Tori, how do I pay off debt and save money with a low income?
Tori, should I open a traditional IRA or a Roth IRA?
Tori, I have a job that I love, but the salary sucks. How can I boost my income?
If you’ve ever wanted to know the answers to these questions and more, today’s episode is for you. In this Q&A session, Tori answers a variety of financial questions from the audience — from how to save more money and invest, to how to negotiate a raise and understand the intricacies of 401k matching.
You’ll also learn:
- The intricacies of 401k matching and the importance of employer contributions
- Strategies for asking for a raise and reframing negotiations
- The truth about life insurance as an investment and the importance of term life policies
- When to DIY your investments and when to pay someone else to do it
- How to “ask for a raise” as an independent contractor
Pour up a glass of your favorite beverage and sip along with Tori as she answers your burning financial questions!
For the chance to get your questions answered in our next edition of “Ask Tori Anything,” and to stay up to date on our other events, make sure you subscribe to our weekly newsletter for the latest Her First $100K news.
Hi financial feminists, welcome to the show. I’m so thrilled to see you. If you’re an oldie but a goodie, welcome back. And if you are new to the show, hi, my name is Tori, I’m a multimillionaire. I’m a New York Times bestselling author. Literally as of this recording, the host of the number one business podcast in the country, which we fucking love. I love it when we beat the Brads and the Chads and the finance bros. And I host the show, which is guaranteed… I shouldn’t say guaranteed. Our lawyers won’t like that. It is guaranteed with a huge asterisk to make your life better, but I help you save money, pay off debt, start investing, feel more financially confident, and it’s what I believe I was put on this earth to do, is fight the patriarchy by getting you rich, baby.
Today on the show we are going to do nearly an hour long Q and A with me. We get a lot of questions on our Instagram, in our comments for the podcast, over on YouTube. Which by the way, we’re releasing episodes on YouTube, which is very exciting, and we get literally thousands of messages every day. I’m not exaggerating. We literally get so many questions from people all over the world asking us, “How do I save? How do I pay off my student loans? How do I actually start investing? How do I navigate the stock market? How do I negotiate my salary? How do I just feel more confident in my life and in my skin and in my money?”
So we are going to release exclusively on the show, a little event that we did back in December. We did a lovely Ask Me Anything event as a way of giving back to you all, to this community. We had a little holiday drink that we sent out a recipe for, and just gathered as a community for an hour. And I just wanted to give my time to you all to answer some questions. So if you were there at the event and you want to recall what that felt like, well cool, you get to listen again, but maybe you have a similar question. I would almost… I keep saying guarantee, but truly I would almost guarantee you have a similar question.
So we’re taking the audio from that incredible workshop and our incredible time together, and repurposing it here because I don’t want you all to miss this. It’s really helpful content and it’s a nice way of gathering as a community, that feels more casual and just like we’re hanging at brunch. So without further ado, we answer a bunch of questions about anything money, so you’re definitely going to want to listen to this and share it with the people in your life.
Before we get into it, couple of housekeeping things. You know the drill. If you have ever gotten value from this show, we really appreciate you subscribing, which is just hitting the plus or the subscribe button wherever you’re listening right now. And if you do feel so called, leave us a review, leave us a five star review, share us with your friends. It truly, truly helps, and the reason every podcast host asks you to do it is because it actually helps. It truly helps you support our show in a very small way. The show is free for you, but expensive for us, so we really appreciate your support for us to continue doing this show, and continue giving you this really helpful advice. So we appreciate the support. All right, team, let’s take some questions. Let’s get into it.
Hello everybody. Welcome. Welcome to the AMA live coaching holiday party extravaganza. My name is Tori. I am the founder of Her First $100K and I’m so excited to see you all here. Couple of housekeeping things before we get started. This is going to go for about an hour. I am here to answer your questions. I’m here to answer your questions about anything money related, saving money, paying off debt, investing, negotiating your salary, building an online business or something else. I’m also here to answer any question that is not too personal or violating boundaries, about me or about HFK, or about this New York Times bestselling book that turns 1 year old already. Isn’t that crazy that this book is already nearly a year old?
So if you have any questions tonight, feel free to drop them in the chat in just a second. We wanted to give you these resources as we go through because I have a feeling your questions are answered in even more detail either in my book Financial Feminist, which is available is an ebook and audiobook as well as a hardcover, and available at your local library, but also on our podcast, Financial Feminist, and any money tools like credit card recommendations, our high-yield savings account recommendations, budgeting tools, anything that we like and recommend is also on our website at herfirst100k.com/tools.
All right. Oh, Melina, “What advice would you give to someone wanting to write a nonfiction book? What would you do the same or differently next time?” Oh, Melina, how much time do you have? I now do consulting for authors because I’ve realized just how chaotic the process is. In terms of writing a nonfiction book, I need you to know that this was the hardest thing I’ve ever done. I’m not going to sugarcoat it for you, writing this book was the hardest thing I’ve ever done, and it is a multi-year process. A lot of people also don’t understand that or know what they’re getting into.
There is the process of actually writing the book of course, which takes typically a couple of years, but then there’s getting the book deal before, there’s the promoting the book. So all in all, to get this book out in the world, it was an eight-year process and I wish somebody had told me just how long it was going to take and how much work it was going to be.
