Financial Feminist - 117. Questions to Ask Before Making Big Financial Decisions

Episode Date: September 28, 2023

In this episode of Financial Feminist, host and financial educator Tori Dunlap walks you through how to emotionally and financially prepare to make big financial decisions. She shares the questions you should ask yourself before making them and emphasizes that everyone’s personal finance journey is unique, and there are no one-size-fits-all solutions. And for a special treat, you’ll also get to hear a financial win from a member of our Financial Feminist community! Read transcripts, learn more about our guests and sponsors, and get more resources at https://herfirst100k.com/start-here-financial-feminist-podcast  Not sure where to start on your financial journey? Take our FREE money personality quiz! https://herfirst100k.com/quiz Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hi, financial feminists. Welcome to the show. We are doing a fun little episode today, a fun solo episode all about how to emotionally and financially prepare to make big financial decisions and basically what questions to ask yourself before you make big said financial decision. If you're new here, my name is Tori. I am the host of the show. I'm a New York Times bestselling author of a book by the same name available wherever you get your books. And we fight the patriarchy by making you rich. We teach you how to save money, how to pay off debt, how to start investing, how to grow a business if you want. But how to just be a better, more rounded person so that you can use money as a tool to not only better your life, but better the world and your communities.

And if you're an oldie but a goodie, of course, welcome back. Right off the jump, right at the gate, we're going to listen to a great win from our community to hopefully hype yourself up. And then we'll get into the rest of the episode. This is from a lovely community member. Hey, Tori and team. I just wanted to thank you so much for all that you do. I've been digesting a lot of Financial Feminist. I not only have the audio book that I listened to like four times driving to and from different states, but also the physical copy of the book.

Within the last year, I've actually been able to pay down $15,000 of my debts and I still have a way to go, but I see a light at the end of the tunnel. So thank you all for all that you do. Congratulations, first of all. I love the sense of hope that you have. It's so important. And it sounds like you've become really comfortable with the mindset that we always say for paying off debt and for progressing financially, which is progress over perfection. So congratulations. I love that you have paired Financial Feminist, the podcast with a little side of not only Financial Feminist, the audio book, but Financial Feminist, the

physical book too. It's like, it likes nice little steak and meat and potatoes. It's like a whole combo meal. So thank you so much for your support of our work and congratulations. We're cheering you on. That's so exciting. All right. In the spirit of our community member, let's talk about how to make some big financial decisions and all of the things we need to consider and think about when we're about to make that decision. Off the top, as you know, if you've listened to this podcast before, as you know, if you've read my book before, I want to first say that personal finance is personal. Everybody's different. Everybody has a different life. Everybody approaches situations differently. There's some of these questions or some of these life events that we're going to describe today that

you might not ever have to ask yourself. You might not want to ask yourself because this is just not about you or about your life. And ultimately, although I can give you a ton of guidance and I think good advice, you are your own best judge of what sort of prep you need to do, what your life needs to look like in order to make you happy and content. We also understand that making big financial decisions and even smaller financial decisions can feel hella fucking overwhelming. Very overwhelming, very scary. So just know that the fact that you're brave enough to even consider these decisions at all is a massive win. And there is no one size fits all when it comes to your financial situation.

So again, first of all, this is your life. You get to decide how you want to live it and what matters to you. Just because someone else is buying a house doesn't mean you have to. Just because your parents told you to buy a house at 22, Tori Dunlap, that was me, doesn't mean you have to. Listen to previous episodes if you want the whole backstory on that. The second one is that you don't know anyone but yourself and maybe a partner, any explanations as to why you're choosing the path that you're choosing. You don't owe anybody shit. You don't need to justify your choices. You don't need to even justify them to yourself. If this feels right for you, and as long as it's not deeply hurting anybody else or yourself, this is the decision

that's right for you, even if other people don't get it. All right. Number three is that capitalism exists because of course it does. And capitalism constantly inundates you with these feelings of, I'm not enough. I'm not doing enough. I'm not progressing at the pace that I should. And just remember that oftentimes what you're experiencing or what you're looking at is not the full story, right? That person in their early twenties who's buying their first apartment, the lavish vacation, the crazy wedding, the quitting their job to start a business, all of these things, you don't know what's going on in their life. Just like they don't know what's going on with yours. They could be getting financial support from their families

They could be getting that lavish vacation comped like who knows so This feeling that you're not enough one that's bullshit and two We need to not judge other people and judge their choices just like we hope that others aren't judging us And finally a good reminder You are also the person who has to live with your choices. This is not to sound like ominous or scary, but your life is yours. You have to live with your choices. You have to make sure that you feel all of that pleasure and joy and ease. And like you're actually making choices that align with your values and align with the life that you want to live. So what has been a resounding theme on this show for the past year or so, if you are living a life that causes you to rethink all of your choices when your head hits

the pillow at night, I would encourage you to investigate that further. Let's talk about some of the big common financial decisions and how we might weigh them out. First, before we get into any of these decisions, we need to talk about Personal Finance 101. True 101. And that is making sure you have an emergency fund before anything else. I tattoo this on my forehead. We say it in almost every fucking episode we do.

