What held you back? Maybe you were scared — of what would happen, of failure, of the reaction of the people you know and love. Although getting over fear may be a goal, there’s another way: You could do it scared. So says our guest Ruth Soukup, author of “Do It Scared: Finding the Courage to Face Your Fears, Overcome Adversity, and Create a Life You Love.” She walks us through how and why it works. Then, in Mailbag, we answer your questions on where to build your savings to buy your first home and why we have many (!) credit scores. Plus: Summer travelers beware! You now stand a higher chance of getting bumped off your flight. Our advice in Thrive.
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This podcast is proudly supported by Edelman Financial Engines. Let our modern wealth management advice raise your financial potential. Get the full story at EdelmanFinancialEngines.com. Sponsored by Edelman Financial Engines – Modern wealth planning. All advisory services offered through Financial Engines Advisors L.L.C. (FEA), a federally registered investment advisor. Results are not guaranteed. AM1969416
Jean Chatzky: (00:07)
HerMoney is supported by Fidelity Investments. We want you to demand more from your money. So start by knowing what you own and what you owe. We’ll help you take the next step at Fidelity.com/demandmorenow. HerMoney comes to you through PRX. Hi everybody. It’s Jean Chatzky. Welcome to HerMoney. So we’re going to start this show a little differently with a little exercise in self-reflection, and bear with me because it sounds more negative than it’s meant to. When you look back on all the things you haven’t done with your money or you haven’t done with your career, what stopped you? What held you back? Maybe you got caught up in the everyday busyness of life. Maybe you weren’t feeling as motivated about those things as you thought you would. Or maybe if you’re being really honest with yourself, maybe you were scared. The fear of the unknown can get in the way of a whole lot of financial decisions, career decisions, moves that we could make that could really be good for us, which is why sometimes you just need to do things scared. That’s the premise behind Ruth Soukup’s company podcast and new book called “Do It Scared: Finding the Courage to Face Your Fears, Overcome Adversity, and Create a Life You Love.” And Ruth is with us today on skype to help us do all of that, to face our fears so that we can create lives that we love too. Hey Ruth, thanks so much for calling in.
Ruth Soukup: (01:55)
Hey, thank you so much for having me. It’s great to be here.
Jean Chatzky: (01:58)
Congratulations on the book.
Ruth Soukup: (02:00)
Jean Chatzky: (02:01)
I know my team recently met you on your NYC book tour stop and that’s how we have you here today.
Ruth Soukup: (02:08)
Yes, it was so much fun to get to know a few members of your team.
Jean Chatzky: (02:12)
So for our listeners who are meeting you for the first time, take me back to the beginning of your journey. Who were you before you were doing it scared?
Ruth Soukup: (02:25)
Scared little girl really. You know, “do it scared” has actually been a mantra of mine for a very long time and it sort of started back in my early twenties when I went through a really, really bad battle with depression. And actually attempted suicide multiple times and very nearly succeeded in that effort and just found myself in a place after two and a half years of really bad depression, almost very nearly dying with that. Just found myself bankrupt, all alone. I had dropped out of college, I was just a mess and really found myself completely at rock bottom in my life. I had no hope left and I didn’t really know where to go and it was the most terrifying place I could ever be in. I felt like I had ruined my entire life and I was 29 years old.
Jean Chatzky: (03:19)
I’m so sorry. There’s a lot of depression in my close family actually. And so I can’t really relate to it myself personally, but I know so many people who have been where you were and it’s awful. So how did you take a step forward from that rock bottom?
