1977: Ask Farnoosh: How Much Should We Pay for College? Plus: Her Investments Went Missing

Summary

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So Money with Farnoosh Torabi

Episode 1977: Ask Farnoosh: How Much Should We Pay for College? Plus: Her Investments Went Missing
Date: May 1, 2026

Episode Overview

In this episode, Farnoosh Torabi dives deep into some of today’s most pressing personal finance questions and anxieties, notably how much one should pay for college in an era of skyrocketing tuition, and the alarming story of an individual whose investments vanished overnight due to a technical glitch. She also discusses Americans’ record-low financial sentiment, her own family’s midlife financial check-in, and provides practical Q&A on credit-building and investment allocation across life stages. As always, Farnoosh maintains her signature blend of candor, empathy, and data-driven advice.

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Key Discussion Points & Insights

1. National College Decision Day – The Real Cost of Higher Ed

• Theme: The decision of where to go to college is described as the “first and probably most important financial decision” young adults make ([02:47]).
• Farnoosh’s Guidance:
  • Treat college as an investment—focus on value over price ([25:45]).
  • Ask not only, “How much will it cost?” but, “What will I get for this investment?”

    “Does the financial outcome justify the financial input?... This is your financial make or break. You can’t sugarcoat this.”
    — Farnoosh Torabi ([27:23])

• Practical rules of thumb:
  • Ideally, avoid debt that’s more than your projected first-year salary. Currently, that's about $65-68k according to the National Association of Colleges and Employers ([33:08]).
  • If a school offers partial scholarship but is wildly expensive, “That still means you’re graduating with $200,000 in debt. That doesn’t feel like very scholarly to me. It sounds more like punishment.” ([28:30])
• Alternative Mindsets:
  • Consider less expensive schools and investing the difference in costs for your child’s future ([34:30]).
  • Don’t be afraid to have tough love conversations with your teen about what’s affordable – short-term disappointment is better than a lifetime of debt ([35:15]).

2. Financial Check-Ins & Homeownership Realities

• Advice:
  • May is an important time for reflection on financial goals before summer distractions kick in ([04:47]).
  • Discusses her family’s personal budgeting exercise and the eye-opening realization that home insurance and property taxes have doubled in recent years ([10:10]).
  • Start a dedicated fund for home maintenance and unexpected house-related costs ([12:44]).
  • Farnoosh highlights the importance of midlife financial planning—urging listeners to “checklist” retirement and healthcare readiness in their 40s and 50s ([13:44]).

    “What do we need to do to be able to arrive at retirement and not have anxiety over money?”
    — Farnoosh Torabi ([13:46])

  • A candid moment: Farnoosh’s husband, overwhelmed by retirement planning talk at dinner, jokes, “Oh my god, you’re aging us so quickly at this dinner,” leading them to “eat their feelings” with dessert ([14:42]).

3. Americans’ Deteriorating Financial Sentiment

• Stats:
  • Over half of Americans (55%) say their financial situation is worsening—the highest in 25 years ([07:45]).
  • Main drivers: cost of living, rising gas prices, stagnant wage growth ([08:16]).
  • Even with inflation cooling, baseline prices remain high in essentials like food and housing ([08:38]).
  • Homeowner’s insurance up 100% in just five years for Farnoosh’s family ([10:20]).
• Empathy:
  • Farnoosh reassures listeners that feeling behind financially is now the national norm ([16:00]).

    “If you’re feeling behind financially, just know that this is the majority sentiment right now.”
    — Farnoosh Torabi ([16:02])

4. The Disappearing Investment Account: What Happened and What to Do

• Story Recap:
  • A New York Times report details a woman whose investment accounts and all associated records suddenly disappeared, due to a technical mismatch in her identity documents ([20:54]).
  • The ordeal: was told by her investment bank that they had “no record” of her, asked to either submit a letter or travel 2.5 hours to the nearest branch ([22:10]).
  • Resolution after six days: “There was a technical error that was tied to her identity records...The money wasn’t stolen. It was just inaccessible and invisible for several days” ([23:29]).
  • Takeaway:
    • Keep paper or digital copies of your latest account statements and know your account numbers, so you have evidence in case something similar happens ([23:55]).
    • “Really important, she had documentation of her accounts. Do you know where to access your account numbers in the event that you log into your bank and everything's gone?” ([24:00])
• Memorable moment:
  • The woman described the experience as a “psychological thriller.” ([22:34])

5. Q&A Segment: Listener Money Questions

How Much Should You Pay for College? ([25:48]–[33:31])

• See in-depth discussion above.