It's also all over in my book, all over in our work. Regardless of how much debt you have, regardless of anything you want to do in life, regardless of how you want to spend your money, I need you to make sure you have an emergency fund first. This emergency fund should be at least three months of living expenses

and it should live in a high yield savings account, an HYSA. For our recommended high yield savings account, you can go to herfirst100k.com slash tools. Took me less than five minutes to sign up. There's no fees, no minimums. It's FDIC insured. This is where all of your short-term savings should live is a high yield savings account. And if you don't have one, you are losing out on a bunch of money in interest.

So as a reminder, before we get into any of the rest of this, you need an emergency fund first, and that emergency fund should live in an HYSA. Okay, first question. Should I take out student loans? I am looking to get my bachelor's degree, maybe an advanced, more advanced degree than that, and I'm wondering, should I take out loans in order to do so? We're going to run through the questions to ask yourself. Can I work in the field I want without a degree or with an alternate certification? Can I work at a company that offers tuition support like a Target or a Starbucks? Boeing here in Seattle also does that. Is there a state school or even a community college track that would be more affordable and offer better financial aid? Our lovely podcast producer Kristen lives in Tennessee

and Tennessee offers free community college to residents with some stipulations. So three good questions to ask yourself. Can I work in the field I want to or that I'm interested in without a degree or with an alternate certification? Can I work at a company that offers tuition support? And is a state school or even a community college going to be more affordable and offer me better financial aid? I also want to add a question that I asked one of our team members who has since moved on, but was one of the original team members at Her First 100K, Olivia. And I remember Olivia came to me before she was working at Her First 100K and she asked me,

should I finish my college degree? She had like started doing some work for us and was still in college and had kind of become disenchanted with the college experience. And she was trying to figure out, should I just quit or do I need to finish? The question that I asked her to ask herself was thinking not just about her in the next three to five years, but also her long-term career. She knew what she wanted to be doing. She was already starting to do it, which was marketing and content creation. And you don't really need a degree for that. But I asked her if she would regret not getting a degree as she progressed through her career, if it meant that she couldn't get a job without it. I think oftentimes we, of course,

only know what's in front of us and we can only make decisions based on what is in front of us. But also zooming out and asking ourselves, well, we're probably likely to change. We're probably likely to be different people as we continue to grow. Is a college degree something I want in my back pocket as I grow and change and potentially want something different? So this is also a good question to ask yourself. Basically, am I going to regret not getting a degree? Now, of course, the other question is, am I going to regret taking out student loans? So if loans are the only option, I need you to make sure you understand the loan terms. We've discussed this before in previous episodes, but are the student loans private,

meaning they're through a private institution? Are they public, meaning they're federal loans, or are they some sort of a mix? A reminder that private loans can be refinanced in the future, and some public loans are available for student loan forgiveness if that actually ends up passing. Another question to ask yourself is, what loan forgiveness programs might exist in my chosen field. And I want to just go back to the top. Is there anything I can do to

help lessen the burden and impact of my loans? Can I seek out scholarships? Can I work on campus? Can I think more strategically about graduation? I have a lot of friends who graduated a semester or sometimes even a full year earlier, and that ended up working out for them. They paid less in tuition and they ended up being able to balance all of the things that came with that. So asking yourself, okay, is there any way I can lessen the burden of these loans is going to be really important. We have many previous episodes about student loans, including one about the student loan repayment pause being lifted, about how to pay off debt. We will link all of those in the show notes. You can also just scroll

back on your podcast platform of choice and find those. All right. Big financial decision number two is should I buy a house or should I rent? Some follow-up questions. As you might know if you followed the show for a while, I am a millionaire who rents. I have discussed this on previous episodes with fellow millionaire and finance expert Ramit Sethi. We talked about how we both choose to rent. I also have an entire solo episode about how not buying a house was one of the best decisions I've ever made. So when we're asking ourselves, should I buy a house or should I rent? A couple of follow-up questions. Am I planning to live in the area for several years? Do I have the money to put not only a down payment and potentially PMI, which is private mortgage insurance, if you don't have that 20% down payment, do I also have the money for closing costs?