Ruth Soukup: (03:41)
You know, it was literally one very small step at a time. And I think so often people will ask me about that depression and they’ll ask me about that time in my life and I’ll say, oh, well surely there must have been some turning point for you, some magic moment where you realize that life was worth living and you made the transformation and it all became okay. And it really didn’t happen that way. It was very slow and painful and it was taking one small step and then another step. You know, I laid in bed for many months and finally, finally, finally my dad convinced me to start going to the gym. He said, please just go for three times a week and walk on the treadmill for 30 minutes. If you want to keep living in my house and laying in bed all day, you have to do this one thing. And so I did that one thing and that was just enough. Literally taking those steps on the treadmill, that was just enough to give me enough of something to call a new therapist, find a new therapist and say, you know what, I’ve just spent the last two and a half years talking about all the bad things that have ever happened in my life and it hasn’t helped. I am not better. I don’t even know how to live anymore and I just need help figuring out how to live. And that was what she helped me do. One very small step at a time. First it was getting a part time job and then it was getting my own apartment. And then it was going to the grocery store without freaking out and getting a dog and going back to school and all of these little steps that each one terrified me. Each one felt so big and so hard, but every time I took that one next step, it gave me the courage to take the next one and the next one and the next one after that. And I have found, you know, many years later I started my own business, which has since grown into this huge company that I’d never could have really dreamed of. But every step along the way as a business owner, as an entrepreneur, has been the exact same thing. Doing it scared, every single step of the way. Feeling like, I don’t really know what I’m doing. I don’t know if I can do this, but every time I managed to take one step, it gives me the courage to take the next step.
Jean Chatzky: (05:44)
So what does it mean to do it scared?
Ruth Soukup: (05:47)
It literally means that courage doesn’t mean that we’re not afraid. Courage doesn’t mean that we don’t feel the fear. Courage is actually taking the step, even when we feel afraid. It’s taking action in the face of fear. And I think so often we don’t actually recognize what we’re feeling as fear. Sometimes we look at it as anxiety. Sometimes we think that it’s just feeling overwhelmed with life. Sometimes we think it’s depression. There’s all these other names for it. Sometimes we call it fear, but not always. Sometimes it just is this feeling of being stuck and not knowing what to do. But it all comes down to fear and I think that we think we have to completely overcome it in our life and we have to figure out how to conquer fear and not ever feel afraid, but that’s not really realistic. If you can actually just learn how to take action despite the fear, to recognize that those feelings are going to be there and that you can feel the fear, but you can still take that step, that’s what makes all the difference.
Jean Chatzky: (06:46)
What I think is so interesting is you did some research that found that fear actually looks different to all of us, that we don’t all experience it the same way. Can you tell us about your study?
Ruth Soukup: (07:02)
Yes. So during the course of this book, what I noticed, first of all, the whole reason for wanting to write this book, was that so many people in my communities were facing fears and talking about it all the time and coming to me and saying, you know, I feel so afraid or I feel so stuck and I don’t know how to move forward. And it got me so curious. So I started asking questions and you got to be careful about asking questions cause you never know where that’s going to lead. But in this case it led to us doing this study of more than four thousand people. And through that, asking questions about how people were experiencing fear, but also how they were overcoming it, we started to see some patterns. And it was so much data. I had to hire a whole team of researchers to help go through all this data. But what we discovered is that fear does look very different for people. But there are seven very distinct patterns that happen, or seven distinct ways that fear tends to manifest itself in our lives and we call those the seven fear archetypes. And so each of us have probably a little bit of all seven of the archetypes within us, but for most people, there’s one or two that tend to be most prevalent. And those are probably the areas where fear is most holding you back or most effecting your life. And the reason why that’s so important is because so much of the fear that happens in our life happens subconsciously without us even realizing it without us knowing it’s there. And so we don’t experience it necessarily as fear. We experience it as truth or this is just the way that I am. And as soon as we can label it and start to identify those patterns in our life, to recognize it when it’s happening, that’s when we can actually start to do something about it. That’s when we can recognize that it’s happening and go, okay, my fear is telling me this one thing, but I know that it’s just my fear of talking. It’s not truth, it’s just fear. And now I can do it scared. Now I can take action even though I’m feeling those feelings.
Jean Chatzky: (09:05)
Okay. I want to dig into those seven archetypes. I want to dig into those seven different ways that fear manifests itself. And I want to do it specifically as they apply to money because as I have been traveling around and talking to women in HerMoney Happy Hours and for my new book, I hear about the fear of investing. I hear about the fear of running out of money in retirement. I hear there’s so many financial fears that women have, so we’re going to dig in, but before we do that, I also want to remind everybody that HerMoney is proudly sponsored by Fidelity Investments. What if you could get past your fear and demand more from your money? What if you could make your savings work as hard as you do and what if that helped you reach your financial goals faster? That all starts with a financial checkup. It starts with an understanding of what you own and what you owe, and from there, the folks at Fidelity can work with you to evaluate your investment options and different ways to grow your savings. You can get started today at Fidelity.com/demandmorenow. I’m talking with Ruth Soukup, author of “Do It Scared.” So there are seven archetypes and you can have more than one I learned, but let’s talk about the biggies. What’s the most common?
