← So Money with Farnoosh Torabi
So Money with Farnoosh Torabi
1803: Ask Farnoosh: How Will Interest Rates Affect My Money? How Can I Stay Involved If I Don’t Manage Money in My Relationship??
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- [01:03]
Ryan Reynolds
So.
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Farnoosh Torabi
Money Episode 1803 Ask Farnoosh.
- [01:07]
Podcast Host
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]
Farnoosh Torabi
Welcome to SEW Money, everybody. I'm your host, Farnoosh Tarabi. It is Ask Farnoosh Friday and we have a bunch of questions. I've actually rounded up some of the questions from a financial workshop I hosted last weekend at the Bloomfield Library in New Jersey. Lots of interesting, important questions about being the breadwinner in your marriage as a woman. How that impacts your relationships. Not with your partner necessarily, but with family and external culture. They've got opinions and you want to create boundaries. How do you do it? Also questions about real estate and how to be a proactive financial player in.
- [02:11]
Workshop Participant
Your marriage if you're not the person.
- [02:12]
Farnoosh Torabi
Who'S actually managing a lot of the money. More on those questions soon. But first I just wanted to check in with everybody. How's everyone doing? There's so much happening in the world and in the financial world and I thought it would be important to Highlight some of the things that happened this week that could impact our money. The biggest news was probably that the Federal Reserve met as they were scheduled to decide on interest rates and they decided to keep rates steady. Why does this matter? Well, so the Federal Reserve announced that it's keeping interest rates at between 4.25% and 4.5%. Keep in mind, this is what's called the Fed funds rate or the overnight bank lending rate. This is the rate at which banks lend to one another. And that does impact, you know, rates eventually, especially in the credit card market and in the consumer loan market. But they decided to keep that benchmark interest rate unchanged. Fed Reserve Chairman Jerome Powell had a few reasons for this. One, economic uncertainty. Who knows what's going on right now? Even the chairman of the Fed was like, I need to assess what's going on. And I thought that it was kind of akin to how we talk about our personal finances when we don't know what we don't know. And of course, we never want to make big lasting decisions in those moments of peak uncertainty. And he kind of said that, he said, you know, right now there is an, there is elevated uncertainty as far as what's going to happen in the economy. And this is all being influenced by a lot of the recent policy changes and trade tensions, AKA tariffs, which we haven't yet seen the impacts of that, but we can guess, but never want to make a decision about interest rates on hunches. There's also still some inflation concerns. Inflation now they're projecting it's going to rise to 2.7% by the end of the year. The Fed was hoping to be on target to closer to 2%, which is the target inflation rate by the end of the year. And again, this was attributed to recent tariffs, the additional tariffs, because in case you didn't know how tariffs work and some people in the administration don't know how tariffs work, tariffs raise the prices of imported goods. And who pays for that? America, the importers, and then ultimately you and I, because those prices, those price hikes get passed on to us in the form of retail prices.
- [04:29]
Workshop Participant
Get it?
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Farnoosh Torabi
Okay, Just making sure. Because some people still think that tariffs are taxes that foreign countries pay when they work with us to import their goods, and that it's sort of an FU to foreign countries, but actually it's an FU to the consumer at the end of the day in America. And also the Fed cited some slower economic growth. They've actually downgraded their economic growth forecast for the year to 1 point.7%, down from 2.8% last year. Ultimately, they're seeing a slower economy. There's a lot of uncertainty, and so they're taking a cautious approach, choosing to hold interest rates steady. Their next meeting is in May, and in two months, maybe they'll get more data to give them a sense of what they really should do with interest rates, either move them up or down. Their whole point in adjusting the Fed funds rate is to 1, get us to a target inflation of 2%, but doing so in a way that doesn't crash the economy. The Fed is very powerful. If you look at where we were with inflation during the pandemic, right where we were looking at 7,8% inflation, now close to 2% inflation. That's thanks to largely the Fed and its monetary policy. So that's a good thing. And I know that, you know, on an individual basis, when you're out there grocery shopping especially, it doesn't feel like prices have come down. That's a whole other conversation. Are we at a stagflation point where prices have come down, but they've sort of leveled off and they're still higher than what they were, you know, pre pandemic or even during the pandemic? That's a healthy debate. And I would agree that in some categories of consumer products, we're just never going to get back to the levels that we had before the pandemic. It's a new normal. Some economists are even saying that this 2% inflation target is unrealistic, that maybe it should be more like a 3% because the cost of living has gone up globally, not just in the United States. And we need to adjust our expectations of where inflation should be