You don’t write a book to make money either. That’s another thing that I always want to highlight for people, is if you think you’re going to get rich from being an author, you’re not. In terms of the revenue streams for our business, it is the least lucrative by far. But you do it because, for me, I’ve always wanted to be an author, and you do it so that your information is accessible. If you’re trying to write a nonfiction book, chances are you’re trying to teach somebody something, or you’re trying to reflect on your life if it’s something like an autobiography. So if you’re going into the book-writing process for any reason other than I want to write this book because I want to write it, you won’t finish it because it is the hardest thing you’ll ever do.
In terms of getting a book deal, that’s a whole other topic that I can discuss tonight if that’s of interest. But in terms of what I would do differently, I think just allowing myself more time to write. I ran her first 100K while continuing to write a book. I did a full-time job of writing a book while running a business full-time, and I would not do that again. In fact, there are starting to be talks of me writing a second book and I will definitely set aside more time than I did for this first book, and think more strategically about trying to also run the business at the same level during that time, because that’s a very tall order to ask myself. So that’s probably what I would do differently. Hopefully that helps.
All right, Cindy, “What happens if I switch jobs and don’t roll over the 401(k) or 403(b)? Does it just sit there and nothing happens?” Cindy, you’re exactly right. It’s just going to sit there. We joke that it’s like leaving money with an ex-partner or an ex-boyfriend, and we don’t want to leave money with an ex-boyfriend. We want to take that money out and make sure that we have it in our accounts because let’s say your old employer switches 401(k)s, right? Let’s say that they switch 401(k)s and you don’t get a notice because you’re not employed there anymore. Yes, it’s still your money, but you have no idea where it is now. And maybe you don’t remember the login or maybe you don’t even know where to find your 401(k).
We have a free tool called Capitalize, that’s at herfirst100k.com/tools on that webpage, and it literally can find your 401(k) for you, roll it over for free. Amanda, my team member can also drop the link, but that is the easiest way to find your 401(k), is to roll them over, to consolidate them all in one place. You’re not having to manage a bunch of different accounts. So that’s what I recommend.
All right, Salem, “What is your best suggestion…” I believe it’s Salem, “What is your best suggestion for paying off debt and creating a savings with a pretty low income?” Yeah, so we talk about this in Financial Feminist. The third chapter is called the Financial Game Plan, and it’s basically what to do in what order? Do I save first? Do I pay off debt first? When do I invest? And like we talk about in this chapter, the number one financial priority for you is an emergency fund. So when you’re thinking about prioritizing any sort of financial goal, especially if you’re lower income, I need you to start small. Set up an automatic transfer from your checking account into your savings account, even if it’s just 20 bucks a month. If that’s all you got right now, that’s incredible.
First of all, it will add up. It will build over time. Second of all, you’re building your savings muscle. You’re getting more comfortable saving money so that when you are making more money and you do have more flexibility, you can save that amount of money. We’ve said this on the podcast too, but if you can manage $10,000, you can manage a hundred thousand dollars. If you know how to manage a hundred thousand dollars, you can manage a million dollars. So we’re building those habits and setting aside that transfer to happen, whether that’s once a month, every time you get paid. Even if it’s just a small amount of money, is going to help you build the habit of saving, but also start accumulating money.
This is also a great reason for a high yield savings account. We talk about them incessantly at Her First $100K, but high yield savings accounts are just like everyday, normal savings accounts, except they’re going to offer you more in interest. And if you already don’t make a lot of money, then a high yield savings account can be a great way to boost the amount of money you are saving, even if it’s small, because then your money is making money, right? We’re talking four to 5% interest as opposed to 0.3%, which is the national average. It is FDIC insured so your money’s safe, there’s no fees, there’s no minimums. Again, herfirst100k.com/tools for the one we recommend, but those are some quick tips in terms of starting to build savings and then starting to pay off your debt.
Carla, “College best 529 or Roth IRA?” A Roth IRA is not for college savings or investments, so a 529 is better. In fact, between those two options, it’s the only option. You cannot save for college or for your kids’ college in a Roth IRA. A Roth IRA is only for retirement, hence the title, IRA, individual retirement account. Your a Roth IRA or any sort of IRA should not be used for any other goal other than retirement. So if you’re trying to save for college, whether that’s for yourself or for your children, yeah, we’re not saving that in an IRA, we’re saving that in something like a 529 or in a general individual brokerage account, which is just a general investing account, not for any particular purpose.
Elise asked, “Where do you recommend opening up a Roth IRA?” In stock market school we created a platform called Treasury for the Her First $100K community. We guide you through a year of investing education, including how to open up a Roth IRA, how to get started investing in a way that is sustainable and according to your values, without all the shame and the judgment, and the fear, and the stock market bros, the Wall Street bros.
But your two basic options other than stock market school are DIY-ing your investments. That means opening up an account through something like Fidelity, Vanguard, Charles Schwab. The pro to DIY accounts is that you are not paying a financial professional to do it for you. You’re not paying a service to do it for you, you’re doing it yourself, so you’re saving money. But for the average person, these platforms are extremely confusing, they’re very overwhelming, and it causes people to hit the bail button really fast. So for the average, Her First $100K community member, that’s probably not the best option, but that’s option number one.