Ruth Soukup: (10:37)
The most common one is the procrastinator archetype, which is really just another word for perfectionist. I like to call it the procrastinator slash perfectionist archetype. But the underlying fear there for the procrastinator is the fear of making a mistake. And so the procrastinator slash perfectionist will often spend a ton of time researching or getting organized or preparing, but there’s this fear of getting started. There’s a fear of commitment. Often, because they don’t want to make the wrong decision and make the wrong move and move forward. It can almost lead to analysis paralysis and that is definitely number.
Jean Chatzky: (11:12)
This one screams money.
Ruth Soukup: (11:12)
Yes, oh totally. Yes, totally. So when, when it comes to, I mean, think of all the financial decisions that you’re making with your money and the fear of making the wrong decision prevents you from moving forward at all or making any decision at all, which is actually probably the worst decision that you could possibly make.
Jean Chatzky: (11:34)
Right? And analysis paralysis. There are so many different choices that we have when it comes to our money and so much information about every single one of those choices that if you start diving in and trying to do your homework, as all the good girls in the world are told we are supposed to do, then of course never going to get anything done, because you’re constantly researching.
Ruth Soukup: (11:57)
Yes, yes. That’s exactly, exactly right. And I probably should point out right now, before we go any further into archetypes, is that each of these seven fear archetypes have both positive and negative qualities. So if you are a procrastinator archetype, there are aspects of that personality type that have served you well. You know, you probably have great attention to detail. You’re very organized. You do really good work. You have a high quality standards for the work that you do. So those are all good things about your personality and about your fear archetype that are serving you right now. And the same goes for all of the other ones which we’re going to talk about in a minute. And so it’s really important when you think about overcoming your fears. It’s not about necessarily completely getting rid of those aspects of your personality. It’s learning how to leverage the good parts of that fear while learning how to mitigate the bad parts, the ones that are holding you back. Cause with every fear there’s something that’s helping you and something that’s holding you back.
Jean Chatzky: (12:58)
So if you see yourself in this procrastinator/perfectionist archetype, when it comes to your money – and I think a lot of women listen to this podcast because we want to take action that we’ve been unable to take before – how do you break through?
Ruth Soukup: (13:15)
Well, I like to tell people that you can work on this on both a micro level and a macro level. So on a micro level, which is probably the easiest cause it’s smaller, more manageable actions. The best thing that you can do is work on building up your immunity to this and that comes with practice. So you have to practice making decisions and making mistakes and doing things imperfectly. And so when it comes to your money, I would start with lower risk decisions that don’t feel like your whole and retirement is depending on it. You know, maybe start with just some smaller investments that are not a huge risk for you so that they don’t feel like the end of the world if something goes wrong on them and you practice building up your immunity so that every time you do it, just like those little steps, every time you do something hard, you work up the courage to do something a little bit harder the next time. And it actually gets easier and easier to make those decisions and to move past that fear.
Jean Chatzky: (14:12)
What’s the second biggest archetype?
Ruth Soukup: (14:15)
The second one, well actually number two and number three are almost tied in prevalence. But the rule follower archetype is followed closely by the people pleaser archetype. So I’ll talk about the rule follower first. The rule follower has sort of this, almost like an unhealthy fear of authority. The rule follower is the person who always reads the instruction manual and who has this feeling that there is always a exact right way to do things.
Jean Chatzky: (14:41)
Kelly and I are laughing because we are not rule followers.
Ruth Soukup: (14:46)
People usually either are or aren’t. There’s very little in between I find with the rule followers. You either absolutely relate to this one a hundred percent or you’re like, oh no, that’s not me at all. But for rule followers, you know, again, there’s the positive side of being a rule follower is that if you can find a framework or a mentor or somebody to guide you, especially somebody who’s giving you sort of step by step instructions, as long as those instructions are solid, you will probably follow them to the tee. I actually have an online program where I teach online business owners how to create a business. And I find that the rule followers are my most successful students because I give them very clear instructions and they do every assignment, they do everything that they’re supposed to do and then they create success for themselves. So if you are a rule follower, that’s what I would recommend even when it comes to your finances, is find somebody who is giving great advice and has a program or something that you can follow and then follow those steps to the tee. And the rule flatter will probably follow through on that.