maintained, quote, unquote, ideal inflation. Anyway, that's my economics 201 for us for this Friday. Sorry, are you still awake? And then the other big piece of data that came out this week is a decline in consumer confidence. So we just talked about all the uncertainty in the economy, trade tensions. There's also been many layoffs in the federal government and in the private sector. All of this has led to a drop in consumer confidence. The University of Michigan's Index of Consumer Sentiment, which is widely referenced, that index dropped to its lowest point in three years. So I just finished saying, you know, while it may seem like the economy on paper, according to certain data and relative data is doing okay, while inflation seems to be tempered, we're living, all of us earthlings in the United States. We're in it and we're experiencing the truth, and we're not feeling so hot about things and I kind of want to understand from you, you know, These episodes on Fridays are dedicated to answering your money questions. What are some of the questions that you have related to the uncertainties in the market and your mood around the job market, the housing, grocery store prices? Like, how are you thinking about shifting your finances? We've done a bunch of episodes on this, even just as recently as last Friday, giving you a little bit of a financial playbook for uncertain times. But this is not a one and done conversation. This is going to be ongoing. So I'm leaning on you to let me know what you're thinking, what you're worried about. The best way to reach me is to email me farnousomoneypodcast.com and also DMing me on Instagram at farnoushtarabi. If you're not not following me there, please do, because then your DMs will go directly to my inbox there and they won't get filtered and buried. If you missed any of our episodes this week, I'm just going to give them a shout out. On Monday, we talked about the student loan crisis. How did we get here and how can we create a path for change going forward? There's a really important book that's coming out called Sunk Cost. Who's to Blame for the Nation's Broken Student Loan System and How to Fix It? Jillian Berman, the authority, who's also a veteran financial journalist, came on the show on Monday and we talked about the history of student loans and the good intentions that our government had initially in creating these. How it sort of morphed into this financial chokehold on so many Americans is really interesting. There's many stakeholders in this and I think we often forget about the history or don't even know the history, but it's really, really important context. And of course, we talked about ways that we can make things better. What are some of the actions that she would like to see, whether it's from government or from universities, to reduce the burden going forward? And then on Wednesday, we talked to J. Dana Trent, who is a memoirist, a book called Between Two Trailers, which chronicles the trauma from her troubled past as the daughter of drug dealers. That's right, a childhood in the drug trade, her reconciliation with her past life and her parents, and how that's allowed her to lead a fulfilling life today. If she can get over that kind of trauma, there's hope for a lot of us. We have a new review this week as well that I want to highlight And I want to encourage again everybody if you like what you're hearing if in your Apple podcast app you can leave a review. And I pick one every week. When there's a fresh review, that person gets a free 15 minute phone call with me as well as a free 30 day trial of our so Money members club. And this week I'm going to extend this to Helena Rowe, who wrote a review earlier this month giving the podcast five stars, saying that this is her favorite finance advice. After getting my first job out of college, I was looking for a financial podcast to, quote, unquote, get smart on my financial status and goals. I found so money and I have been a loyal listener for years. Farnoosh covers a wide range of topics with deep knowledge and understanding, so I'm always learning something new. What I love most is her holistic view of money and how she acknowledges each person has unique financial and life goals. She's kind, funny and smart and I recommend this podcast to everyone. Well, I'll tell you, after 10 years, reviews do not get old, especially ones like yours. Helena, thank you so much for being with us, joining the show, sharing it with your friends, your kind review. If you'd like to get on a call with me, I would love to help you out in any way, whether it's, you know, you've got a financial question, a work question, you can email me Farnayushitsomoneypodcast.com let me know you left this review and I'll be in touch. Well, and as Helena said, each person has unique financial and life goals. And as we head into the mailbag, we're going to learn that and hear from our audience who, who I had the chance to meet many of them in person last week at the Bloomfield Library in New Jersey. I actually met the mayor at the event, a lovely human named Jenny Mundell. She is Bloomfield's first female mayor. I was honored that she came and she said, can you start the Montclair podcast for Bloomfield?
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Workshop Participant
I said, let's talk. By the way, I've started a podcast.
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Farnoosh Torabi
All about Montclair, New Jersey. It's so much fun. You can check it out even if you're not from Montclair.
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Workshop Participant
I think you'd enjoy it.