Building Credit When Debt-Free ([36:09])

• Question: I have no debt and never had a credit card. Should I open one now?
• Farnoosh suggests a secured credit card as “training wheels” for building credit without risking overspending.
• Becoming an authorized user on a responsible partner's card can also help.

• "...if you are renting...some services, landlord companies, they will report your rent payments to credit bureaus, which, again, can help you build credit history."
  — Farnoosh Torabi ([37:36])

Asset Allocation When Investing in Your 30s ([38:29])

• The 110-minus-age rule: subtract your age from 110 to determine your stock allocation (e.g., 110-35=75; so 75% stocks, 25% bonds) ([38:45]).
• Adjust for your own risk tolerance, health, and goals.
• Automated investment platforms will “rebalance,” but won’t “age” your allocation for you ([40:00]).
• Consulting a human advisor can be helpful for nuanced decisions, especially as you age or your financial situation changes ([39:50]).

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Notable Quotes & Memorable Moments

• On College as an Investment:

  “Your decision where to go to school is the first and probably most important financial decision you are ever going to make in your young adult life.”
  — Farnoosh Torabi ([03:13])

• On Higher Ed Emotions:

  “College becomes such an emotional decision that often we allow our emotions to obstruct our ability to make rational financial decisions.”
  — Farnoosh Torabi ([04:22])

• On Stubborn Tuition Costs:

  “It might sound great that a school gives you a 50% scholarship, but if their price tag is a hundred thousand a year, that’s still... $200,000 in debt. That doesn’t feel very scholarly to me.”
  — Farnoosh Torabi ([28:25])

• On Long-term Effects of Student Loans:

  “I can count on my hands the number of 40-something year olds I know who are still paying back their undergrad and graduate student loans. They do not own a home. They hardly have any investments for their retirement. This has been a crippling decision for them.”
  — Farnoosh Torabi ([29:53])

• On Financial Planning in Midlife:

  “I’m really proud of us because we are taking a moment right now in our mid to late 40s to say, okay, what do we need to do to be able to retire or to be able to arrive at retirement and not have anxiety over money?”
  — Farnoosh Torabi ([13:44])

• On the Homeownership Money Pit:

  “Even though our mortgage is stable... the housing costs are going up in general just because of all the extras, the additional expenses homeownership requires.”
  — Farnoosh Torabi ([11:05])

• On Systemic Debt Problems:

  “Debt problems are not isolated to individuals. They are problems that companies experience, nations experience. And interest on debt can be the biggest bite.”
  — Farnoosh Torabi ([25:10])

• On Navigating Investment Technical Glitches:

  “Do you know where to access your account numbers in the event that you log into your bank and everything’s gone, even your statements?”
  — Farnoosh Torabi ([23:55])

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Timestamps for Key Segments

• [02:47] – National College Decision Day: framing college as a financial decision
• [10:20] – Homeownership, budgeting, and rising costs
• [13:44] – Midlife financial planning
• [16:00] – Americans’ worsening financial outlook (and empathy for listeners)
• [20:54] – Disappearing investment account story (NYT coverage)
• [23:29] – What to do if your accounts disappear
• [25:48] – Main Mailbag/Q&A segment opens: Value of college and rules of thumb
• [33:31] – Other determinants of college payoff: jobs, internships, connections
• [36:09] – Q: How to build credit when debt free?
• [38:29] – Q: How to allocate investments at age 35 (or other life stages)

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Tone & Approach:
Farnoosh balances straight talk with encouragement, demystifying financial complexity and calling out industry dysfunction. There’s a strong theme of self-advocacy—whether as an educational consumer, an account holder, or an investor.

For Listeners Who Haven’t Tuned In:
This episode is a must-listen for any family grappling with the costs of education, anyone feeling financial anxiety in today’s economy, or those seeking actionable steps for midlife or early investment strategies. Farnoosh’s practical frameworks, real-world stories, and audience Q&A leave every listener with tools and confidence to tackle their own money decisions.

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Transcript

[Farnoosh Torabi]

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[Farnoosh Torabi]

So money. Episode 1977 Ask Farnoosh.

[Podcast Host Intro Voice]

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. 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.