Jean Chatzky: (15:49)
Well, and there’s a lot of prescriptive advice out there when it comes to your money. You know, you want to achieve $1 million by the time you’re 50 years old, there are steps that you can follow to do exactly that. And so I think that’s really good advice. Okay. So the people pleaser. I suspect I might be one of those.
Ruth Soukup: (16:15)
It’s possible. Yes. So the people pleaser is, the underlying fear there is the fear of being judged and the fear of what other people will think. So the people pleasers are usually great people to be around. So kudos to you because you’re popular, you have lots of friends because you are conscientious of how people, other people, think and feel and and worried about hurting people’s feelings sometimes to your detriment. So people pleasers can be afraid to step on toes. They can be afraid to speak up, they can be afraid to set boundaries and say no. And the other thing that people pleaser has to watch out for, and this can definitely affect you from a financial standpoint, is this need to keep up appearances. So sometimes people pleasers can fall into that trap of wanting to have a really nice house or having the nicest clothes and driving the best car. And possibly you can be so concerned with appearances that you find yourself in financial trouble because you’re trying to afford a lifestyle that you actually can’t afford.
Jean Chatzky: (17:16)
Gotcha. So anybody who finds themselves really, really trying to keep up, needs to watch out for that. How do you break, I mean when you describe a people pleaser like that, I don’t think I am one actually, but how do you break that cycle?
Ruth Soukup: (17:34)
You know, the cycle I think for the people pleaser, you have to again practice on a micro level. You have to practice setting boundaries. You have to practice purposely not pleasing people and again, so you could be a people pleaser, but that might not be the way that it is manifesting in your life or showing up in your life where you care about status, but it could be showing up in a way that you’re afraid to set limits.
Jean Chatzky: (18:01)
Afraid to say no. Yes, there you go.
Ruth Soukup: (18:05)
Remember, it shows up in different ways. For instance, my husband and I are both outcasts, but the way that it shows up for the two of us is very different. So there’s a little bit of wiggle room I guess you could say in these. But if you are finding that your need to please is affecting you from a financial aspect, that’s where you have to practice setting those boundaries and just sitting with the idea that other people might not approve or be okay with the decisions that you make. And again, it helps to start that from a smaller way and work up to the harder decisions. But one of the things that’s really cool about this, and we do have an assessment where you can actually go on our website and take the assessment, find out your fear architect. But what we’re finding for people is that so often, so much of this is happening subconsciously without us realizing it, that as soon as you do shine the light on it and start to see those behaviors and see how they’ve been impacting your life, just the fact that you know about it and can see it helps you be able to change it.
Jean Chatzky: (19:11)
I love that and I think it’s very true with money as well. Once we get a bead on what we’re not doing because of our fears, it almost gives us permission to do it and the push that we need to actually get it done. Where do we take the test?
Ruth Soukup: (19:27)
You can take the test on our website at doitscared.com.
Jean Chatzky: (19:31)
Okay. Ruth Soukup. It’s fascinating talking to you. I just have to ask, you said you and your husband are both outcasts. Now that’s not an archetype that you told us about. What typifies you?
Ruth Soukup: (19:43)
Yeah, well the outcast is probably the most ironic of all the fear archetypes because the outcast appears on the surface to be fairly fearless. It’s the person who’s the rugged individualist. I don’t need anybody. I can do it myself. I don’t need your help. But really what the outcast fears more than anything else is rejection. And so the way that often plays out is that the outcast will reject other people before you can be rejected in return which, I’m sure you can imagine, it’s not the best to have two outcasts who are married to each. So it’s been interesting for my husband and I to have to learn how to walk that line and realize that we’re not rejecting each other, that we’re not being rejected. But the way that it plays out for me is, especially as a business owner, is I often have a hard time delegating. I have a hard time trusting my staff and trusting other people, and I also have a hard time collaborating or reaching out and asking for help from other people outside of my business. I feel like the need to do it all myself. And for my husband, the way that it plays out for him is that he’s very sensitive to just friends and people where he feels if they’re not issuing an invitation, they’re rejecting him. We live in Florida, so if someone from another state comes to Florida to go to Disney World, which is nowhere close to our house, but they don’t call us to tell us they’re in our state, he feels like that’s a personal rejection. So I often have to tell him, well, you know, honey, just because they’re in Florida doesn’t mean they have to come and see us. Like it’s their vacation. So yeah, the way that it plays out is a little bit different, but it’s been very interesting to have that dynamic and to have the realization again, because as soon as you shine the light on it, it just really makes you see where your behavior is holding you back.
