← So Money with Farnoosh Torabi
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- [00:01]
Farnoosh Torabi
If you're a maintenance supervisor for a commercial property, you've had to deal with everything from leaky faucets to flickering light bulbs. But nothing's worse than that ancient boiler that's lived in the building since the day it was built 50 years ago. It's enough to make anyone lose their cool. That's where Grainger comes in. With industrial grade products and dependable, fast delivery, Grainger can help with any challenge, from worn out components to everyday necessities. Call clickgrainger.com or just stop by Grainger for the ones who get it done.
- [00:30]
Ryan Reynolds
Ryan Reynolds here from Mint Mobile with a message for everyone paying Big Wireless Way Too much. Please, for the love of everything good in this world, stop with Mint. You can get premium wireless for just $15 a month. Of course, if you enjoy overpaying, no judgments. But that's weird. Okay, one judgment. Anyway, give it a try@mintmobile.com Switch upfront payment of $45 for three month plan equivalent to $15 per month required intro rate first three months only, then full price plan options available, taxes and fees extra. See full terms@mintmobile.com so money episode 1788 ask Farnoosh.
- [01:08]
Farnoosh Torabi
You're listening to so Money with award.
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Ryan Reynolds
Winning money guru Farnoosh Torabi.
- [01:13]
Farnoosh Torabi
Each day get a 30 minute dose.
- [01:14]
Ryan Reynolds
Of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh herself. Looking for ways to save on gas.
- [01:24]
Farnoosh Torabi
Or double your double coupons.
- [01:26]
Ryan Reynolds
Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life.
- [01:31]
Farnoosh Torabi
Welcome to so Money.
- [01:34]
Ryan Reynolds
Welcome to so Money everybody. I'm Farnoosh Tarabi. It's Valentine's Day or Galentine's Day, also known as T minus 1 until it's my birthday. My mom went into labor on this day around 9pm on Valentine's Day and I was born the next morning around 3. So I was almost a Valentine's baby. But I love being born on February 15th. It just feels, feels, I don't know, like do you feel like that way about your birth date? Like it's meaningful for some reason? Like I feel like a February person and the 15th in the middle of the month sort of. I mean February is a shorter month. Does feel very profound in some ways. I don't know. 2:15 Shout out to all my aquaria out there. We are the best sign. I think everybody feels that way about their sign, but I really think that being an Aquarius fits me well as someone who is entrepreneurial and highly ambitious. Oprah's an Aquarius. Just saying. If you're following me on my newsletter tomorrow, I have a little sentimental email going out to sort of recognize the fact that I have now officially arrived. Two feet planted in mid life. I'm going to be 45 tomorrow. This year is just a lot of milestones. 10 years of so money. I'm turning 45. I know that many of you share this life stage with me and I've been hearing a lot from those of you in the audience about the financial curveballs that come with being in your midlife. You know, questions like how do I reenter the workforce after taking time off to raise my children? Some of you are single again, wondering how to rebuild your financial life. Many of you I know are worried about paying for college without completely derailing your retirement. You wanna support your aging parents, but you also have to save for yourself. And maybe there are other parents, parents in the picture, your spouse's parents. How do you figure out what parent gets how much care and how much money? Oh my gosh. And also of course, if you're grappling with perimenopause or menopause. The financial questions, there are a lot of them. How can I afford better medical care? Tops that list. So life at this age, at this stage gets very real. And many days, I'll be the first to admit it is tough. But here I am with you trying to juggle all the to dos that come with this season of life. And if there's any advice that I can impart to you, and really anybody, is to give yourself a lot of grace. I am saying no more and more these days because I'm trying to prioritize my health. Above all. If you've been following me for a while, you know that last year was a bit of a physical and emotional train wreck for me. Talking to my women friends who are in their 50s. Girl, you need to go check your hormones. So that's on my to do list. So I'm being more intentional and I think my 20 year old self would have seen what I'm doing today and would have been like farnooche, you're just slowing down. But I would say no Farnooche, little Farnouche. It's called being more intentional. And if I have any advice to offer you if you're in this life stage, besides the importance of being more intentional and maybe slowing down. Slowing down so that you can do more of what you love and be more thoughtful about your health is one protect your financial boundaries. Because especially women we tend to put everybody else first. Our