[Farnoosh Torabi]

Welcome to so Money, everybody. I'm Farnoosh Tarabi. May 1st. Happy May Day, everybody. Also known as the decision deadline for colleges and universities. National College Decision day is May 1st. I know many seniors in high school nervous about this decision and rightfully so. In some ways this is a huge decision not to scare them. This is a huge decision, has a lot of implications on your life, whether you like it or not, and in your financial life especially. This reminds me that this week I was also at an event in the evening, Wednesday night at bank of America center at Bryant Park. They had invited students from Brooklyn Tech High School in New York, which is one of the best high schools, public high schools in the city, in the country, to come and learn about money. And yours truly was there to give them some, some nuggets of wisdom. And I said to this audience, and they were in all different grades from freshmen and up, I said, listen, I have a lot of things to tell you, but one of the most important things I want you to understand and maybe your parents have already told you, your teachers have already told you this, but let me also tell you this, that your decision, where to go to school is the first and probably most important financial decision you are ever going to make in your young adult life. It will have implications for your entire life essentially. So be smart about it, be really thoughtful about it. Good news, everybody in this room is smart, is ambitious. These were. Imagine you're a sophomore in high school and you're coming to an evening event during the week to learn about money. I was like, I'm not that worried about you guys. It is not lost on me that you have shown up to learn about this on a weeknight, but that even that said, this isn't about sometimes intellect, right? It's about emotion. College becomes such an emotional decision that often we allow our emotions to obstruct our ability to make rational financial decisions in college as much as it is a cultural experience and a coming of age experience and where you're going to go and make lots of relationships and friends and make mistakes and all the things that we need to do in life, especially early early years in our adulthood. It's also an enormous financial decision. Let's treat it like that. Let's look for that return on our investment. And I'm going to talk later in the show today. One of the questions I want to address is how much should you spend on a college education today? I know some people would say zero because there is definitely a growing school of thought around do we even need a college education? May 1 is also for me, a month that one of the last months of the year before the the year really starts to speed up. Because what do we have after May? We have the summer and everybody goes away. Everybody's busy. You're not really thinking about your financial to do list. So May is a very important month to sit down and reflect on the last four or five months of the year and see how your finances have been doing. Have you been keeping up with your savings goals? How are you doing with your debt management payoff plan? Just a really good time to reflect and reset in some cases so that when you get into the summer months and things go out of your control that you know that your money is working for you in the way that you wanted to back when you made that commitment in January. Whatever the goals were. A lot of interesting financial news this week. Americans are feeling worse about their personal finances right now than at any point in the last 25 years. Yeah. A new study, national study, and there was also a story in the New York Times that stopped me in my tracks. I've been telling everybody about this over the last few days since I read it about basically about a woman whose investment accounts disappeared seemingly overnight. She couldn't see her money when she would log into her investment account. And that's pretty scary, right? We'll get into what happened, why it happened, and what we can all take away from this story. And then also if you're having a hard time managing your finances, I want to put it all in some context and let you know that the government is also having a hard time managing its finances. Our government debt is now larger than our economic output, gdp. Yeah. So if you feel like you're living outside of your means, the government certainly is. And major drivers of that debt, Social Security, Medicare, we'll talk a little bit more about how this happened and what it could mean. Also for us, we're talking hear about things like Social Security and Medicare being one of the biggest driver, being the biggest drivers of this debt. So does that mean that those things are going to go away. I have some thoughts before we get into everything, the news, the mailbag. I want to turn our attention to this week's episodes on SO Money. In case you missed our episodes on Monday, we sat down once again with Amy Morin, who has spent her entire career helping people answer the question, what does it take to be mentally strong? Not like in a self help quote y kind of way, but in the very real, very messy everyday moments of life. And right now a lot of us are dealing with uncertainty. It's impacting our mental health. So I wanted to bring her on and May is actually Mental Health Awareness Month. Her newest book is called the Mental Strength Playbook and it follows previous books which have gone on to become international bestsellers. She wrote a book called 13 Things Mentally Strong People Don't Do. It has sold over a million copies. It's been translated in over 50 languages. So this new book, it's called the Mental Strength Playbook and it's all of the things that she recommends we do in these moments when we need a lot of resilience at work in our finances, in our lives. Amy is a psychotherapist and she's been on the show in the past. She's fantastic. She also lives on a boat in the Florida Keys, which we get into as well. Like, how can I do that? Do I want to do that? Very interesting conversation with Amy Moore. And then on Wednesday, Tess Weirsmith comes back on the show. Tess, she's an investing expert. She's also a former athlete and is very passionate about women's sports. And she has recently done a lot of research and analysis on where we are in terms of women's sports, the financial investment that's pouring into women's sports. She comes with some good news on the show this week that some women athletes are doing, making more than ever before. The salaries are going up, brand deals are increasing and also becoming more lucrative. And why this matters to you and I, I don't play professional soccer, in case you didn't know. But it does matter because when we are seeing more investment in this sector, in this industry, she believes, and she has evidence of this, that there's a trickle down effect into things like kids sports, kids programs, young women getting into colleges with