HerMoney Podcast Episode 220: How Our Shopping And Spending Habits Are Changing 

Jean Chatzky: (00:51)
Hey everybody. It’s Jean Chatzky. Thank you so much for being with me today on HerMoney. I suspect that most of you are listening to me from home. Although maybe some of you are out on a walk or maybe you’re even going somewhere in your car. I have to say, the tank of gas that I have been on has been in my car, I think for over a month. That is how few places I’ve actually gone. And it’s just a reminder of how much our collective habits have changed seemingly overnight. I mean, a few weeks ago, you may have seen the headlines proclaiming things like Americans are shopping for groceries, like it’s 1996. But in a world that seemed to thrive on deliveries from Uber Eats and thrive on business done in actual restaurants, it’s true. In March, 63% of food and drink purchased by consumers were purchased at grocery stores. That is the highest that it’s been in a quarter of a century. And it’s not just food shopping that has evolved. In April, global online sales for merchandise of all kinds were up 209% over last year. So, although we all have many, many questions about the overall economic impact of this pandemic, it’s clear that a lot of our shopping habits and our spending habits have been changed, and quite possibly for good. To help us dig into this topic and figure out what coronavirus means for how all of us will actually spend our money in the future, we’re happy to have Dan Frommer with us today. Dan is the Founder and Editor-in-Chief of The New Consumer, which is a publication devoted to how and why people spend, not just their money, but spend their time, which is a topic that our regular listeners know that we just love exploring. Like me, Dan is based in New York. He is joining us remotely today. Hey Dan, thanks so much for being here.

Dan Frommer: (03:11)
My pleasure. Thanks for having me.

Jean Chatzky: (03:13)
A little bit about The New Consumer. I’ve got to say, I happened upon it on Twitter I think. I read a story or a tweet about your story about Alison Roman, which we can certainly talk about a little bit. But I was really fascinated to see that this publication, not just to money, but money in relation to time, existed. I was very happy to find it.

Dan Frommer: (03:42)
Thanks. Yeah, I started it a little over a year ago. My background is in business and technology journalism. I started my career at Forbes. I helped start Business Insider. My most recent job was at Vox Media where I was running a technology publication called Recode. And over my career, I’d seen technology profoundly change the way that a lot of things worked. The way that we get entertainment, it used to be you’d put a DVD in the mail and now you just pull open your laptop. The way that we buy things, the places that we buy things from, and even the brands that are creating the things that we buy and how they’re selling them. Everything has changed so much. And I thought that was really fascinating and I wanted to kind of devote the next phase of my career into covering that story. So I started this publication again a little over a year ago. It’s this new breed of kind of professional newsletter publications. That’s mostly how people read it. It’s a lot of CEOs and venture capitalists and investors who are in that intersection of retail and consumer brands and technology are my paying subscribers. And then I also publish some free stories here and there to kind of get the word out. And also, especially when there’s let’s say an interview with someone who’s very interesting and well known, usually I’ll make those free so that as many people as possible can kind of get access to that information.

Jean Chatzky: (05:13)
Thus my ability to read that Alison Roman story when I was not a paying subscriber. But I will happily look into joining your paid ranks because I think this is an important topic for me to keep up on. When I introduced the show, I gave a very brief rundown of how the pandemic has changed our shopping and our spending habits, but you’re in it. So what are you seeing?

Dan Frommer: (05:36)
I mean, the biggest shift is that the shift toward e-commerce has really accelerated a lot. And that’s kind of, to zoom out a little bit, that’s what people are saying about a lot of industries. What people are saying basically is that a switch flipped and we skipped 15 years into the future. That’s maybe overstating it in some ways, and I guess the biggest question about all of these things that we’ll talk about is how much of this is permanent and how much of this will shift back fairly quickly once retail stores are open, once people feel comfortable going out traveling again. To answer your question, the biggest shift has been that a lot of commerce that was happening in person is now happening digitally. Even in mid may, something like 90% of retail foot traffic was down year over year. So, in many cases, you simply couldn’t do the sort of purchasing and commerce that you were doing in person this year. So, a lot of that is happening online and then it’s been heavily pronounced in certain categories. Grocery is a great example of that. For many years, actually, Amazon kind of famously struggled to get people to buy groceries online. They had a lot of different projects that they had tried and, you know, it was working a little bit depends on the category. But probably less than 20% of groceries were being purchased online. And now you have a situation where people either don’t feel comfortable going to the store, there’s a long, long line outside the store, lots of different reasons for different people. But now, everyone’s ordering groceries online. It’s been a huge thing for online grocery. You see companies like Instacart, which works with, they say more than half of the grocery stores in the U S and Canada saying, we have to hire 400,000 people because the demand is so great. You see people developing these Chrome plugins to refresh the Amazon prime now check out, so that the minute a spot is open, it alerts you. Hey, there’s a spot open, you should grab it. It’s been kind of a really interesting time. And I would say that’s the biggest shift that we’ve seen so far is really this online. And then, obviously the restaurant industry, which has been totally decimated by the pandemic and the thing that really excites me there is how really creative and improvisational a lot of the restaurants have become. We now know many are selling groceries. Many have totally reinvented their business models to cater to this time, which I think has been really great.