Jean Chatzky: (21:29)
Absolutely. It’s fascinating. I think we’ll all be taking the test and shining this sort of a filter on our own lives. Ruth, thanks so much. I hope you’ll come back.
Ruth Soukup: (21:40)
Thank you so much for having me.
Jean Chatzky: (21:41)
And we’ll be right back with Kelly and your mailbag.
Jean Chatzky: (21:48)
Kelly Hultgren has joined me in the studio. Hey Kel.
Kelly Hultgren: (21:52)
Jean Chatzky: (21:53)
So that was a very nice find. Thank you.
Kelly Hultgren: (21:56)
It was a lovely conversation and a different one than we’ve had before. I think we talk a lot about fear being an emotion we all experience with money, but not getting into the nuances of fear for different people. So I love that she created these different fear personalities that we can better connect to and understand how these invisible chains she speaks of, they don’t always look the same.
Jean Chatzky: (22:21)
Two random questions.
Kelly Hultgren: (22:22)
Jean Chatzky: (22:23)
Did you ever see the movie We Bought a Zoo?
Kelly Hultgren: (22:25)
Yes, I did.
Jean Chatzky: (22:27)
And do you watch A Million Little Things?
Kelly Hultgren: (22:30)
No, but should I?
Jean Chatzky: (22:31)
Well, so I always thought that Matt Damon’s wife, the one who died in We Bought a Zoo, was one of the most beautiful women I’ve ever seen. But she’s one of the leads in A Million Little Things, which it took me a little while to figure out. A Million Little Things. You start watching it, you’re not going to want to stop. I binged the entire thing.
Kelly Hultgren: (22:50)
I need a show, so thank you.
Jean Chatzky: (22:51)
Okay. Yeah, you could watch that show. You should also watch Shtisel, which is a show about Orthodox Jews in Jerusalem. It’s in Hebrew.
Kelly Hultgren: (23:01)
Oh goodness. Okay.
Jean Chatzky: (23:01)
You have to read the subtitles, but it is so good. It is so, so good.
Kelly Hultgren: (23:07)
Jean Chatzky: (23:07)
Oh yes, totally, totally fiction. And evidently, I can’t remember who, but somebody, I think Marta Kauffman, actually the creator of Friends just bought the rights to try to remake it for the US audience.
Kelly Hultgren: (23:21)
Ooh, that’s a good sign.
Jean Chatzky: (23:23)
Kelly Hultgren: (23:23)
That’s a really good sign.
Jean Chatzky: (23:24)
But it’s really good.
Kelly Hultgren: (23:24)
Jean Chatzky: (23:25)
I’m very excited for Season 3, but it just took me off track. We Bought a Zoo. The conversation made me think about that because Matt Damon’s character, instead of asking why, he would ask why not? Because his deceased wife, that’s what she used to say. She used to say, why not? And I think if we could all get ourselves to flip the question a little bit and ask why not instead of why. That’s almost a way of getting ourselves to break through the fear.
Kelly Hultgren: (24:03)
I also like the turn that we got into a little bit here is oftentimes we have fear of failure, that’s why we don’t do something. But sometimes it’s fear of actually succeeding and what it could mean. And I know for so many people listening to our show, they might connect to that in a way that I have to at times. And, I’m a people pleaser. I took her assessment test and I am mostly a people pleaser, which probably shouldn’t come…
Jean Chatzky: (24:31)
…as a surprise.