kids, our parents, our friends, random people. And it's not selfish to say, no, you can't be everybody's hero without taking care of your needs first. Secondly, invest in yourself like it's your job, and not just your career, but your health. So every morning I get up and I work out. And I have always been pretty good about this, but especially now in my 40s, it's not just moving my body, but it's like moving my body in a certain way. Lifting more heavy weights, not doing all of this cardio, stretching more. I used to rush out of workouts at the end when they're like, okay, now let's get into our child's pose and our this pose and be like, I'm out of here. I gotta go back to work now. I relish the stretching. I would also get your support squad in place. Someone asked me today, what's a piece of advice you would have given yourself when you became a mom? And I remember thinking, well, I think I did a lot of things right, but I wish that I had been more intentional about carving out time to be with my friends. Like, I put my friendships on the back burner, and I regret that. And even now in my 40s, it's hard, you know, But I'm trying to be more intentional about making sure that I'm checking in with my friends, we're going out, we're spending time together. Because these are my people, right? My girlfriends. Who's more accessible to you than girlfriends, right, that are going through what you're going. And their advice is so relatable and so invaluable. So get your support squad in place. And beyond friendships, you know, it could be a financial advisor, a therapist. Asking for help is a power move. Revisit your goals and plans also this time of your life, it's okay if things change. You know, your life today may not look like what you had envisioned in your 20s and 30s. That's fine. So maybe you have to do a financial checkup. Maybe you have to reevaluate your friend group. Maybe you need to think about your career more critically. But do it, do the things, because this is your moment. And speaking of midlife, I think when I was younger, I thought of your 40s as kind of like over the hill, right? But it's not. It's full of new beginnings. And if you've been listening to this show, you know, we've had on so many guests who have proven this over and over again that midlife is far from the finish line. It has a specific connotation. We all know it. But I'm telling you, now is not the time to hit the brakes. Maybe you do slow down, but you slow down so that you can reflect more and then get back into things. Hit refresh, launch that passion project, move across the country or to another country if you want to. Reinventing yourself right now. It's not a midlife crisis. It's a midlife awakening. And you know what? I'm still figuring things out. And I'll keep you posted on all the things that I figure out. And I want to know what advice you have for me. I love hanging out with my friends who are a little bit further along because they can look back. And when I was your age, not too long ago, I wish I had done X, Y and Z. Or here are the things that I did that I'm so happy that I did, that I hope that you will take into consideration. I'm a sponge right now. I'm taking it all in. Coming up later in the show, we've got questions about how to manage your money in a later stage in life. A listener in our audience has turned 60. She feels behind because she's been caregiving for a relative for a while and has use up a lot of her savings and is worried about her retirement. Is it too late? And then what to do with some old 401ks. Should you let them sit there or what? This person wants to do a backdoor Roth conversion with an existing IRA. She's worried about converting those 401ks into the existing IRA because that can create more tax complexity when she does the backdoor Roth Roth IRA conversion. So a little bit of a technical question there, but I love all the questions. Just as a reminder, if you have questions, you can email me farnushitsomoneypodcast.com you can send me a voicemail. We have actually a voicemail today you can go to. So you can go to somoneypodcast.com, which is getting a facelift. I'm so excited. And click on Ask Farnooche. And there you'll be directed to leave a voicemail. And my DMs on Instagram are open. If you missed any of our episodes this week, we'd love for you to go back and check them out on Monday. We spoke with Jen Kim, who is a student of my Book to Brand workshop, and now she has an incredible book out. It's called Unicorn Team, the nine leadership types you need to launch your big ideas with speed and success. We talked about what does it really take to launch a big idea, an idea that can change your career, your business, or even the world. It's not always about being a visionary, which was music to my ears because I'm a doer, I'm a strategizer, and Jen's got advice for all types of leaders. And then on Wednesday, we sat down with Jessica Morehouse on how to overcome the Barriers the Emotional Money Blocks to achieve Financial freedom. And spoiler alert, it's not just about the money, as her new book described A few of my friends