Option number two is working with what’s called a robo advisor. Robo advisors include Ellevest, Acorns, Wealthfront, Wealthsimple, Betterment. These are platforms that are going to invest for you. So they ask you a couple of questions, you answer a couple of questions like, “When are you expected to retire? How old are you? How much money do you make?” And they will make investment choices depending on your answers.
Now, the pro to these accounts is they’re getting you started, right? Which is massive, especially if you have felt nervous about investing before. The con though, first is that they’re taking a fee to do that. They’re taking a fee to do that for you. And the second thing is that they’re fishing for you rather than teaching you to fish, right? And one of the things we heard from countless community members is they were like, “Cool, I’ve been with X robo advisor for three years, five years, but I have no idea why they’re choosing the things that they’re choosing, or I just don’t understand any of what’s happening. I still don’t understand the jargon, and even though it’s my money, I’m still handing it over to somebody else.”
So we built what we jokingly call the Hannah Montana of investing platforms because it is the best of both worlds. We teach you how to invest, yourself, in a safe space, to get your questions answered, to hop on live coaching with me, and be able to do that in a way that again reflects your values. Those are your three basic options in terms of where to actually open that Roth IRA or any investing account for that matter.
Alexa, “What saving or finance tips would you recommend for students who make about $500 a month?” Great question. High yield savings account, we’re going to open one of those. We’re going to set up an automatic transfer, that’s number two, of even just a small amount of money. And three, we’re going to make sure that we’re prioritizing not only saving money but also spending money. Yes, I want you to spend money. I want you to spend your hard-earned money on things you actually care about. We talk about that in the spending chapter of the book, but finding that balance is really important. Deprivation doesn’t work, right? And especially as a college student, I would like you to have fun. I would like you to use your money to make your life better. So those are three really great things that you can start doing to set yourself up financially.
Olivia, “What is more important, a 401(k) or an HYSA?” It depends on how you define important. They’re both incredibly important, but in terms of what the priority is, you need an emergency fund first. I mention this chapter three of my book. We’re telling you what to do in what order. You need an emergency fund first in a high yield savings account, above anything else. Above paying off debt, above investing, above paying off your student loans faster or your car loan, or your mortgage, or your credit card debt. You need that high yield savings account where your emergency fund lives. So in terms of what’s more crucial, like what’s the priority? That’s a high yield savings account for your emergency fund.
How much money do you have to put in an HYSA when opening one? $1, that’s it. You can fund a high-yield savings account with as little as $1 or even 50 cents I guess, if you want. But people think you need thousands of dollars to get started, no, anybody can open up a high-yield savings account.
Daniella, “How do I cut out years from a student loan payment?” We all want to figure this out. I have an entire chapter about debt in the book that teaches you how to do this in more detail, but the TLDR around paying off your debt quicker, whether that is student loans, your mortgage, credit card debt, is any money that you’re sending in your monthly payment or in the statement that you get through your bill, or the amount of money you’re trying to send in or that you’re required to send in, we want to send any additional money towards the principal.
The principal is the original amount of money we took out. So if you have $10,000 of student loans, you took out $10,000 of student loans, that’s the principal. The interest is everything that’s on top of it. It’s the cost of taking on debt. The interest is the fee that you’re paying or the percentage you’re paying to get that money from somebody. So when we’re talking about paying off debt faster, we want to contribute extra money towards the principal so that the principal balance goes down.
Now, why do we want the principal balance to go down? Well, because we pay less in interest, right? If we can get the original balance to go down, well then we don’t have to pay as much in interest. We don’t have to pay as much in total on our student loans, or our credit cards or anything else. So if you want to pay off your debt faster, and again, more information on this in the book and the podcast, but you’re going to contribute extra money to the principal, if you have it, to be able to lower your principal so that you’re paying less in total. And that’s how you pay off debt even faster than just sending in your monthly payments.
Oh, Carissa, “What were your salaries after college? Did you have any student loans?” I did not have any student loans. That was a combination, a hundred percent, of some privilege. But also me working on campus, I worked three jobs while attending college. I had a bunch of merit scholarships. I worked summers. But also I had parents who had saved up a little bit of money for college for me, so it was very much a collaborative thing for us of sitting down and figuring out, “Okay, how can we pay for this year of college?”
And I remember my senior year of college not knowing if we were going to be able to get through the end of that year without taking on debt, and we scraped by by the skin of our teeth. I’m also an only child, so that helps, and that’s a conversation for another time about why I’m an only child, but my parents just had me to take care of financially, so that was a privilege as well. In terms of my salaries in my career. When I was working a 9:00 to 5:00, I graduated in 2016 and I graduated college when I was 21 and got my first job technically when I was 21. It was like five days before my 22nd birthday, and I was making $55,000 a year as a marketing manager in Seattle, which was a pretty decent salary, especially right out of school. But I had a lot of relevant work experience, I negotiated my salary and that was a really good first job salary for me.
I was at that first job for a year, and then I received a 20% raise due to performance, so then I was at… What is that? $66,000 a year. And then I chose to leave that job for a job at another company after about a year and a half. And if you read my book, you know how that worked out. We talk about it in the introduction to my book. I left my first job to go to another job where they wanted to pay me $60,000 a year, and I negotiated up to $80,000 a year. And I was like, “Oh my gosh, that is so much fucking money.” I was just thrilled. And even though there were so many red flags about taking that job, I took it. And unfortunately, I only made that salary for about 10 weeks because I had to quit that job without another one lined up because it was so toxic.
