Invest Real Estate

HerMoney Podcast Episode 195: Selling A Home, Moving, Renovations, Downsizing And More

Kathryn Tuggle  |  January 8, 2020

It's time to stop thinking like a seller and start thinking like a buyer.

If you’re looking to move, sell a home, buy a home, renovate, downsize or even rent, then this episode is for you. We’re tackling all of the above, and diving into the emotional ties we all have to the four walls that surround us, and to the possessions we have inside them. Why do we make decisions with our hearts that should be made by the financial part of our brains?

To answer that question, Jean is joined by Caroline Carter, founder and CEO of Done in a Day, a Washington, D.C. based home transition and move management company. Caroline is also the author of the book “Smart Moves: How To Save Time And Money While Transitioning Your Home And Life.”

Caroline was inspired to start her career when she recognized her own passion for “creating organization out of chaos.” Moving is one of the most stressful life events we go through, and every year approximately 40 million Americans move. Caroline dives into how we can all bring the stress levels down when embarking on a move, and dishes on some of her favorite tips she’s learned from helping more than 2,000 families over the last 14 years.

Caroline talks about how sellers should package their homes to sell so that the buyer sees the value, and offers a checklist of things for people to do before they put their homes on the market. One trick: You can never go wrong by going to your local home depot and snagging a gallon of paint. (Neutralizing your personal space is always a good move, because you have to turn your home back into a house in order to sell it, she says.)

Caroline also dives into ways we can de-clutter our space, and how best to ignore the temptation to put everything into storage when what we really need is a trip to the dump… Oftentimes it’s not worth the cost of moving and storing things just because of the emotional implications they may have.

She also offers a step-by-step guide for how to tackle the moving process in the most efficient way possible. Hint: Start with the things that only you can do, and then plan to hire help for the things that you can’t do yourself. Also, Caroline shares her thoughts on what people regret most after a move, and how to decide how much space you’ll really need if you’re downsizing.

Then, in Mailbag, Jean advises a mom who is concerned about saving for her son’s college education, and guides a woman who’s considering putting all her investments into a target date fund. She also counsels a listener who’s worried about timing the markets while recession fears are looming. Lastly, in Thrive, we dish on allowances for kids, and how much they should really be getting.

Transcript

Caroline Carter: (00:01)
There’s a need to change your mindset. From the minute you make the decision to sell. You need to stop thinking like a seller or a homeowner and start thinking like a buyer.

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Jean Chatzky: (00:17)
HerMoney is brought to you by Fidelity Investments. We want you to feel confident about investing so that you can make your money work just as hard as you do. Learn the ropes without the jargon at fidelity.com/demandmore. HerMoney comes to you through PRX. Hey everybody, I’m Jean Chatzky. Welcome to HerMoney and thanks so much for joining me because today we have a lot to unpack. And I mean that literally. We are talking about home buying, home ownership, moving, renovations, renting, and the emotional ties that we all have to our places and to our things. For those of you who are homeowners and those of you who are renters, you all know far too well that we can get so attached to the four walls that surround us to the possessions that we have inside of them and we start to make decisions that when should be made with the financial sides of our brains are actually made by our hearts. I was struck, you all have heard me refer to the research that fidelity did with the Stanford university center on longevity where they talked about the fact that we all as individuals go through four stressful life events each and every year and these can be good things like getting married and having a baby and getting a new job, but they can also be troublesome. Things like getting a divorce or losing a parent or losing a job and moving ranks really high on the list of these stressful situations, which is why I’m so excited that today we’ve gotten the studio, Caroline Carter, she is founder and CEO of Done in a Day which is a Washington D.C. based home transition and move management company. She’s also the author of the new book Smart Moves: How to Save Time and Money While Transitioning Your Home and Your lLife. Caroline, thanks so much for being here.

Caroline Carter: (02:44)
Thanks Jean. I’m really excited to be here.

Jean Chatzky: (02:47)
So I haven’t let my listeners know this yet, but my husband and I are actually planning a move ourselves.

Caroline Carter: (02:53)
Well congratulations. Where are you moving to?

Jean Chatzky: (02:55)
Thank you. We bought an apartment in Philadelphia and we will be first renovating, which is going to be stressful in it of itself, but we’ll be moving there in I hope less than a year.