scholarships, that when there's more sort of attention given to and deserved attention, right, to women athletes, that there was a halo effect, a financial halo effect for more than just those women athletes. So I was excited to bring her on to spotlight that. We don't often talk about sports on the show. So it was an opportunity to bring some sports culture to so money and to tie it all back to why it matters for our finances. One quick announcement. If you are interested in writing a book, publishing a book about specifically a self help book or a nonfiction prescriptive nonfiction book memoir, I run a workshop every year in New York City called Book to Brand. It's happening again October 9th. We have early bird tickets so the price is low now. It will go up over the summer. So this is the time to book. Not just to get the best price but also to plan your travel because so many of our attendees come from all over the world world and we know that the longer we wait to book those flights, chances are we won't get the seats we want or the price that we want. So really important to plan. If you want to come and join us for Book to Brand, plan for this now and you can go to booktobrand.co to learn more there. We have the entire lineup on that website, including all of our literary agents who will be attending and speaking and guiding you throughout the day. Publishers, editors, our expert authors. We love to bring authors as well to speak because they are just fresh off the media tour the book writing journey and can tell you all the things that they wish they had known before they got started or their best practices for authors as they're publishing their books and then of course marketing their books. Booktobrand.co all right, into the news. Here we go. First story. Americans are feeling worse off financially than at any point in 25 years, according to a Gallup survey. This is because inflation, while it's cooled and the broader economy, isn't really in a crisis. What the data is saying is that over half of Americans, 55%, say that their financial situation is getting worse. And it's the highest level of pessimism in 25 years. It's also the fifth straight year that more people are saying that they are falling behind rather than getting ahead. So this isn't like a one year blip. This is now what we can call a sustained tre. And what's driving the anxiety is affordability. Like life is expensive. 31% of those surveyed say that the cost of living is their top financial problem. Rising gas prices, we know that's happening right now and a lot of that is tied to geopolitical tensions. That's not helping. And even though inflation is lower than say when it peaked in 2022, prices are still higher than than they used to be. It just we've gone down maybe a Little bit in some categories. But in other categories like food and everyday staples, I feel like we're still paying 20, 22 prices. So prices have not gone down, they've just stopped rising as fast, we could say. And so this is challenging, right? People feel like they're falling behind. Wages have not fully caught up to cumulative price increases. Financial stress really comes down to monthly cash flow, right? We just did a budgeting exercise in our household and it was eye opening. You think you know how much you're spending and how much you're bringing in, but when you see the numbers on paper and you really also start to see patterns too. Like, we weren't just looking at one month, right? We were looking at the last six months, averaging our credit card bills. And sometimes it's 50% more one month than the previous month. Because life happens, travel happens, all of that. It's just really interesting to see how easy it is for money to flow out. The thing that really caught our eye was the cost of our home insurance, which I believe has doubled in the last five years since we moved in compared to today. Our home insurance, I think, has gone up 100%. 100%. And that's not because we live in a flood zone. We only had a claim on it this year. So this is not even including, gosh, maybe the increase again, that we're going to see because we had a claim on our home this year and the taxes are going up. So even though our mortgage is stable and coming down because we're paying it, obviously the housing costs are going up in general just because of all the extras, the additional expenses that homeownership requires, property taxes, home insurance, maintaining your home, the older your home gets. We are starting a fund this year that's earmarked just for home expenses. In the past, we would be able to just pay for this stuff out of cash flow because it wasn't expensive. It was like a paint job over there, a little gardening over here, monthly lawn mowing costs. But now we're like, okay, we need to replace all of our gutters, and then in five years we have to replace our roof. And we know maybe we're going to need some new appliances in the next few years. So that stuff is not like you can just take it out of cash flow, right? You need to start stuff, saving for this stuff. And also being in our 40s. I was having this conversation with my husband last night at dinner. I was like, I'm really proud of us because we are taking a moment right now in our mid to late 40s to say, okay, what do we need to do to be able to retire or to be able to arrive at retirement and not have anxiety over money? I'm going to probably write about this because I don't think enough people talk about this. Maybe people are doing this, but I don't see the financial planning community saying, for example, hey, midlifers, here are the things that we want you to start checklisting because we now have the hindsight. We now know that for people who are turning 65, 70, 75, here are the big financial headwinds, healthcare costs, cost of living still is very high in your retirement age. Do we know what you're going to be getting from social? What are the gaps that we need to start filling and start filling incrementally today so that when you arrive in retirement, you're not shocked, surprised, feeling super behind? And at dinner last night, I asked my husband, where do you think we should retire? He goes, I don't want to have this conversation. Oh, my God, you're aging us so quickly at this dinner. And I said, no, but when are we supposed to have this conversation? I'm not talking about burial plots here. I'm talking about where do we want to go after this home is no longer a need for us. Because I don't think it makes sense to stay in a home that costs, has so much carrying cost in your 60s when you're only two people. And he agreed. And then we ordered dessert because we needed to eat our feelings. All right, so that story. I only wanted to point this out because I think it's important for sometimes people to feel like they're not alone, that however you're feeling, if you're feeling behind financially, just know that this is the majority sentiment right now in this country. This episode is sponsored by Study.com Let

