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With the holidays in full swing, many of us are struggling to get it all done. It still feels impossible to balance the work > school > life schedule, and when we throw in the holidays (which are stressful enough even in a “normal” year), 2020 seems like it might never end.
But it is coming to a close, and here we are, looking to channel that holiday spirit in any way we can. This year, we may not be gathering with friends and family — our hopes for a Christmas feast may have been replaced with more of exactly what we’ve been doing since March: Enjoying what we can with our immediate families, within the walls of our own homes.
But in true ‘How The Grinch Stole Christmas’ spirit, the holidays aren’t about the gifts we get on the eight nights of Hanukkah or under the Christmas tree — there is so much more that brings joy around the holidays. And though we won’t be finding holiday cheer in the ways we have in the past, there are still plenty of ways to feel fulfilled as we close out this crazy year.
Today’s guest, Karamo, knows a thing or two about finding meaning in all areas of our lives, even when things are tough. He’s the Emmy-nominated host and culture expert on Netflix’s hit series ‘Queer Eye,’ where he serves as a guide to helping people thrive in their personal and professional lives. In his role, he draws on his work as a social worker and psychotherapist, and pulls from his experience as a son of immigrant parents and a single father. Karamo started his television career in 2004 on the show ‘The Real World,’ and is also the author of the bestselling children’s book, ‘I Am Perfectly Designed’ that he co-authored with his son, Jason.
Karamo shares his career journey with us and tells us why he came back to television after a hiatus. He shares some of the most rewarding parts of his work, both as a mental health professional and as host of Queer Eye — a show that has won 8 Emmys since 2018. Karamo talks about how we can all stay emotionally strong during these difficult times, and the importance of asking for support from our loved ones when we need it.
“Be able to find the confidence to say to people, ‘Today, I need you to love me a little bit louder.’ You know, that is something that a lot of us won’t say, because we’re so used to being the strong one in our group of friends, the strong one in our family, and we feel like if we talk about what we’re feeling we’re a burden,” Karamo says.
Jean and Karamo discuss how we can find nuggets of cheer and optimism this year, even when we’re in bubbles at home. “We all have the capacity, even in our own darkest moments, to still shed a little light on someone else,” Karamo says, highlighting a $25,000 giveaway he’s doing on instagram this Thursday, December 15th. In 2020, giving back is what it’s all about, he says — especially this year, when people had no idea on Jan. 1 that they’d be facing financial hardship just a few months later.
The pair talk about giving money this year, and whether or not it’s an acceptable gift — Karamo gives a resounding “Absolutely,” stressing that this year, many people need money just to cover the basics, like to pay a light bill, and to put food on the table. Karamo also talks about what he’s doing to take care of himself during stressful times, and boost his self esteem. “Self esteem is based on one thing: practicing what you say to yourself,” he says. “What you say to yourself each day, how you practice those words, and what you take in, that’s how your self-esteem is built.”
In Mailbag, Jean dives into a question on whether your 15% recommended savings for retirement should include what your employer contributes on your behalf. She also tackles a listener’s concerns that she’s over-insured, and walks us through which policies she needs, and which ones she doesn’t. We also hear from a woman who is recently divorced and is looking to finance some home renovations, but is unsure what she can expect her ex to provide, if anything.
Lastly, in Thrive, are you making a New Year’s resolution this year – and if so, does it have anything to do with your money? According to the 2021 Financial Resolutions Study from Fidelity Investments, there are four main things that inspire people to make financial resolutions each year – searching for greater peace of mind tops the list, followed by the desire to live a debt-free life, to eliminate financial worries during unforeseen expenses, and getting greater control of daily expenses. Listen in for a full breakdown.
Karamo Brown: (00:02)
Be able to find the confidence to say to people, today, I need you to love me a little bit louder. You know, that is something that a lot of us won’t say because we’re so used to being the strong one with friends, the strong one in our family. We’re so used to feeling like if we talk about what we’re feeling, we’re a burden.
Jean Chatzky: (00:20)
HerMoney is supported by Fidelity Investments. Whether you’re celebrating a milestone or adjusting to the unexpected, Fidelity’s there to help you navigate life’s important moments with confidence. Visit the Fidelity.com/HerMoney to learn more. Hey everyone, I’m Jean Chatzky. Thank you so much for joining me today on HerMoney. With the holidays in full swing, many of us are struggling to just get it all done. It feels impossible to balance the work, school, life schedule. And then you throw in the holidays, which are stressful enough, at least for me, even in a normal year. But it is coming to a close. And so here we are, looking to channel that holiday spirit any way we can. This year, we may not be gathering with friends and family. Our hopes for a holiday feast may have been replaced with more of exactly what we’ve been doing since March, which for me means eating carbs with my immediate family. But in true how the Grinch stole Christmas spirit, the holidays aren’t just about the gifts that we get on the eight nights of Hanukkah or under the tree or whatever you’re celebrating. There is so much more that brings joy around this time of the year. And there are plenty of ways to feel fulfilled. Our guest today knows a thing or two about that. He is an expert in finding meaning in all areas of life, even when things are tough. Karamo is the Emmy nominated host and culture expert on Netflix’s hit series Queer Eye, where he serves as a guide to helping people thrive in their personal and professional lives. He draws on his work as a social worker and psychotherapist and pulls from his experience as a son of immigrant parents and a single father. He is also the author of the bestselling children’s book, “I Am Perfectly Designed.” He co-authored that with his son, Jason. Karamo, we are so excited to have you here. I got to say.