Caroline Carter: (03:11)
Wow. That is exciting.

Jean Chatzky: (03:13)
But we’ll see. Yeah, so, this is a very personal conversation for me today. I’m excited to dig into it and to make it as stress less as possible, but before we get there, tell me a little bit about you. This is a very interesting business to specialize in.

Caroline Carter: (03:33)
It definitely is. And I sort of fell into it. I’m a single mother with three kids and back in 2005 when I was newly divorced, I was in a position where I hadn’t worked outside the home for 12 years, at least professionally and could not afford to continue living where I was living in Bethesda, Maryland without producing income for my children. And I received a call from a very good family friend who had recently lost her husband unexpectedly to a heart attack while he was out for his morning run.

Jean Chatzky: (04:03)
Oh my gosh.

Caroline Carter: (04:04)
Yes. She had two small children and had decided to move back to D.C. where she bought a property, sight unseen, and asked me, would you, you know, go over and assess what needs to be done, paint, landscaping, new carpets, so on and so forth, and can I send a truck ahead and you just do this. I am literally unable to move forward. I’m doing everything I can to keep life and limb together right now and I don’t have the bandwidth. And I thought, of course I’ll do it for you just because I would do it for anybody, but this might be an interesting opportunity for me, for her, for everybody. So I spent a couple of weeks and immediately set about sourcing the trades and so forth that I would need. And a couple of weeks after we were getting the work done, she sent ahead the 53-foot moving truck full of household belongings that I had never seen before. And I settled the home. The family arrived a couple of days later and was able to move in and do nothing for the first year, but really pay attention to, you know, dealing with their grief and, and reconnecting to the D.C. community. So it was during that first project where I really kind of had my “aha” moment.

Jean Chatzky: (05:15)
You realized this is a business.

Caroline Carter: (05:17)
I thought, wow, this is an opportunity. I am an absolute organizational freak and love. I’m able to really see, you know, we each have our own superpower and I think that mine is to be able to create order out of chaos for people. And what I really learned from this first home transition was the emotionality surrounding it. In this particular case, the death of a spouse was, I mean, would bring any family to their knees, but as you mentioned, it is one of the five most stressful life changing events. So from this first transition came requests for other families who had heard about it.

Jean Chatzky: (06:03)
And 40 million people do this every year.

Caroline Carter: (06:05)
Every single year.

Jean Chatzky: (06:07)
It runs the gamut, right? We’re not just talking about people who buy homes or sell them or tying about renters who are moving to a bigger apartment, or smaller apartments. How do you, when you’re thinking about a move, start from square one so that you can, let’s just focus this conversation on doing it right, to bring the stress levels down.

Caroline Carter: (06:32)
Okay. That’s a great place to start. And the place that you start is by understanding that there’s a need to change your mindset from the minute you make the decision to sell. And Americans move 11.7 times throughout their lifetime. That’s a lot of moving. So from the moment you decide to sell is the moment you need to change your mindset.

Jean Chatzky: (06:54)
What do you mean?

Caroline Carter: (06:54)
Okay, you need to stop thinking like a seller or a homeowner and start thinking like a buyer. For many of us, our home is our largest asset or one of the largest we own. Yet consistently over the 2000 families I’ve helped over the last 14 years, I see people making very poor financial decisions about this asset.

Jean Chatzky: (07:17)
Like what?

Caroline Carter: (07:18)
Am I going to stage it? For instance, staging is just one portion of the total home transition process. Meaning am I going to hire someone who is going to help me to visually and cosmetically update the house, place furniture, tablescape that is aspect of the process. Am I going to invest in painting? Am I going to make fast, easy and inexpensive updates?

Jean Chatzky: (07:46)
I just painted the outside of my house. Are you going to tell me I made a mistake?

Caroline Carter: (07:49)
No, not at all. Not at all. But the issue is the, the problem is today there’s so many experts telling people so many different things what to do, how to do it. People really don’t know where to start. I am a truth teller in this industry and obviously have been working in it, which is really a niche topic for the last many years. And what I would tell you is the ability to think like a buyer is the most critical aspect of the process. Meaning what, as a seller, okay, you want to do the least amount of work possible. As a buyer you want to do the least amount of work possible. So what does it mean for both sides? Well, for the seller, you need to emotionally disconnect from this asset. You need to be able to look at your asset and rate it based on what a buyer, a current buyer currently expects and is and is determined to find, right? So it’s really not about you as a seller, it’s about the buyer. And it’s about packaging your house to sell so that the buyer sees the value. Right? It’s a very strange concept. A.