Jean Chatzky: (08:16)
Yeah. I’ve been reading a lot of stories about how they’re selling kits to make your own sushi and make your own pizza and make all of these wonderful things that you didn’t think that you were capable of making before you were forced into this relationship again, with your kitchen that maybe you haven’t had for a very, very long time. I do want to talk about what you think will be permanent versus just a blip, because as you were talking about grocery shopping, I actually came to online grocery shopping like a decade ago. For me, once I hit upon the fact that I could order from Peapod, which hasn’t done particularly well in the pandemic, I was just in awe because it was a time saver for me. It was an errand that I just didn’t have to run. And I could care less about the fact that occasionally I would get hard avocados. It was so worth it to me. But there are other types of shopping that I’m not sure about. Like my husband makes fun of me when I’m in a clothing store because I like to touch everything. I’m one of those people. I walk through the store and I just touch, touch, touch, touch, touch. And I’ve read a lot of behavioral research that says, well, that makes me really inclined to buy, because if you’re a toucher, once you try it on the chances that you actually take it home are much, much greater. So I’m wondering where you think the line is.

Dan Frommer: (09:43)
That’s a great point. And just an anecdote. I did something as an experiment last week for my job, but also I thought it would be really interesting. I did a virtual appointment with a clothing retailer over FaceTime. And it was something that they had sent an email message out saying, hey, this is a chain called APC, which was started in Paris, but now is in New York and LA and in a lot of major cities around the world. And they had sent an email saying, hey, our stores are still closed, but we’re starting to do these virtual appointments over the internet. And I immediately signed up for one. And then the next day, a gentleman who is one of their corporate managers was in their store on Melrose Place and FaceTiming me for a private tour of their collection. And, you know, talking about all the textiles and some styling tips and that sort of thing. And it was kind of interesting. I kind of liked it. I ended up buying two things that unfortunately I have to return because the fit. You can’t really try on things over the internet. And you’re totally right about the texture. So much of different forms of shopping, not just apparel, are about the touch and the feel. And so I think a lot of that is still lost. And then sizing as well. It’s still, as you know, every store, every size of everything is very different. There are some technology tools that may let you see, will this cabinet look good in my house? But it’s still hard to really tell, will these pants fit or not. And so we see different verticals doing differently. You know, home improvement, people have been ordering a lot online, but they’re also going to the store. Apparel, you can’t go to the store so some of that has been happening online as well. And then another shift I would say that’s been interesting is the shift from, and this is another thing I think that’s been accelerated by the pandemic, it’s this shift from the big historic storied brands that you would find in a big box retailer, to this kind of new wave of what many call themselves direct to consumer brands. And, you know, the first ones, we all know Harry’s and Warby Parker and Glossier, but you’d be surprised just how many there are in almost every category. And in fact, you go on Instagram and you click on an ad for one of them, and then all of a sudden you get an ad for all of them. So toilet paper is an interesting category. We’ve read all the articles about how the toilet paper shortages are because of a lot of different factors, including, no one’s at the office building or at a movie theater or a lot of places where they were pulling from a different supply chain. These direct to consumer toilet paper brands have been selling out of all their stock. And these direct to consumer soap and home cleaning product brands have been selling out. And it’s been really interesting to see this shift accelerate again to these brands that have a kind of different perspective on life. A lot of them are driven by a desire to be more sustainable and more environmentally friendly. Some of them just have really great creative and marketing and visual design. But that’s another shift that’s been really interesting to see.