Karamo Brown: (02:29)
I’m excited to be here with you all. Thank you so much.
Jean Chatzky: (02:31)
Thank you. Tell me a little bit about you. I know you have been on TV for close to almost two decades now. How did you choose to embark on the path to become a mental health professional in the midst of all this. Was that always the plan?
Karamo Brown: (02:48)
Ironically, it wasn’t really two decades on TV. It looked like that way, so you’re not wrong. But after I finished college, I got an opportunity to be on The Real World in 2004. And that experience was an amazing experience. But then, after that, that experience only lasted for about a year and a half of like the filming, the taping, after the show was aired. And then fame quote unquote, after it, only lasted quickly. And I realized that I need to go back to doing what I went to school for which was in social work. And so I then went back and started working in my field. And even though I had a desire to be in television, I didn’t get back to television until 2015 I think it is. So it seems that there’s two decades, but there was a large gap in between there where I did nothing in television at all. And to be honest with you, the only reason I went back in television is because my youngest son was writing a paper on living your dreams. And in that moment, he asked me if I was living my dream. And I had this surreal moment as a parent where I said to myself, how do I respond right now? Because yes, I love the work that I’m doing. I love helping people, but my dream as a child was to be in television. It was to figure out how to make that career happen. But being the son of immigrants, TV wasn’t a real career that you go into. You get a degree. You do these certain things. You achieve these certain things and that’s what it is. And so in that moment, I had to decide whether to lie to my child and say, yes, I’m really my dream quote, unquote, or say no and face the reality. And I found the courage in myself in that moment to say, no, I’m not living my dream. My child said why. I said, because I got to feed your because somebody has to work. But then immediately after I said to myself, why aren’t I living my dreams? Why not going after the things that I wanted? And how can I mesh the work that I’ve been doing with this new career in television? And that’s what started me on the path almost like 12 years later, to have the career I have now.
Jean Chatzky: (04:53)
Well, how did you mesh it? I mean, that’s the interesting part to me, right? It’s not like you went out to host a game show. You actually took these really important, helpful, social work, mental health skills that you had developed, and you found a way to put them to work on television.
Karamo Brown: (05:11)
Yeah. It wasn’t from the beginning to be very honest with you. I knew that my career, I wanted to do something. I originally started to, as I went back to school, to a community college and then also took hosting classes because I was like, I need to learn what journalists know. I would try to infuse this mental health. But in 2014, 2015, I don’t think people were really in a space yet to really talk about mental health. You know, it was something still, that was a bit taboo. And so it was hard for me. I then started to talk about pop culture news. I started to talk about hard news. All these things that were great for other people, but were not in line with me. And I kept getting told by networks, agents, this is never going to make you any money. This is not going to ever be your path. And I believe that we all come to that crossroads in our lives where you have what’s in your gut, what you want to do, what you have been training for and what you know is going to be successful. But then you have the narratives from the outside, the external world, telling you no, no, no, no. Look at what everyone else was doing. This dream is not going to work. No, no, no, no, no. You can’t be the first. No, no, no, no, no. This is not going to happen. And you have to play this balancing act of sort of like remembering your true intentions and remembering what you want, remembering your dreams, while also still not being so thrown off by saying, okay, if someone’s telling me what the market has in it, I can still listen to what’s going on in the market, but still be cofident in what I know to be true and finding a way to do that. And it took time. It took a lot of trial and error. You know, my grandmother used to say, failure is not the opposite of success. It’s part of it. And so every time I would have a moment where me meshing in the mental health piece didn’t work, I would not look at that as a failure. I’d look at that, okay. Let’s figure out a new way to do this. And I realized some of the things for me was like, how am I talking about it. How am I communicating what I want. The language. How am I marketing it to individuals when I would show it on my social media. Like, how am I making this more digestible. Again, mental health today, we see it on every Instagram page. We’ve see it before. But if we really think back when Facebook, just six years ago, you rarely saw anybody post about mental health. And so it was about meshing the two slowly but surely, but never giving up on what I knew true to my intentions and to my heart.
Jean Chatzky: (07:34)
I think I love your grandma. That’s a really, really smart thing to say. So those of us who are as old as me, or maybe even a little bit younger than me, watched eye during the first iteration. It is just so much better now. And I hope I don’t get in trouble for saying that. But, you know, tell me about that success. What do you think is the secret sauce right now?