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[Farnoosh Torabi]

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[Farnoosh Torabi]

In other news, a crazy story in the New York Times by Tara Siegel Bernard Who's a fantastic writer, fantastic journalist. About how one woman's investments seemingly disappeared in a flash. She couldn't access her money online. When she called her investment bank, they told her they don't see her accounts. Very frightening. Right. This is where she was holding a majority of her money. So what happened was she got a customer alert that her email and phone number had been removed from her account. Okay. This is a major financial institution. I have the link to the New York Times article in the show Notes. When she logged in, this woman discovered that her accounts showed a $0 balance and no records. Even her historical documents, like her statements, her tax forms, everything was missing. And so from her perspective, it looked like her money had been wiped out. Like someone had hacked into her account and stolen all her money. Right. Like what would you think? So she gets in full panic mode. She calls the company on her way to her job, and they told her that, well, she doesn't seem to have any accounts with them. They actually suggested that maybe she called the wrong bank. Like, are you sure you have any accounts with us? Maybe it's our competitor. And then they told her on the phone that even if her account was closed or deleted, that, that they could usually see that they didn't let her connect with the fraud department. And so she was left feeling like she had no recourse. The call lasted more than an hour. Many holds. Finally, a representative left her with two options. They said, you can either send a letter of instruction by MA detailing what is wrong, or you can drive to the nearest branch near you with your id. And that nearest branch was two and a half hours away. So she just dropped everything, Dropped all of her work for the day, grabbed her personal computer, her ID and some other records, got in the car and started driving to this branch. You said it felt like a, quote, psychological thriller. Then as she's driving, she decides to call the fraud department one more time. She pulls over and finally gets a rep. This is in the article, who was more helpful. And he couldn't immediately find any evidence of her accounts, but she was able to produce one of her account numbers to share that with him. And then after a second hour long call, the guy at the company, the rep said that they would continue to investigate, but said that it was most likely a systems related issue.

Hmm.