So we are looking at January of 2018 at this point. January of 2018 to March or April of 2018, I spent unemployed. So I was not only spending the money that I was trying to save to hit my first 100K, but I was also not making money. I wasn’t able to contribute any money to my 100K goal. And one of the most impactful things that I realized during that time was that I had an emergency fund. I had diligently saved my emergency fund while at my first job, and that emergency fund was the reason I was able to quit. It was the reason I was able to exit that toxic job even though it had paid me more money than I had thought possible, because I was able to say, “Fuck off.”
I was able to leave that bad situation, and that was one of those turning point moments where I realized, “Oh, this is the feeling I want for every single woman. This is the feeling I want. I want the ability to leave a bad situation that I don’t want to be in any anymore, even if I don’t have something lined up, because I am financially able to do so.” So I spent a couple of months unemployed, wasn’t the best time, but it was the right decision to get me out of that job.
Then my last corporate job I took for $70,000 a year. It was an increase compared to my first job, but I actually, technically took a pay decrease from the toxic job, because that felt right. That felt right for me to be able to just have a better work-life balance and not hate my life. Then after a year at that job, I received a raise and then I made $77,000 a year. So I was making good money, but a lot of people think that my 100K story was me making six figures and me living at home, and me eating oatmeal every day, and none of those things happened.
I lived on my own. I lived at home for the first three months of my corporate life, other than that, I lived on my own in Seattle. I was making my 9:00 to 5:00 and then for a little bit was also making money on the side through HFK. So I was able to save a little bit more money. And then, yeah, I was making the market rate for a marketing manager with my level of experience. The other big thing to take away from my story is you’ll notice that that was about three or four years. It was from 22 to about 25. I had three different jobs, and really let’s count it two after I quit the toxic one. But two jobs in three years, a lot of people would consider that job hopping. But we’ve talked about this on the podcast before. I think it’s really, really crucial that if you do not feel valued in a job, it is time to look for something else and/or negotiate your pay at your current job.
If you feel like your pay is not commiserate with your experience or not commiserate with the salary data that’s out there, and other people with your level of experience who live in your city, it’s time to move on or it’s time to put yourself in a better situation. That was a long-winded answer, but hopefully the answer you were looking for.
All right, Allison, “Traditional or Roth 401(k), pick one.” Truly, it does not matter. I need you to just get started. If you are scared of making the wrong choice, and so you haven’t started investing yet because you’re like, “I can’t start investing until I figure out which one to choose,” truly, it doesn’t matter. We were talking about this in stock market school last night. Somebody asked the same question and I was just like, “It does not matter. You just need to do it.”
Also, I will say that if you really, really do care, I personally went with a Roth 401(k) option. I’ve talked about this before, but Roth IRAs, Roth 401(k)s allow you to pay the tax now so that 65-year-old you is not caught with a tax surprise later. So just something to keep in mind, but truly, I’m not just saying this, pick one, it doesn’t matter. It matters that you start investing. If you’re afraid of making a mistake, the worst mistake you can make when it comes to investing is making no choice, right? Is making no mistake. The worst decision you can make when it comes to investing is making no decision at all, so please just get started.
Janice, “I finally have a job that checks all the boxes. Great coworkers, love the work, don’t want to leave, tons of vacation time. Downside, miserable salary. I’ve asked for a raise and will find out in January. Already have several side gigs. Any recommendations about boosting my income?” This is a good question. It sounds like salary is important to you, which of course it is, because if a job wasn’t paying you, you shouldn’t go, right? But I think it’s important to think of, kind of like me taking a slightly less paying job, but it was better for my mental health. When you’re looking at a job and it’s compensation, you’re not just looking at salary, you’re looking at everything else, right? You’re looking at does it offer a 401(k) match? Does it offer PTO? Does it offer paid family leave? Does it offer a flexible schedule or flexible work hours?
So when it comes to thinking about, is this job worth it? And that’s not the question you’re asking and I understand that, but maybe I’m answering somebody else’s question, you need to think about total compensation. Now, ideally, we have a bunch of great benefits and great coworkers, and a great mission and all of those things, and a good salary. So for you, if you’re like, “I don’t make good money, but everything else is perfect, how do I make more money?” If you’re doing the side hustle thing, that’s a great option. I would also say research what’s out there, right? Don’t rely on this company to a hundred percent give you a raise in January, they might not. So there’s companies out there that do have great coworkers, that do have great benefits, and that can also pay you according to what you should be getting paid.
Again, I mentioned this in the earning chapter of my book, but I think one of the lies we’re fed is that we’re not deserving of more, or I’m trying to remember exactly how I phrase it. It’s this belief that, oh, this is as good as it gets, right? So when I’m talking about that, what I mean is we have been told that this is fine. And when you’re in the slog of your job or in your commute, it’s impossible to realize that maybe there is better out there for me, and maybe I can have all of the things I want and all of the things that are good for my mental health, and also get compensated fairly. So yeah, if you haven’t started looking at what’s out there, I would encourage you to do so, at the very least so that you can then go into your employer and be like, “Hey, this is what salaries are now, let’s figure out how we can work together to get my salary commiserate with all of the other numbers I’m seeing.”
