So Money with Farnoosh Torabi
Episode 1854: Ask Farnoosh: Debt Consolidation, Roth IRA Investing and Windfall Management. Plus: How Much to Feel Wealthy?
Released: July 18, 2025

Introduction

In Episode 1854 of So Money with Farnoosh Torabi, host Farnoosh delves into pressing financial questions from her audience, providing expert advice on debt consolidation, Roth IRA investing, and managing unexpected windfalls. Additionally, she explores a compelling survey on what Americans believe constitutes wealth. This episode seamlessly blends current financial headlines with actionable strategies, ensuring listeners are well-equipped to navigate their financial journeys.

Mentorship Program Announcement

At the outset, Farnoosh shares exciting news about reopening her private mentorship program in September. This exclusive, four-month virtual program is designed for individuals aiming to build their personal brands across various platforms. Emphasizing sustainability and alignment with personal values, Farnoosh outlines the program's benefits, including personalized guidance, access to annual in-person retreats, and comprehensive support for brand growth.

Farnoosh Torabi [05:30]: “This mentorship program is designed to help you level up across multiple platforms...everything sustainably and align with your values.”

Recap of Previous Episodes

Farnoosh briefly revisits the highlights from the week's earlier episodes:

• Episode 1852: Featuring Mariam Bennikaram, a C-suite executive turned podcast host, discussing the upsides of a non-linear career path, managing career burnout, and the importance of taking breaks.

• Episode 1853: With Martha Underwood, a tech veteran, exploring AI and data surveillance's impact on privacy and financial freedom, including the risks of AI bias and strategies to protect personal financial data.

Current Financial Headlines

Farnoosh transitions into a discussion of significant financial news impacting listeners' wallets:

1. Trump Accounts for Newborns:

   • A recent bill provides each newborn from 2025 to 2028 with a $1,000 seed account that grows tax-deferred. Families can contribute up to $5,000 annually, intended for future education, home purchases, or career training.

   Farnoosh Torabi [15:45]: “The real benefit comes really though, if you can continue to contribute... it grows tax-deferred.”

2. Federal Student Loan Overhaul:

   • A new budget bill simplifies student loan repayment by introducing two options: standard and a new income-driven repayment assistance plan. Existing plans like SAVE and PAYE are being phased out.
   • The 0% interest pause under the SAFE plan ends on August 1st, leading to higher payments for borrowers.

   Farnoosh Torabi [20:10]: “Fewer choices may simplify things, but for many borrowers, they will feel the hit with rising monthly bills.”

3. Social Security Transition to Electronic Payments:

   • Social Security will move to a 100% electronic platform, requiring direct deposits or debit cards for payments, affecting the remaining 2% who still receive checks via mail.

   Farnoosh Torabi [24:30]: “This could be a problem... they are not up to speed on this.”

4. Wealth Perception Survey:

   • Charles Schwab's 2025 Modern Wealth Survey indicates Americans feel a net worth of $2.3 million defines wealth, while $840,000 represents financial comfort. This highlights the psychological aspects of wealth.

   Farnoosh Torabi [28:15]: “Wealth is a very psychological state. Comfortable versus wealthy. That's different for everybody.”

5. Affordable Care Act Premiums Increase:

   • Premiums are projected to rise by 15% in 2026, with some insurers contemplating hikes of 20-30%, primarily due to the expiration of pandemic-era subsidies.

   Farnoosh Torabi [32:50]: “It is literally for some households the most expensive bill they have every month.”

Audience Questions and Answers

1. Investing Without a 401(k):

A listener nearing 40 without a 401(k) seeks advice on starting to invest. Farnoosh recommends opening an Individual Retirement Account (IRA), specifically a Roth IRA, due to its tax-free growth and flexible withdrawal options.

Farnoosh Torabi [38:00]: “With the Roth IRA, you pay taxes on the contributions now, but all of the earnings and the withdrawals in retirement are 100% tax free.”

Steps to Get Started:

• Open a Roth IRA through any brokerage or robo-advisor.
• Invest in low-cost index funds or diversified portfolios.
• Set up automatic monthly contributions up to the annual limit ($7,000 for those under 50 in 2025).

2. Debt Consolidation with Upstart:

A listener with a credit score just below 700 considers using Upstart for debt consolidation. Farnoosh expresses caution, noting that while Upstart is legitimate, their interest rates can be as high as 36%, potentially worsening the debt situation.

Farnoosh Torabi [45:20]: “The interest rates that they can charge you on your debt once they consolidate can be up to 36%... it's much cheaper.”

Alternative Recommendations:

• Seek certified credit counselors from organizations like nfcc.org.
• Explore debt management programs that negotiate lower interest rates and streamlined payments.
• Consider negotiating directly with credit card issuers for lower rates or transferring balances to cards with introductory 0% APR offers.

3. Managing an Unexpected Inheritance:

An anonymous listener received under $100,000 and plans to use it for debt repayment, home repairs, and a vacation but is uncertain about the remaining funds. Farnoosh advises:

• Prioritize Paying Off Debt: Ensures financial stability.
• Establish or Bolster Emergency Fund: Aim for 4-6 months of expenses.
• Maximize Retirement Contributions: Especially if employer matching is available.
• Invest Excess Funds: Through high-yield savings for short-term needs or diversified brokerage accounts for long-term growth.

Farnoosh Torabi [60:45]: “Attach price tags to those dreams. I always say goals carry price tags and hold yourself accountable.”

Conclusion

Farnoosh wraps up the episode by reiterating the importance of strategic financial planning and invites listeners to join her mentorship program for deeper insights. She emphasizes staying informed, setting clear financial goals, and taking actionable steps to achieve financial well-being.

Farnoosh Torabi [68:30]: “Stay well everyone. Stay cool, stay curious and I hope your weekend is so Money.”

Key Takeaways

• Mentorship Opportunities: Farnoosh reopens her exclusive mentorship program, offering personalized support for brand-building.
• Current Financial Trends: Awareness of new financial policies and their implications is crucial for effective financial planning.
• Investing Strategies: Starting a Roth IRA can be highly beneficial, especially for those without access to employer-sponsored retirement plans.
• Debt Management: Exploring nonprofit credit counseling and cautious evaluation of debt consolidation options can lead to better financial health.
• Windfall Management: Prioritize debt repayment and essential expenses before considering investments or discretionary spending.

By addressing real-life financial concerns with practical solutions, Farnoosh Torabi continues to empower her audience to make informed and strategic financial decisions.