It ultimately took about six days for her accounts to reanimate and for her balances to be restored. Six days. Now what actually happened? So there was a technical error that was tied to her identity records. She apparently had accounts tied to different ID numbers, like a tax ID tied to one account, a Social Security number tied to a different account. And so when the banks system tried to reconcile her accounts, it temporarily broke access and visibility. The money wasn't stolen. It was just inaccessible and invisible for several days, almost a week. So this makes me wonder, what can I do? What can we do in the event that this could happen to anybody? Right? So really important, she had documentation of her accounts, she knew her account numbers. Do you know where to access your account numbers in the event that you log into your bank and everything's gone, even your statements? We are mostly paperless in this house. We do still get a couple of things in the mail, even though I swear I asked for them to be paperless. Whatever. We do get some like quarterly statements, monthly statements here and there. Really important to keep the latest one somewhere, whether that's the physical copy or you can go right now into your account, grab the latest monthly statement and save it on your desktop or write down the account number, take a screen, grab something so that you have evidence that, yeah, I do have an account with you. And here's the account number and here's the most recent balance. Crazy story, right? Again, that link to that story is in our show notes. And finally, our government debt is now larger than the entire economy or our economic output gross domestic product. Major drivers of this debt include Social Security and Medicare as well as the interest payments on the debt. So the interest on the debt is 14% of government spending. I just say this to relay to everybody that, you know, debt problems are not isolated to individuals. They are problems that companies experience, nations experience. And interest on debt can be the biggest bite. So if you have credit card interest rates right now over 20%, this should be the priority to bring those balances down, to wipe out those balances before other balances. Because this is it, this is where you, I mean you buy all this stuff, you put it on your card, we carry the balance and those items end up costing us multiples of what we paid over time if we don't pay off the debt right away or quickly. That $30 sweater is now $75 over the many months or years that you're carrying that balance. When I first heard that in my 20s, that really clicked for me. I was like, oh, okay, yeah, I get it. Interest is no bueno because you know, you're buying something as small as a coffee, you're putting it on your credit card. But if you don't pay off that balance in full every month, that $4, $5, $6, cup of coffee over the next six, seven, eight months becomes double what you paid for it. Like, why are you doing that? Why are you doing this to yourself? All right, let's answer some of your money questions first. I want to start with this big one because it's May 1st and a lot of people are deciding on college right now. This message may be too late for these people, but for everybody else tuning in, who has a child where college is in their future, a niece, a nephew, a grandkid, you yourself maybe considering going back to school, what should we pay for college? What should we pay? Now, I want us to reframe this question. I want us to not think about price, but think about value, right? What is the value that I'm going to get out of this education? Is what I'm paying into this degree going to give me an equal or better output? Will I have a positive roi? I was talking again to my husband last night. I said, I said, look, question for us, if we had unlimited money, would we right now send our kids to College with a $100,000 a year tuition and housing bill? I don't know. I don't know if even if money was no object, if that would feel like a good investment. Unless maybe there are a few, like brand name schools. I think that, you know, if you go there, you're getting not just the education but the cachet of that school, which is worth a lot in the marketplace, places like Stanford and Harvard. But a lot of those kids are not paying full price, the ones that go there. Ironically, it's a lot of these state schools and liberal arts schools that are good, but not high ranking necessarily, that are charging 90,000 a year, a hundred thousand a year, sticker price. Tuition has risen faster than almost any other major expense. And I find that families are just left to kind of figure it out with their own savings, with loans, with the grace of God. And yes, some students are