When’s the last time you did nothing? Really — watching Netflix while also responding to email doesn’t count. Sitting in the park while also keeping an eye on the kids doesn’t count. Having a day to ‘relax’ at home that also involves doing three loads of laundry does. Not. Count.
On today’s episode, we’re talking about what it means to truly disconnect, and the power of stepping away. The truth is that we are so often occupied by “something” — work, family commitments, volunteer work, side hustles, errands, cooking, the list goes on — that we’ve almost forgotten what it looks like to just veg out. Worse than that, many of us actually feel guilty when we do manage to squeeze in some “me” time.
On a daily basis — on social media and in pop culture — we’re reminded that we should do more, earn more, and weigh less, while learning to “hack” our bodies and minds for peak performance, but oftentimes our constant pedaling to keep up leads to burnout, loneliness, and anxiety, and we’re left wondering: Where’s the fulfillment I was promised?
Our guest today says that fulfillment is actually within our reach, but that we need a global shift in our thinking to get there. Celeste Headlee is the author of the new book: “Do Nothing: How To Break Away From Overworking, Overdoing, And Under-living,” which is a manifesto on how we can all stop sabotaging our well-being and start living instead of doing. (Celeste is one of our all-time favorite HerMoney Podcast guests! Listen in to her first episode with us here, where we discuss the most important takeaways from her book, “We Need to Talk: How to Have Conversations That Matter.”)
Celeste says she’s an advocate for boredom, and an advocate for good, old-fashioned time wasting. Magic happens in boredom, she says, which is simply a state of being that allows your mind to wander. When you’re bored, your mind sifts through thoughts and memories and ideas, and this is why it’s our most creative and fertile state of mind. (This is why we have our best ideas when we’re in the shower or out for a run and we are fully decompressed!)
In order to arrive at this state of true decompression, Celeste says we have to distance ourselves from technology — to turn off the podcast, mute the music, and power down the tablet. We get a dopamine shot every time we refresh our devices, which only makes us more addicted over time. It’s up to us to train ourselves out of these bad habits and set rules. If necessary, turn it into a game with yourself — how long can you go without looking at your phone in the morning?
Celeste also breaks down what she refers to as the “busy-ness” delusion — we are not as busy as we think we are. We’ve tricked our brains into thinking we’re insanely busy because we never give them a break. She breaks it down for us: If we get a 20 minute break, and we sit in the break room scrolling through our phones, our brains aren’t actually getting a break — they make no distinction between work and instagram. If we then go home at night and scroll our tablet as we’re lying in bed, our brains may never get a moment during the day to fully relax. But thankfully, there are ways to regain control.
Celeste talks about her personal experience tracking her hours on her devices — she realized she was spending more time online shopping and on social media than she ever realized. It’s so easy for all of us to fall down the rabbit hole of the internet; we’re finding things we didn’t know existed 30 minutes before that we’ve now been convinced we can’t live without.
To that end, Celeste also discusses how “more” doesn’t necessarily make us happier. In fact, “less” is sometimes what does that. Also, we should avoid falling into the trap of believing that the steps someone else takes to get to their goals are the same ones we should follow. We live in a culture that’s obsessed with taking to heart every single tip from our favorite successful CEO, but just because they wake up every morning and listen to opera, or make their bed, or whip up a triple espresso, doesn’t necessarily mean those things will work for us. “You have to figure out what it is that you want before you start following someone else’s recommended steps,” Celeste says.
Lastly, she breaks down how we can implement some tactical changes in our lives that will bring us closer to our big life goals, and the importance of setting boundaries that will benefit our brains — like taking a real vacation, not responding to work emails late at night, not taking your device into the bed with you at night, and many more.
In Mailbag, Jean and Kathryn dive into a question on how much you should have saved for your child’s college education if you want to have their education fully funded. They also tackle a question from a woman who is filing for bankruptcy and is unsure what her next steps should be to get back on her feet. Then, we hear from a listener curious about the best step-by-step budgeting and budgeting accountability tools on the market.
