← So Money with Farnoosh Torabi
So Money with Farnoosh Torabi
1872: Ask Farnoosh: When Money Gets Messy: Family, Love, and Work Decisions
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- [00:00]
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Farnoosh Karabi
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- [01:32]
Farnoosh Karabi
So Money Episode 1872 Ask Farnoosh.
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LinkedIn/State Farm Advertiser
You're listening to so Money with award winning money guru Farnoosh Karabi. Each day get a 30 minute dose of financial inspiration from the world's top business minds, authors, influencers and from Farnoosh yourselves. 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 Sew Money.
- [02:04]
Farnoosh Karabi
Welcome to Sew Money everybody. It is Friday, which means one thing. It's time for AskFarnoosh. It is Friday, February 21st and today we're tackling audience questions about how to create some boundaries when you are the daughter of immigrants and there is an expectation that you're going to support your family financially. But of course you also want to manage your own finances and build wealth. How do you do it? Also, how to not become completely financially dependent on a partner. One person in the audience is concerned about this as her boyfriend is in active duty in the military. They may have to leave the country in the next few years for her boyfriend's job and if they do, she'll have to forfeit her job and she's terrified. And then how do you know when it's the right time to walk away from your business? When. When to sell it? When to just say I quit. You've got employees, so it's not that easy of a decision. I have some advice, a sort of small business closure calculus, if you will. First though, how's your week going? Personally, in New Jersey, I'm trying not to get literally blown away. Wind gusts here hit 40 miles per hour earlier this week and it actually impacted us because we were flying back from Florida on Monday and and we got delayed. Nothing like being at the gate, boarding pass in hand and hearing this. Flight will now depart at 3pm and it's 11am I'm all about air traffic safety. Whatever you have to do to get us home safely, please and thank you. I did something a little different for me today. I woke up extra early. For me, that's 6am it wasn't to work out. It wasn't for a paying job. It was to do some good old fashioned boots on the ground reporting. I got up early and went to one of our train stops here in town to interview New Jersey transit riders. Why am I doing this? Well, as you may or may not know, I recently launched a new podcast with a couple of friends here in my town, Montclair, New Jersey called the Montclair Pod. This week our goal was to get some reporting done around commuting in Montclair, especially in light of the recent scrapping of congestion pricing they were going to raise the TOL from For those commuting into New York City, it's just not that fun sometimes to take the train. There's talk of people going back into the office five days a week. So we had a lot to talk to transit riders about and we got the scoop. The podcast is taking off. I haven't launched a podcast in 10 years and a friend of mine who has a podcast said, what's it like? Farnouche? How's it been going compared to when you launch in 2015 versus 10 years later? I feel like I'm balancing a plate on my head while jugg while jumping on one foot. These days you gotta do a lot to get yourself out there. But good news, we're a local podcast so we can also rely on a lot of traditional marketing like word of mouth flyers. We held an event Tuesday night to celebrate the launch of The Montclair pod. Over a hundred people showed up. I guess that says a lot about how much people love beer. But also our mission, to bring more important storytelling to our neighbors and amplify the community's voices. We've talked about schools, some of the drama within our public school district, redevelopment controversy, politics, and next week we're going to talk about ghosts because apparently Montclair is haunted, depending on who you ask. But we are a spirited town to say the least. And I have some stories that I'm going to share next week. So anyway, even if you're not living in Montclair, I think this could be a really interesting podcast to go behind the scenes of this town called Montclair, which is a bit of a microcosm for many of the country's very left leaning suburban towns. Although, are we as left leaning as we think we are? I did ask that question on a recent episode and I was surprised to hear what I found all this happening during my birthday week, which made it extra special. The party on Tuesday night at Tierney's was really special and someone actually said to me when wait a minute, you're 45? I would have guessed you're 40. And I don't know how to feel about that. I will take it. I think that's a very nice compliment. Whatever. Age is just a number, but I guess being mistaken for being in my 20s is over and that's okay. I don't wish to go back necessarily to my 20s. All right, now let's dive into your questions. First question is actually a question that came up during one of my one on one phone calls with a listener. As you know, if you leave a review for this podcast on Apple Podcasts, I might read it on a Friday episode as my thank you. I'll grant you a free 15 minute money checkup with me. And this week I spoke to a listener and part of what we talked about was her struggle with how to set herself up for success financially. She and her partner want to buy a home, they want to start investing more, they want to build wealth and then on the other hand they have she has this concern that as the oldest of seven children in her family and there's quite an age gap, the youngest is only a teenager. As the oldest and kind of