Karamo Brown: (07:56)
I appreciate the kind words you just said about our show. But I always, you know, by the way, I don’t think you’re saying anything negative about the original. So I didn’t get that from you. But I always say thank you to those original fab five because, you know, some of the pushback and some of the things that they dealt with, we didn’t have to deal with because they dealt with it. Where people were leery about having five members of the LGBTQ community in their homes, we didn’t really have that much pushback because people were like, oh, we know what those five people did. Oh, we’re kind of into it. I think the thing that has changed is mostly my category from the original show, which a lot of people, to be honest with you, during season one did not understand and did not get. You know, the original show, the culture expert was a Broadway star. He’s super talented. And so he gave away tickets for Broadway shows. He talked about the arts. My background in mental health. And so I’m trying to figure out the core of what’s stopping you from changing your clothes and changing your diet, from fixing your home, from changing your hair. There’s always something from our past or something in our current situation that is blocking us from going after the life that we deserve. And I think it takes time and patience to sit down and say, what is this? And so I think for me to come into this space and have those conversations, and be the one that always, you know, people always say, what Karamo comes on, you know, you’re about to cry. Because that’s where the tears sort of come in. And I wear that as a badge of honor. But it’s one of those things where I’m like, I’m thankful that for those five individuals and how they paved the way so that the show could evolve and give space for myself and Jonathan and Tan and Bobby and Antoni to talk about emotions in a vulnerable space, where I don’t think in 2004, the audience would have allowed that or been open to it.
Jean Chatzky: (09:44)
No, I think that’s right. I didn’t mean to dis the first fab five either. And believe me, Ted Allen and Chopped have gotten me through so many sleepless nights. I owe that man a lot. But you did make an important point where you say mental health is the new thing and you’re right. We are talking about it so much more now. And yet I think, especially now, nine months into this global pandemic, stuck inside our homes, not going out, not seeing the people we love, knowing that we’re not going to see them at the holidays, we’re struggling. What are you hearing? And what are you saying to people to help through these struggles?
Karamo Brown: (10:24)
Yeah. so I’m hearing that so many people are scared. They feel alone. They feel isolated. And when I think about that, really what people are experiencing is the grief of loss. You know, when we think about grief and loss, we usually think about it in the sense of death. And you know, like, okay, someone’s died and now I’m grieving. And what I think people should shift their mindset to realize is that we grieve all the time. We’re grieving the security that we all thought we were going to have. We’re grieving our futures. We’re grieving the futures we thought we were going to have. We’re grieving. You know, our finances. We’re grieving so much. And I think that what you should do is first of all, understand that the patience you give yourself when someone actually dies, you would never say to someone get over it or you it will be fine. You would give someone this space to feel what they’re feeling. And that’s what I try to do, first of all, for everyone. Is, first of all, to acknowledge what you’re feeling is valid. You’re grieving a life that you thought when 2020 hit on January 1st and we were all like, this is going to be my year. You’re grieving all of that, you know, and that’s okay. And no one can rush your grieving process because you need to take the time to feel and deal with that as you see fit. But secondly, I think what’s important to share with these individuals is that as you’re grieving, it’s okay to ask for help. It’s okay to reach out and to talk to people. You know, one of the things that I’ve been trying to encourage people, and I’m really big language and what you say, is to be able to find the competence, to say to people, today, I need you to love me a little bit loud. You know, that is something that a lot of us won’t say, because we’re so used to being the strong one of our friends, the strong one in our family. We’re so used to feeling like if we talk about what we’re feeling, we’re a burden. And that comes from our culture. Like when most people say, how are you doing. And you say fine. They never usually follow up with a follow-up question of like, what makes you fine. You know, they’re never really curious. And usually if you say, I’m sad, they’ll follow up, but there’s this sort of uncomfortableness that it’s like, ooh, am I putting something on them? And am I giving too much? And I think we need to dismiss that. And it’s okay to stay in a very positive and different way, during this time where I am grieving, I might need you to love me a little bit louder. I might need you to tell me that I’m okay, that I’m beautiful. That things are going to be all right. That like you got my back that, you know, just love me a little bit louder and I’ll do the same for you. And I think as we’re going through this process, I think that love and connection is what’s going to really help us to get to the next stage.
Jean Chatzky: (12:59)
Yeah. It’s an interesting way to look at it. All of these different things that people are grieving. And I agree with you. I think finances are such a big one. We’ve got a new piece of research. We’re going to actually talk about it a little bit later in the show, from our sponsor Fidelity. But it shows two thirds of people in this country have experienced a financial setback this year. And for many of them, it’s a really big one. It seems like a good time to remind everyone that HerMoney is proudly sponsored by Fidelity Investments. Because although some of life’s important moments are planned for way in advance, there are others that we just don’t see coming. Fidelity is always here to help you navigate both the joyous and the unexpected with confidence. Their resources, their guides, their tools can help you through important financial decisions when you need it. Most you can visit Fidelity.com/HerMoney to learn more. I’m talking to Karamo, the culture expert on Netflix’s Queer Eye. We know anecdotally that this year has not just left people struggling, but it’s left people searching for meaning. How do we find those nuggets of meaning, those nuggets of cheer and optimism this year, even when we’re in these little bubbles at home?
