So Money with Farnoosh Torabi: Episode 1779 – "Planning to Be a Stay-at-Home Mom? Ask for Benefits"

Release Date: January 24, 2025

In Episode 1779 of So Money with Farnoosh Torabi, host Farnoosh Torabi delves into the multifaceted considerations of becoming a stay-at-home mom, emphasizing the importance of negotiating benefits and understanding the economic value of domestic roles. Joined by Georgia Lee Hussey, a certified financial planner and founder of Modernist Financial, the conversation navigates through financial planning, investment strategies, and personal career transitions, offering listeners invaluable insights and actionable advice.

1. Introduction to the Episode

Farnoosh Torabi opens the episode by introducing her co-host, Georgia Lee Hussey, and highlighting the episode’s focus: assisting listeners who are contemplating stepping away from the workforce to become primary caregivers. The discussion aims to shed light on the economic implications, benefits negotiation, and maintaining financial independence during such transitions.

2. Launch of the Montclair Pod

At the outset, Farnoosh shares exciting news about launching a new podcast, the Montclair Pod, aimed at reviving local news and fostering community engagement. She elaborates on her motivation to create a platform that offers in-depth local stories and aims to inspire others to initiate similar ventures in their own communities.

Farnoosh Torabi (01:33): "If you're Montclair Curious, as we've coined it, we hope that our podcast will be fun and informative... 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."

3. Economic Responsibility and Wealth Management

Georgia Lee Hussey introduces the concept of wealth responsibility, posing critical questions about the ethical and societal obligations that come with financial prosperity. This segment underscores the importance of viewing wealth through a broader lens, incorporating social capital, relationships, health, and personal development alongside monetary assets.

Georgia Lee Hussey (07:42): "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."

Farnoosh expands on this idea, emphasizing that financial decisions should align with personal values and community impact.

Farnoosh Torabi (08:34): "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."

4. Investment Strategies in a Bearish Market

In light of growing bearish sentiments among market analysts predicting slower growth in the next decade, Georgia offers strategic advice for investors, particularly those nearing retirement who seek to preserve their gains.

Georgia Lee Hussey (14:45): "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."

She emphasizes the importance of diversification and disciplined portfolio rebalancing to mitigate risks associated with market volatility.

Georgia Lee Hussey (15:46): "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... we need to just structurally sell the cream off the top and buy things that have gone down in value."

5. Navigating the Debt and Credit Market

With persistent high interest rates impacting mortgages and credit markets, the conversation shifts to managing debt effectively. Georgia advises prioritizing cash flow and reassessing debt obligations to ensure financial stability.

Farnoosh Torabi (21:11): "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."

Georgia Lee Hussey (21:48): "If you can't afford that 600 car payment, then you need to buy a cheaper car... Maybe it's time to clean out the garage and sell a bunch of stuff on consignment."

She highlights the critical role of maintaining adequate cash reserves and being cautious with adjustable-rate mortgages and home equity lines of credit (HELOCs) in the current economic climate.

6. Listener Mailbag: Career Transition and Financial Planning

The heart of the episode revolves around listener questions, providing personalized advice tailored to real-life scenarios.

A. AW's Career Transition Challenge

AW, a business owner and new mom, seeks guidance on transitioning back into the corporate workforce after successfully running a restaurant through the pandemic. Despite her entrepreneurial success, she faces challenges in securing interviews for corporate roles due to a lack of traditional job experience.

Farnoosh Torabi (24:22): "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."

Farnoosh suggests strategies such as networking, pursuing certificate programs, and leveraging entrepreneurial skills to bridge the gap between her current experience and desired corporate roles.

Georgia Lee Hussey (27:07): "Create a little bucket for the career transition investment... hiring a career coach... building relationships in the community."

She also emphasizes the importance of reinventing one's resume to highlight transferable skills like project management, leadership, and strategic planning gained through running a business.

B. Irene's Financial Milestones and 529 Plan Inquiry

Irene, an inspiring listener, shares her journey from managing significant student debt to achieving financial independence. She has successfully paid off over $100,000 in student loans and increased her investments from $8,000 to $400,000.