Kelly Hultgren: (24:32)
Not so much and I’m a proud people pleaser. I had the opportunity to chat with her before the show and she said what can cripple me is me letting other people’s opinions or what I think their opinions will be, affect what I do and don’t do. I’m prone to maybe thinking of how it will look and be and not really asking myself what I want or what’s really right for me. So I hope this show inspires people to kind of challenge their fears in a way that I hadn’t.
Jean Chatzky: (25:02)
It definitely did it for me. I mean, got me to look at what stands in my way.
Kelly Hultgren: (25:09)
I guess you’re a little bit of a people pleaser, too.
Jean Chatzky: (25:12)
I’m a little bit of a people pleaser. I think we learned that about ourselves. Remember when we had Gretchen Rubin on for her 4 Tendencies.
Kelly Hultgren: (25:19)
Oh my gosh, that’s such a good throwback. Yes.
Jean Chatzky: (25:21)
Yea. We learned that I’m a little bit of a people pleaser, but in the end I do what I want to do.
Kelly Hultgren: (25:25)
I see I have a lot to learn. I do.
Jean Chatzky: (25:28)
I learned that from my mother who does exactly what she wants to do all the time, but in such a nice way that nobody ever knows until it’s too late.
Kelly Hultgren: (25:40)
We could all learn from her then.
Jean Chatzky: (25:43)
Yes. All right. What questions do we have today?
Kelly Hultgren: (25:47)
First, one from Carolyn. Oh, and before I read Carolyn’s question, thank you everyone for using email@example.com our new email.
Jean Chatzky: (25:55)
Yes, we are getting a ton of emails that way. It’s actually easier for us to track them. It’s going to give us the ability just so people can understand why they’re doing what they’re doing. If we decide that we want to put together a show that has all of your student loan questions in them, this is going to give us the ability to very easily categorize them, put them in a single place. So we’re actually doing this for good, not for evil.
Kelly Hultgren: (26:24)
Yes. And so while we encourage conversations to be had, all of the places where we live, whether it be on social media or through our newsletter or now this lovely email, that’s a big reason why we should all just start using the email so that we can organize better mailbags for you.
Jean Chatzky: (26:40)
Exactly. And while you mentioned the email, just one mention for everybody who’s not signed up for it, HerMoney.com/signup will get you on the list for our weekly newsletters,
Kelly Hultgren: (26:54)
Our free weekly newsletters. Okay. Carolyn, sorry, Carolyn has a question. She says, I have a quick question about my credit score. I bank with USAA and the website showing my credit card expenses used to list my credit score. I started keeping track a few years ago and from January, 2017 to December, 2018 my credit score fluctuated between 720 and 776 with 770 as the last reported score in December of last year. I recently found out that through USAA I can sign up for a credit check program with Experian. Well, when I logged on the other day, it said that as of May 20th, 2019 so pretty recent, my FICO score was 850. I was pleasantly surprised, but I’m also not sure how I went from being in the 770’s to 850 in five months. Is it possible that the scores were being calculated in different ways? Are some of the ways of calculating the score better than others? Maybe the 850 is just wrong, and she also had a hahaha after it because I think she was just amused with it.
Jean Chatzky: (27:51)
No. I’m sure the eight 50 is totally right. It may also be a blip, but here’s what I think many people don’t understand about credit scores. We think we have one. Some of us understand maybe we have three, one calculated by each of the credit bureaus, Experian, TransUnion, and Equifax. In reality, we have many, many different credit scores because the credit bureaus are in the business of taking the information on your credit report and making it into credit scores, not just for us as the end users, but to satisfy the questions that are being asked by various types of lenders. So if you’re going to try to buy a car and you apply for a car loan, the score that’s going to be run is an auto credit score and it’s going to more heavily weight your past behavior in paying back auto loans. And if you’re going to get a mortgage, the score that’s going to be run, and typically with a mortgage, they look at credit scores from all three bureaus, the score that will be run will be one that emphasizes your behavior when it comes to paying back mortgages. So you have many different scores. Here’s what I want to tell you about both 770 and 850, they’re both excellent.