In Thrive, Jean breaks down various types of life insurance including term life insurance, employer-sponsored insurance, and permanent life insurance. She offers an overview of whole life, variable life, and universal life, and for a more complete breakdown, we’ve got all the details at HerMoney.com.
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This podcast is proudly supported by Fidelity Investments. Join the Fidelity® Women Talk Money pop-up for access to virtual live events in March, with guests including Jean Chatzky. You'll also get weekly action steps for a healthier financial future. Get started at Fidelity.com/HerMoney. Brokerage Services LLC Member NYSE, SIPC.
Celeste Headlee: (00:07)
You are more than your work. You have a place and a purpose on this planet that has nothing to do with what you produce.
Jean Chatzky: (00:19)
HerMoney is supported by Fidelity Investments. We want you to demand more from your money. Start by knowing what you own and what you owe. We’ll help you take the next step at Fidelity.com/demandmore. HerMoney comes to you through PRX.
Jean Chatzky: (00:36)
Hey everybody, I’m Jean Chatzky. Thank you so much for joining me today on HerMoney. So I’ve got a question for you. When was the last time you did nothing? And really nothing. Watching Netflix while also responding to work emails doesn’t count. Sitting in a park while keeping an eye on the kids doesn’t count. Having a day to quote unquote relax at home, that also involves doing three loads of laundry… you get my drift. Well today we are talking about what it really means to disconnect. The power in stepping away. The truth is we’re all so often occupied by something, work, family, volunteering, side hustles, errands, that we almost have forgotten what it looks like to just veg out. And worse, many of us, and I’ve got to say I am among them, we actually feel guilty when we do manage to squeeze in a little bit of that time. On a daily basis, on social media, in pop culture, we are reminded that we should do more and earn more and weigh less, while learning to hack our bodies and minds for peak performance. But often our constant pedaling to keep up, just leads to burnout, loneliness, anxiety and we are left wondering where was the fulfillment that I was promised. Today’s guest says that fulfillment was actually within our reach but that we need a global shift in our thinking to get there. You’ve met Celeste Headlee before. She’s been in our studios with her last book. She’s back today with her new one. It’s called Do Nothing: How to Break Away from Overworking, Overdoing, and Underliving. And it’s a manifesto on how we can all stop sabotaging our wellbeing and start living instead of doing. Hey Celeste, welcome.
Celeste Headlee: (02:46)
Thanks for having me back.
Jean Chatzky: (02:47)
Thank you so much for being with us today. I saw you a couple of times. We were on the same circuit this year for a number of women’s conferences. And you told me you were on this book and I was like, I need that.
Celeste Headlee: (03:02)
You did, you said have them send me several copies almost immediately.
Jean Chatzky: (03:06)
Immediately. I need that. What inspired you to head in this direction?
Celeste Headlee: (03:13)
I mean, I was trying to solve my own problem, right? Which I had thought, having been broke for most of my life, I had these ideas about what it would be like to be financially stable. I thought, you know, I’ll actually have time. I won’t be hustling all the time, won’t be working all the time. I’ll learn to play the guitar and I’ll take salsa lessons and I’ll travel. Only to find that when I finally did reach, not just stability but abundance, it got worse. Right? I was busier than ever. There came along offers, I just felt I couldn’t turn down. And so when I was lying in bed sick with really severe bronchitis for the second time in like eight or nine months, I just thought, this is not working. Something has to change. And I started the research to figure out what was going on for me and only to realize it wasn’t a personal problem. It was a societal problem.
Jean Chatzky: (04:06)
What has caused this in society? I mean, I think we’re tempted to blame everything on social media. We blame things on gig work and freelance work and the fact that many of us have more than one job. But I also think there is something in what you said about this propensity of women like us. And I think I have an audience that is made up of women like us, to just keep striving even when we’ve gotten where we thought we wanted to go.