All right, “Can you give an example of what a 4% match to a 401(k) looks like or how it works?” Sure, great question. Again, more in the book, you’re going to hear me say that. Take a little sip of your drink every time you hear me say it’s in the book, but truly it’s in the book. It’s almost like I took every question that you all have and I made sure that’s in the book. But 4% match or any percent match, what does that mean? That means that if you contribute 4% of your salary to your 401(k), so if you make, for easy math, a hundred thousand dollars a year and you contribute $4,000 a year to your 401(k), the company will give you a match.
They will match your 4%. So as opposed to you only having $4,000, well now you have $8,000. It’s free money. They’ve doubled your money and you’ve only done half the work. This is why it’s so crucial if you have a 401(k) match, to take advantage of it, because it’s free fucking money. So when it comes to knowing about your 401(k), if you don’t know if you have a match, ask. And if you don’t know how to make sure you’re getting your match, ask. Ask your boss, ask your HR person, ask your benefits person. But for this person who has a 4% match, that’s how it works. If you contribute 4% of your salary in the calendar year, they’re going to match you at 4%. They’ve just doubled your money and you’ve only done half the work. That’s again, part of your overall compensation benefits. Take advantage of it. Free money.
Okay, somebody asked, “Who do you recommend for high yield savings account?” Like we said, we have our recommendation linked at herfirst100k.com/tools. Devin, “I want to approach my employer about a raise, but I can’t get past my negative thoughts, any advice?” Entire chapter in the book about asking for a raise. We also have our navigating the negotiation course. The biggest thing to keep in mind is that you are deserving of money. You are deserving of your own compensation. And one of the things that helps me anytime I’m about to do something scary is I ask, “What’s the worst that can happen? What’s the worst that can happen?” And weirdly, that comforts me. They’re not going to fire you. They’re not going to fire you. If they fire you, that is the worst place ever to work, and they’ve just done you a massive fucking favor because they’re awful.
They’re not going to fire you, right? The worst they’re going to tell you is, “No, we can’t do raises right now.” And then if they say, “No, we can’t do raises right now,” you know what you say? You go, “Okay, I appreciate that. Thank you. What do I have to do in the next six months to make sure I can get a raise?” And then when they tell you and they map it out, you’re going to email them the next day and say, “Hi, here’s what we discussed.” And then in six months, you’re going to CC your boss on that email from six months ago and you’re going to be like, “Hi, we did all of these things. I would love to talk about my compensation.” The worst they can say is no or not now. And the cool thing is that they’re probably not going to say no. They’re probably very much looking to get you to stay, because as an employer, it’s very hard to replace people, and so there’s no reason not to ask, right? There’s no reason not to ask.
In terms of prepping your ask, I again have so many more resources in the book, but you always want to think of negotiations as collaborations, not conflicts. I think we think that with negotiation we’re going to have to put on our boxing gloves and unsheathe our sword and fight to the death, and it’s going to be really ugly and messy, and people are going to hate us. The truth is, is that you are solving a problem, that’s it. And you’re probably a really good problem solver, it’s what makes you good at your job.
The problem you’re solving is you not being compensated fairly, and rather than looking at your boss as being on the opposing team, you’re on the same team and you’re trying to solve the problem of you not being compensated fairly together. So always view negotiations as a collaboration, not a conflict, right? You are problem solving together. You’re on the same team, you’re on the same side of the table. Hopefully that’s helpful.
Brianna, “Can I ask for a raise as an independent contractor?” I love this question. Technically, you’re not asking for a raise, you’re just raising your rates. Because when you’re an independent contractor, technically you’re your own boss and you’re contracting your services out. So when it comes to whether you’re asking for a raise or not, basically what you’re doing is you’re saying, “These are my rates now,” and it’s actually a perfect time to do that because it’s about to be the new year. And then you get to figure out compensation with the person who’s employing you or the person who’s contracting your services. So yeah, it’s less about asking for a raise and more about saying, “My rates are increasing.” Now, if you work at a company where you just already know that that sort of language isn’t going to fly, then yes, you can a hundred percent talk about compensation and talk about getting an increase in that compensation.
Miranda, “I have $30,000 coming in from a life insurance policy. My dad passed away last year.” Really sorry to hear that. “Where should I go if I may be pulling out again soon for a down payment, or where should the money go?” First of all, this is a question that we get a lot, which is, “I’ve just gotten the money from a relative passing or from some sort of insurance policy. What do I do?” There’s a lot of emotional baggage with this money, and I wish more people talked about it like this. Do your question in a second about where should it go, but I want to acknowledge that if this money at all feels weird, if it feels like blood or death money, I completely understand. That’s totally normal to be feeling that way, and I don’t have an answer for you except to just acknowledge if you’re feeling that way and feeling a little weird or icky, or just uncomfortable with getting money because someone you deeply love and cherish has passed.
In terms of where it should go. If you’re trying to use it for a down payment on a house in the near future, and we’re talking a couple of years, it needs to go in a high yield savings account. That’s the best place for it. Again, link on the screen for the one we recommend, but that’s where it should live. For anybody watching who is looking to save a house, looking to start building a down payment and wondering where that down payment should live, it needs to live in a high yield savings account, a hundred percent. And again, sorry for your loss.