Jean Chatzky: (13:01)
Again, I think, I mean, I look at my own experience during the pandemic and I think you’re right on, I mean, I have been coloring my own hair with Madison Reed. We had Amy Errett on the show maybe a year ago. I had met her on a panel. I thought she was fascinating. We had her on the show and at the time I was still going to the salon and getting my hair colored. And I was forced into doing it myself. I don’t think I’ll ever go back. I mean, it’s so much cheaper. I think my hair looks fine. I will go get a professional haircut. But the other thing that’s so appealing about these direct to consumer brands, I think, is that you feel closer to them in some way. And I don’t think it’s just because I know her. I ordered bathing suits from a small company called Andy and ordered bras and ordered… I mean it sounds like I’m shopping just for, you know, I want to actually dive into this to. The things that I’m shopping for are not the things that I would normally be shopping for. I mean, during the pandemic, I’ve bought underwear, I’ve bought socks, I’ve bought sheets and towels. It’s all nesting kind of stuff, which I wonder if you’re seeing with other people too. I mean, leggings, I know are the fashion item of the moment, but it’s more than that.

Dan Frommer: (14:30)
Absolutely. A few weeks ago I talked to a gentleman who runs a cashmere line and I don’t remember the exact percentage, but most of their business happens between November and February. And he said that, and this was in April, I think he said, well it still feels like the right now. People are buying different things. I think I read that sweatpants are doing really well, but dress pants are not really doing well. But maybe people are still buying a nice shirt here and there to wear on their zoom call. I’m sure it really depends on the category., But totally. Yeah. The nesting thing is real. I mean, we want our homes to be comfortable right now. It’s where we’re spending all of our time. We want them to be clean and safe. And so definitely ordering all kinds of stuff that you probably wouldn’t have, going back to that question of what’s permanent and what’s not, if people are going to be working from home for the foreseeable future, a lot of these kind of one-off purchases will become more repeat semi-permanent purchases. And I think a lot of the things that people are buying as a one-off now, we’re also buying a lot of puzzles. We’ve seen the trends of people buying junk food. I think that will taper off as people get more comfortable in this situation and realize that things aren’t really gonna shift dramatically back to the way they were before. And so we have to live a pretty healthy and comfortable life right now. And I think we’ll still see more of that nesting. We’ll see more home improvement purchases. We’ll see people who, we just canceled our trip. I was supposed to be in Wyoming right now. And so maybe that money back was just spent on a nice shelving unit instead of a fancy hotel.

Jean Chatzky: (16:19)
Exactly. Same here with many, many things. I want to dig a little bit into how we do this new kind of shopping well. But before I do that, let me just remind everybody that HerMoney is supported by Fidelity Investments. For more than 70 years, investors have relied on Fidelity Investments to help plan for their financial futures. And,. as always, when the unexpected happens, Fidelity’s there to help you work through it with financial planning and advice for what you need today and tomorrow helping to make it all clear. To see how Fidelity can help you and your family on the path forward, visit Fidelity.com. I am talking with Dan Frommer, Founder and Editor-in-Chief of The New Consumer. How do we find your publication?

Dan Frommer: (17:08)
Newconsumer.com. Also on Instagram and Twitter at NewConsumer.

Jean Chatzky: (17:13)
That is easy enough., As we’re trying to navigate this landscape with unemployment higher than it has been in decades and decades and people absolutely being careful about their finances, what are the strategies for doing it well?

Dan Frommer: (17:36)
Well, I think that this situation is definitely abnormal. And the key for all of this is, in general, the other thing I do is I also run a called points party, which is about credit card points and travel rewards and some elements of personal finance and loyalty. And the biggest of big picture ideas from that is, don’t spend more than you can. Don’t ever really spend more than you can afford to spend in order to get rewards for points or something like that. Don’t put yourself into a position of financial harm. There are points in life where we have to go into debt for one reason or another. To borrow for a home or for a major purchase or education for many people. And so my personal advice is always to just to live within your means.

Jean Chatzky: (18:38)
You’re preaching to the choir here.