And do I have an emergency fund left over when all of that is said and done? In that vein, can I not only afford the mortgage, which many people cite is typically cheaper than rent, but not just the mortgage, but also the insurance, the repairs, the property taxes, the utilities. And am I even emotionally and physically ready to manage that? Do I live in a high cost of living area or a low cost of living area? And if I can only purchase a property in a lower cost of living area, but my friends, my social life, my work, where I hang out a lot are not in that low cost of living area, am I willing to sacrifice or at least have to adjust my life to not have those things anymore or to have less of those things? One of the other questions to ask yourself is, can I house hack? Can I get roommates to help pay the mortgage and pay for part of it? Can I

not only buy a house, but maybe buy a duplex or buy a house with a separate entrance, like in a basement or like a mother-in-law unit? Can I subsidize the rent? And do I even need to do that? And will buying a house help or hinder my other financial goals? As I have expressed before, buying a house at this point in my life is not the right decision for me because I travel a lot, because I am not very handy around the house, and because I like the flexibility of renting. And as I'm progressing in my financial goals,

meaning that I am focusing a lot on growing her first $100K and growing my investments, it might not make sense to liquidate a bunch of those investments so that I can purchase property. Now, that will likely change. I almost know for a fact that that will change. But at this season in my life, that's what feels good right now.

Again, I've expressed in many other episodes all of the other reasons why I'm not purchasing a house, including but not limited to, I live in Seattle where it's really expensive. It's just emotionally difficult for me to justify spending a million dollars for a three-bedroom house. All of that is in previous episodes. But some really good questions to ask yourself on if I should buy a house or if I should continue to rent.

All right. One of the other big financial decisions that we get asked about a lot is, should I combine my finances with a partner? This is one of the ones that I'm just going to give you an answer. The answer should never be 100%. If you are 100% combining finances with your partner, that is a big financial no-no. It's one of the only hard and fast rules that I have. Usually, I'm like, personal finance is personal. And that's true. But the big thing I say is you should not 100% combine your finances with your partner. We just have seen countless women, especially, get in relationships that they can't leave because they don't have their own money. We have also just seen fights and arguments break out

because when you're making decisions with two people, it's just harder, right? And if you have some of your own separate money, it's easier to make decisions about your money and how you want to spend it and where you want to put it. And I think people always need a little bit of their own money. It doesn't have to be a year's worth of salary, but it can just be enough money where you can make decisions for yourself, both in these more serious situations, but also in these situations that's just like, like my dad wants to play poker. Like he plays poker with his buddies and he buys golf clubs. That's not purchases that he and my mom talk about with each other. They don't need to.

And my mom has her scrapbooking money. And that way they have their own hobbies and they can spend money how they want without having to like counsel the other person and make it a huge thing. and they can spend money how they want without having to like counsel the other person and make it a huge thing. So let's ask ourselves a few follow-ups. One, are they willing to sign a prenup? We talked with Melissa Jean-Baptiste about this, about prenups and about how prenup is a dirty word and it doesn't need to be. Please go listen to that episode. But are they willing to sign a prenup? Are they willing to even talk about a prenuptial agreement? And as we mentioned in that episode with Melissa, every single state has a prenup.

When you get married, you are actually signing a prenup. It's just a prenup that has been dictated for you by the state. A reminder that you don't have to completely combine your finances. You don't have to put it all in one pot. You can have a checking account

that's just for you, a checking account that's just for your partner, and then an account for shared expenses. This is what I typically recommend. You can also split finances by income or by expense. And it's just really important to have good communication and to set clear boundaries. I will also say that if you are not in a legally binding agreement with your partner, meaning marriage, civil union, some sort of partnership like that, and you combine your finances, you need to make your own written agreement. You need to make your own written agreement about if you separate, if something happens, you are protected and your partner is also protected. Like again,

I wouldn't go into a business relationship with somebody and start pooling our money and not have a written agreement about whose money's whose, how the contribution happens. We don't like thinking of marriage or partnership as a legal contract, romantic partnership as a legal contract. It 100% is. And we've seen enough Judge Judy episodes to know that a lot of the money that gets quote-unquote loaned out does not get repaid. So if you are going to combine finances, make sure you have a legal document in place that outlines that. And if you do not feel like you can have a productive conversation about finances with your partner, hot take, you need to break up. Or you need to start working on that with each other.

