Money Rehab with Nicole Lapin - Encore: “I don’t have a penny in savings. What should I do? ” (Listener Intervention)

Episode Date: May 29, 2022

Originally aired Nov 26, 2021  Today, Nicole has a Listener Intervention with a Money Rehabber who, in her words, “doesn’t have a penny in savings.” She says: “My parents didn't teach me this stuff and school certainly didn't. I've always felt like there was a secret world I was excluded from. I wish I would have gotten on this way sooner but I'm clinging to the ole 'better late than never' expression.” Today, Nicole shows this Money Rehabber that it’s never too late.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. The money rehabber on today's listener intervention sent me a note telling me that she, in her words, doesn't have a penny in savings.

She grew up like a lot of us. She wasn't taught best practices around making, saving, or growing money. She says the whole money world felt like a club she wasn't invited to. So today we crash that club together. Donna Rae, welcome to Money Rehab. Thank you. I am so excited to have you here. Can you tell me a little bit about what's going on? Yeah. So I think the reason that I reached out to you is that I think it's important to show the other side of maybe what some professional people are living because I hear on a lot of like on your podcast and on some other things where there are financial experts giving advice where they'll say something to the effect of, you know, you should have three months saved in an emergency fund. And I'm like, like, I don't have any clue how people manage to do that. I had been

listening to some FI podcast in the effort to learn more and attract more and just learn more about my own financial health and well-being. And then I discovered you and it was the best because you really do explain things in a way that I can understand. So I've had a good understanding of general personal financial management since I was about 30, but all of the extra stuff, I was like a foreign language that I could never get on top of, like market capitalization or what it means to short a stock or things like that. So I'm super excited and learning a lot. But when I sat down to figure out what my percentages were for the three E's, my essentials come in at so much higher than 70%. And I think I've already shaved down everywhere that I can in

order to make them fall into that percentage point. And I make a good salary and I have a good job with good pension. It was not affected by the pandemic. So I just think that I'm living in this way, super paycheck to paycheck, no savings in a way that would make you have a stress heart attack, I'm sure. And it's been like this for probably 18 years. And I know a lot of my friends are in a really similar boat, also professionals bringing in a decent salary, but our essentials are just way more than the 70%. My house is pretty old. It could use loads of upgrades to windows and other things that would make it more energy efficient.

But I live on the East Coast of Canada. We get tons of snow and cold winters. So I have my heat and lights, et cetera, are through electric baseboards. And so what I do is I pay the same amount monthly. I have it prorated over 12 months so that it's not insane for me in the winter and less so in the summer. So I pay about $270 a month for my heat and lights. And then I have my mortgage, but I bought my house for a very low amount like 16 years ago.

So that's not too crazy. like 16 years ago. So that's not too crazy. Property tax, a car payment, car insurance, house insurance, water and sewer, which is about $50 a month for my house. That's most of that. And then there's groceries, gas, and credit card or loan payments. Those take up all the essentials. It takes up 86%, you said, of your take-home pay. Yeah. And sometimes a lot more. If your son is home, he probably eats a ton. Yes. Yeah. I live with a man. It's ridiculous. I don't even know where it goes. Yeah. So I totally know what that's like. I lived paycheck to paycheck for many years, and I did have those stress, almost heart attacks all the

time. And typically, when you're in a place where you can't really pinch from here or there, and also it might not be the best use of your time to negotiate for 20 bucks here or there, the biggest advice is either move somewhere less expensive, but it doesn't sound like that's something you can do right now unless I'm wrong, or make more money. Those are really the options to get out of this rut because we could go through your different bills, but I don't know if that's actually, pun intended, the best bang for your buck. As I was reading more of your story, I saw what I would really love to focus on with you is your side hustle. So can you tell me about that? Yeah. So I worked as a casting director in Toronto for a production company. And then when I moved back here about 19 years ago, I started doing that here in the province

of New Brunswick and did it fairly regularly for film and television projects. And it paid fairly well, but I did that while working full-time and raising a son on my own. And if you've worked and you have worked a lot in sort of film and TV, or at least in TV, it's everything has to be done yesterday. They don't care that I have another job. They don't care that there's not a ton of diversity here. Like there are some crazy demands were put on me in that side hustle. So every time I would do it, I'd say, oh my gosh, never let me do this again. Like it's so stressful. So in the last few years, I just stopped doing it. Like I'm working at a job where my income was a little bit higher. And I wasn't

willing to use a lot of my vacation to do that side hustle. I wasn't willing to suffer the stress of doing it in these like short spurts as well. So I just hadn't been doing it. But recently, somebody reached out to me asking me if I still did any casting. And I said, no, I haven't been in the last little bit, but I'm open to a conversation. And that was right after I listened to your side hustle episode. So that was a universe. I know, I know. It's law of attraction.