Dan Frommer: (18:41)
Excellent. One of the great things about the internet is that it lets you, sometimes to the detriment of local retail, it really lets you compare products and pricing around the world. And there’s kind of an expert level game where you’re ordering stuff overseas because it’s cheaper to do that. Even if you have to pay more shipping, it’s cheaper because there’s no VAT If you’re buying a European thing or something like that. That’s not practical for most things, but here are great publications like The Wire Cutter, for example, which reviews technology items and also home items. And it was purchased by The New York Times a few years ago and it’s now operated by The New York Times. And it’s a great way to see, is this product that I’m being that I’m either being marketed or have found somehow, is this the best product? Is there something that’s going to be just as good, but a lot less expensive? Is there something that is going to cost a little more, but will last much, much longer? One of the things that I’m most curious right now is to see, we have this situation now where unemployment is very high, where people are going to have less disposable income. They’re also going to have fewer ways to spend their money. So, you travel is going to be kind of out of the question for many people for awhile. I’m very curious to see if people do end up buying more expensive things that are better and will last longer simply because they’re spending less money on other things. I think that will highly depend on everybody’s personal situation. It kind of always does. But I think it’s a great time for tools like Google shopping, which lets you see are these shorts on sale somewhere at a random store on the internet that I’ve never heard of.

Jean Chatzky: (20:30)
Uh huh.

Dan Frommer: (20:30)
Are they in stock somewhere that I’ve never heard of? There are a bunch of tools like that and also discovering new brands. And I think that’s still a real challenging thing. It’s hard to find new brands that you’ve never heard of that make a certain product, that’s possibly even tailor made for you. And a lot of that actually happens on Instagram. Instagram is such a visual medium and such a really interesting place where you can see products that either other people that you follow are using, or even just discover the brands themselves. You said that a lot of these direct to consumer brands you feel close to them. They’re such great storytellers. They really are so much better than most of the legacy brands at telling you who they are and how they think about the world and what they believe in and where their products come from and how they’re made and what they want. And I think that’s really interesting. So there’s some clumsiness to that discovery process. You know, Instagram is building out the shopping system. Facebook announced recently that they’re also going to try to make it easier for small businesses to put shops up on Facebook. It’s not a perfect system, but I think putting some time into researching products, brands, pricing, availability, is a great way to do business. Now,

Jean Chatzky: (21:50)
Do you think consumers now are feeling more inclined than before to buy things that they feel good about. Morally good about. Socially good about. Good for the planet. Good for the world. Supporting causes they believe in. Has that become more important in the past few months?

Dan Frommer: (22:12)
I think generationally, it is still very important. I think that in certain categories, one of the questions a friend asked at the beginning of this, in March, was are people going to still buy the natural cleaning products that are better for the environment and that might feel better to buy, or are they just buying the harshest stuff possible to kill those germs? And I thought that was a really wonderful question. The answer is they’re buying everything. People are still trying to buy Clorox wipes that are literally bleach wipes and bleach spray. And it’s been very interesting to see in New York City. I haven’t been out very much or very far, but I’ve noticed a lot of the kiosks, the booths under the subway tracks or on the street corner, that used to sell sunglasses and visors and hats, are now selling masks and Lysol. Just very interesting.

Jean Chatzky: (23:10)
Amazing how quickly they can morph, right? But I think you make a very, very good point. And it actually takes me back to where we started this conversation. This feeling about products. This feeling, and I think largely thanks to how quickly things spread through social media, we can turn on on people and products overnight. I mentioned that I discovered you because I happened upon an article that you had written an interview, that you had done with Alison Roman, who writes for Bon Appetite, The New York Times, very popular on Instagram and has some wonderful cookbooks that I use and love. And so I clicked and I read the story and it produced a big whirlwind involving comments that she made about Chrissy Tiegen and Marie Kondo and resulted in her taking a leap from The New York Times, many apologies later. What do you think about this whole circumstance individually, but also environment, that we’re living in?

