georgia Lee Hussey
But 5.2% inflation rate on college and everyday living expenses are 2.4.
- [34:48]
Farnoosh Torabi
I feel like it's never enough. I feel like you're never gonna have enough unless your kid chooses to be a conservative to go to a school with conservative tuition.
- [34:57]
Georgia Lee Hussey
Well, what's interesting is the inflation rate on public school is actually higher than on private school. And the reason that is because state federal support for education has been plummeting. So state support for education has been plummeting. And so state schools have to find money in a way that they just did not have to in the past. And private institutions often have endowments, so, you know, they can actually go to a fabulous school if they're organizing themselves around grants and scholarships.
- [35:30]
Farnoosh Torabi
Great advice. All right, her follow up question, and this is really where I think we need to help her out. Are you ready? She says, feel free to give me a pep talk about the benefits of me returning to work when my daughter is three months old and my parental leave is over. I'm having a lot of guilt about not staying home with her based on pressure from family, But I know I need to work to remain financially independent and be a responsible provider for her long term. And that's it. I think you answered your own question, Irene. I think you know what you need to do. It's not going to work for everybody. But if you are feeling the call to go back into the workforce, which is twofold. Right. You get to have a life outside of the home that is meaningful to you. You have found your path. Like you have done so well. And it sounds like she's enjoying herself. I dare say that's not a little thing. In addition, she knows that that money can be extremely impactful. Especially we know she's a saver and an investor.
- [36:38]
Georgia Lee Hussey
Yes.
- [36:39]
Farnoosh Torabi
So she's gonna stretch that dollar, that paycheck.
- [36:41]
Georgia Lee Hussey
Irene, she is amazing.
- [36:44]
Farnoosh Torabi
And not for nothing, but to have a moment that you see really being happy. And again, this is not about needing to go back into the workforce, but you have to think about what is actually gonna be fulfilling to you because that is a legacy you're gonna leave right to your kids. They've done the studies. Financial security aside, just like thinking about how adult children sort of, when they reflect on their childhoods, where they feel motivated to mirror their parents is when they do remember there was happiness, yes, there. And not every day was great. But my parents felt good about the choices they made for themselves and for us. And so they have a healthy recount of that childhood that was, you know, again, everyone's got a unique setup. And so whatever you decide, audience, whether that's you're going to go back in the workforce or not. And I do want you to make money and I do want you to be financially independent. But if that's not for you, do it for you. Not because of pressure from family, not because you're trying to fit some sort of model that you think is quote, unquote, you know, motherly. You know, moms and dads come in all shapes and sizes and you know your family best. If you know that bringing in extra money is going to be the stronghold for your family going forward, then support that to your best ability.
- [38:08]
Georgia Lee Hussey
Yeah, it's hard to argue with that advice. The one thing I would add here is I often when this question comes up for our clients, I really lay bare the economic implications of a single income family and the implied cost of doing the domestic labor. So for example, you might say, oh, we need to get life insurance on the breadwinner, the person who's earning income. Well, I look at the person who is staying home and taking care of the kids and no, no, no, we need to be able to afford to hire an au pair if something happens to the stay at home parent. Because the domestic labor to care for a family is really quite significant and worth a lot. So if your partner or the family members who would like you to stay at home are willing to fund your retirement while you're doing this and fund your two days of daycare so that you can continue to support and invest in your well being and intellectual development. I would think about the employer benefits that you receive from the family at large.
- [39:13]
Farnoosh Torabi
Yes, what are my employer benefits if I stay home? Because this is a freaking big job with a lot of economic value.
- [39:20]
Georgia Lee Hussey
Exactly how much money am I going to get for income? How spending money, how much time off do I get? What's my education benefit? How much are you going to put in my retirement?
- [39:29]
Farnoosh Torabi
What are my hours?
- [39:30]
Georgia Lee Hussey
How many hours am I expected to work Because I would like to make sure that we've got a babysitter at least two nights a week. I mean, these are the kinds of ways we can express what the real domestic labor cost and benefit is to staying home. And we know that. I mean, I know you can pulse all the research out showing that when you take somebody out of the workforce for multiple years, it is far harder for them to get back in. And it is hard to make up the lost wages and the compounding on those wages. Women who are traditionally the stay at home parents are in a very rough spot for retirement savings if they take that time out in some of their highest earning years. So if your family and members want to see you stay home, I would ask them what the benefits they're going to provide to you as the family employer. And they better be really hot benefits. I mean, they better be good, lucrative. Irene, you are a baller because everybody.
- [40:28]
Farnoosh Torabi
Would be lost without you.
- [40:30]
Georgia Lee Hussey
Yeah.
- [40:30]
Farnoosh Torabi
They literally wouldn't know how to get downstairs.
- [40:34]
Georgia Lee Hussey
Irene, you're the best. Please listen.
- [40:36]
Farnoosh Torabi
Oh my God. This is why I love having you on Georgia. You are able to frame things in such a way that makes so much sense and that for the first time, maybe you're gonna rally behind that. Yeah, this is a rallying call. Like you are an employer. What are your freaking benefits?
- [40:54]
Georgia Lee Hussey
Yes.
- [40:55]
Farnoosh Torabi
Let's start having that conversation. Woo. Okay, this is. I'm going to end. This is like a mic drop moment for you. Not for me. You came up with that idea. But I will be sharing this widely on social because fun I've been looking for. I like a good viral video and I think this is going to break the Internet in a great way.
- [41:12]
Georgia Lee Hussey
Yes.
- [41:13]
Farnoosh Torabi
Georgia Lee Hussey, thank you so much.
- [41:16]
Georgia Lee Hussey
It's a pleasure, Farnoosh. I'm so grateful that we get together and talk about the meaning of our wealth and how we show up and how we make decisions. And Lord knows we need to live into our best selves in this future.
- [41:28]
Farnoosh Torabi
Yeah. And think expansively more positively. Listeners, thank you for your questions and keep them coming. You can email me Farnoosh@somoneypodcast.com we have a little AskFarnoosh button on the website at so many podcasts. My DMs on Instagram are open as always. Hope your weekend is so money.
- [42:01]
Georgia Lee Hussey
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- [42:15]
Farnoosh Torabi
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