So, yeah. And then it was something that I could do. So I said, sure. And that gave me a little bit of extra money. So that's something. Well, hold on. That gave you a lot of bit of extra money. How much did you get from that gig? Well, I made $1,200 for doing that. So what did you do with that money?

I have it aside for now. So my son's in university and we have to come up with the amounts that aren't covered by his student loans, etc. So I've got that kind of aside to put towards that. Where is that right now? In a savings account? Yes. In a regular savings account, like a checking account? It's in a regular savings account that I have access to, which is danger, danger. That's what I'm worried about because I'd like to have that money start growing for you

because you are 49 and have no savings. No. And your son is now in college and thankfully your grocery bills are less because of that, but he's on his own. I wish you put your oxygen mask on first before helping others in all aspects, even your son. But now I think it's time to really get focused on what your future looks like. Mm-hmm. So can we put that $1,200 as our initial Miss Independent fund

where we grow that money, where that money starts working for you? Because here's the thing. You spent many years of your life as a single mom helping your son making this beautiful life with a lot of experiences, it sounds like, which is awesome. So you worked really hard for that money. I think it's now time to make that money work for you.

You've never had an investment or anything besides a regular checking account or a savings account. So I'm like, you're probably nightmare guest, but... No, you're my dream guest. Yeah. Stop talking about my new friend like this. So I had hilariously, when I was in my 20s, I called a discount brokerage when I was living

in Toronto and Pfizer had just invented Viagra. So I called a discount brokerage when I was living in Toronto and Pfizer had just invented Viagra. So I called a discount brokerage and said, I want to buy one share of Pfizer. He's like, okay, so a hundred shares. And I was like, no, just one. Thanks. And so I did buy that. But when my son was a baby and I was completely broke and it was clear that his father who I left when he was about a year and a half was not going to be helpful in the situation, I had to cash that in. So it had split a couple of times. And now, of course, they've invented a global vaccine

for a global pandemic. So it would have been a great little thing to hang on to. But that's that. Hold on to your wallets, boys and girls. Money Rehab will be right back. Now for some more Money Rehab. So we're all genius investors in hindsight. We all think we could have called the market and all of these things.

And that's OK. We have to forgive our former selves who sold Pfizer pre-pandemic. It is what it is. We can't go back, unfortunately, but we do have all the control of what we do with our money moving forward. So I would love if you took that $1,200 and started dipping your toe into other higher interest-bearing accounts or funds or different options. So this depends really on your risk tolerance and your risk appetite. So baby steps beyond just the regular nothing,

essentially, that you're getting at a savings account, you know the interest that you're getting, but it's under 1%. It's negligible. Yeah, it's nothing. Yeah. So a CD would be a good baby step option where you have that money locked up for a certain number of years. You don't touch it. That is a good safeguard against Donna Ray's pretty, I'm sure, manicured paws getting on that money. And so, you know,

some of this is just that safeguarding yourself against yourself and being really honest about what your temptations are. And that's OK, because you can set up a lot of your financial life in the most lucid times. So CDs could be a good first option. You could also look at money market funds or money market accounts. This is essentially like a cash equivalent option. You could also look at money market funds or money market accounts. This is essentially like a cash equivalent option. These are very low risk, but you're at least getting something versus bubkis that you're getting right now. And the ones that you can lock up, it sounds like personally for you, maybe not for others, would be a good safeguard against some of that temptation.