Jean Chatzky: (08:56)
re there things that sellers should do every time that we can direct them toward? Is it about clearing the clutter? Is it about painting the walls white? Is it about embracing the fact that everybody seems to like gray these days? I mean, are there, is there a checklist of things that we can tell people to do?

Caroline Carter: (09:19)
Yes, that’s really a great place to start. And one of the reasons why I wrote the book Smart Moves. There are some basic things that you need to pay attention to. The first of which is you can never go wrong by going to your local Home Depot and getting a gallon of paint neutralizing the personal space. Meaning, what sellers need to understand is there’s a difference between house and home. You buy a house but you make it a home. In order to sell it quickly and at top dollar, you need to turn it back into a house, which is marketable asset. That has nothing to do with the emotional investment we make in our homes. So, so to be able to look at it as an asset and say, what would be the bottom line impact, financial impact both on days in the market and bottom line list price and sales price. If I neutralize the space, I have a cherry red dining room. Everybody loves the cherry red dining room. Well maybe, maybe not. So looking past our personal choices that we’ve made to make our house a home, going back to the basics, it’s why builders have done it for, you know, since the sawn of time, it’s because you’re neutralizing space so the buyers can envision themselves there.

Jean Chatzky: (10:35)
And getting rid of clutter is a big part of that, right?

Caroline Carter: (10:37)
This is way beyond tidying up. This is, if you think about it, the LA Times had an article that said that in each American home we have 300,000. Items now in my business that means that you need to touch each one of those items once and make a decision about it. Am I going to keep it to store it? And what, what are the financial ramifications of that choice? Because as you and I both know, people have storage areas that’ll go for years and years and years and you’ll say, well, what’s in that storage area? They’ll say, I have no idea.

Jean Chatzky: (11:15)
So as we are touching those possessions and deciding whether to keep them, whether to store them, whether to get rid of them, you know, is it Marie Kondo? Is it, does it bring you joy? What’s your mantra?

Caroline Carter: (11:29)
My mantra is to number one, touch everything once and understand the implication of keeping it. Okay. There are various things throughout your home that’ll be a must keep or a must pack. And that could be family china, it could be your children’s momentos, your son’s little hand print from first grade. Now understand that in 30 years, you know, someone’s going to call me and say, I don’t want my handprints. Or you’re going to say to your son, I have your first years, you know, your kindergarten hand print. He’s going to say, mom, seriously, I have nowhere to put that and I don’t want it. But as mothers, we feel that that’s part of our job, to save that, those momentos that are important to us, but there are going to be a lot of things when you talk about your move to Philadelphia, there’ll be a lot of things that you have in your house today that you’re going to look at and say, it’s not worth the cost of storing or moving this, so I’m going to donate it or dump it. Wl, we all have a dump run. So it’s really making meaningful choices about the items you own and understanding the impact of those choices financially and emotionally.

Jean Chatzky: (12:36)
And I can’t tell you the number of people who have said to me over the years, I thought I needed to store this stuff, but after, you know, $500, $600 a month for 10 years, realize they just sunk $50,000 into this project.

Caroline Carter: (12:50)
That’s exactly right.

Jean Chatzky: (12:51)
Stuff that they don’t care about.

Caroline Carter: (12:51)
That’s right. And the, and the self storage industry makes it really easy. I’m going to give you two months free. Give me your credit card. You never have to think about it again. And guess what, you don’t. But all you’re doing is delaying the decision making process. Right? So I encourage folks to really combine, you know, when the total home transition process, we combine the sale of the home with the actual move into one continuous process rather than two separate unrelated events.

Jean Chatzky: (13:21)
That is exactly what we are hoping for. But before we get to the move, and I do want to spend some time focusing on making a move work, but also making it work financially.

Caroline Carter: (13:34)
Absolutely.