Dan Frommer: (24:22)
Yeah. I’m not a big fan of cancel culture. You know, sometimes it’s applied correctly and sometimes it’s applied incorrectly. There was a very stressful situation. This is someone that I had been a huge fan of for a long time. I thought she did a few things really, really interestingly, including building a community on Instagram of people who were making her recipes and by reposting their Instagram stories. And it was such an interesting technique, which has since been copied by everybody. Who’s to know if she was the originator of it. But she certainly was the person in my universe who really used that as a community building technique. And I thought it’d be really interesting to have a conversation with her about what she wanted from her career, what you know, where someone with such great talent and personality and tastes, what they thought of as being the right path for her career and her business. And because it is such an interesting time. And again, I’m speaking as someone who does not work for a major publication, who started his own publication. So I’m very curious, always, how other talented people are thinking about that. It was stressful. It was certainly not the reaction that I had anticipated that morning. And a lot of it was displeasing to see. I feel bad that people were offended. I feel bad that people were angry about it. I feel bad that it turned out to be such a negative moment, kind of for everyone. It’s not funny, but it’s been a few weeks now, so I can laugh a little. And it’s just this time where the internet can make you very famous and just in a matter of minutes or hours, it can also take a lot of wind out of what you’re doing. And it’s reality. There’s no escaping it. There’s certainly far worse things. Yeah. It’s just been a fascinating learning experience and kind of spectacle to be observing and to be a small party to.

Jean Chatzky: (26:44)
Yeah. And I have to say, as somebody who has built a brand and has a brand to protect, it scared the hell out of me.

Dan Frommer: (26:51)
Yeah. I still think about it all the time. I see stories all the time. Recently The Times kind of made clear, I think this week, that she will be returning. So that’s good. And it’s hopefully a learning experience for people. I still find her to be a really incredible talent as a cookbook author and as a recipe creator and I think just a really, really interesting person. AndI really hope that the best is to come, and I think it is.

Jean Chatzky: (27:24)
And for you as well, thank you so much for doing this today. Again, we can find you at newconsumer.com. I think this landscape is just going to keep shifting and I hope we can talk to you again about how to deal with it.

Dan Frommer: (27:37)
Thanks so much for having me.

Jean Chatzky: (27:39)
Thank you. And we’ll be right back with Kathryn and your mailbag.

Jean Chatzky: (27:49)
HerMoney’s Kathryn Tuggle is with me now. Hey, Kathryn.

Kathryn Tuggle: (27:53)
Hey Jean.

Jean Chatzky: (27:53)
So how are you doing shopping-wise. I mean, I haven’t been shopping. I’ll just throw it out there. Aside from my hair color and a pair of really good scissors to cut Elliot’s hair, which I’ve now done three times and I’m getting really good at it.

Kathryn Tuggle: (28:09)
Wow. I’m impressed.

Jean Chatzky: (28:10)
I know. Well, his hair grows really fast. But fortunately it’s very sort of wavy, and it’s very forgiving. I’m sure that his barber, when he does eventually go back, is just going to be horrified. But it looks all right for right now. It looks fine. I haven’t been shopping at all. And then over the weekend I was sitting in bed and I had cleaned out every closet. Cause of course we’ve been home for long enough that I’ve cleaned out every closet. And I realize, okay, it is time for socks. It’s time for underwear. It’s time for bras. You know, it’s time for all those things that you just hate to buy because they seem like a waste of money, but you have to do it anyway. And I bought a couple of pairs of shorts cause I hate all my shorts. Yeah. I had dropped hundreds of dollars within 20 minutes.

Kathryn Tuggle: (29:02)
Right? Yeah. I mean, I have been spending a little more, I think. Just because we are all spending a lot of time online and some of those Instagram ads have definitely sucked me in. But I have excused it by saying that I don’t have my daily commute. So the monthly Metro card that I ordinarily buy, which is $130 a month, that’s no longer part of my budget. And the lunches out, which I tried to pack my lunch probably two to three days a week, but if you seem that I’m also buying it out three days a week, that expense is gone. But I have putting more money into good groceries as well. My husband and I discovered Eataly.

Jean Chatzky: (29:49)
Oo. Yum.

Kathryn Tuggle: (29:49)
Which I had never been to Eataly. I kind of thought it was a place for, I don’t know, maybe like fake Italian food and maybe a little bit of a tourist trap because it’s always so crowded. And I have to say it is a wonderland of proper European goods from all over Italy and all over Europe. And I want to buy everything.