Finances are the number one cause for divorce, number one cause for separation. If you don't feel like you have a partner who is willing to have hard conversations, including but not limited to money, sexual pleasure, what constitutes cheating. Now I'm just on a rant. But if you can't have these conversations with your partner, it's not going to go well. It's not going to go well can't have these conversations with your partner It's not going to go. Well, it's not going to go well, so Start having conversations with your partner about money. We've talked about this before on the show And if you're wondering if I should combine my finances Please make sure you have some sort of legal document outlining what this actually looks like

All right. Finally our final big question Of course, there are many more if you'd like us to do part two Let us know but one of the big questions that I get asked and that we get asked to her for Center K is, can I quit my job? Should I quit my job? When can I fucking quit my job? Follow-up questions. One, do you have that emergency fund? And do you feel like it's enough to be able to support you while you either go for entrepreneurship or you find something else, you find another job? And while you look for a new opportunity, can you pad it further?

Can you add more to the emergency fund? This is also, again, a perfect plug for a high-yield savings account because your high-yield savings account is going to help you beef up that emergency fund without you doing anything. So if you want to quit your job someday, get a high-yield savings account.

If you want to not be stuck in a situation long-term, get a high-yield savings account. Some of the signs it's time to quit your job someday, get a high yield savings account. If you want to not be stuck in a situation long term, get a high yield savings account. Some of the signs it's time to leave your job. Your boss is toxic, does not support your growth, does not advocate for you, does not check in with you, and you don't see any chance of that really changing. It might be time to leave if you're just not being challenged. If, again, you don't find that there's any room for growth, if you don't see a future at this organization, and if you don't feel like you can buy in anymore to not only the company, but to your own growth. If your compensation is way below industry standards and it's not going to change, meaning you have actually asked for a raise.

You have asked for compensation and they have told you no. And they've maybe given you a bullshit answer for no. Then it's probably time to move on or at least start looking. And maybe you're just ready. Maybe you've known for a while that this is not something that lights you up and you're just ready for a career change. that this is not something that lights you up and you're just ready for a career change. I will also highlight a great follow-up episode to listen to if you are thinking about a career change.

And that is the episode about a good enough job with Simone. We will also link it in the show notes about our relationships with work and about becoming disillusioned with work and about what we can do about it. If you're wondering if you should quit your job, the biggest thing to always ask yourself is beyond just that ecstatic feeling you're going to feel the next day or even the

moment after where you're like, yeah, I mentally told him to fuck off and I gave my two weeks notice. Are you going to regret that decision? There's this beautiful moment in the office, if you all have seen it, where Michael quits his job to start his own paper company, but he has no idea what the hell he's doing. And then Pam follows him. Pam quits her job, her stable job at Dunder Mifflin in this kind of rush because she realizes after trying to put a copy machine together or a copier that she's just not happy. that she's just not happy and you see her so excited and then she leaves with Michael walking down the street and you can see this moment where they're both just like holy shit what have we done if you feel like you will have a holy shit what have you done moment that lasts for a long time don't quit your job at least not yet and I will also say if we're keeping with the office and you just quit your job but you have a fiancee counsel your fiance before you quit your job. This is one of the things that always drove me

crazy about that episode is she never does anything impulsive, does this very impulsive thing. Jim's very supportive, which we love, but like she does not have a conversation with him about it. She just does it. So have conversations with somebody else in your life if you are managing money with them before you make one of these huge decisions. Don't go buy a car. Or literally, Jim does this a season later as he buys a house. He buys his parents' house. I'm on an office rant.

He buys his parents' house and does not counsel Pam. It drives me insane. If you're managing money with somebody in your life, talk to them before you make a big life decision. Okay, that was a quick rundown of a lot of the big financial decisions that you might be faced with and some of the things to ask yourself before you make said decision. If you want a part two, feel free to comment down below some of the questions we may have missed. This is also, again, a good episode as a jumping off point. We have a huge back catalog with everything from

how to know when it's the right time to quit your job and be a full-time entrepreneur, how to know if it's the right move to buy a house, how to know if I should take on student loans, and if so, what does that mean? So please feel free to revisit the back catalog. It's there for a reason. We so appreciate you being here, and we love that you're asking these questions of yourself because it means you're leveling up your life and we fucking love it. So thanks for being here. I hope you have a great week and we'll talk to you soon. Thank you for listening to Financial Feminist, a Her First 100K podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristen Fields,

associate producer Tamisha Grant, marketing and administration by Karina Patel. Sophia Cohen. Khalil Dumas. Elizabeth McCumber. Beth Bowen. Amanda Lefeu. Masha Bakhmikieva. Kaylin Sprinkle.

Sumaya Molokario. And Harvey Carlson. Research by Arielle Johnson. Audio engineering by Alyssa Medcalf. Promotional graphics by Mary Stratton. Photography by Sarah Wolf. And theme music by Jonah Cohen Sound. A huge thanks to the entire Her First 100K team and community for supporting the show.

For more information about Financial Feminist, Her First 100K, our guests, and episode show notes, visit financialfeministpodcast.com.