So Money with Farnoosh Torabi - Episode 1848 Summary: "Ask Farnoosh: Big Beautiful Bill Winners and Losers"

Release Date: July 4, 2025
Host: Farnoosh Torabi

Introduction

In this special Independence Day episode of So Money with Farnoosh Torabi, host Farnoosh delves into the intricacies of a significant piece of legislation—the "Big Beautiful Bill"—that has recently passed the House and is poised for President Donald Trump's signature. Farnoosh not only breaks down the bill's provisions but also explores its broader implications on various demographics and sectors. Additionally, she addresses listener questions on financial planning, investing, and educating the next generation about money.

The Big Beautiful Bill: Winners and Losers

Legislative Passage and Political Climate

On July 3, 2025, the House narrowly approved the Big Beautiful Bill with a vote of 218 to 214, sending it directly to President Trump for his signature. The bill's approval came despite unanimous criticism from Democrats, highlighting deep partisan divides. House Minority Leader Hakeem Jeffries even delivered an impassioned 8-hour and 44-minute protest speech against the bill (02:26).

Who Wins?

1. High-Income Households and Corporations

   • Tax Cuts Extension: The bill permanently extends Trump's 2017 tax cuts, benefiting high earners and large corporations.
   • New Perks: Introduces deductions on overtime and tips, a $6,000 senior deduction, and increases the State and Local Tax (SALT) limits to $40,000 for five years.

2. Defense and Border Contractors

   • Military Allocation: Allocates $150 billion for military upgrades.
   • Immigration and Border Enforcement: Allocates over $70 billion, with an additional $46.5 billion earmarked for physical barriers.

3. Traditional Automakers

   • Auto Loans Deduction: Offers a $10,000 deduction for U.S.-built auto loans, significantly benefiting Detroit-based manufacturers.

Who Loses?

1. Low and Middle-Income Families

   • Cuts to Social Programs: Slashes approximately $1.2 trillion from Medicaid, SNAP, and food aid programs, potentially leaving up to 12 million Americans uninsured by 2034.

2. Energy Transition Sectors

   • Reversal of Clean Energy Tax Credits: Diminishes support for solar, wind, and electric vehicle (EV) industries, hindering progress toward sustainable energy solutions.

3. Taxpayers at the Bottom

   • Income Disparity: According to reports from Time and The Guardian, the poorest 20% in America could see their incomes decrease by about 4%, while the top 10% gain approximately 2%, a phenomenon described as a "reverse Robinhood transfer."

Broader Impact

• Deficit Growth: The Congressional Budget Office (CBO) estimates the bill will add between $3.3 to $3.4 trillion to the national deficit over the next decade.
• Healthcare and Social Security: Massive cuts to SNAP and Medicaid, coupled with new work requirements for Medicaid recipients, could exacerbate the financial strain on vulnerable populations.

Farnoosh's Personal Reflection

Farnoosh shares a personal anecdote about her family's reliance on educational subsidies, highlighting the bill's potential impact on families requiring specialized education plans (Individualized Education Plans - IEPs). She underscores the precariousness of dependents who rely on government support, emphasizing the bill's far-reaching consequences on everyday Americans (02:26).

Recap of Recent Episodes

Before diving into listener questions, Farnoosh briefly revisits the past week's discussions:

• Monday: Crafting a financial plan that leverages science-backed principles.
• Wednesday: Evaluating the evolution and current relevance of the FIRE (Financial Independence, Retire Early) movement.

Listener Questions and Financial Insights

1. Designing Your Investment Portfolio: Stocks vs. Bonds in Your 30s

Question from Lucia: "How much should you be invested in stocks versus bonds in your 30s?"

Farnoosh's Advice: Farnoosh introduces the age-based rule of thumb—110 minus your age—to determine the percentage of your portfolio that should be allocated to stocks. For a 35-year-old like Lucia, this suggests a 75% allocation to stocks and 25% to bonds. However, she emphasizes personalizing this guideline based on individual risk tolerance, investment goals, and financial situations. She also recommends consulting with a financial advisor to tailor asset allocations effectively.