Kelly Hultgren: (29:17)
Jean Chatzky: (29:17)
They will both qualify you for the very best interest rates. Please don’t worry about this. Like on the list of things in life that you worry about. This should not be one of them because your credit score is already excellent. There are things that may have improved the score over the past five months. Maybe you were carrying debt on a particular credit card and you started paying some of that back. Maybe you saw an increase in some of your credit lines. Those would be the two biggies that would move a score fast. Either way, you got nothing to worry about.
Kelly Hultgren: (29:55)
Now is there a score or a source that has our score that does carry more weight for more lenders in the US? I remember some research we looked at a while back or when we were delving into how nuanced our credit scores are that there’s one in particular that is more polled.
Jean Chatzky: (30:17)
Yes. So FICO score, FICO now stands for FICO, it used to stand for Fair Isaac and Company. FICO is the historically important credit score, but the Vantage score has made great strides and is being relied on by a lot of lenders. And what we know about both of these scores is that although they’re not run with the exact same calculations directionally they move the same. So if you’re making progress with your credit score, if you’ve got a credit score that’s excellent with FICO, it should be excellent with Vantage and if you’re moving it in the right direction with FICO, you should also be moving it in the right direction with Vantage.
Kelly Hultgren: (31:00)
Okay, great. Thank you. Now, one from Danielle. HerMoney podcast groupie here. Thank you for sharing such meaningful content every week. I leverage your advice both personally as well as professionally as Chief Talent Officer, big title, for an organization of 67% female employees, many of whom are millennials. I have an opportunity to design solutions to help our employees increase their financial health. We’ve done some of the obvious automatic enrollment into our retirement plan with an automatic increase annually. We’ve also tried to get creative – a $50 match if an employee established as a qualified savings vehicle for their new child before he she is walking. That’s pretty cool.
Jean Chatzky: (31:36)
That is cool.
Kelly Hultgren: (31:37)
Four hours of preventative care, paid time off – so our employees are catching health concerns sooner rather than later. We also have a variety of forums where employees can bring forward financial related questions slash concerns to the team for discussion as we believe in eliminating the stigma around talking about money, makes us all healthier. I take my responsibility in designing our benefit offering seriously. What else can I be doing to help our employees be successful? Have you seen any creative benefit designs or ideas that could be deployed in an organization that would be worth sharing?
Jean Chatzky: (32:07)
So two thoughts. I can tell you what employees want right now and particularly your younger millennial employees. They want student loan relief. That’s what they want. And we’re seeing many more companies stepping up and talking to their benefits providers about offering some sort of payback, some sort of match on the payback that you’re making yourself. The student loans, and we know this, that $1.5 trillion in student loan debt that this generation is carrying. And it’s not just this generation by the way. Because you know, I also write a column for AARP. People of every generation are carrying student loans for themselves, for their kids. Any relief that you can provide in that area I think is really, really appreciated. But the other thing that made me think from your question is this idea of getting your female employees to talk about money. I think that you should call Kelly and I and we should come do a Happy Hour for your company, for your employees.
Kelly Hultgren: (33:18)
Jean Chatzky: (33:18)
So one of the things we do through HerMoney is these HerMoney Happy Hours where we gather with groups of women and we facilitate conversations about money. And you could absolutely do this yourself without us. But now that we know that you’re a podcast groupie, we would love to meet you. And, just getting women in a room, opening a few bottles of wine and asking some leading questions that get people talking is really, really powerful. And we did one about a couple of weeks ago with close to 50 women, which was bigger than the ones we’ve done before, but it made me understand that they have the legs to be part of a bigger gathering.
Kelly Hultgren: (34:07)
Absolutely. There’s something just so powerful about being in a room where you know that you can say or ask whatever you want when it comes to your personal finances and not be judged.
Jean Chatzky: (34:17)
Right. No. The rules on the package say, this is a judgment-free zone. What happens in a HerMoney Happy Hour stays in a HerMoney Happy Hour.
Kelly Hultgren: (34:27)
We do not tolerate it. Yup.
Jean Chatzky: (34:29)
We shut that judgment right down.
Kelly Hultgren: (34:32)
All right. We’ll do one more from Alejandra. I listen to the podcast, I wanted to ask. I’m a 32 year old single, no kids and have never contributed to my company’s 401k. Never worked for a company that would match until now. I’ve been living in the country since 2000 so I don’t have a lot of financial experience, nor does my family. I do hear traditional 401k is not the best for my generation. So do you recommend opening a 401k or a Roth IRA? I’m looking to buy a house in the next five years. I have a little over $20,000 saved up, but it’s just sitting in savings and not growing. Help, help, help.