Jean Chatzky: (30:15)
I haven’t shopped there in a very long time, but that sounds amazing. I was actually thinking, I read a story yesterday, in The New Yorker, in the new edition of The New Yorker, about these sort of farm to table boxes that a wonderful chef named Dan Barber of Blue Hill is putting together. He knows he’s responsible for the livelihoods of a lot of the small farmers that grow things and produce things for him. And so, because he’s not cooking with them, he’s packaging them up into these nice evidently beautiful boxes that have amazing ingredients that you can just sort of snack on and keep in your fridge and that elevate your refrigerator. And he’s right around the corner. When I go running in the Rockefeller State Park, which is just out the back door here, I’m just there. So I think, I think I might succumb to one of those.

Kathryn Tuggle: (31:17)
That sounds amazing. And probably offers some good inspiration for cooking.

Jean Chatzky: (31:22)
Yeah. I need some inspiration. I am so sick of my own cooking. I mean, we’re talking about Alison Roman and she has literally gotten me through a lot of this quarantine. And Melissa Clark. And Ina Garten. And actually mostly just the three of them. I do have the Ottolenghi cookbooks, but I find that they have so many ingredients in many cases, that I find them harder to deal with. Fewer things that I can easily substitute for, if I don’t have them in the house. And I think the series that Melissa Clark has been writing about how to cook from your pantry has just been wonderful.

Kathryn Tuggle: (32:05)
I agree. There’s so many things that I think we all have on hand that we don’t realize can be turned into an amazing dish in a pinch. Or in a pandemic, as the case may be.

Jean Chatzky: (32:17)
Exactly. All right. Let’s answer some questions. What do we have?

Kathryn Tuggle: (32:20)
Yeah. Our first note comes to us from Carrie in Minneapolis, Minnesota. She writes, hi Jean. My daughter returned home from college about two months early because her dorms closed due to COVID-19. Earlier this month, I received a refund for her room and board expenses. Most of her spring tuition room and board was paid from her 529 account. What do I do with the refund so that there aren’t tax implications. P.S. I love your podcast and have enjoyed following your advice since your Money magazine days. Thank you.

Jean Chatzky: (32:50)
Okay. So this is such a good question, but you’re going to have to act quickly. You’ve got 60 days to return the money to your 529 to avoid paying taxes or having some tax penalty on the refund. That’s according to Mark Kantrowitz, who is one of our sources that we always go to for college advice. And so I would say do whatever you can to move that money as completely and quickly as possible. Just another note from Mark on that is that the refund has to be put back into a 529 for the same beneficiary. So for your daughter. It doesn’t have to necessarily be put into the same 529 account, if you have several. But it does have to be put away for her. If it isn’t re-contributed to an account, it will be considered a non-qualified distribution. And that means the earnings portion of that money, not the principal, but whatever you earned on the money that you contributed, will be subject to income taxes at the beneficiaries rate, so at your daughter’s rate, which should be low, as well as a 10% penalty. And if you got a state tax break on those contributions, that may also be pulled back as well. I wish the clock was longer on this. It doesn’t seem quite fair to me in this era where colleges took a while to make the decision. But hopefully if you act fast, you can get it done.

Kathryn Tuggle: (34:35)
Yeah, it definitely seems like that should have been part of the CARES Act to give people a little more time with this.

Jean Chatzky: (34:41)
We know things are being reevaluated. So it’s possible that the IRS could give us some additional guidance. But that’s what we’ve got so far.

Kathryn Tuggle: (34:49)
Our next note comes to us from Susie in Florida. She writes, hi ladies, I’m a member of your private HerMoney Facebook page. And I listen to all of your podcasts. I love the show and both of you. Your relaxing voices and your advice are what make it so great.

Jean Chatzky: (35:03)
Oh, thank you. And just a shout out to everybody who’s not on our private HerMone Facebook page and who doesn’t subscribe to our, HerMoney newsletters. What are you waiting for? If you like this show, you will like those things. They’re both free. They’re fun. They’re there. So just go to HerMoney.com and sign up for that stuff.

Kathryn Tuggle: (35:26)
Totally. And what we hear so often from our listeners is that when they are reading content on our site and then the newsletter and in the Facebook group, that it’s just a more in-depth look with just more perspectives thrown in. So if you like what you hear here, then it’s pretty much a guarantee, you’ll like what you find there.

Jean Chatzky: (35:46)
Absolutely. All right, let’s get back to her.