- [11:34]
Farnoosh Torabi
Might have a couple laughs because, you know, we get a little goofy, but we also talk about really important issues. Like our most recent episode is about crime and safety in our town. We interviewed the police, we interviewed safety experts. I interviewed a woman who has been practicing jiu jitsu for 20 years because that's Also becoming more and more popular as people are concerned more about their personal safety. Did you know this? I'm learning so much. But I digress. Let's get to some of these questions that we unpacked at my financial literacy workshop. First up, a female breadwinner shared how her first husband was uncomfortable with her earning more. She's married again to a lovely man, and it's still a problem, but it's not about her husband being uncomfortable. It's about her parents are uncomfortable. She's the daughter of immigrants. This wasn't what they had envisioned for her. Despite that, they encouraged her to go out there and earn a paycheck and go to school and all the things. And then she did it. And now everyone's giving her side eye because God forbid she married a man for love and not his bank account. We talked very candidly about this because I kind of related to what she was going through. I no longer have, thankfully, the parents who give side eye. But for a while there, when I was dating my husband and even early on in our marriage, there was a lot of, how shall I say, disbelief, not a lot of confidence in how our marriage could actually quote, unquote, work in the event that we also brought children into our lives and our lives got more complete. How in the world, how in the world could a mother who's out there with a big career and a lot of her household relying on her paycheck be functional? And also, the other question that I.
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Workshop Participant
Often got, or maybe I didn't get.
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Farnoosh Torabi
It directly, but it was implied, is like, what is your husband gonna do? Here's the thing, too, that we often forget is that while women can feel targeted in this complex, dynamic economic flip of she making more than him, we often forget that men are also labeled and pigeonholed into this of breadwinner. And that's limiting for them, too. Like both men and women are given these constraints by society, by culture. And what I've done is I've put stakes in the ground. I have created boundaries. I have even some automatic replies to when I sense anybody is trying to nitpick at our financial life, our financial arrangement. And it doesn't really happen as much these days, but it didn't early on when we weren't talking about this as much and it wasn't as culturally accepted. I don't think we've, you know, completely changed the culture, but it's gotten better over the last 10, 15 years, for sure. So back then, it was really me protecting my mental health and protecting My dignity. If I ever felt like our decisions were scrutinized, I would not entertain the conversation. I would pivot. I would throw it back to them. You know, one thing I've learned over the years, whether we're talking about our choices around who we marry, our choices around whether we pursue having children or not, there are expectations that society places on everybody. And when you go outside those expectations, people are going to get confused, and they express their confusion by asking you annoying questions. And they get critical, because what's ultimately happening is that their choices, which were, quote, unquote, more traditional or more common, they're feeling threatened by those decisions. They're starting to wonder, how could it be possible that someone who didn't do what I did, didn't do, is, I was told, also right? Growing up in my culture, that was, quote, unquote, the best way forward. This person's doing it differently, and somehow they're happy. Somehow it's working out. It completely upends so much of what you've been taught, and that feels threatening. And it manifests in them accusing you of not knowing what you're doing, as opposed to saying, you know what? There are a lot of truths in this life. People can do a lot of things a lot of different ways. It doesn't mean that one way is righter or wronger. It's just, it is what it is. So to summarize one, own your success. Own it with confidence. Other people may not understand your triumphs, your courage to be who you are in a world that isn't always accepting of the choices you've made. And hopefully your confidence will be a signal to those around you that things are okay. So better just shut up. You don't need to justify your financial life to anyone. And I know we're talking about family here. It's not always easy to create boundaries, shut people out. But I find that typically, when family feel like that is on the line, their relationship with you is at stake. If they don't learn how to play nice, attitudes do change. Maybe I'm optimistic, but I've seen it happen in my own life. And then I would say, you know, if you do want to have a conversation with them about it, make it less about gender norms and cultural expectations and just get down to the truth of it all, which is that marriage is a partnership. We're both contributing in ways that support our life together, and it's working. And, you know, one thing that I expressed at this workshop was quote from Adam Grant. I excerpted it in my book A Healthy State of Panic. Adam Grant is a American author, he's a professor, and he has said that too many people spend their lives being dutiful descendants instead of good ancestors. That the responsibility of each generation is not to please their parents, their grandparents, it's to improve things for the next generation. Your children, your nieces, your nephews. It's important to make your kids proud than your parents proud. That seemed to really resonate with the group. Reframing this as we got to stop trying to please our parents, those who came before us, and live our truth so that we can inspire and empower the next generation. Because how we're living our life today, if we are happy and truly dedicated to it, we think it's an alternative to the quote unquote norm and it should be celebrated more. Then live it loud so that this next generation can see that that and trust that it can work for them as well. Who doesn't love the good things in life? Even though I enjoy a little luxury.
- [17:34]
Workshop Participant
It doesn't mean I can always afford it.
- [17:36]
Farnoosh Torabi
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Farnoosh Torabi
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- [20:20]
Ryan Reynolds
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- [20:54]
Workshop Participant
Our next question is also from the literacy workshop where a single mom of two who had very sadly lost her husband, he had passed away, came to figure out whether or not it would make sense for her to sell her home the home. She described it as sort of not really accommodating them anymore, especially now that.