Jean Chatzky: (13:35)
I want to remind everyone that HerMoney is brought to you by Fidelity Investments. You don’t have to know all the answers when it comes to your financial future. But an important question to ask yourself is what do you want from your money? What are your financial goals? No matter where we’re meeting you on your financial journey, Fidelity is here to help you reach those goals faster. It starts with a financial checkup and an understanding of what you own and what you owe. From there. We’ll work with you to evaluate your investment options and ways to grow your savings, discuss your goals, see where you stand and get help taking the next steps at fidelity.com/demandmore. We are talking with Caroline Carter, founder and CEO of Done in a Day and author of the new book Smart Moves: How to Save Time and Money While Transitioning Your Home and Your Life. When you know that a move is coming up, how many months in advance do you have to start planning and what are the steps to take so that it doesn’t become a financial sinkhole and a stress ball?

Caroline Carter: (14:44)
Okay, that’s a great question and I am glad that you asked that because everybody should be asking that of themselves. From the moment you decide is when you begin to look at the scope and what it’s going to entail financially, emotionally and physically for you to move your family and create a smooth transition so you’re almost a year out. I would say that at this point you should begin considering time for files. For instance, think about all the different files you have. You have school files, you have medical files, you have financial files, you have friend files, you know, everything having to do with disconnecting yourself from community, whether it’s church, home, whatever it is. You’re the only person that can really make a decision about those files. So what you’re going to want to do is focus on the areas that only you can make a decision about because you have time to do that. The pressure is not as intense right now. So you will go through your home and really make those decisions. It might be a closet, it might be cubbies for the kids. It might be, you know, the low hanging fruit where you’re, you know, giving away sports equipment, things that even going through the momentos and figuring out, okay, I’ve saved absolutely everything. It might be time to pare it down. As you begin to get closer to the move date, you’ll want to sketch the scope of exactly what steps are necessary, you know, in more detail. Because the closer you get to the move, the more anxious you become. And the interesting thing about this process Jean, is that no one escapes it.

Jean Chatzky: (16:31)
Right. We do it 11 times in our life, it’s there is there is no escaping it. But it sounds like what you’re saying is almost no matter how much time you have, you got to chunk it down into separate tasks and then just start tackling them. And if you have to tackle a task a week because you have a year, then you tackle a task a week. And if you have to tackle a task a day because you have a month, then you tackle a task a day. You can’t do it in a weekend.

Caroline Carter: (16:58)
No, you can’t. And knowing which task to tackle in which order and why is critical to understanding the entire emotionality of the process.

Jean Chatzky: (17:09)
So what order do we go in?

Caroline Carter: (17:11)
Just what I said. Start with a thing that only you can do.

Jean Chatzky: (17:16)
And then the others, if you get to the point where you have to hire some help to pack up the dishes, you can do that.

Caroline Carter: (17:21)
Everybody should focus their time on what they do best. Okay, so if you’re not an expert packer and you’re not placing a premium on your time, meaning many of the families that I deal with, I most often will work with the woman who in spite of the fact that she may work outside the home, be responsible for the entire social aspect of the family’s calendar, the kids, she is the one most often tasked with this responsibility. She is overstressed, overburdened. She needs to make the most effective use of her time because she is the most emotionally connected to the health and wellness of her family. But she also wants to ensure that she’s making really good solid financial decisions too. She does need ahead of time a task list. You know, the, the women I work with tend to be very detail oriented. They are, they’re doers.

Jean Chatzky: (18:20)
Like our listeners.

Caroline Carter: (18:21)
Yeah. Like your listeners. That’s right.

Jean Chatzky: (18:23)
One of the things that we thought an awful lot about when we decided that we were going to move was how much space we actually needed. I mean we’re living in this world where you turn on HGTV and you can watch all about tiny houses and, and I think they’re miraculous, but I don’t think I could ever live in one when we’re making decisions about our next space. Is there a good calculation that you fall back on? How much? How much space do you need?

Caroline Carter: (18:55)
Well, I think that it’s going to, there’s no one size fits all. Just like there’s no one size fits all with this process because we all live at different price points, locations. We have different situations. But I think that it’s an interesting exercise in how truthful we can be with ourselves about the, you know, I keep getting back to the emotionality of moving and moving on and how it affects this process for everyone.

Jean Chatzky: (19:19)
Of the 2000 families though that you’ve worked with? What are they sorry that they did? What do they, sorry. They spent money on, what do they never regret?