Farnoosh Torabi (31:07): "She's paid off over a hundred thousand dollars in student loans... grown her investments from, oh, my God, what? 8,000 to $400,000."

Irene seeks advice on selecting an appropriate 529 plan for her newborn and determining the optimal contribution amount.

Irene's Question (33:03): "What kind of 529 plan should I open? How do I calculate how much to contribute?"

Georgia recommends starting with clear financial goals for education, utilizing government calculators to estimate future costs, and taking advantage of the tax benefits offered by 529 plans.

Georgia Lee Hussey (34:34): "As in any good financial goal, we gotta figure out what we're aiming for... use a calculator from the federal government to see the real cost of an education at a particular school."

She also advises monitoring college inflation rates, which are notably higher than general inflation, to ensure adequate savings.

7. The Value and Negotiation of Staying at Home

A significant portion of the discussion addresses the often-overlooked economic value of staying home to care for a family. Georgia and Farnoosh advocate for recognizing domestic labor as economically substantial and encourage negotiating tangible benefits for stay-at-home parents.

Georgia Lee Hussey (39:19): "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?"

Farnoosh Torabi (39:30): "What are my hours?"

They propose that families treat stay-at-home parenting like a formal employment scenario, outlining specific benefits such as retirement contributions, childcare funding, education allowances, and flexible hours.

Georgia Lee Hussey (39:29): "We need to be able to afford to hire an au pair if something happens to the stay at home parent... these are the kinds of ways we can express what the real domestic labor cost and benefit is to staying home."

This approach aims to alleviate common guilt associated with not staying home by framing the decision as a financially strategic and mutually beneficial arrangement within the family unit.

8. Conclusion and Final Thoughts

As the episode wraps up, Farnoosh and Georgia reinforce the importance of proactive financial planning, whether one chooses to remain in the workforce or take on the role of a primary caregiver. They encourage listeners to make informed decisions that align with their personal values and long-term financial goals.

Farnoosh Torabi (41:28): "Listeners, thank you for your questions and keep them coming. You can email me at Farnoosh@somoney.com or use the AskFarnoosh button on our website."

Farnoosh also teases upcoming content and events, inviting listeners to engage further through social media and live sessions.

Key Takeaways:

1. Redefining Wealth: Wealth encompasses not just financial assets but also relationships, health, skills, and social capital. Recognizing and nurturing these areas can lead to a more fulfilling and balanced life.

2. Investment Prudence: In anticipation of a potentially sluggish market, diversification and disciplined portfolio management are crucial. Avoid emotional investment decisions by adhering to evidence-based strategies.

3. Debt Management: Prioritize cash flow and reassess debt obligations in a rising interest rate environment. Consider the sustainability of loans and adjust financial plans accordingly.

4. Career Transitions: Leveraging entrepreneurial skills, networking, and continuous learning can facilitate successful transitions back into the corporate world. Tailor resumes to highlight transferable skills and seek mentorship or coaching.

5. Educational Savings: Utilize 529 plans with clear financial goals and account for higher inflation rates in education costs. Take advantage of tax benefits and plan contributions based on projected educational expenses.

6. Valuing Domestic Labor: Treating stay-at-home parenting as an economic role warrants negotiating tangible benefits and recognizing the significant financial value it contributes to the household.

Notable Quotes:

• "Is there a responsibility associated with wealth? And if yes, what could it be?"
  — Georgia Lee Hussey (07:42)

• "We want to think more expansively about our money and the positive role it can play in our lives."
  — Farnoosh Torabi (08:34)

• "If you're going to take risk, do not do it in bonds. You will not get paid in the end."
  — Georgia Lee Hussey (20:02)

• "We need to treat domestic labor's economic value appropriately and negotiate benefits accordingly."
  — Georgia Lee Hussey (39:19)

Resources Mentioned:

• Modernist Financial: Visit Modernist Financial for more insights on responsible wealth management.
• So Money Members Club: Join at SoMoneyMembers.com for exclusive content and community engagement.
• Montclair Pod: Look out for the new podcast launch in the So Money feed for local news and stories.

Tune in to Episode 1779 of So Money with Farnoosh Torabi for a comprehensive exploration of balancing family commitments with financial independence, equipped with expert advice and real-life success stories.