the most accomplished and successful, she is going to be the one her parents will turn to for financial help for their retirement. And she's the daughter of immigrants. You get the picture. Definitely. So what did we talk about? The big thing being that you can't be the safety net for everyone unless you first build your own solid foundation. My friend, friend on the phone call, she was also worried about the dog. My parents dog is going to need new teeth and I'm like, okay, whoa. Taking care of your parents, one thing, these extended family members and pets, I think you got to draw a line somewhere, right? That's hard. We don't want to feel like we're excluding people or pets. But it's important because I said to her, the last thing your family needs is for you to, to go financially broke, right? And that doesn't help anybody. So you gotta prioritize your own wealth, building first your biggest asset. I said is time. And if she hasn't already, I want her to start maxing out her retirement accounts. It's not selfish, it's smart. The stronger the firmer her financial position, the more she's gonna be able to help later without sacrificing her own wellbeing. I also said have the hard conversations now. If she thinks her parents will need her help, don't make it a think, make it a no. And talk to your par about what they're expecting. Because sometimes we blow things up in our heads. I'm going to have to move in with my parents or vice versa, or I'm going to take over all their bills when maybe they do have a pension, maybe they do have some savings or some assets that they could liquidate. Maybe they do have long term care insurance. You don't know. So without knowing this problem is going to turn into a big hairy monster in your life. Instead you have to just tackle it head on and know what holes there are to fill sooner than later. That's the key. Nobody ever wants to be told, hey, we need to help out our mom, dad and we need to help them out yesterday. We want to be able to plan for these things and we can. Speaking of long term care insurance, I think this was the biggest takeaway for my friend. She said, yeah, I'm going to go and look into this. Because her parents are in their late 50s, early 60s, so they're at the prime age to apply for and probably get a good rate for long term care insurance. Long term care insurance is an insurance that kicks in later on in your life when you have costs related to your quality of life. If you need to live in a nursing home, hire someone to come and help you part time in your house. You need to go to an assisted living facility. This is the sort of stuff that Medicare doesn't cover. Having long Term care insurance is very helpful in those cases. Many adults in their 70s and older will encounter a cost like this. Actuarial studies show it's a good investment. It's not a guarantee, but it's a pretty good investment. Just like you get life insurance, you want to get long term care insurance as well. Especially now I'm talking to those in their late 50s, early 60s. The healthier you are, the cheaper it's going to be. It will come in real handy because assisted living facilities. Have you looked at the price tags on these places? I'm talking a hundred thousand dollars a year potentially depending on the amount of aid that you need. So that alone I think that piece of it was really eye opening for my friend and hopefully she's now got her parents and her doing some research. She's got six or seven siblings and she's the most accomplished so naturally she feels the weight of expectation. But I said take a reality check. It's not all on you have conversations about shared responsibility and yes, I understand that the 13 year old and the others who are a lot younger may not have money to help your parents out now, but they may have other resources. They have time, they have caregiving skills, they can help with logistics. Money helps, but there's so many other ways to support people. And finally, just give yourself permission to prioritize yourself and to create more equilibrium in your life. You're not responsible for fixing everything. The best way to be there for your family is to make sure you're financially strong and not burnt out. You got this. Lately I've been turning to quince for just about everything. 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- [14:50]
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- [15:24]
Farnoosh Karabi
All right, next question is from an anonymous listener. Her concern is being completely financially dependent on her partner. Here's what she writes Farnooch I've been meaning to send my question in for a few months, but grateful that I waited as my income has changed drastically. I'm in my early 30s. I'm living on my own in Southern California. My boyfriend is active duty in the military and our relationship plan is to move in together this year, be married in the next two, and become parents in the next four. I'm a full time entertainer and part time federal contractor. With my contracting work, I was making more than enough to cover my daily expenses While funding my 401k automatically depositing money into my high yield savings account. I even had leftover cash to cover unexpected expenses. I also have workplace health insurance and an HSA account. Unfortunately though, with the federal changes, my hours in income are down 25%. I'm still grateful to even have my job. After going over my budget spreadsheet, I've had to adjust my auto deposit by $300 a month. I have to make a more strict grocery plan. I have very little leftover. I'm trying to find ways to supplement my income elsewhere, but I have a huge medical expense next month and that's putting a lot of things on hold in the next few years. There's also the huge possibility that we're going to have to leave the country for my boyfriend's job. If we do, I will