Oh, here we go. “When changing your career, how do you apply for jobs when you don’t have any experience in that field or are too old to be an intern?” Kelsey, we have an entire free workshop for you. It’s called How to Land the Job When You Don’t Meet the Requirements? And it’s for people who are either in the beginning of their career or changing careers. Amanda, would you mind grabbing the link for that? It is all about how to craft your career story, and I’ll give you a tip from that workshop.
One of the things that is so important if you’re going in to interviews or even just trying to position your resume in a way that shows that you are qualified for this job, even if you don’t have the qualifications on paper, is to think about bridge skills. Bridge skills are the things that you already know how to do, but need a story or need some way to showcase these skills and the alignment between these skills and the job they’re looking for. I mention this in my book, I also talk about it in the workshop, but my friend Haley was a maître d at PF Chang’s and she wanted to go into recruiting. And she did not have any experience in recruiting, and she was like, “I don’t know how I’m going to be able to get this job, stand out in these interviews.”
And what she did was she would look at job descriptions for recruiters and they would say, “Okay, I need somebody who’s organized. I need somebody who manages their time effectively. I need somebody who knows how to juggle a lot of balls in the air at once.” And she came up with stories or specific examples of ways she did that at her job at PF Chang’s. When she was talking about, oh, knows how to manage her time, well, cool, she was a peak time manager. Knows how to juggle a lot of balls in the air, well, she was managing people coming in all of the time, and the back of the house staff, and organizing the whole restaurant. So finding those bridge skills can be really great between the jobs you have had in the past, and the job you actually want.
Okay, Carly, “Advice for a first time potential home buyer and advice for when is a good or bad time to become a first time home buyer. Huge fan, by the way.” Appreciate it, Carly. Thank you for being here. There is no good or bad time because we [inaudible 00:34:02] predict it. The good or bad time is when it feels right for you, that’s it. In terms of when you are looking at a house for the first time. We have multiple podcast episodes about this, so please go listen to those. But first of all, I need you to ask yourself, do you actually want to buy a home? If the answer is yes, great. If the answer is no, don’t do it. You have been told that home buying is the right thing to do or the thing that officially makes you an adult, or financially the smart thing to do.
And as I’ve discussed on the podcast with my friend and fellow finance expert, Ramit Sethi, we are both multi-millionaires who rent, and that is the decision that is right for us. So I need you to ask yourself, “Do I actually want to buy a house?” If the answer is yes, okay, let’s proceed. Making sure you have the highest credit score you can, is going to be massive. So not buying a car six months before you’re trying to buy a house is great. But also paying down any debt you have, making smart decisions with your credit cards. Increasing your credit score will help you decrease the interest rate on your loan, right? So that’s a great way to prep. There’s ways that you can purchase a house without a 20% down payment if that’s something that is useful for you or flexible for you. Again, a realtor can tell you more about your options.
And just starting to prep for every cost that goes into buying a house, right? We have the actual cost of the home or the cost of the down payment. We also have closing costs, we have inspection costs, we have the furniture you’re going to need to outfit your new house. The cost of owning a house, which includes insurance and property taxes, and also when your basement floods at 3:00 in the morning. So there’s a lot of things to think about, both emotionally, like am I ready to own a home? Am I ready to have this responsibility? Do I have the mental capacity and the time at my disposal to think about home ownership right now? But also the financial impacts of all of that? Do I have the money for a down payment or at least enough to purchase this home? Do I have enough to outfit the home and to remodel if I have to do that? There’s a lot of things to think about, but if you are still like, “Cool, I want to buy a house, then amazing, congratulations. Very excited for you.
Okay, Anne, “Can you talk a bit about permanent versus term life insurance?” I believe you mean whole life insurance. “Which one is better? I keep hearing that you can borrow from whole life insurance instead of borrowing from a bank.” Okay, anybody who tells you that life insurance can be used as an investment is actively trying to scam you. We’re talking whole life insurance. We’re talking index, universal life insurance, IUL. These are both bad decisions for most people, and really by most, I mean all but legally I can’t say all. So it’s a bad idea. And people who are recommending those things to you, you don’t have a financial advisor, you have a life insurance salesman.
Now, we all got to make money, we get it, but they’re actively recommending things that are bad for you because they get a huge commission. Life insurance is for life insurance. Life insurance is to protect you and your family in case you or your partner dies, right? That’s what life insurance is for. Life insurance is not for investing, that’s what investing’s for. We have a life insurance partner that we work with. I’ll have Amanda drop the link in the chat. We’re looking at term life insurance for life insurance. Do not use your life insurance for or as an investment vehicle. Bad idea. Your investments are for investments, your life insurance is for your life insurance. And the reason that my tone has slightly changed, I’m not yelling at you, I’m yelling at these fucking stupid people, typically men, who just talk about these things like they are the best thing since sliced bread, when really they are just completely scamming you and making money off of you. It’s just a bad idea. Don’t fall for it. Cool.