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Farnoosh Torabi
Her mom, who's 80, is living with them.
- [21:17]
Workshop Participant
There are a lot of stairs and it's just not set up for multi generational living. She also mentioned that the house had accumulated quite a bit of Equity, which could definitely come to help them right now. I mean, she said that she is five years away from collecting her pension from the public school system. She is receiving some Social Security from her husband following his passing away. But something that is keeping her up at night is the cost of childcare because her little girls are going to soon be going into daycare. That alone is going to eat away like half of her paycheck every month. So her main question was about should she sell her house and move potentially to another state. And then there were these other kind of open ended issues of childcare, taking care of her mom. I said, you know, right now I don't think you should do anything. You can definitely take this time to make plans and think about where you want to be this time next year. Write it down. I think her husband had only passed away in the last year. It's just a really tough time to be, you know, making any big life decisions. I like hearing that the home that she's living in earned a lot of equity. I think ultimately, ultimately if she wants to move, if she wants to free up her finances, selling that home could be very, very helpful. It didn't seem like she was married to the idea of, you know, staying where she is even in her state. But of course she wants to stay to be able to collect her pension. So no move is probably going to happen right away. Or at least she might move and rent in the same town or in the same area until she can retire and collect her pension.
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Farnoosh Torabi
So.
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Workshop Participant
So that was one thing that I suggested, was that if you do decide that you want to let go of this house, obviously the next thing is.
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Farnoosh Torabi
You want to look to stay in.
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Workshop Participant
The area so that you can continue working and collect that pension. And maybe that means you rent for a while and that's totally fine. She said to me, I know I'm worried about making a decision and then regretting the decision. I said, well, staying still, being in this same position year after year, will that not also be a regret? I mean, we find so much comfort in what we know, even if what we know is not ideal, such human nature. I promised her, I said, when you are able to sell the home and you have cash in your bank, more cash than you have now, those what ifs really have a chance now of happening. You'll have a way to afford options. And that's something that you don't have right now. You know, you have things that you would like to do, but they cost this home. Selling it can be a way to address all of those wishes. And look, I'm not saying you're gonna make the best decision. It's. I'm not saying it's all gonna work out. But I've said this before, and I'll say it again, and this isn't my advice. I got probably a so money guest who got it from somebody else. When you make a decision in life, your life doesn't stop. You can make another decision. Decisions are not finite. We have to sometimes keep the ball moving. Right? Stagnancy carries its own risks. Now, I also offered her some advice around childcare because she did mention that she's been looking around at different solutions. One solution is daycare, which she said, with two kids, it is what it is. The alternative may be to bring someone into her home to watch her girls. But she said, that's probably gonna cost the same amount of money. And I said, well, then I would have someone come into my home. I said, the other thing that you may or may not know is that when your children go to daycare, they will get exposed to illnesses. And a lot of times kids get sick during those years when they're in daycare and parents have to take time out of work or they have to come up with backup childcare solutions. Ask any parent who's had a child in daycare, and they know it's really hard to plan your life because your kid could be homesick. You know, every other day, every few days, if your child is home, even if they do get sick, it's not like daycare is going to say they can't come. Their daycare is home. I could sense too, from her question that there was this sadness around losing.
- [25:02]
Farnoosh Torabi
The home, which carries a lot of.
- [25:04]
Workshop Participant
Memories, which is, you know, maybe a home that she purchased with her husband. Also, there's this overhang of, like, if I'm not a homeowner and I'm renting, even if it's just temporary, is that a failure? Is that a step backwards? And I, of course, had to squash that right right away and say, no, it is not. It is you affording yourself options. It is the responsible thing to do if it means it's going to open up your life for you and your.
- [25:32]
Farnoosh Torabi
Kids and your mom.
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Workshop Participant
And I saw her smile, and that was really nice to see because she was definitely in a much different place when she came into the workshop. Sometimes we just need somebody else to reassure us. And hopefully I did that for her. And lastly, a question about, am I doing enough as the wife who isn't managing the finances. Now, there was a lovely woman at the workshop who has a great career at a university, kids, husband, happy marriage, but said her husband's very traditional and takes on all of the financial accounting and management and bill pay and investments and all that in their marriage. She completely trusts him. It's not like he's shutting her out of it, but she just isn't sure. She has this nagging fear that she's.
- [26:18]
Farnoosh Torabi
Not maybe doing enough to stay involved.
- [26:20]
Workshop Participant
And to stay aware.