have to forfeit my job with the understanding that I may not have any income for however long we're there. We've discussed how I could continue performing in the new country, but that's a huge uncertainty since I don't know much about the market there. My biggest concern is being completely financially dependent on him should this happen. So how can I build a savings net in the next four years while living on a volatile income how can I best save for this uncertain future and what resources are out there? All right, my friend, I want to first just say you're already managing your finances very well despite all this uncertainty. You're being proactive, tracking your budget, making adjustments that are strategic. You're thinking ahead. This is exactly the kind of financial self advocacy we want. So I'm going to break this down for you in some actionable steps. Okay? Firstly, with this expectation that you may be leaving the country and job prospects won't be great, it's important to maximize your savings Right now. Even with your reduced hours, you're still saving. That's great. But you do anticipate a period of no income. And so right now the importance is liquidity, ensuring that you have enough cash accessible to you. You do have that high yield savings account. That's key. I would consider as hard as it can be to increase contributions whenever you can, even temporarily. Like tax season is approaching. If you get a windfall, if you get a tax refund, if you get extra gigs you weren't expecting, consider that all money that's going to go towards this security fund for your future. There's emergency savings, so six months of living expenses, especially since you may have an extended period without income, a relocation fund. I don't know if the military pays for that, but some of your initial expenses in a new country may be out of pocket. And then I would also create a savings bucket that gives you flexibility to invest in yourself, in your skill building, in your networking, all in your new country. It's going to be hard in the beginning to hit the ground running, but there are ways to invest your time and build relationships while you're there. And that sometimes does take some savings. Next, I want you to diversify your income streams. Your federal contracting hours are uncertain, so diversifying your income is crucial. You're already well versed in hustles, so the easiest ones would be like digital revenue streams. Are there ways to monetize your talents online? Can you teach? Can you, you consult? Can you offer virtual performances? Can you do freelance work, remote work? There are websites like Upwork and Fiverr or even federal contract work that let you work remotely. That could be an option, although I don't know what the law is anymore about that. Did Trump get rid of all remote federal work? There are various companies that specialize in providing virtual freelance opportunities tailored for military spouses. You can go online and search for those. Whether it's virtual assistants work or graphic design work, the opportunities are usually very flexible and Obviously remote because they understand that you have a transient lifestyle and then passive income. Consider low effort ways to generate income. Maybe there are royalties that you can earn from creative work, digital products or rental income. If you own any extra rooms or property, nine out of ten might not apply to you, but maybe one will and that's going to be your money job preparing for potential financial dependency. I don't like the idea of being fully financially dependent on someone else. Even if you're not working. It's okay if you're not working because that happens. We all have gaps in our careers, but you should have savings of your own. You want to feel financially independent, that you can go out there and spend your money and not have to answer to anybody, not have to ask for permission or have a whole conversation about pulling money out of your joint savings. You should have your own money. Shared finances can be a very healthy part of a partnership. But I do think you should always try to maintain both of you a level of financial independence. So to that end, I would look into a pre marriage financial plan before you move, before you step foot on foreign territory or get married, have a clear financial agreement. Is your partner going to contribute to your savings if you can't work abroad? Our episode with Janiece earlier this week. Her partner is now the stay at home parent. She's put him on payroll and he's earning money while he does this job. I know that's not applicable in this case because your partner doesn't own his own business, but there are things like spousal IRAs and taking part of your paycheck and putting it in your spouse's savings account. Even though you're not working outside of the home, you're doing a lot inside of the home to support your family. Are there military spouse employment programs, financial assistance options, maybe some tax benefits that could support you? And then keep an independent savings account. Don't lose the accounts that you have currently when you go abroad, look into maintaining a personal financial account. And I hope you're having conversations with your partner that you're not just coming to me, that you're talking with your partner. Maybe you're talking together with a financial advisor. There are financial advisors that specialize in military families who have a lot more insight into what's available to both of you as resources, how to structure your finances. All right, thanks my friend, and good luck. And last but not least, how to know when it's time to end a business. I have a question today from a vegetable farmer in Vermont who's been running her business for 20 years. She's financially struggling due to rising costs and labor rates. The farm, she