Money Rehab with Nicole Lapin - Listener Intervention: "How Much Should I Put Into Long Term Savings?"

Episode Date: April 7, 2021

In Money Rehab's first Listener Intervention, Nicole answers questions about how much to put into long term savings, guilt over receiving an inheritance, and when to spend on home renovations.    Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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You think the whole world revolves around you and your money. Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. Today we have our first listener intervention. And listener interventions are really what this show is all about. I have said it before and I will say it again. I didn't get to where I am today, living paycheck to paycheck to being the self-professed rich bitch that I am by doing everything right.

In fact, I have made a ton of mistakes, and now I'm here to make sure that you don't make the same mistakes I did. I went through a long money rehab myself. It wasn't called that back then. I just made it up as I went. It was a long road to recovery. And I want to make sure that your road is shorter and more comfy cozy than mine was. So Nina, welcome to Money Rehab. Hi. Hi, Nicole. So I saw you in real life when we saw humans in real life. Yeah. I think it was 2019 when you had your money party. I think every party should be a money party, but if I were in charge of the world, that would be the case. But when you went to the money party, what were your main concerns and what were your main questions at that point?

So my main concern was my debt at that time. I had a huge debt monkey. It was just unbearable. And I was at the point where I was just working to pay off debt. And it was just so huge at that point too, that there was like a lot of shame around it. That was pay off debt. And it was just so huge at that point too, that there was like a lot of shame around it. That was my main concern. And a lot has happened since then, actually. I can't wait to hear. One thing I just have to like, thank you is becoming superwoman was a game changer for me. Like I'm not trying to like flatter you, but for real, I I've dealt with mental health issues my whole life and I wasn't ready to deal with them. I always thought it was like a weakness thing. Like on lunch breaks, I work in Philly. I've dealt with mental health issues my whole life and I wasn't ready to deal with them. I always thought it was like a weakness thing. Like on lunch breaks, I work in Philly, I would go to

a park, just listen to the audio book. It's like you open the gate and then all of a sudden I started, you know, hearing everybody's story. So I really appreciate it. I'm so glad it resonates. I mean, it was something that I really struggled with talking about because I felt shame myself. And I was dealing with mental health issues and trying to climb out of that. And I was like, this is the only authentic thing that I could actually talk about. And I think people can tell if you're being honest. Mindset has everything to do with career and money. Like nothing else actually matters if you don't have that foundation. I know you have an important money question and I want to hear it. I know everybody else does, but I also want to hear where you're at now. You know, the pandemic has been

crazy, but I've spent so much time like working on myself. And I, I said to my therapist the other day, I'm like, I'm like, I'm actually really happy. I'm just really grateful. So I don't know how to like express it other than just, I hope you know that it means a lot. Oh my God. Wow. I think that these are the last two real taboos we have in society. It's money and mental health. Yes.

Strangely enough, like talking about mental health was a little bit easier than money. And then the money conversations are coming up now. I think that money actually has everything to do with mindset. So I think you tackled it in the exact right order. I never realized how much money affected my mindset. I think I've always just trying to be like, I can deal with it. Like my school background is like finance and marketing, but I'm like, I know how to like move things around and I can figure this out. But it's almost like when people lie a lot and then they can't keep track of lies. I wasn't lying to anybody,

but just like myself. And then I was just like, I can't do it anymore. It's just so hard. And then that's not the only thing that happens in life. Like, you know, I had family issues and stuff too. And of course all the things happen at one time. I just, I couldn't do it anymore. And then it was like affecting my relationship. And like, I've only been married for five years and I didn't want it to be like, you know, something that's gonna ruin the rest of my life because I'm just, I couldn't get help. So anyway, I started doing like payoff programs and stuff, like very aggressive things. And it scared the crap out of me. The craziest thing that happened last year was that, um, unfortunately we had a death in the family. It was my husband's aunt, but she left money to us and we had no idea she had like stage four cancer and like she knew she was gonna

go kind of quickly so she just like set everybody up and I really struggled with that and it's so weird because like you know I've had these struggles with money for forever and I'm you know sometimes like at my most desperate I'd be like I just wish like you know money would fall from the sky or something and then it just seemed like that happened. And I was like, Oh God, no, this is not what I meant. Like, and I felt like really guilty, really sad. I mean, it had nothing to do with me, but you know, like all these things I was like, what, what is happening? Like, and that ended up being like a three month, like mental struggle for me, which was so weird, but I was able to pay off all my debt. So that was wild. And you struggled because you felt like you didn't deserve it or it wasn't yours. Yeah. And that like, I felt like if I took a penny, then like, I don't know, then it was my