Caroline Carter: (19:28)
They’re sorry They did not give away more as they were downsizing. They’re sorry that they stored more because they thought they were going to need, you know, great aunt Rita’s dressing table that at the end of the day, after storing it for 15 years, no one wants it. I mean, we have a big issue today.

Jean Chatzky: (19:48)
With Brown furniture.

Caroline Carter: (19:49)
Brown furniture, people, you know, things that we grew up with and Oriental rugs. And again, this speaks to the emotional decisions we make regarding a financial asset. And you know, how we can guard against that. And part of that is really just educating ourselves about the play of emotions. You know, I talk about two stories. There’s always the first story, which is the logistical part of the move, which is what you and your husband, your family are talking about now. but there’s always a backstory for people and that’s just as important, if not more important. And that’s the emotional story, the emotional story of why we’re moving, how this emotion that weaves through our families is going to affect each decision we make over the course of this transition. You know? And how can we guard against making poor decisions?

Jean Chatzky: (20:37)
How can we guard against making poor decisions, whether it’s decisions about the place we buy, whether it’s not selling our house, because we don’t think that they’re paying us enough for something we value more than they value or whether it’s holding on to things that we really shouldn’t be holding onto. How do we know when we’re leading with our heart instead of our head?

Caroline Carter: (21:00)
I think to understand that we are all naturally prone to do this, to make these decisions with our emotions first and foremost, because we’re talking about a very unique asset, our home. We’re also talking about a transition that really affects our bottom line, basic needs. You know, Abraham Maslow’s hierarchy of needs. This affects our very basic needs of safety, security, health, wellness. I think to understand that we will, our knee jerk reaction will be emotional and to gut check and say, Hmm, is that an emotional reaction versus, you know, an educated well thought out decision.

Jean Chatzky: (21:46)
So a little time and a little space before you pull the trigger?

Caroline Carter: (21:50)
I think so. And not to make knee jerk decisions, but to really think things out. This is a discoverable process. It’s also one of the reasons why I wrote the book because people do need an advocate. People do need a step by step guide. Our lives are so busy, we are stressed, we are trying to be perfect in all these different areas of our lives and we want to ensure the best possible transition for our families without leaving money on the table. But we also appreciate someone giving us the down and dirty saying, look, expect this roller coaster of emotions. Expect this to be hard, expect to act out or have the dog act out or the kids act out. It’s really difficult. Moving is brutal, but there is a way to educate yourself about a process that we all go through and how to prepare yourself for the emotional side of it. For the financial side of it. Most people, if you ask them, you know, how much do you think it’s going to cost you from house to house to move? They would have zero idea.

Jean Chatzky: (22:57)
And the answer?

Caroline Carter: (22:57)
What I can tell you is I have never had a client who was not surprised by how expensive it is to move from start to finish. People don’t understand that everything from packing materials to, if you look at the transition from day one, from the moment you decide until you unpack the last box in your new home, you know, it’s only with the IRS 523 that you’re able to look back and say, geez.

Jean Chatzky: (23:26)
How much did this cost?

Caroline Carter: (23:27)
How much did this cost?

Jean Chatzky: (23:29)
Caroline, thank you so much. This has been a great conversation. I appreciate it. Thank you.

Jean Chatzky: (23:33)
Thank you. I am so happy to be here. And we’ll be right back with Kathryn and your mailbag.

Jean Chatzky: (23:40)
And HerMoney’s Katherine Tuggle has joined me in the studio. Hey Kathryn.

Kathryn Tuggle: (23:53)
Hi.

Jean Chatzky: (23:54)
So you just moved. What advice do you have for people?

Kathryn Tuggle: (23:59)
It’s such a good question. Make your husband do all the work.

Jean Chatzky: (24:04)
Your stuff was in storage for a long time. Was there stuff that you realized in unpacking it that you really didn’t need?

Kathryn Tuggle: (24:14)
No, because we did a really good job paring down, but this was my third cross country move. I moved from Alabama to New York, then from New York to Alabama, then from Alabama to LA and then LA back to New York. I’m finally settled here, thankfully.

Jean Chatzky: (24:29)
Thankfully.

Kathryn Tuggle: (24:29)
But we kind of have it down to a science.

Jean Chatzky: (24:32)
And did you find that you moved fewer and fewer things each time?

Kathryn Tuggle: (24:36)
I would say about the same amount because what we got rid of would equal what we had accumulated. I would definitely say by the heavy duty boxes from Home Depot, because the last thing you want is the bottom falling out of one of your boxes.