Notable Quote:
"It's important that we look at this as just a guideline. It's not okay for everybody." (14:02)

2. Teaching Kids About Money

Question from Johnny: "How can I help my kids learn about money and investing?"

Farnoosh's Strategies:

• Tools: Recommends the Money Savvy Piggy Bank with slots for Save, Spend, Donate, and Invest to teach children the diverse uses of money.
• Books: Suggests titles like The Lemonade War and The Ant and the Grasshopper to introduce entrepreneurial concepts and the importance of saving.
• Conversations: Encourages integrating money discussions into daily life without overwhelming children with complex topics like compound interest.

Notable Quote:
"It's not going to be maybe a teacher's full-time job. We're just saying let's sprinkle this in so kids don't start college... completely blind to the financial world." (14:02)

3. Backdoor Roth IRA: Step-by-Step Instructions

Question from Brooke: "Is there a place where I can get idiot-proof instructions for a backdoor Roth IRA?"

Farnoosh's Step-by-Step Guide:

1. Contribute to a Traditional IRA: Open and fund a traditional IRA, which has no income limits.
2. Convert to a Roth IRA: Initiate the conversion through your IRA provider.
3. Calculate Potential Taxes: Be aware that converted amounts may increase taxable income unless converted immediately.
4. Report the Conversion: Use Form 8606 when filing taxes to document the Roth conversion.
5. Consult a Professional: Seek advice from a CPA or financial advisor to avoid errors.

Notable Quote:
"Tax laws and retirement planning are complex and so if you want to talk to a certified public accountant, a financial advisor, or both, just to make sure you're not going to make an unintentional error, well worth your time." (14:02)

4. Managing High Credit Card Balances

Question from Instagram: "How do you manage credit cards with high balances?"

Farnoosh's Tips:

• Balance Transfers: Move high-interest debt to a card with a 0% APR introductory offer, ensuring to pay off before the promotional period ends.
• Prioritize High-Interest Debt: Focus on paying down the card with the highest interest rate first while maintaining minimum payments on others.
• Psychological Boost: Alternatively, eliminate the smallest balance first to gain momentum.
• Negotiate Rates: Contact credit card companies to request lower interest rates.

Notable Quote:
"You don't want to risk this money. Because the rationale behind this is that we tend to see recessions in a cyclical pattern." (Unspecified Timestamp)

5. Handling Medical Bill Debt

Question: "Where's the best place to go for help with medical bills?"

Farnoosh's Recommendations:

• Medical Advocates: Professionals who review bills for errors and negotiate on your behalf. Organizations include the Alliance of Professional Health Advocates and Health Advocate.
• Hospital Financial Aid: Many hospitals have patient advocates who can assist with payment plans or financial assistance.
• Fee Structures: Advocates may charge a flat fee or a percentage of the savings they secure.

Notable Quote:
"Medical advocates are essentially professionals who review your bills... and they can help negotiate on your behalf." (14:02)

Conclusion

Farnoosh wraps up the episode by emphasizing the importance of staying informed and proactive in financial matters, especially in the face of legislative changes that can significantly impact personal and familial financial stability. She encourages listeners to utilize provided resources, engage in thoughtful financial planning, and remember that their financial choices and voices matter.

Final Quote:
"A little fire, a little financial clarity, hopefully a big reminder that your money and your voice matter more than ever." (Conclusion Timestamp)

Additional Resources

For more detailed information and resources mentioned in this episode, please refer to the show notes available on SoMoneyMembers.com.

This summary provides an overview of the key discussions and insights presented in Episode 1848 of So Money with Farnoosh Torabi. For a complete understanding and to hear the nuances of Farnoosh's advice, listening to the full episode is highly recommended.