Celeste Headlee: (04:39)
It’s interesting, I have a chapter in the book called The Busiest Gender, that addresses this particular issue – whether women are more effected by this than men. And you know, the short answer is yes. Not by a huge amount, but yes, we are. I thought the villain of the piece was going to be tech and it’s not. If you throw all your electronics in the river tomorrow, it will not solve your problem. As it turns out, after years of research, what I discovered is that this really started in the industrial revolution when that steam engine went online. We aren’t taught, when we learn about the industrial revolution, just how much changed. The way to think about this is that human beings, homo sapiens, our species, lived a certain way for 300,000 years and change. Right? And then all of a sudden, two to 300 years ago, we changed almost everything. We literally altered almost every facet of our work at home life. And that change has continued toward the industry part in the ensuing generations. So yes, it has been a while coming, but in the history of our species, it’s a relatively recent change, which to me is hopeful. Because although it is ingrained in society right now, we changed it once, which means we can change it back.
Jean Chatzky: (05:57)
It does seem like when you talk about the steam engine and that sort of being the impetus for all of this change, that that is somewhat technological.
Celeste Headlee: (06:08)
It is. Absolutely, but you have to think about all the changes that came with that. Part of it was philosophical because when the steam engine came online, it was the first time in human history when time equaled money. Before that it had not. So in other words, if you broke a wheel on your wagon, you went and you got a wheel made and it didn’t matter how long it took, you paid for the creation of that particular wheel for your wagon. It wasn’t until we had factories churning out wagon wheels all day long, that it was the time that equaled money. That sort of equalled your profit margin, right? How many wheels can I put out in, at that point, we’re talking like 19th century, 12 hour days, 16 hour day. How many wheels can we get out? Right? That was your money. That was a seismic shift in human life. And one of the things that really surprised me was going back through these, and believe me, I read a lot of incredibly boring books so you don’t have to. Going back through these texts about the working hours of surfs in the middle ages and realizing they had more than half the year off. They didn’t work punishing hours.
Jean Chatzky: (07:16)
I mean, I’ve often thought that we don’t think enough about the fact that our time equals money and that we can choose really how much of our time we want to trade for money or for other things.
Celeste Headlee: (07:31)
Right? And I think it goes the other way too. It can become toxic and it has become, because now, because that is so ingrained in us that time is money. Then you feel guilty if you’re wasting time because you’re wasting money.
Jean Chatzky: (07:45)
You’re an advocate for wasting time. You’re an advocate for boredom. So what is the upside in boredom?
Celeste Headlee: (07:53)
Boredom is so productive. Let me explain how this works inside your noggin because we’ve kind of eliminated boredom, right? Remembering kids used to say, I’m bored. I’m bored. Right? I’ll give you somebody be board about. It doesn’t happen anymore. You just hand them a tablet. So when you’re bored, it’s a, it’s a state of mind that your brain does not particularly enjoy. So your brain immediately gets active on doing something. And so what ends up happening is neurologically you switch into what’s called the default mode network, which just means sort of like your librarian is sifting through the archives inside your brain. Your brain is going through all the information you’ve gotten recently. Sifting through memories. Making unexpected connections. Cause it’s just kind of wandering through all the things that you’ve learned in recent times. So that makes it your most creative and fertile frame of mind. That’s when it’s not focused on anything. And therefore you’re going to be surprised by the thoughts that come to you.
Jean Chatzky: (08:54)
This is why we have our best ideas when we’re out for a run and we’re letting our minds wander. I mean, I’ve noticed personally my mind does more interesting things when I run without my headphones than when I run with my headphones.
Celeste Headlee: (09:10)
Yeah. And one guy was telling me that he used to get great ideas in the shower. And I said, well, what happened? He goes, well, I listened to podcasts now. While you’re in the shower? For the love of God, do you not have three minutes? Yeah.
Jean Chatzky: (09:24)
So how do we do that? For me, it’s a conscious decision as it is, I’m sure for this guy to not listen to podcasts when he’s in the shower. To not go for a run with my headphones, even though I’m listening to a really good book. But it’s a little stressful at the same time, I got to tell you.