says, breaks even, but she's working 80 to 90 hours a week, no savings and a lot of stress. She wonders, how do you know when it's time to call it quits? I think this is a tough question. Deciding to end a business, it's gotta be really emotional, especially the kind of work that you do. Nobody chooses to be a farmer because it's easy, right? This is hard work, physically hard. And I'm sure you're so passionate about it. But it's a financial and strategic decision when it comes to whether we stay or call it quits. And so my methodical approach to figuring out whether it's time to move on involves one, a financial viability check. So already you're telling me that you're breaking even, so you're not profitable. Is this business providing you a sustainable income? Do you have any personal financial stability outside of the business? I often wonder about some of these shopkeepers in town, and I'm thinking there's no way they're profitable. And then you find out, maybe they have savings, maybe they have a partner who's supporting them. And this business is more of a passion project and less of a financially strategic endeavor. Whatever I'm Investing in, your case, 80, 90 hours a week, and I have employees. I have an obligation to make sure that we're all making enough money so that this feels worth it. You're running a business, not a nonprofit, as part of that financial viability check. The other question is, have I exhausted all my options to increase revenue or cut costs without. Without, and this is key, sacrificing my well being. Because certainly, yeah, there's probably things you could do, but you don't want to do them because they're going to make you more stressed. And you're already stressed. So that's the first thing. Look at your finances. Do an audit there. Secondly, let's think about workload versus life quality. Are you working unsustainable hours with no improvement in sight? Is your mental and physical health suffering because of the business? Here's a good question. If you could start fresh today, would you choose this business again? The third piece of this as part of the overall calculus is to think about the sort of industry and market conditions going to be long term, or if these are cyclical or if these are outlier situations. Like maybe there are rising costs and labor shortages right now, but things will improve. And that's more your expertise you know, the industry having been in it for decades, I think sometimes we have a bad month or a bad year, and we think this is going to be forever. But maybe some of the headwinds that we're experiencing are temporary. But again, that's for you to analyze, and I don't know the answer to that. The other piece of this is to think about what are your other options if you do shut down the business? If you do plan to shut down the business, what are going to be the ways you're going to do it? What are the options? Are you going to sell the farm and the business to somebody else who might have better capital or a better sense of how to run the business? Is there a way to shift your business model? Maybe you scale down, maybe you pivot, maybe you partner with others. This kind of goes back to what I was saying earlier though, of would you do this again? Do you like even what you're doing? And then if you were to close down the business strategically, how would you minimize the financial loss? How would you transition to a new career or a venture that better aligns with what you want to do? The decision that I think you have to make is not about whether the business should survive, it's about whether you're going to want it to survive. Right? Whether you can thrive in this climate. And if you were in in the same place next year, how would that make you feel? Right. I remember I had a conversation with my husband years ago, before we were married even. I think we were just dating. And he was having a lot of concerns about his career path. He was unhappy at his job. And I felt like he just kept on being unhappy. And I felt as though we reached a point where it was very repetitive. I'm not happy at my job. So then the question becomes, what are you going to do about it? And I asked him, if you're still in this situation next year, unhappy, unchanged, then it's not your employer's fault. It's your fault because you've had consistent years of being unhappy at this job. You're smart, you have a good resume, you have relationships, and I think you have the desire to move elsewhere. If you're not, then you gotta stop blaming the employer or the business. In your case, it's you. It's time to make a decision. And that's scary. I think I have a lot of friends in that camp where they would rather just be unhappy at their job because it's certain, as opposed to what's on the other side, which is uncertain but potentially 10 times happier. So bottom line, my friend, if your business isn't giving you financial security now or in the future, it's not giving you work life balance, there's no clear future. Then I think you have your answer and that is not a failure. I think that's what I'm also extracting from your question is that there's a lot of heartbreak attached to this, like walking away from your business. That's not a small thing at all. So this is a very big decision and I hope that you consult with others and I may have given you a bit of a push to go and get some questions answered at least to help you narrow down what it is that you do want to do. And I wish you the best of luck and I would love to stay in touch and learn what happens next. And that's our show everybody. Thanks so much for tuning in this Friday. I hope you check out the Montclair pod. I'll put the link in our show Notes. I hope your weekend is so money.
- [28:11]
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Farnoosh Karabi
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