Jean Chatzky: (24:51)
Oh wow. That’s good advice.

Kathryn Tuggle: (24:52)
Particularly if you have a lot of books or La Creuset cookware that weighs a thousand pounds. You really want those heavy duty boxes.

Jean Chatzky: (25:00)
We are trying, so our trash gets collected twice a week on Thursdays and on Mondays and we’re trying to get rid of things like three things a week. There was this very popular blogger in the early days of the internet called the Fly Paper Lady who said that you should go around your house and throw away 27 things every day, and I did that for a little while, but I want to get to the point where when we decide we’re ready to have a garage sale to get rid of this stuff, only the stuff that will actually sell is left.

Kathryn Tuggle: (25:34)
Right.

Jean Chatzky: (25:35)
You know, I don’t want to have the kind of garage sale where once you’re done, you still have a full garage.

Kathryn Tuggle: (25:40)
There’s always going to be stuff though. Right now we still have a box in our apartment and it has been looking at us for the last four weeks and it contains clothespins and a pasta thing. I don’t even… You’re supposed to serve pasta with it or make pasta with it. That box just is there.

Jean Chatzky: (25:59)
Yeah, this I’m not looking forward to, but hopefully if we start now and we just keep working on it, we will get there. All right. What do we have in mailbag? de

Kathryn Tuggle: (26:10)
Our first letter comes from Susan. She writes, last November, my husband lost his job through a company acquisition and his unemployment ran out months ago. He’s in his mid fifties and hadn’t looked for a job in over 20 years. I’m starting to wonder whether he’s ever going to get a job and I’m in a dilemma about whether to abandon my solo-preneur ship if that weren’t stressful enough. My son is now a high school senior who’s looking at colleges. We followed the conventional wisdom of saving for retirement before saving for college and we’ve been extremely good about that. Unfortunately, we have very little saved for and I’m now kicking myself about it. Fortunately, my son’s top colleges, an in-state public university, but it’s extremely competitive for music, but some of his backup schools are actually highly selective schools that have less competitive admission for music. Read: big bucks. Bottom line question, what should we be doing at this point to pay for college and in general, financially?

Jean Chatzky: (27:05)
So I understand that you are regretting your decision not to put as much away for college as for retirement, but I actually think that in light of everything that has happened to you, Susan, and I’m really sorry that your husband has found himself out of work and is having trouble getting back in. I think in light of all of that you are in a much better financial aid position than you would have been otherwise. But there are a couple of steps that you should take. The first is when you fill out the FAFSA, you’ll notice that it looks back a couple of years at tax returns. If it looks back to your tax returns to a point where your husband was still earning a good income, you’re going to want to write letters specifically to the colleges or call the financial aid departments to let them know that your financial circumstances have changed significantly. You’re going to have to give them a heads up about that and you shouldn’t be shy about doing so because that’s something that will alert them to your son’s needs in advance. You’re also going to want to cast a wider net as far as schools are concerned. It’s possible that that in-state public university is something that he will want to apply to early or rolling or something to get his application in quickly. But otherwise you’re going to want to make sure that you include some schools on the list that really, really want to have your son on the basis of his musical talents or his academic talents because those are the schools that are likely to offer him more in merit aid. It may mean that you’re applying to more schools than you thought that you should necessarily, but in this case when you’re casting a net for aid, it is a very, very wise thing to do and then you’re going to want to follow the process for borrowing for his education in a way that maximizes the federal aid that you’re offered and he’s offered before you tap into the private market. But I actually think you’re going to find that there is a lot of aid coming his way, maybe even more than you expected prior to your husband losing his job. And I wish you all the luck in the world.

Kathryn Tuggle: (29:46)
When you write to the schools and tell them that your situation has changed, are they going to want proof or should you supply proof?

Jean Chatzky: (29:52)
They will likely want proof and you should absolutely supply proof. You’re going to maybe need to show them more recent tax returns than the ones that they’re pulling into the FAFSA.

Kathryn Tuggle: (30:03)
Great. Our next letter comes to us from Amanda. She says, can you speak to how bad, or maybe not so bad, it is to just dump all your investments into target date funds. I like the hands-off approach but want to be smart about my 401(k).