graduating with manageable debt, but a lot of them are, are leaving with six figures in loans without a clear path to repay them. It might sound great that a school gives you a 50% scholarship, but if their price tag is a hundred thousand a year, that's still you're graduating with $200,000 in debt. That doesn't feel like very scholarly to me. It sounds more like punishment. So the basic question we all need to ask ourselves is, does the financial outcome justify the financial input? This is a very hard place for 19 year olds to live and think and breathe. It's hard for mature adults to, you know, think more about the money than the emotional ties to a decision. But this is your financial make or break. You can't sugarcoat this. Deciding on where you go to school and how much you're going to pay and how you're going to pay for it can be a make or break financial decision. Not just for the next four years, but for the rest of your life. The rest of your life. I can count on my hands the number of 40 something year olds I know who are still paying back their undergrad and graduate student loans. They do not own a home. They hardly have any investments for their retirement. This has been a crippling decision for them. Yes, they have jobs, jobs that they probably wouldn't have without those degrees. But did it need to cost what it did? Were there other ways to get those educations? I would argue a hundred percent yes. And many of my friends say the problem was for them back then. Nobody stopped them to say, this is not a good idea. You might want to rethink taking out all of these loans. The bank's not going to tell you this is a bad idea. Your teachers probably aren't going to tell you, right? My high school teachers were like, just take out the student loans. It's what you do. What part of this issue is structural? It's not just the people who may not have given you the advice, it's also the industry. Right? It's loans are widely available. Underwriting is minimal to nothing. Borrowers, often teenagers, are making these six figure financial decisions without much guidance. And we know that student loans are quite difficult to discharge in bankruptcy. So the risk of this debt is shifted entirely onto the borrower for the most part. And so then parents are stretching beyond their means. They're draining their retirement accounts. Just last night I met up with a friend whose son is going to a school in Philadelphia, not an Ivy League, but a good school, and he's paying $93,000 a year to go there. Who can afford this? Millionaires. Right. So I don't know where this is all going to lead us in the future, how this is all going to shake out. But we do know that universities are going out of business because some people are waking up to the fact that some schools just aren't delivering on the promise they are not giving their clients. And this is the thing I told everybody in the audience this week. I said, by the way, you are a client of this college, that wherever you go you must expect a certain level of service and a return on your investment. Go in with that mindset. Don't be like, oh, I'm so lucky to be here. Yeah, of course there is some of that. They should feel some gratitude, but, and, and you should feel some entitlement that you're here and the school needs to show up for you. They're lining their pockets with your tuition dollars and your housing dollars. What are you getting in return? Not just again over these four years, but when you leave, what is the residual impact of this degree? So how much should you pay for college? Ideally, as little as possible. Is that always going to be the best school, the cheapest school? No. So you have to balance it obviously with where you're going, but be very, very sharply critical. Sometimes it is worth paying a little bit more to go to the brand name school, but often paying a lot more to go to a school that, you know, 10 years ago, nobody was applying to. This is another thing with the common application. Schools have so many kids to choose from. Like, if one person can't pay, someone else will. It's just, unfortunately, families don't have a ton of leverage. But in the absence of a school giving you more money, your dream school, look for alternatives. It's four years of your life are gonna, they're gonna go quickly. But the financial decision related to these four years has a lifelong impact. There's a rule of thumb that you don't want to borrow. Back in the day, when I was first starting out, the rule of thumb was don't borrow more than what your first year salary could be. So what is the average salary for a college educated person? Right now it's about 65 to $68,000 a year. That's according to the 2025 National association of Colleges and Employers survey.