Kathryn Tuggle: (35:49)
Yeah, she continues. I’ll be 55 this year and a late bloomer in regards to savings. I almost lost my home by quitting my full time job and starting a business that brought in much less than what I was making. I eventually went back to work full time, but between 2012 and 2016, during the time I was pursuing my business, my credit took a huge hit. Fast forward to 2020, and I’ve just moved my 401k from my previous employer to a Fidelity IRA. I contribute 7% to my current 401k with a 3% match and save about 10% of my net income in a money market account. The money market account has about $8,000 in it now. I have a personal loan at 9% with a balance of about $10,000. It started at 26,000 in June of 2018. I’ve been throwing extra money at it every month, some months more than others. At the rate I’m going now, I should have the 9% loan paid off by the end of the year. But if I stop saving money in my money market or my 401k, I could pay it off even quicker, if no home or auto emergencies arise. So, should I consider halting saving for a while and get this darn loan paid off? I’m really itching to get this final debt paid. Or should I just bide my time and keep moving forward at the pace I’m going. I really want to do some updates on my house too, but I don’t even want to think about that until I get this last loan paid off. Also, I just refinanced my home to a 15 year mortgage for 1.1% less than I was paying. And it also shaved 11 years off the mortgage. Bonus question: Am I a mess or what? LOL, thank you both.

Jean Chatzky: (37:26)
So let’s just tackle that bonus question first. No, you are not a mess. It sounds like you’re making amazing, amazing progress toward where you’re going. So here’s what I would do. You just, refied the mortgage for significantly less than you were paying. Have you looked at refi’ing the personal loan for less than what you’re paying? I would not stop putting money into your 401k right now or into that money market. I think right now life is just so uncertain in general, in all sorts of ways, that it’s been more important to have a significant savings cushion. So don’t stop saving. Also paying off that loan at the current rate by the end of the year, sounds pretty quick to me. I mean, it is already almost June as we are taping this show. That’s like six months to go. That’s nothing. And, and I say this very kindly because I am 55 years old myself, you’re young. You have time. Looking ahead, you are very likely going to pay off that mortgage before you retire. I can just tell based on your question. And you’re gonna continue to save and you’re going to continue to work. So I would just keep going as you are going, with the exception of trying to pay off that personal loan a little faster, but only if you can get a reduction in the interest rate. I am guessing that you have an excellent credit score based on the refi that you got for your mortgage.

Kathryn Tuggle: (39:07)
I totally agree. I think the end of the year is going to be here before she knows it.

Jean Chatzky: (39:12)
Yeah. I mean, June got here before we knew it. I don’t know. I feel like I went to sleep in March and woke up now. That’s how fast it feels like it’s going to me.

Kathryn Tuggle: (39:22)
I could not agree more. And I also think that just to our earlier points about our spending, that is easier now than it has been in a while to throw all your extra money at your debt because there’s no vacations right now. There’s no big dinners out. So I think, if she puts her mind to it, she could reach that goal before the end of the year.

Jean Chatzky: (39:44)
Yeah. Yeah, absolutely. That’s a really, really good point. But thank you so much for listening and thanks for the question. And you are so not a mess. I would put that on a tee shirt for you if I could.

Kathryn Tuggle: (39:56)
Yes. Our last question is from a self proclaimed HerMoney tribe member in California. She writes, Dear Jean, Kathryn and the entire HerMoney team. First and foremost, thank you for the incredible work you do to empower women in taking ownership of our financial well-being. Since discovering HerMoney via the podcast about a year ago, I look forward to the weekly episode and newsletters as touch points with good friends. To quote Anaïs Nin, each friend represents a world in us, a world not born until they arrive. Thank you for opening up.

Jean Chatzky: (40:30)
Wow.

Kathryn Tuggle: (40:30)
I know, right? Thank you for opening up the world of financial confidence and wellness to me. You have revolutionized my relationship with money and thus my life more than I can describe. Thank you.

Jean Chatzky: (40:42)
Well, no, Now that’s what I want to put on a tee shirt.

Kathryn Tuggle: (40:45)
That’s amazing. I love the poetry.

Jean Chatzky: (40:49)
Thank you so much. You just made my day. So let’s, let’s see if we can help her.