Karamo Brown: (14:22)
Well, it’s about sending cheer to other people, you know, and like understanding that we all have the capacity, even in our darkest moments, to still shed a little light on someone else. And I think that’s really an important thing. You know, that’s why I’m so happy that, you know, one of the reasons I’m talking to you is because on December 17th, I’m doing a holiday spectacular on my Instagram live, where I’m going to be giving $25,000 away to three people. And the the reason that they’re going to get this is just because they sent cheer to other people. It’s sponsored by Zelle and I’m so excited about this because, you’ve mentioned this a little bit earlier, we’re in a space right now where people didn’t know that they were going to be in a financial hardship. They didn’t know what was going to happen, and they’re still sending a little light out to someone else. So here’s a way to give back to them and to show them that, listen, you can give back even in your moments. And I think that’s the true meaning of what we all should be learning right now. The clarity is that human connection, giving back, loving each other. You know, I was just talking to someone about their child, and their child feeling really depressed about the holidays and saying, well, is Santa going to forget about me? And that’s a hard thing for little kids to hear. You know what I mean? Because, as kids, that’s the meaning of our world. It’s like, you know, does Santa exist? Is Santa great? You know what I mean? Am I loved? That love is wrapped in this idea that me getting means that I was good. And I kind of suggested to the friend, instead of having your child write a letter to Santa about, hey Santa, this is what I want. How about you encourage your child to write a letter to Santa, to say, Santa, I know you’re probably overwhelmed this year. How can I help you? What can I do to give you a little support? Or what can I do to give my community support? And now this gives parents a creative way of helping kids to understand that the meaning of life is yes, we all love getting things. We all love feeling like it’s about us, but there’s the real importance, and I think what is going to take us through generation after generation is understanding that,, if we give back just a little or a lot if we can, that’s where the true meaning is. That’s where the connection is. And that’s how we start to heal and grow as a society and a world.
Jean Chatzky: (16:36)
I think you’re absolutely right. I did a big study on money and happiness years ago. And there were a lot of findings about things like, if you pay your bills, right as they come in, you’re happier. But there was also this big giving back component. Like it’s just one of those things. You do something for other people. You use some of your resources for somebody else, that feels good. It feels much better than doing something for yourself. And, and I love that you’re giving $25,000 to these people and kudos to Zelle for doing that with you. I wonder what you think about the concept of giving money to friends and family members who need it? I mean, sometimes we think, oh, I should pick out the perfect gift. I should really go shopping for something that is so personal. But yet, this year I think people need money. Is that okay?
Karamo Brown: (17:24)
Yeah. I think it is definitely okay. I think behind any gift is always the intention. And you’ve got to remember what the intention is. The intention is that some people would love to get a candle from you or get whatever tangible gift. But sometimes somebody would rather just have a little extra money to pay a light bill. Sometimes it’s just nice to have a little extra money to put a little extra food in the fridge for the new year. Those are things that are very important to people. And I think if your intention is to say, hey, I was going to buy you something, but instead of buying it for you, here’s this, and accompanying it with a letter, a some sweet note. I think that really is a beautiful gift to somebody. You know, one of the things that I’ve been doing personally is like, you do the Zelle app, that you can find on any online banking app, is sending money to random family members with the intention of just saying, hey, here’s $50 for this week. I mean, it’s not a lot. But sometimes when you have to put gas in your car and figure out how to get to work or how you’re going to, you know, especially in this world where people are now at home homeschooling and you have to figure out how do I get supplies at home that would have normally been in the school. We see the pressures that teachers have been under for many, many years in these underfunded schools. Parents are really feeling that now. It’s nice to say, hey, let me give a little bit more. Let me give you something to help you out in that moment. And I think that’s a really good gift to give. I will say this for anyone giving money, whether it’s a gift or if it’s not a gift. I give money under the intention that I am not getting it back. If you are going to give money, don’t give money with the intention of getting it back. If you get it back, great. But I promise you, anytime you make deals, unless you are a bank or a finance institution where you have a contract, where they can affect your credit, the most likely people are not going to give you. And then you find yourself in an awkward situation where they’re avoiding you. They’re not calling you back. Relationships are ruined over it. And so for me, I always say, if I’m giving, it means that I don’t need it. So don’t give to somebody, if it’s part of your rent. As much as you want to help, or as much as you’re like, okay, I can trust you to give it back. Don’t do it. Give money when you know you don’t need it back or give money because you just have extra. And that will avoid so many financial conversations that are awkward or are going to cause bad relationships. Just don’t do it.
Jean Chatzky: (19:49)
You are totally 100, 1000% right on that. As we wrap it up here, what about taking care of ourselves? What are your favorite self-care secrets for this season and every season? What do you do to make yourself feel great?