Amanda, “Got approved for a credit card and my score dropped 17 points, went from very good to good. Is there anything I can to boost it quickly or do I just have to wait it out?” You probably have to wait it out. Score fluctuations like this, especially something that’s pretty minor, like 17 points, is not something to worry about. Your score will even out. This happens to me all the time. It happens to everybody all the time. If you are looking to boost your credit score and thus be more strategic in paying off debt and becoming more financially stable, again, we mention this in the book and we talk about this in the podcast, but ask for a credit line increase with your credit card company, and then don’t use it. If you can limit or lessen the amount of credit you’re using, it can help boost your credit score faster.
So you can go into your credit card company and say, “Okay, I want this credit line increase from…” Let’s say you have a credit line of 10,000, “I want it to 12 or I want it to 15,” and then your credit utilization rate goes down so you are able to boost your credit score because you look like a more responsible borrower suddenly, because they’ve given you more credit, but you’re not using it. That is one way to boost your credit score. However, in your particular situation, don’t stress, girl, you’ve got it. It’s totally normal, especially since you’ve asked for credit, right? You’ve opened a credit card, you have put in a credit inquiry, so your score’s going to go down, most likely a little bit. Totally, totally normal.
All right, Emily, “How can you figure out how to budget for each category? Is there a tip or trick for that? Also, is it better to have fewer, more broad budget categories?” It sounds like maybe you’ve read my book or maybe not, but we have an entire budgeting method in this book called the Three Bucket Budget, and it is how you categorize your budget for your spending. So if you’re wondering how much to categorize or how much money to go to in each category, bucket number one is your expenses. It’s everything you need to eat, sleep, breathe, move, and live. Bucket number two is your goals, right? Paying off debt, starting investing, saving money. And then your third is your fun stuff, things that make life worth living, right? Using this budgeting method allows you to not have to track every single thing you purchase and track every single penny, because frankly, that’s not very fun.
Again, we have this budgeting method outlined as well as how to implement it, in the book. This is the budgeting method I used to save 100K at 25. And again, it wasn’t tracking every penny. So in terms of categorizing specifically, in terms of shopping or entertainment or food out, I find that that just gets really convoluted really quickly and also it’s like tracking what you eat, it leads to really disordered eating. It leads to disordered spending. So if that works for you, great. I have never found that to work for me, so rather I just put things in buckets. So a fun bucket as opposed to specifically money for spending on clothes or food or makeup. I just put it all in one bucket.
Is it Ryan? “What are some financial investing pitfalls to watch out for?” We have an entire investing workshop called Stock Market Secrets. I will have Amanda link it in the chat. But we literally talk about what are the myths or the misconceptions that you’re believing about investing. I’ll give you a teaser for a couple of those. One is that investing is just for rich people or you need a bunch of money to invest, that’s not true. Time is more important than the amount of money when it comes to investing.
One of the things we talked about before is one of the pitfalls is believing that investing is just about picking a winning stock or picking individual stocks. It’s actually an extremely risky and probably unwise way to start investing. We want to look for diversified long-term investments. The biggest pitfall however, and if you’ve been with us for a while, you’ve heard me say this, but a lot of people believe that investing is just putting money in an investment account and calling it good, right? Putting a thousand dollars in a Roth IRA and saying, “Cool, it’s done. I put a thousand dollars in, like a bank account and now I’ve invested it.” You have not.
You have to not only put a thousand dollars in something like a Roth IRA or a 401(k), but actually choose your investments. This is financial purgatory. If you don’t actually do step two, your money is just sitting on the sidelines, waiting to be invested, and it is the number one mistake I see new investors make. I see thousands of women in our community, even who have just joined, make this mistake all of the time. Please do not be one of them. Make sure you’ve actually done step two or else you are not actually investing, and you can lose out on hundreds of thousands, if not millions of dollars by not actually investing your money.
Michelle, “Any tips on how to start a LinkedIn?” I love this question. This was not one I expected to get tonight. How do you know who to connect with? Maybe you want to connect with me, I’m on LinkedIn. When it comes to how to start building a network on LinkedIn, the easiest thing to do is start connecting with your coworkers. Do that first. Then start connecting maybe with folks you worked with at a previous job. Start connecting with people in your industry, right? If you’re a marketer, very good time to connect with other marketers. If you live in Seattle, great time to connect with other people in Seattle, and then you can start branching your network out from there.
I will say that some people that you would not expect, will accept your LinkedIn request, so shoot for the stars, baby. And LinkedIn, just like any other platform, it’s not really a job site. You can find a job on LinkedIn, but it’s really a social media site. It’s really about posting and connecting with people. It’s like a professional Facebook. So if you do want to see any sort of success on LinkedIn, well you got to think about it strategically as a social media platform. So feel free to post, feel free to have conversations.
One of the things we’ve actually just discovered, and I believe Amanda, our marketing manager told us this, but comments on other people’s LinkedIn posts are just as valuable, arguably more valuable than you posting your own content. If you are scared about you posting your own content, comment on somebody else’s. If you have something thoughtful to say, comment on somebody else’s.
Okay. Carissa, “Recommendations for someone who micromanages their money.” Stop. No, I’m kidding. It’s okay. It’s totally normal. I would say that you need to set boundaries with yourself and with your money. If you are somebody who actually cares too much and is too involved, well that’s a lot easier to fix than someone who I’m trying to get more involved with their money. So set specific boundaries. Say, “Okay, I’m only going to log into my accounts to check once a week,” and then log yourself out. Truly go into your laptop or your phone and log out of the accounts so that you can’t just use face ID to log in really quick. Log out of your accounts.