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Farnoosh Torabi
So I just said very simply, even.
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Workshop Participant
If one partner takes the lead in managing money, both should have a working knowledge of what's going on. No one should ever feel like they're in the dark about their money. I would just say she doesn't feel like she's in the dark, but she does have this feeling of like, there's got to be something that I can do here.
- [26:38]
Farnoosh Torabi
So I said, the best thing you.
- [26:40]
Workshop Participant
Can do is ask questions, be a partner in this. You know, if he's going to take the lead and make some decisions, maybe he checks in with you before he does. So have these regular financial check ins set aside time each month to review your bank accounts, your retirement contributions. They were both approaching retirement, maybe in the next five to 10 years.
- [26:59]
Farnoosh Torabi
So I said, this is a great.
- [27:00]
Workshop Participant
Way to anchor your conversations.
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Farnoosh Torabi
Do you know when you want to.
- [27:03]
Workshop Participant
Retire or how you can retire? I suggested maybe bringing in a financial advisor just to help them solve for that, because that was something that she said would be very interesting to the both of them to kind of figure out when could she stop working or he could stop working.
- [27:18]
Farnoosh Torabi
So I said, well, it would be.
- [27:20]
Workshop Participant
Helpful to get a third party to sit down with you who can kind of look at everything, be objective, and make you both feel reassured. And I said, do you have access to everything? Like you have access to your bank accounts, you have access to your investment? She said, yes, we use an app to pull all of our accounts onto one dashboard. I said, great. I really don't have that much of advice for you. And that may sound strange to say, you know, it's okay for one person to be more in charge than the other.
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Farnoosh Torabi
It is.
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Workshop Participant
Because as long as there's communication and transparency and trust. They've been married for a long time. He's given her no reason to doubt him. She has access to their finances. She can see what's going on at least. But when I told her about thinking about retirement, her eyes lit up. She's like, oh, yeah, that is actually something that, that I don't think either one of us really knows much about or if he knows, he's not telling me. So I said, great, this is something to go back to him with. And I suggested going to national association of personal financial advisors NAPFA n a p f a.org to find someone in their area who could help them. It could be a one time consultation or two day or like a two part consultation as opposed to someone who's going to come in there and, you know, be your advisor year in and year out and take a percentage of your assets. This could be just a one time fee, so be sure to ask about payment options. And then we did get a question from the mailbag that came in through Instagram, so I just want to bring that into the fold as well. Sheila wants to know, a relative just graduated from a new career program with.
- [28:48]
Farnoosh Torabi
Some credit card debt and now they're.
- [28:50]
Workshop Participant
Going to be submitting job applications. This relative has maxed out on two credit cards and has a student loan.
- [28:57]
Farnoosh Torabi
What are the best financial strategies for my relative to tackle the debt without.
- [29:00]
Workshop Participant
Negative impact to the credit? Well, Sheila, this advice is very straightforward, although in practice it can get hairy. So the best advice for getting out of debt so that your credit score doesn't get hurt is to first pay those bills on time every month. Never, ever miss a payment. The best way to do this is just to tell your relative to get on some sort of automatic payment plan, assuming he's got some money in his checking account to cover the minimums. That is where I'd start.
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Farnoosh Torabi
Now I don't like the idea of.
- [29:30]
Workshop Participant
Just paying minimums for the purposes of getting out of debt quickly. And to nurture your credit score, you want to pay off the balance as much as possible every month, as close to what's due entirely every month. So if he's got $2,000 on a credit card, man try to pay that off within the month or two. I know that's aggressive, but if he can prioritize paying this off within the first few months of working, that would be great. She asks, could credit card companies help with his debt? Yeah, they do have departments dedicated to helping people with providing, you know, payment plans or payment plans. But that's usually only when you are in a little bit of a bind. And so I would say sure, give them a call and see what's possible. But make sure to ask how it's going to be reported to the credit bureaus. You know, is this going to negatively impact my credit it? Because otherwise you might just want to stay the course, paying this off as much as you can every single month.
- [30:27]
Farnoosh Torabi
And it goes without saying, but I.
- [30:28]
Workshop Participant
Would tell your relative, stop taking on more debt while you're paying this off.
- [30:33]
Farnoosh Torabi
And thank you so much everybody.
- [30:35]
Workshop Participant
I hope you have a wonderful weekend.
- [30:38]
Farnoosh Torabi
Happy Spring, Happy Nowruz to all my.
- [30:40]
Workshop Participant
Persian friends and Iranian friends. I'll see you back here on Monday and I hope your weekend is so Money Foreign.
- [30:59]
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- [31:14]
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