Karamo Brown: (20:07)
Well, you know, there’s things that I do both physically and then there’s things that I tell myself. You know, first of all, when people talk about self-esteem, we think about it as this like, oh, you know, like this big thing. Like, how do I make my self esteem bigger? And what people need to realize is that self-esteem is based on one thing. Practicing what you say to yourself. What you say to yourself each day, how you practice those words and what you take in, that’s how your self-esteem is built. So for me, when I talk about self-care, one of the first things I do is that, in the morning time, when I get to the bathroom or when I’m getting ready for work or whatever it is, for a zoom call nowadays, instead of going into the back bedroom and being like, oh, look at my body. This doesn’t feel right. Or look at my hair. It’s so ugly this morning, Or oh, look at whatever. Fill in the blank. I change it with looking at something that I love about myself. It could be my eyebrow one day, literally. My skin could be just a little bit more moisturized. It could be my nail beds. It’s the weirdest things each day. But instead of focusing on the negative, I focus on something I love about myself. And I say that to myself. And what happens is that, after awhile, you start finding the armor to arm yourself from the negative comments you’re going to get on social media, from families, or that mom, or brother, or a father that likes to make a little joke that they know is going to bother you, but for some reason, they can’t stop saying it. You know what I mean? Like, if you build up saying positive things to yourself, when you hear those negative comments, you can go into that arsenal of like, no, this is good about me. This is what’s special. You know, I saw this meme recently where this teacher wrote the times table for nines. And she did nine times one wrong. And after she went through, all the other ones were correct. Nine times two was correct. Nine times seven was correct. But the kids laughed in the class. And they were like, ha, ha. Look, you got this wrong. And she said, look at this. Instead of focusing on all the ones I got right, you’re focusing on the one I got wrong. And so I think in those moments, we have to recognize that that’s what life is. People are going to focus on the one we got wrong and you have to be able to remind yourself of the 99 you got right. The 99 things that are beautiful about yourself. And that’s a big piece of self-care. Then secondly, I am big on locking doors to set actual physical boundaries in my life. Let me tell you something. You know, in every movie, when a mom or dad locks the door, especially moms. They like to dramatize it as like, she’s in the bathroom and she’s crying. And it’s like, oh my gosh, I’m the worst person and whatever. It’s like, take that narrative out of your mind. It’s okay to lock your bedroom door or your bathroom door and say, guess what? For the next 30 minutes kids, you can’t talk to mommy or daddy. You know what, for the next 30 minutes, I’m going to be in the garage. Don’t come in here. It’s okay to set physical boundaries so that people understand like, this is my time. And if you don’t know how to do that on your own, set up phone reminder. I have reminders that pop up on my phone that say, hey. For the next 10 minutes, relax. And once the alarm goes off, I’m like, oh yeah, relax. Don’t get on another zoom call. Don’t try to help somebody else in your family. Don’t try to do this. Don’t try to do that. Just be there for yourself. And those are self-care moments for me. You know, you always can add in a piña colada. But whatever you add in with it, it’s about taking the time and the language. That’s what’s most important.
Jean Chatzky: (23:29)
Love having you here. Love this conversation. We are going to send our listeners to Instagram for your extravaganza on December 17th. Tell us what other details do we need to know about that?
Karamo Brown: (23:41)
Yeah. Just come on December 17th to my Instagram Live. It’s going to be full. We’re going to have a lot of special guests, a lot of people that are gonna be great. And the people who signed up, who are going to be winning the $25,000 a piece, don’t know. So you’re going to get to see their live reactions on camera, of them getting money, you know? And so I think it’s something that’s just special in this moment. Just to see somebody who’s been giving and sending cheer to other people. And so it’s really special. So just log on to Instagram Live on December 17th and you can watch the holiday spectacular presented by Zelle.
Jean Chatzky: (24:12)
Awesome. Thank you so much. Thanks for being here. Happy Holidays.
Karamo Brown: (24:17)
Happy Holidays. Thank you.
Jean Chatzky: (24:17)
And we’ll be right back with Kathryn and your mailbag.
Jean Chatzky: (24:24)
And HerMoney’s Kathryn Tuggle is with me now. Hey Kathryn.
Kathryn Tuggle: (24:27)
Hello Jean. That was a great show.
Jean Chatzky: (24:30)
I really loved talking to him. And so much of what he said resonated really personally with me. I mean, I’ve just been getting up every morning, feeling like I am COVID ugly. And, you know, it’s the not being able to get a haircut. I mean, I, these are such small problems cause everybody in my house is healthy, and we are incredibly grateful for that. But I am not as low maintenance as I’d like to think.
Kathryn Tuggle: (25:01)
Yeah. I loved what he said about just being thankful for an eyebrow, because I will say, I have one eyebrow that I do prefer over the other. So that resonated with me in a major way.
Jean Chatzky: (25:15)
Well, I would take both of your eyebrows. Your eyebrows are spectacular. You know, it’s just hard to not be out in the world as much. And just, I don’t know. It is. It’s really hard. But I like what he said too and I’m going to try to just hone in on the good things.
Kathryn Tuggle: (25:33)
Yeah, absolutely. And I’ve had that thought, as a New York City resident, that so many of us live here because we enjoy being social and we want to go to museums and we want to go to galleries and book launches and happy hours and opera and all of that is gone. So we do have to take the little things where we can find them and just be thankful and appreciate them.
Jean Chatzky: (25:58)
Yeah, no question. He’s my new favorite out of the fab five. Unseating Ted Allen who’s long been my favorite just because of Chopped. Yeah. Yeah.