Kathryn Tuggle: (40:53)
Now that I have a sense of my net worth, I’ve put away eight months of living expenses for an emergency fund in a high-yield savings account. I’ve started a separate savings account for the house I hope to buy in five years and I’m ready to lean into investing. As Jean’s latest book “Women With Money” taught me, I am already an investor, thanks to my workplace 401k and boring is better. But I do have a question today about how to create my overall portfolio. For background, I’m 30, single and now contributing up to the 2020 maximum in my workplace for 401k, which is with Fidelity. Hooray! Outside of my retirement account, I have two individual stocks from my current and previous employer. My retirement account is a hundred percent allocated in the Fidelity TFCW Retirement 2055, a target date fund started in 2018 with a 0.2% gross expense ratio. I couldn’t find the prospectus for this fund, but the asset allocations are roughly in alignment with the allocation for your thirties chart on page 107 of “Women With Money” so I feel directionally good about this. However, I’d love your advice on whether I should optimize by number one, changing from a target date fund to a personalized mix of index funds given the statistical better return of passive index funds. Or, number two, opting for this self-directed brokerage account option through Fidelity and choosing from that wider pool of index funds or the Fidelity Freedom Fund, which seems to have more performance data and a better fee ratio. Lastly, a final dimension to this is that I am committed to allocating a percentage of my total investment portfolio in an impact investing fund (thank you for the many great episodes on this subject) and given this overall portfolio goal and my 35 year or so timeline, how would you recommend I proceed. Thank you so much for your time and insight.

Jean Chatzky: (42:47)
Wow. You are a rock star and this is a fantastic question. I thought I was going one way on the answer until you threw in the paragraph about impact investing. And here’s why. If you’re going to go with a target date approach for your retirement, that’s a one and done solution. It messes with the target date mojo when we start taking money out of the target date pool and putting it into other things. It’s really meant to be that one stop shop. And so based on what you’re saying and the fact that you want to do some impact investing, which argues for a less passive and more active choosing of your investments, I’d go with the self-directed brokerage account option and choose from that wider pool of index funds or the Freedom Fund, as well as some of the impact funds that you are clearly very, very interested in. And I would take a listen again to the interview that we did with Nicole Connolly, who is now running a fund at Fidelity that is investing in businesses and companies that have a significant percentage of women in management and on the boards, which I think is interesting as well. What do you think, Kathryn?

Kathryn Tuggle: (44:20)
That’s a great idea. Yeah. I think she clearly is already with Fidelity and enjoying the offerings that she’s getting there. And I highly recommend re-listening to that episode with Nicole Connolly to get some ideas for maybe where to put her money.

Jean Chatzky: (44:36)
Yeah, absolutely. And good luck. Keep us posted. Thanks Kathryn.

Kathryn Tuggle: (44:40)
Yeah. Thanks.

Jean Chatzky: (44:41)
In today’s Thrive, turns out one of the ripple effects of COVID-19 is a shift in the way that we use LinkedIn. From March of 2019 to March of this year, LinkedIn reported a 55% increase year over year in conversations on the platform. No, coronavirus hasn’t changed the way we network since we’ve been digitally building resumes for years now, but it has accelerated the shift from shine to substance in terms of what most people view as important. These days, you need to convey specifically how you built or grew something and provided value to a company rather than just talking a big game, with words like leverage and value add. Your profile should be more focused on your audience than it is on you. So think, client testimonials, references to companies you’ve helped in the past, and a detailed explanation of your specialties. And in the experience section, don’t just say you’re a marketing director, say you’re a marketing director who increased sales by 35% year over year with three successful media campaigns resulting in 10,000 unique impressions. Overall experts advise moving away from a generic recitation of where you’ve worked. Instead, describe your years of experience in the field. International experience and specific projects or metrics as well as degrees, awards, honors, and certificates. If you’ve been interviewed in the media or had articles published, make sure to link to those things too. And last and perhaps most important, in the age of coronavirus, everyone is hungry for human connection. If you’re looking to strike up a conversation with someone you’d like to add to your network, take the time to personalize a thoughtful note that expresses your admiration for something specific they’ve done, or that highlights something that you have in common. Personalized notes, especially those with compliments, are always appreciate it. Thank you so much for joining me today on HerMoney. Thanks to Dan Frommer for joining us as well and sharing his insight into today’s retail economy. If you like what you hear, please subscribe to our show at Apple Podcasts. Leave us a review because we loved hearing what you think. We also want to thank our sponsor, Fidelity. Our music is provided by Track Tribe and our show comes to you Megaphone. Thanks so much for joining us and we’ll talk soon.