Celeste Headlee: (09:43)
It can be, and it’s because most of us are addicted to our technology. I mean, literally addicted, right? Like every time you refresh your Instagram feed, it’s shooting a shot of dopamine into your brain. Dopamine is the addiction hormone. Baby boomers are just as likely to be addicted to their cell phones as any millennial or gen Z. Let’s just lay it out there. So you’re addicted. I’m addicted. And it’s hard. So I actually suggest what you’ve just said is perfect. These little tiny changes. You don’t have to say, okay, I’m going to stop using my cell phone half of the time, right? No, just say, okay. When I’m out running, I’m just gonna listen to the world around me. I’m just gonna let my run wander. You can start a small as, I’m just going to take my shower again without podcasts.
Jean Chatzky: (10:27)
Not this podcast, by the way.
Celeste Headlee: (10:29)
Right. Of course. Obviously listen to this podcast in this shower. I play a game with myself in the morning of how long I can go without looking at my cell phone after I’ve woken up.
Jean Chatzky: (10:39)
What’s the record?
Celeste Headlee: (10:40)
Four hours. I forgot about it one morning.
Jean Chatzky: (10:44)
You left it home?
Celeste Headlee: (10:46)
I left it at home. Yeah.
Jean Chatzky: (10:47)
That’s pretty good.
Celeste Headlee: (10:48)
Jean Chatzky: (10:48)
That’s not bad at all.
Celeste Headlee: (10:49)
Jean Chatzky: (10:50)
You speak about something called the busyness delusion. What is that?
Celeste Headlee: (10:55)
Busyness B. U. S. Y. N. E. S. S. I made it up. It’s not in Webster’s. There’s a couple of things. First of all, we’re not as busy as we think we are. That’s why I call it a delusion. We have really good records of time use going back decades and decades. And so we know that in general, people today are working fewer hours, not more. Yeah. That doesn’t mean that when you feel overwhelmed and overworked that you’re wrong. There’s a reason why you’re feeling that way. It’s just not that you’re working more hours than they were in the 70s say.
Jean Chatzky: (11:26)
What is it?
Celeste Headlee: (11:27)
So there’s a few reasons. For example, when we get downtime, let’s say you get a 20 minute break between interviews or whatever it is that you’re doing, and you’re going to walk into the break room and sit there and scroll through your phone. Your brain makes no distinction between you scrolling through Instagram and work. So as far as your brain is concerned, you’re going the whole day without a break. And then you lie down in bed at night and you sit on your tablet and you scroll through stuff on your tablet. Your brain thinks you’re still working. So you never give yourself, either your neurology or your physiology, a rest. That makes you feel exhausted.
Jean Chatzky: (12:08)
So how do we get to the point where we can regain control?
Celeste Headlee: (12:15)
This is going to be a personal journey for a lot of people like it was for me. I put a lot of guidelines in the book that are not just Celeste tested but scientifically shown to be helpful.
Jean Chatzky: (12:26)
Well let’s start with you and then we’ll move to the guidelines. How did you gain control of your life?
Celeste Headlee: (12:33)
The first thing I had to do was track my hours. And the reason why that was so important is because it turns out we’re just not very accurate in knowing what we’re doing with our time. There’s a thing called time perception and it just basically refers to how good you are at being intentional in your time use. Time perception is pretty low in general. So I actually spent nearly a month with a little notebook and every couple hours I would write down what I did for the last two hours. And I was brutally honest about it. I mean, if I had spent 45 minutes searching through dog photos on Instagram, I wrote that down. At the end of that nearly month, I added it all up and realized I, I was spending way more time on social media and idly online shopping then I realized. I had no idea. Which also made sense when it came to my bank statement, right? Because you’re shopping and finding things you need that you didn’t even know existed 30 minutes before. So that was the first thing for me. And I had to kind of come to grips with the fact that on most workdays I really only have like maybe five at the most, six hours at my disposal. And I was spending half of that searching around on social media and on the internet. Right? That’s not how I wanted to spend that time. So I had to literally put things in place. I put things on my browsers that shuts sites down like Twitter, if I’ve used them for too long. I took all of those apps off my phone. I’d shut down almost every single notification except for my alarm and my texting. Right? So for me the first part of taking control was actually knowing what was happening.
Jean Chatzky: (14:19)
It’s amazing the parallels between what you put yourself through and what I put people through when I’m having them track their spending.