Kathryn Tuggle: (26:08)
Jean Chatzky: (26:08)
Maybe they’re tied.
Kathryn Tuggle: (26:09)
It’s a tie. It’s a tie.
Jean Chatzky: (26:11)
Let’s answer some questions.
Kathryn Tuggle: (26:12)
Absolutely. Our first note comes to us from Sarah. She writes, my question about retirement saving is, should my 15% savings include what my employer contributes in profit sharing into my retirement account. My employer usually contributes 5% to 7% of my annual salary into my 401k and I’m attempting to max out my allowable contribution. I’m almost 40 years old and currently still paying off student loans so I’d like to not contribute too much into retirement due to the detriment of my current debt payoff plan. Thank you.
Jean Chatzky: (26:44)
It’s a really good question, Sarah. I know sometimes these rules of thumb and benchmarks that I throw out can be confusing. But, generally, the answer is that 15% can absolutely include what your employer kicks in. In fact, for many people, it’s the only way that they’re ever going to get there. And so that is fine. Before you back off too much on retirement savings, I’d just like you to do a sanity check to make sure you’re on track. And you should be on track as long as you’ve been saving pretty consistently. The benchmarks, just to remind you of them. You should aim to have about one times your annual salary put away by age 30, three times by age 40, and that’s what you’re making now. Six times by age 50, eight times by age 60 and 10 times by the time that you retire. And if you feel like you need to make up a little bit on the backend, one easy way to do that is just by working a year or two longer. That can help you catch up really quickly because your salary at that point is usually generally pretty high. But as long as you’re on track, then I would say, yeah, put in the 15% and throw the excess against those student loans and just get them off your plate and off your mind. I know they are generally a low-interest rate debt, but around age 40, when we start to think about our futures, having that still hanging around can feel like a real heavyweight. So that’s what I would encourage you to do.
Kathryn Tuggle: (28:21)
Great advice Jean. Thank you.
Jean Chatzky: (28:22)
Kathryn Tuggle: (28:23)
Our next question comes to us from an anonymous listener. She writes, thank you so much for your show which has become my most trusted source of financial advice. Plus, listening feels like catching up with old friends. I have a question hanging over me. What types of insurance do I really need? A bit of background. I’m 35, married, expecting my first child in March, and in escrow on a $1.07 million home in the Bay area. I’m self-employed as a journalist and writer and make a $100,000 to $185,000 a year before taxes, though that might go down after the baby. My husband has a regular job and makes $150,000 before taxes. After the initial cost of the home and baby, we hope to have six months in emergency savings. We have about $270,000 saved for retirement. And our only debt is the mortgage and $830 a month in student loans. We have the insurance basics, health, car, homeowners, and term life, but I’m having trouble figuring out whether other options are worth it. I have long-term disability insurance with an annual premium of $2,184. The annual benefit would be $28,248. I can buy up to $4,700 a month benefit with no medical exam, but that would increase the premium. I’ve heard disability insurance is important, but it feels like I’m paying a lot for little potential gain. Earthquake insurance would cost us $1,600 a year with a 15% deductible. Most people don’t buy this because it’s expensive, but it sounds scary to risk being left with a destroyed home and a mortgage you still have to pay. Media liability insurance would protect me if I got sued for things like libel or invasion of privacy. This is a real, if rare, risk for a freelance journalist who often covers controversial topics, and I could have to pay to defend myself even if the claim was frivolous. A decent policy costs $3,500 a year. I don’t think I can afford all these policies. And I can’t tell if I’m being overly cautious. What’s worth it? Help. Thank you.