fault, just like crazy stuff. So I, I mean, I had to talk it out because I knew that I never would have fixed anything. But again, I've never seen like that much money in a bank account that belongs to me that had my name on it before. I've been struggling with debt for over 10 years. So that's all I've known as being a grown up. I mean, I'm used to like, oh my God, I have a hundred dollars left and it's like Thursday. Am I going to make it to Friday? That kind of thing to like actually having a couple thousand dollars in a bank. And to me, that's rich people stuff. That's not me. So what do you mean? That's not you. What do you mean? That's rich people stuff. And why are you not rich people? Maybe you're just pre-rich right now. I was like very, you know, warped thing that it was going to take 25 to forever for me to

pay off my debt just because it just like would never go away. And it was just like really bringing me down. So now my questions are exciting questions, which is what I wanted to ask you is, you know, I'm saving and I'm starting to put more money in like my 401k and I bought a house. So now I'm just like, what do I do now? You know, I have a finance background and then my husband works in sales and we both grew up different, differently with money. Like he was just like pay everything with cash. And I was, I didn't learn the best things. So we always feel like we're one of us is right. And it's because of our experiences. So like my question was, how do you decide between saving like for an emergency versus upgrade a bathroom so that we can enjoy it now?

And then maybe in like three to five years, we sell our house and, you know, we get a little bit more from it. And if we fix it now, then we won't have to do so much. I think that those are really, really good questions and ones that people have a lot when it comes to short-term versus long-term savings. It's really important to clearly outline what your savings goals are. And generally speaking, oh, this is going to be a pop quiz. What percentage of your spending plan goes to the end game? 15%. That's my girl. That's who I taught. That's my rich bitch. Yes. So ideally at least 15% of your overall spending plan or overall take home pay. So after taxes goes to your future self, the future Nina, when you have 15% going to your future self, the future Nina. When you have 15% going to your future self,

you want to break that down based on goals. And so you want to connect the dots with the Fs that I talk about, family, finance. A plus. First, understand what those goals are. I like to break them down into one, three, five, seven, 10-year goals. Second, decide how much flexibility you have around those goals. And so you want to divide what your goals are based on duration. You know, I recently had somebody say, I want to put a new roof on my house. I'm freaking out. I'm like, how do I pay for the roof?

Similar to what you said. How do I pay for the roof? How do I pay for the emergency fund and the 401k and like all of life? Not thinking you're going to live forever and not thinking you're going to die tomorrow is how you save, right? Because you don't want to deprive yourself, but you also don't want to blow everything because your future self is going to be really pissed off. So I think that's the sweet spot. And when you have overwhelming ideas, breaking those down into little chunks, like we did with our goals is much more manageable. So if you say, okay, well, let's think about this. When do we actually want this roof? You want a $10,000 roof in 10 years. Okay. So that is $1,000 a year. Coming up with $10,000 is more overwhelming and much less likely to actually happen than

coming up with $1,000 and planning for it and figuring out how to break that down. And third, figure out the right optimal amount that you need to satisfy those goals and what vehicle would make most sense for that. So what ends up being your year one goals, that goes into a different account than the stuff that you guys are saving for long-term. So the year one stuff, that should be in like an online savings account. And then from there, you can have other accounts for the midterm, like the next three to 10 years. You could look into CDs that offer a little bit more interest.

Not much right now, but a little bit more. Or money market accounts, or short-term bond funds, or treasury bonds. So bonds are basically debt from other people, whether it's the government or businesses. If they need to do something, they issue a bond in order to pay for that. And so when you buy that bond, you are helping them finance whatever they need to do for the promise that they're going to return that principal and then some after a certain period of time.

They're less flexible though. So that's the thing that you're giving up. You're giving up some of the accessibility to it for more return. And so you don't want to have like your emergency fund locked up in bonds. You're not going to put your emergency fund into the stock market, but you would put your long-term goals into the stock market because you're not going to care if it's fluctuating like crazy. You're not going to need a value when you look at business news because you know that this is a long-term thing. Yeah. That you're not going to be taking it out.