Jean Chatzky: (35:06)
A traditional 401k is very likely the right thing for you to do because you’re getting a company match at this point. And a company match is basically the last form of free money that we have. So anything that you can contribute to your company’s 401k to grab those matching dollars I would say should be job #1. The other thing to look at though is whether your company offers a Roth 401k option. Many companies these days do, and just like a Roth IRA allows you to pay the taxes on the contributions before you make them and not have to pay taxes when you withdraw the money in retirement, a Roth 401k works just like that. And so for younger people especially, they tend to be a really, really good option. But they’re also a good option for people who are genexers and who really haven’t thought that they’re a good option for them. Jason Zweig wrote a great column in the Wall Street Journal about this just a couple of months ago. I would encourage everybody to Google that. Take a look at it. The end result seems to be that your tax bracket in retirement may not change as much as you think. And so for that reason, the Roth option is beneficial for people who are older and are already at significantly higher tax rates in some cases. So for now, open the 401k, make the contributions, contribute at least enough to get any matching dollars. And if you can contribute more, if you can get even closer to maxing out, do that too, because the money that you put away now has so many more years to grow then money that you put away down the road.
Kelly Hultgren: (36:58)
And because of that, I have an aunt and I want you to tell me what you think about this. If she starts the traditional 401k or Roth 401k at work. The fact that she has $20,000 saved up already and she’s starting from square one on her retirement savings, which is totally fine. Should she also open up the Roth IRA or IRA and just contribute the max this year and put some of her savings that she’s had in an IRA as well?
Jean Chatzky: (37:22)
That’s a good idea. I was thinking about it, but it really depends on that purchase of the house. She said she wanted to buy a house. The $20,000 could form a very nice down payment as well as an emergency cushion, so you wouldn’t want to take it all out of savings for either purpose, but if you think that you are going to start looking at a home, I would make sure that that money is in a high interest rate savings account, not just sitting in a bank where it’s earning 0.1% and consider how much additionally you’ll need to add to it through automatic savings, I hope, to get you where you need to be for that down payment.
Kelly Hultgren: (38:01)
Okay. Don’t listen to me Alejandra.
Jean Chatzky: (38:03)
No, no, no, what you suggest, you’re right.
Kelly Hultgren: (38:07)
But I totally disregarded the house and emergency savings and those two things are more in the future.
Jean Chatzky: (38:11)
It’s all good.
Kelly Hultgren: (38:13)
Jean Chatzky: (38:15)
Kelly Hultgren: (38:16)
And thank you everyone for your questions. Again, the place to ask them is emailing us at firstname.lastname@example.org.
Jean Chatzky: (38:23)
And today in Thrive, summer traveler’s beware, you now stand a higher chance of getting bumped off your flight. For example, US Airlines denied boarding to 6,100 passengers in the first quarter of this year and that’s nearly triple the number, same time last year. And note this number only includes those people who are unwillingly bumped by the airlines, not those who are volunteering to take a voucher or take a later flight. The bad news is due at least in part to the grounding of more than 70 Boeing 737 Max planes which were blamed for two fatal crashes in the last six months to a year. Most airlines we should note have measures in place to avoid involuntary bumping. For example, if your flight is oversold, you may get a notification via text before you get to the airport so that you either can opt to rebook your flight or take a later one in exchange for a voucher. If you go the voucher route, particularly if you are already sitting in the Concourse, make sure you make it worth your while. You can and you should negotiate beyond the first offer because remember, if you don’t ask, the answer will always be no.
Jean Chatzky: (39:45)
Thank you so much for joining me today on HerMoney. Thanks so much to Ruth Soukup for the fantastic conversation. If you like what you hear, I hope you’ll subscribe to our show at Apple Podcasts. Leave us a review. We love hearing what you think. We also want to thank our sponsor Fidelity. We record this podcast out of CDM Sound Studios. Our music is provided by Track Tribe, and our show comes to you through PRX. Join us next week when we’ll be back with another great guest.