Jean Chatzky: (30:22)
First of all, thank you so much for the nice words about catching up with old friends. That’s how Kathryn and I think about all of you too. So it’s really nice to hear those words rebounded. I’ve got to say, I have had all of these questions myself. Not the earthquake one, but I have it about flood insurance in the area where we live. So let me just sort of go through them one by one with you. But before I do that, let’s revisit the real question of what we buy insurance for. We buy insurance for that catastrophic event where we’re not going to be able to pay for whatever happens out of pocket without real severe financial hardship. And you’ve covered those in general, with your health, your car, your homeowners, and your term life. The long-term disability is, I just paid my disability premium today actually. My disability policy would pay about double what yours would pay and the premium is about, it’s a little more than double actually, what yours is. And every time I pay this premium quarterly, I think, should I just drop this thing? And the reason that I think should I just drop this thing is that I look at the amount of money that it would pay out. $28,000 in your case. And I asked myself, if I were disabled, would I be able to work in a way that I would earn at least that amount of money? And I wonder in your case, what sort of disability would prevent you from being unable to freelance? I mean, disability is a tough, tough policy for freelance writers to get. And so you shouldn’t drop it without being sure that you want to drop it. But I do wonder how hard it would be for you, particularly looking at the fact that your income is six-ish times that in a reasonable year, to replace that amount of money. That may be one that you think about letting go, but I’d also look really, really carefully at how long that annual benefit will last. So for example, I know my annual benefit is only good for five years. And you also should look at what has to happen for that annual benefit to pay out. Do you have to be unable to work at all, or do you have to be unable to work in your chosen profession? The latter is better because otherwise they can argue, hey, go get a job in a restaurant. Go get a job doing something else. We’re not going to pay. And so make sure you know what you have there. The earthquake insurance also is an interesting one. So I actually just did a little reading up because I’m not from the Bay area. And the reason that most people don’t buy it is not necessarily because of the cost, but because of that deductible. And with a 15% deductible, it would have to be like the big one in order for most of these policies to pay out. And so I would think about what sort of damage your place might sustain in an earthquake that wasn’t the biggest one. And then I’d also encourage you, the reading that I did sort of gave me a heads-up that there’s more happening in the world of earthquake insurance over the past couple of years. And there are policies available that cover the structure, but not the stuff inside. There are policies available, I think, that covers specific levels of loss. And so you may be able to insure partially but not fully or do it in a way that makes more sense for you. The media liability insurance, I would take a real hard look at that one before you buy it. I think you’re probably better off, and you should talk to an attorney about this. Typically I don’t believe this is necessary unless you employ other people who write for you. Also, I don’t know how your business is set up, but if it’s set up as an LLC, a limited liability corporation, you do have some level of protection. So I’d talked to an attorney before you do that. Although I would make sure that in addition to your homeowners and your car insurance, you have an umbrella liability policy. That’s more protection for your life, not protection for your business. But with a home of the value of your home, you need that. The good news is it’s a really inexpensive policy to get. So I hope that answered the questions. If anybody out there who is listening has additional suggestions here, we welcome them. I’m not an insurance agent. So if you think there’s additional information that our listener needs on this one, please let us know.
Kathryn Tuggle: (35:44)
I definitely feel her pain with the desire to have as much insurance as you possibly can. It’s something that I am always wondering if I’m properly covered. But it sounds like she’s making all the right moves.
Jean Chatzky: (35:58)
Well, absolutely. And that she’s looking into all of these various policies, I think is step number one and a very, very smart step at that. But I agree that at some point you have to take a look at what you’re spending and say, what’s the cost benefit analysis here. And you have to look at the risk as well as the payout. I also think as women, this is the reason why so many of us keep so much money in our savings accounts when we really should be investing that money. We look at it as an insurance policy. We want to be safe. We want to be protected. But sometimes spending our money for that protection is not the best move.
Kathryn Tuggle: (36:43)
Yeah, absolutely. Thanks Jean. Our last question comes to us from Kathryn, spelled like me. Shout out to everybody who is an R Y N.
Jean Chatzky: (36:51)
The only way to spell it really.
Kathryn Tuggle: (36:53)
Thank you. Thank you, Jean. She says, this is probably when you’ve never heard before. I am 67 years old, just divorced in January, 2019. My ex, age 59, and I bought two businesses before our divorce. He makes nearly $100,00 and I make just $10,000 annually. The house is in his name and was his before we met. I live in it now, rent-free. Part of our divorce agreement is that he gives me $1,000 to $1,200 per month for three years and that amount titrates down over the next three years. I gave him $70,000 worth of investments. He will pay off the mortgage and then put the house in my name within the next four years. He’s also going to pay for anything that needs work on the house until then, plus replace the windows, siding and roof with a line of credit which, by the way, my name is also on. He has finished paying the line of credit in December, 2020 from the update we did on the house last year. We are friends. I realize the sort of iffy place I’m in, especially if something happens to him, though I am in his will and will get everything should he croak before me. My credit is great because I believe it is still attached to his. That was the background on my situation. And here’s my question. I currently have an Airbnb rental in my home, two bedroom, two bath that I share, but not the living areas. I want to enlarge my money-making capacity with this home by building up and adding a story. It’s currently a one-level ranch with an acre yard. I’ve wanted to put a tiny house rental on it for years, but the furthest part of the yard is in a flood plain. It may not be possible. I realize I’ll have to increase the size of the septic. Building up costs money and I think my ex may have to put that money on the $40,000 line of credit for me and I’d pay him back. Is building up a good idea, just so I can rent that out or do Airbnb, which has been a very lucrative thing for me. Just so you know, I have to my name, $30,000 in cash in a money market. I feel frozen about what to do with that money. Keep some for a security blanket. Yes. Even though there is no such thing as security and safety. I have no debt. I just paid off my car and I put about $500 a month in savings. What do you think? Thank you so much for your help.