Does that sound right? It does sound good. The other options could be bonds that, you know, you could buy a different bond funds. You could buy ETFs. ETFs are exchange traded funds. So they're funds that you can get a lot of different things in with a lot of different diversification and already hedged exposure in one purchase. And those are traded like stocks. So you can buy a bond ETF, which bonds are typically safer investments than stocks. Stocks have more risk, but they also have more reward. So we have to look at what our personal risk appetite is because it's a balance between how much you want to see this stuff fluctuate, ideally you're putting your blinders on, and how much money you're going to get back because of that. So typically the rule of thumb is take your age in bonds and the rest in stocks. So you're about 50. So you would be 50-50 because

you still have some room to grow before you retire, but you don't want to be so reckless with all of it. So I would use this $1,200 and try to make as much interest as you can that you feel comfortable with. And it's not what I feel comfortable with. It's not what our producers feel comfortable with. It's like what makes Donna Rae sleep well at night. Tell me more about your tolerance for risk. I think my tolerance for risk will be pretty decent. You know, I like some high risk sports. Actually, it sounds funny, but it's true. It's how you feel in real life that typically translates into your risk in investments. Like, are you a skydiver? Or are you, you know, do you take on other risks in your life? That's typically how you would be as an investor.

I'm a good, big, into it downhill skier. And I love like power boating. I like to drive fast. I enjoy things that go fast. So that stuff, I did grow up in a fairly carpe diem household as well. And I've always had the feeling that you never know what could happen. So you should as much as possible with balance, enjoy the wine, enjoy the nights out if you can afford them, like have the experiences. Yeah, I agree. I think open the good wine now, for sure. You don't know what's going to happen. Don't save the good plates or the good wine, big philosophy of mine in my household. But I think there's a sweet spot between thinking you're going to live forever and thinking you're going to die tomorrow, right? Because it's a tradeoff between enjoying life now and feeling secure for later. So it sounds like there could be some space for you to grow later from some of your experiences that you're investing in now? I don't want to say don't have fun, don't do these experiences, but I'm wondering if there are ways to even potentially barter for

some of your skills and get, you know, have you ever reached out to some of these ski places and asked if they want to do videos and that you could cast for them or you could do something like that? I have not. Nope. I haven't considered that at all. Would you be interested in something like that? Possibly. Yeah. It's all, um, I'm open. I'm open to a conversation. I'm open to seeing, I'm calling it the Donna Renaissance. Lots of stuff going on with me right now. Doing some miracle morning stuff. I'm learning so much from you. I'm like, I'm very, very open to whatever possibilities are coming for the second half of my life. I love that. I love that. I'm so excited for you. So, so basically, when you look at your budget, right now, or your spending plan breakdown, as I like to call it with a little

bit more euphemism, it's really tight. I'm not going to lie. Like, I'm not going to mince words. I'm not going to sugarcoat this. And the way to get out of that is to make more money right now, if you have the bandwidth to do that. And it sounds like you do. Yeah, well, and especially with my son now being in his first year at university, he, by the way, is at business school. So yay, he's going to break the cycle. Um, yeah, exactly. And then he can just take care of me and pay for all my ski stuff. Um, but no, with him being at university, that frees me up quite a bit. And I think just knowing that I'm in a different place now than I was during these last few years, and that I can now set what I want that

side hustle to look like. I don't have to react as much as I can design. So I'm going to look at it in that, in those terms and see what it can do for me. I think that we jump on this momentum. Are you on sites like ZipRecruiter or Upwork or any of those types of sites? Did you post anything on LinkedIn saying that you were available? No, I have not done any. Or like Backstage or there's a bunch of different entertainment specific websites. I know that Canada, you'll forget more than I will know about casting in Canada, but also offers some incentives, right? So potentially, you know, production companies who are looking from the States or elsewhere online would, you know, be able to find you,

but only if you posted about it. Yeah. Only if you, you know, put yourself out there in that way. Yeah, this is all excellent. And this is one of the things that nobody tells we lay people. So we hear the you have to pay yourself first all the time. And it's essentially like 10% of whatever you make, you should be putting aside to pay yourself first before you do anything else. When your essentials are taking up such a large percentage of your take home, you really don't have the 10% to put aside.

And when you do, you always tap into it when these other little extra things come up. That's where it feels like a secret world that people don't let you into. So what you just told me is like gold. And so this is the type of thing I'm going to start really learning about and really delving into. And this will change my life. For today's tip, you can take straight to the bank. If you have a skill that could become a side hustle, cast a net online and see what you catch.

Putting yourself, your boss bitch business self, of course, out there doesn't have to mean you're committing to the side hustle grind. Instead, you can view it as testing the waters to see what sort of interest there is for your skill or product. From there, you can decide to pursue it or not. But one thing is for sure, you will never get a bite if you don't just cast that net. Money Rehab is a production of iHeartRadio. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team Michelle Lanz for her development work, Catherine Law for her production and writing magic,

and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.