So like exchange-traded funds, you know, those corporate bonds that we talked about that offer more of a return. you know, those corporate bonds that we talked about that offer more of a return. Those would be great options for goals that you have later on that will ultimately give you more return, but you're not going to want to touch that. Does that make sense to you when it comes to some of your home renovations? Like think about what that timeline is. Yeah. I think my struggle is to create a timeline. Like I'm just like, I want to do it right now. I'm also learning patience, which is like not in my DNA. It's not in mine either. And patience, I think are for doctors.

But like you can't do all the things right now. And that's okay. I want you to just prioritize what you want to do first. Just think about it. And maybe you can do all the things, but more likely than not, you can't. And that's okay. And you just want to see what's the most important. It's like sitting down with your significant other and you want to just look ahead and again, come up with that timeline together. Maybe there's a tax bill looming in your future. You know, maybe you want to buy a

house or another house or a beach house or whatever. Maybe you want to renovate more. Like maybe you want to have babies. Maybe you want to have fur babies. Maybe you have medical expenses or maybe you want new toys or adventures or vacations. Like maybe you want a car or you're dying to go to Paris or, you know, whatever it is, like all these dreams are amazing, but dreams have price tags. And so a dream without a plan is just a wish and wishes are awesome, but they don't take you to Paris and get a croissant, right? But what does is a little bit of planning and breaking how much that costs down into baby steps and setting it up automatically so you can actually achieve those goals. So now like I can have a conversation about money with my husband without crying, which was not a thing. It was always just so like, ah, because I felt so guilty all

the time. And I felt so much shame. And because the difficult conversation was always me. It was always me with the debt. I brought the debt into the relationship, but I had like a higher income. So I was like, I'm the breadwinner. So like I can, and then my partner would be like, yeah, but you never have any money because you just spend it all. And then I would keep things because I felt really guilty about it. And then I was just like, you know what? I have to forgive myself. I'm going to donate it. And hopefully someone can like take something with it and I just have to do better. Just recognizing that you had that problem, right? First step to any recovery is admitting you have a problem. The only ones you can't fix are the ones you don't admit you have. And once you can forgive your are the ones you don't admit you have.

And once you can forgive your former self, you know, that alleviates so much of the guilt and so much of the shame. Whatever is that narrative in your head, whatever that go-to best hit is, we all have it. I still have one. My best hit of the mean girl living inside my head, she's a pop star who sings to me about being broke, alone, and homeless and dying in the gutter. I have to tell that bitch to sit down and take several seats. But she's still there.

But I know she's there. And I know that that's my fear. And that's what happens when you're continuing to learn and grow because we all continue to learn and grow. And so that's why step one comes before step two and step two comes before step three. And that's how a step program works.

And I think that you can take baby steps to the finish line and still get there. It takes a minute. Like it doesn't happen overnight. You've got your debt taken care of. Please give yourself some more credit. You've done an awesome job and I'm really proud of you. I'm just grateful for like the road that I'm on and where I'm going.

So me too. I can't wait to meet you at whatever that destination is. Or along the way, we can grab a snack or coffee. Thank you. You're so lovely. Thank you for the advice too, Nicole. It's really helpful. For today's tip, you can take straight to the bank.

really helpful. For today's tip, you can take straight to the bank. Once you set a clear savings goal for yourself and you know what you want to use the money for and also how much you need, then put that money into the account that's going to work best for you. So if it's a long-term goal, then invest it cautiously and carefully, of course. If it's a midterm goal, then put that money in something like short-term bond funds. A huge thank you to Nina for coming on the show, sharing her story. If you want to come on the show for your own one-on-one intervention, then send me an email with your burning money question or conundrum or issue or whatever you want to talk about, moneyrehab at nicoolelappin.com. Thank you so much for listening, and I'll be right back with you

tomorrow for some more Money Rehab. But in the meantime, don't do anything with your money. I wouldn't do. Money Rehab is a production of iHeartMedia. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Catherine Law. Money Rehab is edited and engineered by Brandon Dickert with help from Josh Fisher. Executive producers are Mangesh Hatikader and Will Pearson. Huge thanks to the OG Money Rehab supervising producer, Michelle Lanz, for her pre-production and development work. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.