[T-Mobile Advertiser]

And.

[Farnoosh Torabi]

And then if you go to graduate school, you can make more college education, I think, still very important in the grand scheme of our economy and your placement in our economy. But what's most important when you go to college is not even the degree. It's did you get a job while

you were in school?

Did you have internships? Did you have work experience? Who did you meet? What, what relationships did you forge? What relationships did you create? So pick a school based on that too. Will this school help me get internships? Does this school have a strong alumni system that connects and helps one another out? I've toyed with the idea of, like, if my kids were going to college right now and they were looking at a school that was $100,000 a year, it's kind Of a non starter, I would say in our household, but I would say, look, in lieu of going to that school, what if you chose a school that was 40% less and I would give you the remaining 40% that we're not giving to this academic institution. I will invest this money for you. By the time you turn, turn 30, you could probably buy a house, you could do whatever you want. You could start a business. You would have such a leg up in life. Again, really hard to have these conversations with teenagers, but you got to have the conversation. It's hard. I see parents like the kids are not happy with them, but it's a small price for you to pay for your kids gain in the future. Let them be unhappy with you for now. All right, McCain writes in and she asks, hey Farnooj, I have no debt. I've never had a credit card. Do I need to open up a credit card now to build credit? All right, so first of all, congratulations on becoming debt free. That's incredible. Unlike our country, you can be happy that you don't have any debt. The good news is that you don't have any debt. The bad news is, is that you're not really establishing credit. So in your future, if you do want to take out a loan for a car or house or anything, your credit will be important. Credit cards and healthy credit is still very important for your future. You can do this first by just opening up a secured credit card where you put down a cash deposit as your sort of credit line, if you will. This is your money that you are borrowing against. Your money is the collateral and secured cards you can open up. At most major banks and credit unions do watch out for the fees. Sometimes you can find ones that don't have any fees. So I like those more. But this is a way for you to get back into the swing of using credit. And they say like a credit card with training wheels. After about a year of using the card responsibly, paying off your bill every month in full, you can graduate to a real credit card that might have a larger limit attached to it, maybe even some perks like cash back or points. The other thing that some people do is if they have a partner become a authorized user on their credit card, which allows for your partner's payment history to be reflected on your credit report as well. Very important, of course, that your partner is responsible with credit because this would only really work in your favor if your partner has good credit and cares about maintaining good credit. I will say though that if you are Renting your apartment, your home, some services, landlord companies, they will report your rent payments to credit bureaus, which, again, can help you build credit history. And I gave this advice recently. Somebody wanted to know how to kind of get back into the swing of credit without blowing their budget, overspending, slipping back into debt. I said, you know, I would just tie your credit card to one or two recurring bills that you have to pay because it's a need, whether it's a utility bill or your cell phone bill, reconcile that every month with your checking account on time, and this way you're keeping that credit card quote, unquote, alive, and it's supporting your credit history. All right, and one last question from the audience. Lucia wants to know how to design your investment portfolio. If you're investing for the first time, and specifically, how much should you be invested in stocks versus bonds in your 30s? I'm going to get into the asset allocation throughout the decades here, thanks to this question. It's a good question. You know, I've come across this rule of thumb over the years in my work, and it's adjusted over the years, too. Even this rule of thumb, I think, is we're living longer. But it started as a rule of thumb where you take the number 100 and you subtract your age and that number that you're left with, the percentage of that is the percentage of your portfolio that should be allocated to stocks. Well, now we're living longer. So many people, and I myself included, use 110 and subtract your age, and then that is the number you allocate to stocks. So for Lucia, who's 35, 110 minus 35 is 75. So 75% stocks, that's called the age based rule. Then the remaining percentage, 25% for Lucia, would be allocated to bonds. But capital B, this is just a general rule of thumb. Right. It's important that we look at this as just a guideline. It's not okay for everybody. You want to factor in your risk tolerance, your investment goals, your time horizon, your personal financial situation. All of this needs to be taken into consideration when determining your portfolio's asset allocations. I know people who are in their 50s, but they don't have dependents and, and they're super healthy and they're 100% in the stock market because they're also extremely risk tolerant. I don't think if I'm 50 and I don't have kids, I'm doing that because my risk tolerance just isn't where that person's risk tolerance is. So to some extent, this is an extremely personal decision. It would be helpful if you wanted to talk to a financial advisor on this piece of your investment strategy. I don't think necessarily working with an advisor to pick your stocks or pick your bonds makes that much sense these days, especially with all of the automated platforms that we have. But talking to a human who has experience and can elaborate on stock charts for you and show you patterns and to give you that reassurance that you need to maybe take your portfolio to a higher stock allocation, I think that could be worth it. And then the other thing is that you're 35, as you get older, you want to adjust this allocation. A lot of the automated platforms, they don't do this for us. They will auto rebalance, which means that in any given day or month, however, often they auto rebalance when your portfolio goes off kilter. So if you set it for say 75% stocks and 25% bonds, but then because of the swings in the market now you're like 80% stocks and 20% bonds, it will reallocate to get back to that initial allocation desire. But it's not going to adjust because it's like, oh, now Lucia's 45. So we need to be thoughtful of that. That's something that you need to be on top of. And that's our show, everybody. Thanks for tuning in this May 1, 2026. I hope you have a great start

to the new month.

I'll see you back here next week. Our guests, oh, we have an incredible lineup on Monday. We're going to be talking to Laura Vanderkamp, who's the author of a new book called Big Time A Simple Path to Time Abundance. How to make the most of your time when you feel like you have none of it. And we have a very special guest on Wednesday, Mrs. Dow Jones, Haley Sachs, very popular personal finance guru. And she has her first book, her debut book. It's called Future Rich Person the New Rules for Building Wealth. Even if you're stuck, broke, and that billionaire won't text you back, I hope your weekend is so money.

[Autotrader Advertiser]

Are you really buying a car online on Autotrader right now?

[Farnoosh Torabi]

Really? I can get super specific with dealer listings and see cars based on my budget.

[Autotrader Advertiser]

You can really have it delivered or pick it up. I think kid is walking up the slide.

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Really?

[Farnoosh Torabi]

Auto trader, buy your car online. Really?

[T-Mobile Advertiser]

We're lost. It feels like we're going round in circles. I'm going to ask that man for directions. Hi, there. We're trying to get to the state fairgrounds.

[T-Mobile Representative]

Well you're going to take a left at the old oak tree at this here road. Nah, I'm just kidding. Let me get my phone out.

[T-Mobile Advertiser]

How is there signal out here?

[T-Mobile Representative]

T Mobile and US Cellular are coming together so the network out here is huge. We get the same great signal as the city saving a boatload with benefits. And there's a five year price guarantee too. Okay, here's the turn.

[T-Mobile Advertiser]

Actually can you pull up the way to a T Mobile store?

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