Jean Chatzky: (30:18)
I love this letter and the reason that I love it, Amanda, is because it’s a mistake to not dump all your money into a target date fund if you’re going to go the target date fund route and that’s because target date funds are meant to be all in solutions. They balance your asset allocation for you. They put you in the right mix of stocks and bonds and cash alternatives for somebody at your stage of life based on the year fund that you choose. And if you then invest money outside that target date fund by putting it into a total stock index fund or a total bond market index fund or something else that is otherwise putting you into other stocks or other bonds, you’re messing with the math in the target date fund and you’re causing the target date fund to work less efficiently. So putting all your money into the target date fund, embracing it as a one size fits all solution, that’s exactly what it’s built to do.

Kathryn Tuggle: (31:30)
I like to hear that.

Jean Chatzky: (31:31)
Good.

Kathryn Tuggle: (31:32)
Lastly, we have a letter from Morgan. She says, hi, HerMoney. I am 23 years old and I’m a year into the workforce with no debt. I took financial courses at school and listened to your podcast. I know I should be investing. I already invest 15% of my income into a company matched 401(k) matched at 6% and 5% into a Roth IRA. But with all the predictions of recession, I’m wondering if I should delay starting in additional investment account, like one with Fidelity into the S & P 500. Should I invest regardless of the recession predictions because I plan to contribute to the account for at least 10 years or should I wait for better market timing?

Jean Chatzky: (32:10)
So as you probably know, Morgan, from listening to this show, I am not a market timer. I think you buy the market at all levels, particularly if you have a longterm time horizon. The most important question to ask yourself is what is this money for? If this is your down payment for a house money and it’s possible that you could need to use it in 3-5 years rather than that 10 year time horizon, then I would probably put it somewhere safe. But if this is additional money for retirement or for something 10, 20, 30 years down the road, then I don’t see any issue with investing it over time now knowing that the market will go down in that time period, but it will also go up and it will also go down and it will also go up and you will be buying at all levels. So that’s my advice. If you want to sit down with a financial planner and look at your overall goals, because you are doing really well, you’re putting a lot of money away, and it’s not premature for you to think about charting a path to your specific goals. I think that would be a good use of your money, too. Thanks so much Kathryn.

Kathryn Tuggle: (33:31)
Thank you.

Jean Chatzky: (33:32)
Sure. And in today’s Thrive, I’ve got a question. How much money were you making as a kid? Yup. A kid, because this week we’re talking allowance. While you might have felt like a millionaire with a fresh $5 bill in your pocket at the end of each month, parents are now on average shelling out $30 in allowance to each of their kids on a weekly basis, according to a survey published by the American Institute of Certified Public Accountants. Turns out 80% of parents expect their kids to do work around the house in exchange for the payout, and 60% hope that this money will help their kids learn responsibility and the value of a dollar. While, that seems great on paper, the survey concludes that only 3% of kids are saving any of that money. Ordinarily it’s spent on entertainment, outings with friends, or toys. Now, if you’re a parent hearing this, I don’t want you to stress. Your intentions are good. But experts recommend making allowance, giving more of a teachable moment. Help your kids open savings accounts so they have a place to put that money instead of allowing it to burn holes in their pockets, teach them the difference between a want and a need, and help them think of both short term and longterm goals they can save for. More importantly, it might be time to rethink the concept of an allowance if you’ve been paying your children for chores. Todd Usura who is a cohost of The Money Jar, which is a family finance podcast sponsored by Junior Achievement suggests maybe jobs around the house shouldn’t be tied to an allowance. Household chores should be expected of everyone, while an allowance is designed to help your kid learn to manage their money. I agree with that by the way. And as their allowance grows, so should the list of things that you, the parent, expect them to pay for. The goal is that by the time they leave for college or independence, they can manage greater sums of money on their own. Thanks so much for joining me today on HerMoney. Thanks to Caroline Carter for the great conversation on moving on and ways we can take control of our lives during times of transition. If you like what you hear, I hope you’ll subscribe to our show at Apple Podcasts and leave us a review. We also want 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 PRX. Join us next week. We’ll sit down with Maxine Trump, writer and director of the film To Kid or Not to Kid about the growing chorus of women who are choosing to live childproof and what it means for our futures and our finances. Thanks so much for listening and we’ll talk soon.


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