And also just be more mindful of when you feel triggered to look or when you feel triggered to be micromanagey with your finances. Is it because again, you had a bad day at work and you’re trying to make sure that your money is taken care of? Is it because you just felt like you overspent on something and you have to go check? Just start to be more mindful of how you are engaging with money. In the first chapter of the book, I wrote it specifically, and I put it first because it’s called the Emotions of Money. And we can’t learn to pay off debt and we can’t learn to budget, and we can’t learn to invest until we understand all of our emotional hangups and the narratives we’re believing about money, and the reasons we act the way we do about our money.
So if you haven’t taken a look at this chapter, I would recommend that for everybody, truly, because we all have financial trauma. Yes, even me, a globally recognized finance expert, I have financial trauma too. So understanding what sort of triggers you have, understanding why you might be thinking the things that you think or feel is really, really important to you managing money in a healthy, sustainable way. Because the truth about micromanaging is that’s not sustainable. And the truth, of course, about the ostrich effect of you never looking at your money, that’s not sustainable either.
Anna, “How to invest to help pay off debt?” Don’t. You can’t use investing to pay off your debt. Because investing is used for long-term goals like retirement or your kids’ college, trying to use investing for paying off things now or paying off things in even a couple of years, it takes a massive amount of risk. You will take a massive amount of risk on, and it’s not something in good conscious… Consciousness? Conscience? Maybe that’s it. That I can say you should do. If you are going to do it, just be aware of the risk. If you are going to try to use investing to pay off your debt, you have a larger potential of losing money because you are not giving yourself as much time for your investments to grow. So just be aware of that.
Esther, this is a perfect last question to end on. “Are there any courses or articles to teach my seven and 14-year-old daughters on teaching them how to save?” We have a couple episodes of Financial Feminist, the podcast, as well as one upcoming, that talks all about how to raise financially minded kids. We also have, Amanda can link it, a way for adults to protect their kids. We’ve partnered with our friend Andy Hill, who runs Marriage, Kids and Money, and he has a whole course around how to make your kid a millionaire and how to protect them, and build their wealth while also having conversations with them about money.
But the easiest thing you can start doing is talking to them about money, just like you talk to them about anything else. When you go to the grocery store, show them how much things cost. When you are setting aside money for savings, talk about why you’re doing that and how. One of the best gifts that my parents gave me was the gift of a financial education, and it was a hundred percent a privilege because I thought everybody knew not to overspend on credit cards. And I thought everybody knew how to save money, but it was because my parents sat down with me and taught me these things about money, and taught me how to be a responsible user of my money. So start to just have these conversations, start to bring them into the fold. And again, we have a lot more resources on the podcast, especially from parents, I am not a parent, who can help you just become more transparent with your money, with your kids.
I really hope you enjoyed our AMA, our Ask Me Anything time together. There were so many incredible members of our community who were vulnerable enough to ask their questions, and we appreciate that. We will also give you some space below if you are a Spotify listener, to be able to ask your questions and maybe we’ll take them in a future episode. You can also submit a voicemail. No matter where you’re listening right now, you can submit a voicemail that will potentially be used in a future episode, and we’ll answer those questions as we get them. We also have so many other resources for you beyond this AMA today, that are linked in the show notes. We have a whole guide and a template that we have put together post workshop, post this AMA, that will take this advice further and your learnings further, so you can go to the show notes to take advantage of that.
And if you are just wondering where to get started about money in general, you can go to herfirst100k.com/quiz. We ask you six questions. It’s not a pass or fail thing. You can’t can’t fail it. We’re just asking you questions about your financial standing, what’s going on in your financial life, so we can deliver you the tools that serve you best. It’s a personalized guide to wherever you’re at in your financial life. So truly, if you’re just like, “I don’t know where the fuck to get started,” herfirst100k.com/quiz, it’s also linked in the show notes.
If you want to jump in on our next Ask Me Anything, the best way to stay in touch is to subscribe to our email newsletter. Yes, we have a HFK Weekly that goes out, you guessed it, every single week, full of tips and tricks and trends to help you better manage your finances. We’ve dropped that link below in the show notes. You’ll also be the first to hear about exclusive events, exclusive ways to learn from me. You can follow us on social @herfirst100k on Instagram and TikTok as well. And if you have a question we didn’t get to, leave us a voicemail or submit it down below if you’re listening on Spotify. We appreciate you all, financial feminists. I hope you have a kick-ass week, and we’ll talk to you soon.
Thank you for listening to Financial Feminist, a Her First $100K podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristen Fields. Associate Producer, Tamisha Grant. Research by Ariel Johnson. Audio and Video Engineering by Alyssa Medcalf. Marketing and Operations by Karina Patel, Amanda Leffew, Elizabeth McCumber, Masha Bachmetyeva, Taylor Cho, Kailyn Sprinkle, Sasha Bonnar, Claire Coronan, Daryl Ann Inman, and Janelle Reasoner. Promotional Graphics by Mary Stratton. Photography by Sarah Wolf, and theme music by Jonah Cohen Sound.
A huge thanks to the entire Her First $100K team and community for supporting this show. For more information about Financial Feminist, Her First $100K, our guests and episode show notes, visit financialfeministpodcast.com.