host on Airbnb. One friend actually maintains an Airbnb in the bottom floor of their Jersey City townhouse. How perfectly located is that? And while they love the extra cash, say the same thing, their biggest pain point is actually managing the day to day responsibilities of these secondary properties. From handling guest questions to managing bookings and maintaining the space. It's work and they don't want to be doing admin all day. That's where Airbnb's new co host network comes in. It's a total game changer. With this feature, you can hire a local co host to do the heavy lifting. They'll handle everything guest communication, reservations on site support, even styling your space to make it more inviting. If you've ever thought about hosting your home but worried about the time and effort, this is the perfect solution. Whether you're traveling often for work, living bicoastally, or just want to maximize an unused space or secondary property, co hosting takes the stress out of the process so you can focus on earning extra income. Find the right co host for you@airbnb.com host who doesn't love the good things in life right? I enjoy a little luxury in my wardrobe, but it doesn't mean I can always afford it. Until I discovered Quince. Quince is my go to for luxury essentials at affordable prices like 100% Mongolian cashmere sweaters from $50, washable silk tops and dresses, organic cotton sweaters and 14 karat gold jewelry. My closet is full of Quince cozy sweaters, silk pajamas and lots of tees. And the best part? All quince Items are priced 50 to 80% less than similar brands. By partnering directly with top factories, Quince cuts out the cost of the middleman and passes the savings on to us. And Quint's works with factories that use safe, ethical and responsible manufacturing practices and premium fabrics and finishes. Give yourself the luxury you deserve with quince. Go to quince.com sewmoney for free shipping on your order and 365 day returns. That's Q U I N C E.com so money to get free shipping and 365 day returns. Quince.com so money have you ever woken up with a funky symptom like a swollen itchy eye or a tight pain in your neck and immediately googled it or searched TikTok to see what's wrong? We've all gone down that rabbit hole, but it's time to get the help and care you really need with ZocDoc. ZocDoc is a free app and website where you can search and compare high quality in network doctors and click to instantly book an appointment. We're talking about booking in network appointments with more than 100,000 doctors across every specialty from mental health to dental health, primary care to urgent care, and more. Once you find the right doctor, you can see their actual appointment openings. Choose a time slot that works for you and click to instantly book a Appointments through Zocdoc also happen fast, typically within just 24 to 72 hours of booking. You can even score same day appointments. I can't tell you the number of times I've used ZocDoc in a pinch and you should too. Stop putting off those doctor's appointments and go to Zocdoc.com somoney to find and instantly book a top rated doctor today. That's z o c-o c.com somoney zocdoc.com so so money this episode of so Money is brought to you by Sparrow, the service that makes it easy to claim money from class action lawsuits. Did you know that 9 out of 10 people don't file class action claims, leaving millions of dollars unclaimed every year? That's money you could be entitled to, but most people don't realize how easy it is to claim. Sparrow simplifies the process, showing you eligible claims in minutes. Most claims don't even require proof. No receipts, no digging through old files, and on average, Sparrow users claim over $300 a year. Imagine what you could do with that extra cash. I just used Sparrow myself and it was shockingly easy. In just a few clicks, I discovered over a thousand dollars worth of claims I didn't even know I was eligible for. Start claiming what's rightfully yours today. Visit usesparrow.com Farnoosh to see what you're eligible for. That's Use Sparrow as in the bird.com Farnoosh all right, let's hit the mailbag. Our first Question is from an audience member who left a voicemail concerned about managing her retirement later in life. Take a listen.
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Angela Gordon
This is Angela Gordon and this is really a serious situation. I'm an attorney, 60 years old and I have not saved properly for my retirement. I recently spent a large amount of money to support my aunt who needed 247 care and no one else in the family could help. So I did that. And I need help on how to quickly save more for my retirement because I feel like I haven't done the right things along the way. I didn't learn those things, although my salary is a good salary, like 270 a year. But I need help on strategies how to catch up and not only catch up, but how to set myself up so that I am supported when I retire and beyond because I don't have any children to swoop in and save me. I've been the saver of the family and now I fear that I will need to be saved.