Celeste Headlee: (14:28)
Absolutely. And you know it’s also similar to what a nutritionist puts people through when they’re trying to track their eating.
Jean Chatzky: (14:33)
It is, and it works by the way. It works. Because none of us know, I mean, I’m little obsessed with the notification that I get on my iPhone that tells me whether my screen time is up or down for the proceeding week. And when it’s down I feel very victorious. And when it’s up, I feel like a loser. But it is interesting how tethered we are to these things. And I’m just as guilty as anybody else. I do a lot of online browsing, not as much online buying, but I know I waste a ton of time doing it. We’re going to get to the strategies for how do we retake control of our time so that we can use it the way we want to use it. It’s, it’s a limited resource and we should treat it that way. But before we do that, let me remind everyone, HerMoney is proudly sponsored by Fidelity Investments. What if you could 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? It all starts with a financial checkup and an understanding of what you own and what you owe. From there, the folks at Fidelity can work with you to evaluate your investment options and ways to grow your savings. You can get started today at Fidelity.com/demandmore. I am talking with bestselling author, Celeste Headlee, her new book. Do Nothing: How to Break Away from Overworking, Overdoing, and Underliving. Underliving. Describe underliving.
Celeste Headlee: (16:05)
Well, I like to think of it this way. Everyone is struggling and striving to earn more money, right? And to gain more power and status. And I like to ask people why, like what’s the end goal? Cause more money can’t be the end goal, right? You and I both know that above $70,000 and change, once your basic survival needs are taken care of, more money is not gonna make you happier, in general.
Jean Chatzky: (16:31)
Celeste Headlee: (16:31)
So, once you are above that threshold, what is the purpose of the more money? And most people can’t really tell me. It’s just that we have this push to be making more money. I mean there’s things they may want to buy, but we also know that buying more things isn’t going to make you happier than going and taking a hike through the forest.
Jean Chatzky: (16:51)
Celeste Headlee: (16:53)
Which costs you usually nothing.
Jean Chatzky: (16:54)
Yeah, no, it’s this level of comfort that you want to achieve and you really need to achieve in order to get happy. But beyond that, there is reams of research that shows that more doesn’t make us happier. And in fact, if you’re a Marie Kondo person, maybe you believe that less, in terms of your belongings, makes you happy.
Celeste Headlee: (17:16)
There’s evidence to support that. And this isn’t recent. We’ve known this for a while. Right? So in terms of under living the source of it is that we get so obsessed with means goals. The means to an end. You read an inc.com article saying every successful CEO wakes up at 4:30 AM and immediately makes their bed right? And you say, okay, I’m gonna wake up at 4:30 AM and make my bed. But to what end? Right? Just because it helped this other person doesn’t mean it will work for you at all. You have to look for your ends goals and let the ends goals determine your means goals, instead of the other way around. And that’s sort of underliving because you’re living someone else’s life. You’re living the recommended steps that Steve Jobs said would make you successful, which I’m sure worked for Steve Jobs. Doesn’t mean it’s going to work for you.
Jean Chatzky: (18:10)
How do you get a grip on what your ends goals are?
Celeste Headlee: (18:13)
That’s hard, isn’t it? Because end goals are nonnegotiable. We’re talking about making the world a better place, which is one of mine, right? Loving your kids and family as much as you possibly can unconditionally maybe. End goals are big and broad and non-negotiable. They can change, but frankly they usually don’t over the course of a lifetime. The great thing about end goals is, the means goals can change however many times they need to, right? If your goal is to make the world a better place, that doesn’t say anything about how much you’re making, what job title you have, whether you have kids or don’t have kids and where you live.
Jean Chatzky: (18:54)
Celeste Headlee: (18:54)
Right? Those all can change. Those are all flexible. They’ll all hopefully get you closer to that end goal as long as you’ve defined it. And that’s what you’re keeping in sight.
Jean Chatzky: (19:05)
So how do we then use our time? How do we, let’s get strategic, make some tactical changes in our lives in order to bring us closer to those goals, those big goals.
Celeste Headlee: (19:20)
Yeah. So I always suggest in everything to start small. And especially because in this particular case we’re talking about addiction. And I don’t just mean tech addiction. I’m talking about our addiction to hard work.