Jean Chatzky: (39:00)
Boy. I think, I think, I think, I think, I think I’m worried is what I think. Kathryn, you say that you’re in an iffy sort of place. I worry that you’re in a dangerous place. You’re not clear with me about what’s in writing. The $1000 to $1200 a month for three years. Okay. I get that. That is in writing. But how about the paying off the mortgage, the putting the house in your name, the time horizon on this, the paying for work on the house, the agreement that the work that you think the house needs, he also thinks the house needs and is willing to spend money on that. I don’t know because both of your names are on that line of credit that you would need his permission to draw from it. You may very well just be able to do that yourself. However, I don’t really know that I think you should do it either. What I want is to make sure that everything that you are getting, you think you are getting and that it is buttoned up as tightly as possible. Because even though you’re friends with your ex, which is a great thing, I am friends with my ex, friendship is not something that you can bank on. You just can’t. I also would say, you’ve got an Airbnb that is producing some income. I’d keep doing that. I’d keep doing that at least until you know that all of these other things are happening. And then I want you to look at your income situation. You say you earn $10,000 yearly. You also say that you’re 67 years old. Are you drawing social security? And if not, when are you going to start drawing social security? And what is that going to mean for your financial situation? I think I’ve asked you far more questions than you asked me, and you asked me a lot of questions. So I want you to write me back. I want you to tell me that this is buttoned up. I want you to give me this additional detail and then we will revisit this scenario and we’ll talk about how to move forward next year. But right now, keep the cash in cash in the bank. That is the best place for it because we’re not sure exactly what you’re going to use it for in the future. And the last piece of advice that I am going to need from you is the value of that house once your ex pays it off. So you asked a little of me. I’m asking a little of you and let’s just keep this one going.
Kathryn Tuggle: (42:00)
I love this so much, Jean. And I completely agree with you.
Jean Chatzky: (42:04)
You know, sometimes it’s really hard to tell. We get these letters by email, which we love and I so appreciate. And I want you all, all of our wonderful listeners, to hear me telling you, I appreciate that you try really hard to give me all the essential details, without overwhelming me with details. Sometimes though I just need a few more details in order to get the answer to the question right.
Kathryn Tuggle: (42:28)
And just personally, as someone who has lived in apartments for many, many years, you don’t want anybody bumping around above you.
Jean Chatzky: (42:35)
Kathryn Tuggle: (42:35)
I think building up and having a steady stream of random people upstairs every night is going to get old really quick.
Jean Chatzky: (42:44)
Well, maybe she goes upstairs and the other people live downstairs.
Kathryn Tuggle: (42:47)
Oh, that’s true. Well tell us that too.
Jean Chatzky: (42:51)
I mean, I love the tiny house in the backyard idea. I really do. I think when I was last looking at Airbnbs, there were a lot of places that did that. And that is a really, really wonderful solution because you can share the outside space. If the person who’s staying in your Airbnb wants to use the grill or something, it gives them a little bit of their own space. And I think that’s really nice. But again, you said it’s a flood plain, so maybe not. And let’s get the finances nailed first.
Kathryn Tuggle: (43:18)
Absolutely. Thank you so much, Jean.
Jean Chatzky: (43:21)
Thanks, Kathryn. In today’s thrive, I alluded to this before. A new piece of research out from our sponsor, Fidelity. Are you making a New Year’s resolution this year? And if so, does it have anything to do with your money? According to the 2021 Financial Resolution Study, there are four main things that inspire people to actually make financial resolutions each year. Searching for greater peace of mind tops the list, followed by the desire to live a debt-free life, to eliminate financial worries during unforeseen expenses and fourth, and finally, gaining a greater control of daily expenses. In the midst of this seemingly never-ending pandemic, every one of those seems both more desirable and tougher to achieve than ever before. Indeed, according to the research, more than two thirds of Americans say they experienced a financial setback in 2020, and nearly 40% more women than men, by the way, say they expect they’ll be in survival mode, survival mode, in 2021, focused on the day-to-day as they just to get themselves and their families through next year. The good news to emerge from these findings is that optimism still abounds. Nearly three quarters of the respondents say they expect to be better off financially next year than they were this one. Women are a little less likely to express that sentiment than men, which is no doubt a reflection of the fact that we lost more jobs and left the workforce to take care of our kids and other family members at home. So what do we do? What do we do to keep our resolutions and as firm a grasp on that optimism as possible. First, control what you can control. This means your expenses, but also your endorphins. Winter is going to be a more depressing slog than usual in many parts of the country. So make sure you get up and move. Grab some free vitamin D, eat as healthy as possible, and check in with loved ones often, even if you do it via phone or via zoom, I will never forget what the Cleveland clinics Dr. Mike Roizen says about loneliness and isolation. It can be as bad as smoking a pack of cigarettes a day. And then take a page from people who have been able to stick to their resolutions in the past. They set goals that are clear and specific, not vast and meandering. They keep tabs on their progress, not just their end goals. And because making that progress feels good, they’re able to stick with the program. And finally, they’re realistic about what’s possible. That makes it easier to maintain your program long term. Thank you so much for joining me today on HerMoney. Thanks to Karamo for the insight on how to find meaning in this holiday season. I hope this episode brings you some holiday cheer, no matter where you are or what you’re facing. If you like what you hear, I hope that you’ll subscribe to our show at Apple Podcasts. Leave us a review because we love hearing what you think. And if you’ve got a friend or someone else in your life who you think needs Karamo’s wisdom, please just send this episode along. We’d also like to thank our sponsor Fidelity. We record this podcast out of CDM Sound Studios. Our music is provided by Video Helper and our show comes to you through Megaphone. Thank you so much for joining us and we’ll talk soon.