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Ryan Reynolds
All right, Angela, first of all, thank you so much for reaching out your situation. It does sound serious. But let me tell you, as I tell so many people who feel late to their personal finances, whether they're 30 or 60, let me tell you, it's not hopeless. You, what you have on your side, what you have as your biggest tool is that you have strong income and that you are deciding you want to take action. Those two things combined puts you in a good spot. You've been incredibly generous with your family. So now I want you to prioritize yourself. Be incredibly generous for yourself and your future. The first thing I think I would do if I were you is I would supercharge my savings. You have $270,000 annual income to save for your future. I would start maxing out any and all tax advantaged retirement accounts that you may have access to a 401k. Can you contribute the full $30,500 this year? That includes catch up contributions that are allowed for those who are 50 or older. Beyond that, you can consider opening up a taxable brokerage account that allows you to supplement your retirement. This is not a tax advantaged account, it's taxable, which means that whatever money you put in will be taxed when you take it out. You'll pay capital gains tax on that with regards to how to invest. You know, it's not enough to just open up a 401k. You also need to do the second thing, which is decide what you're investing in within that retirement account. At age 60. I think it's important to balance the growth that you're looking for with the fact that you're pretty close to retirement age. Assuming you do want to eventually slow down your work and bring in less money or no money in 10 years or so. So you want growth, but you don't want to take on too much risk, right? I wouldn't be a hundred percent in stocks because they're very volatile, they're riskier than bonds. You want a mix of stocks and bonds. Now what is that mix? I've talked often on this show and in my investing program that you take 110 and you subtract your age and with whatever number you're left, that is what you want to be invested in stocks. So 110/60 is 50. So give or take, right? I'm not for this exact precise number. You can work with a brokerage firm, you can work with an automated investment platform or a financial advisor to get to the best number for you based on your risk tolerance, you might be fine with taking on more risk. The shorthand math is you take 110 minus your age and whatever numbers left. That is your portion of your portfolio that you could probably be in stocks, risk adjusted for age, the rest in bonds. So 50, 50 stocks, bonds. You might look at 60 stocks, bonds if you're a little bit more risk friendly. The key though, and this is true for anybody investing, is that you want to invest with a platform that's not going to charge you too much. And then you want to invest in funds, stock funds, bond funds that are low fee. And that's mostly going to be index funds and exchange traded funds. So just to wrap this up for you a little bit, start with your 401k at work. Max it out. If there are any matches at your company, let's say they'll give you a dollar for every dollar you put in. Find out what the match is and absolutely invest enough to earn that full match. Additionally, you might want to open up a brokerage account that could mirror what you're investing in in the 401k. But it's going to be in its own account, it's going to be taxable. So the money you take out from that is going to be taxed at the capital gains rate that you're in the 401k. Just to back up for a second, those contributions that you will make annually will help to reduce your taxable income today. So you'll have a little bit of tax savings in that year. But when you go to withdraw it you'll pay income tax on those withdrawals. As far as what you're investing in, you definitely want to take into consideration the fact that you don't have a long horizon here. You're 60 now, so by the time you're 70, early 70s, I, I'm, I'm just guessing, I'm throwing out a number here. Don't know exactly what your retirement plans are. You may want to stop working entirely or stop working or work less. Either way it's going to be less income. So you're going to become reliant on these savings and you don't want to risk too much this 10 year period. While that's a healthy amount of time to be investing, the advice I would give you is different obviously than someone who has 20 years or 30 years to keep that money invested. Those folks who have 30 years, they have more time to ride out the ups and the downs and the swings in the stock market and recover. I worry that if in 10 years, let's say next year, the market tanks like big time, it could take several more years for you to recoup those losses and then start gaining again. So I wanna make sure that you have a nice balance of stocks and bonds in your portfolio. My recommendation is to go with whatever the 401k is available at work. Use their automated platform or their customer service to help you figure out what the makeup of your portfolio should be. With the brokerage account, you'll have to go outside of work for this, but you can go to any number of automated platforms out there. Investment banks, whether that's Charles Schwab, Fidelity, Vanguard, Ellevest, these are all great. They charge relatively low annual fees to sign up for their automated systems. Then once you enroll, they'll ask you a series of questions. You know, what is this money for? How much time do you have until you need it? What's your risk tolerance? And from there, they'll develop a portfolio for you that has the best mix of stocks and bonds. A lot of their stocks and bonds are funds, index funds, ETFs that come with low annual management fees, or another term for that is expense ratios. It's the annual cost of that fund, whether the fund makes money or loses money. The brokerage account's going to absorb that fee to direct more of your money towards retirement. This may require a shift in your lifestyle. It may require letting go of some expenses. So there's other work here to do as well, which is to review your budget, see where you can trim costs, bring down costs, eliminate costs and that way you'll have more to invest for your future. I also want to make sure that in addition to investments, you have enough in rainy day reserves. So simultaneous to all of this, if you can create a four to six month cash reserve for yourself. So if you needed to, you could tap this money to pay your necessities, your housing costs, your gas, your food, your utilities. And finally, I would look into long term care insurance. Typically, people get long term care insurance in their mid-50s to early 60s. This