Jean Chatzky: (19:32)
That is an addiction?
Celeste Headlee: (19:33)
Yeah. We have gotten to the point in society where we think the harder you work, the better a person you are. And if you’re not working as hard as possible, you don’t deserve great things. Right? Like we don’t want a lazy person to succeed. And we think if someone isn’t working all the time and productive all the time and constantly improving themselves, they’re lazy. We have busy dysmorphia.
Jean Chatzky: (19:58)
Uh huh. I am so guilty. I am just listening and I’m thinking, oh my God, I have these perceptions of myself and probably everybody else.
Celeste Headlee: (20:08)
And it’s dysfunctional. It’s incredibly dysfunctional.
Jean Chatzky: (20:11)
And so how do we get rid of them?
Celeste Headlee: (20:13)
It’s going to take a global conversation because this is particularly bad in America, but it’s not only bad here. Really closely following in our footsteps is the UK, Canada, Australia, many of the English speaking countries and frankly the rest of Europe. You know as well as I do, we’re experiencing not just a burnout epidemic, but a loneliness epidemic, a social isolation epidemic. This is all because we have this idea that industry is the purpose of human life. And this is one of the chapters that I had to go kind of deep into where I ended up talking to evolutionary biologists and paleontologists, cause it’s a question. Are human beings meant to work? Is that the purpose of human life? Right? Again, no. You can be absolutely healthy and happy as a human being. If I were to give you $500 million tomorrow and you never had to work another day in your life, you would be okay.
Jean Chatzky: (21:14)
Except I think, and I hope I’m not the only one, I’m pretty sure I’m not the only one, but I’ve gotten to the point where I feel like… here we go guys. I am now on the couch. I’ve gotten to the point where I think work makes me happy. I like what I do and maybe I’ve convinced myself. No, I do. I like what I do. So what do we do with that?
Celeste Headlee: (21:36)
That’s okay. You can like what you do without it being work. So here’s the reason why work makes you happy in my opinion, and obviously there’s going to be disagreement about this. And it’s the same reason why if you were unemployed, even if you are financially stable, you would probably experience some level of sadness or depression. It is because we live in a society which values people who are working. And so therefore, it’s one of the reasons people have such a hard time retiring because when your work is your identity, what happens when that work goes away? Right? So of course work makes you happy. You have high status, highly renumerated work that is respected by the people around you and that you love and that you think is making the world a better place. But frankly, you could also reach those end goals without doing the jobs that you’re doing. And you would be okay, except for this societal idea that if that’s what you were doing, you are lazy and a lolly gagger and wasting your time and worthless.
Jean Chatzky: (22:40)
Alright. So I am a big believer in we control the things that we can control. I am not going to be able to facilitate a global conversation on this subject. Let’s talk about what we can do. What can we do in our individual lives to reclaim a little bit of time to restore ourselves, our brains and our sanity.
Celeste Headlee: (23:07)
Number one, I do think you can add to the global conversation and you’re doing it right now, right? Because the purpose of this book is to get people talking about it and rethinking it. And you know, we’re approaching work like we do the bucket of popcorn at the movie where you get to the end of the movie and you’re like, how did I eat all that popcorn? Right? You’re just mindlessly. So I want people to start mindfully thinking about their work hours. But even in your own life, one of the first things is, number one, take your vacation. Please take your vacation. And don’t leverage your vacation for work. Take a real break. The other thing is that when you get a moment free, whether it’s while you’re at work and you get lunch or whether when you go home, start re-establishing those boundaries between work and home life. Don’t answer work emails at nine o’clock at night. Don’t take your electronics with you into bed. Try to see how long you can go without touching your phone in the morning. And when you’re sitting down to eat, leave the electronics in another room. Just find those spaces, those little cracks in your day, when you can reestablish yourself as a human being and not as a laborer. You are more than your work. You have a place and a purpose on this planet that has nothing to do with what you produce.
Jean Chatzky: (24:29)
Celeste Headlee, we are all going to read this book. It is called Do Nothing: How to Break Away from Overworking, Overdoing, and Underliving. Thank you for writing it.