is the sweet spot. Because premiums are lower, you're more likely to qualify without health issues. If you're in good health, now is a good time to lock in coverage. Now, long term care insurance, it's a type of coverage that helps to pay for extended care services. When someone can no longer perform basic daily activities independently due to aging or illness or injury or cognitive impairment, like dementia. You know what it's like to caregive for someone. Imagine if that person had insurance to afford a full time caregiver, to afford to afford an assisted living facility or a nursing home or an adult daycare service. And you didn't have to imagine that. So I want you to learn from this experience and know that there are financial resources for you so that for your future, for your healthcare down the road, you can afford it yourself and not have a relative or someone else step in financially to help you out. And that's through having long term care insurance. There are a number of insurance companies that offer long term care insurance. I might recommend working with a broker who can shop around for you. And that way you're not making all these phone calls, sometimes you can pair it with your existing life insurance plan if you have it. So I might recommend that if you have life insurance already, calling up that company and asking to add on long term care, how does that work? Can they do it? That might be the easiest thing and maybe even the most cost efficient. All right, I hope this was helpful to you, Angela. I really appreciate you reaching out. I know that through your question you've helped many people feel hopefully better about their finances to know that it's never too late. I have to say, you making $270,000 a year, I feel very good that with some adjustments and a dedication to investing, you can approach your retirement with more confidence. And I'm here for you in the meantime. And our last question comes from Nat, who left a question on Instagram. DM'd me on Instagram. Nat asks, hey Farnooj, I have two 401ks left with my previous employer, each at different financial firms. The main reason I left it with my old employer is because not having pre tax funds in my traditional IRA allows me to do a clean backdoor Roth without the pro rata rule. Any thoughts on this? So great question. I like that you're thinking strategically here. Just for everyone listening, the pro rata rule with regards to backdoor Roth IRA conversions is an IRS tax rule. It affects how your taxes get calculated when you convert pre tax IRA funds to a Roth ira, which we've called a backdoor Roth IRA conversion. If you have any pre tax money in a traditional IRA or even a SEP IRA or a simple ira, the IRS requires you to blend all the IRA funds when figuring out how much of a Roth conversion is taxable. And this can create an unexpected tax bill. So in this case, leaving the money in the 401ks for the time being is going to allow our friend in the audience to do a backdoor Roth away a little bit more straightforwardly and without all these tax implications. So in this case, Nat leaving her money in the 401ks, not converting them to to IRAs just yet is going to allow her to do a clean backdoor Roth IRA because 401ks are not included, remember in that pro rata rule. So for next steps, some thoughts, I would look at your 401ks currently and where they're being invested, the companies that are the institutions that are managing them. I would check to see if they have low cost index funds like an S&P 500 index fund or a total market index fund. If the fees are high or if your investment choices are limited, then a rollover might make sense. If your current employer's 401k plan, has great investment choices, has low fees, then yeah, rolling the old 401Ks into the new 401K is probably a better place for that money. And it also preserves the ability for you to do a backdoor Roth IRA without the pro rata concern. So bottom line, you want to keep the 401k with your old employer. If the investment choices are good, the costs are low, the fees are reasonable, and you do want to do this backdoor Roth IRA conversion, you want to otherwise move the funds to your new employer's 401k. If you find that this new 401k has better funds, lower fees, and honestly it helps to just simplify the account management having more money under one roof. And that's our show everybody. Thanks so much for tuning in. I'll see you back here on Monday when I've got a great guest. She's a listener of so Money, Brittany Wilson. She's going to talk about how in the last five years, listening to nearly every episode of so Money, how she's managed to increase her salary and eventually quit her Fortune 500 job to run her business full time. You don't want to miss that. I hope your weekend is so Money. Ladies, let me tell you about how I discovered skims. It's kind of a funny story. I was traveling abroad recently and I realized I'd forgotten all my undergarments. Yeah, cue the mini panic attack in a foreign department store. But then I spotted something familiar. The Skims brand. I'd heard all the hype and so I thought, you know, let's give it a try. And let me tell you, I've never looked back. The Fits Every Body collection is like nothing I've ever worn. The fabric is soft, it molds to your body perfectly, and between you and me, it feels like you're wearing nothing at all. Skims was such a lifesaver on that trip, and now it's a staple in my wardrobe. My favorite piece right now is the Fits Everybody triangle Bralette. I've always struggled to find Bralettes that actually provide lift and support without feeling restrictive, but this one game changer. The Fits Everybody collection is available in sizes XXS to 4X, so there's something for everyone. You can shop now@skims.com or in Skims stores and after you place your order, let them know I sent you. Select podcast in the survey and choose this show so Money in the dropdown menu. Go. Treat yourself. You deserve it. And if you're looking for the perfect gift for your valentine or for yourself, Skims just launched their best Valentine's shop ever available in sizes for women, men and kids.
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Farnoosh Torabi
If you're a maintenance supervisor for a commercial property, you've had to deal with everything from leaky faucets to flickering, flickering light bulbs. But nothing's worse than that ancient boiler that's lived in the building since the day it was built 50 years ago. It's enough to make anyone lose their cool. That's where Grainger comes in. With industrial grade products and dependable, fast delivery, Grainger can help with any challenge, from worn out components to everyday necessities. Call clickgranger.com or just stop by Grainger for the ones who get it done.