Celeste Headlee: (24:40)
Thank you for reading it.
Jean Chatzky: (24:42)
Absolutely. And we will be right back with Kathryn and your mailbag.
Jean Chatzky: (24:54)
HerMoney’s Kathryn Tuggle has joined me in the studio. Hey Kathryn.
Kathryn Tuggle: (24:59)
Jean Chatzky: (24:59)
Did I get a little too personal there?
Kathryn Tuggle: (25:00)
No, I thought that was great.
Jean Chatzky: (25:03)
You know, I am fascinated with this topic. I’m fascinated because I think I’m a little out of control in this way in my own life. Like I just have to put the computer down.
Kathryn Tuggle: (25:15)
I really feel like most people would say this, to be honest with you, because when I was doing the script for the show, I was just thinking to myself, wow, I feel really seen or maybe personally attacked. Not sure. I just think we work a lot, particularly the women who listened to this podcast, who are ambitious, who are trying to do everything right and do so many things. I think we probably all see ourselves in this.
Jean Chatzky: (25:45)
Yeah. Yeah. And that point about you’re not taking a break when you’re scrolling through Instagram. I mean, that was like, whoa.
Kathryn Tuggle: (25:55)
That hit home.
Jean Chatzky: (25:55)
I mean maybe it’s not Instagram, but am I taking a break when I’m watching TV? Am I taking a break when I, I guess I’m taking a break when I exercise, but maybe I’m not taking a break when I exercise, but I’m also listening to a podcast? Like that’s really hard to stomach because we think of these things. I think of listening to the podcast, scrolling through Instagram as fun and maybe because my brain doesn’t think of it as fun, I have to just completely shut down the outside input.
Kathryn Tuggle: (26:31)
Jean Chatzky: (26:31)
And look at the leaves, look at the water, smell the air, you know and really, really disconnect.
Kathryn Tuggle: (26:39)
It’s true. I wonder about reading. Hmm. Reading a screen that is not illuminated. If that would count.
Jean Chatzky: (26:47)
We’ll have to Celeste.
Kathryn Tuggle: (26:48)
Jean Chatzky: (26:48)
We will. The next time we have her back, we’ll definitely. We’ll definitely have her back again. We’ve got a bunch of questions. I know. Let’s get to those.
Kathryn Tuggle: (26:57)
Our first question comes to us from Sarah. She writes, how much do you recommend saving each month or year for children’s college funds? We set up 529s for our kids when they were born. They’re now nearly three years and eight months. Our goal is for tuition to be fully funded by the time they turn 18 with the hope that they’d go to a public in state school but who knows. It’d be great to have extra money for living expenses. How much money do you think we should have saved by the time they start college? What is recommended?
Jean Chatzky: (27:26)
So I want to answer this question Sarah in two ways because I hear what you’re saying. You are hoping to be fully funded by the time they go to school and fully funded for a public in state school, you’re probably based on the age of your kids looking at about $180,000 each, which is a huge amount of money. So I want to back off that recommendation and tell you that when I talk to the smartest people that I know in the world of college savings, they advocate parents aim to try to save about a third of the cost of college. And the reason for that is that they assume that kids will have some stake in the game, that maybe they’d borrow a third, parents pay a third through savings, and then the last third is made up, as you’d pay for any other big expense, out of current cashflow at the time. Maybe by tabling your retirement contributions at that point or backing off for a little while or just simply that your earnings have increased, but your standard of living has not kept pace and you’ve got a little bit of extra breathing room there. I get the desire to try to pay for the entire thing. I really, really do. Having put two kids through college myself and just written that last check about a year ago. But I also think as you’re trying to save for your own retirement, which is the financial goal that has to come before this, if you can’t get to that level, don’t beat yourself up about it. Just aim for the third and know that when it comes to doing right by your kids, you absolutely are.
Kathryn Tuggle: (29:19)
Yeah, that’s so much. It’s such a gift. Anything that you can provide for your kid is a gift.
Jean Chatzky: (29:25)
Yeah. And I am not opposed to kids having a stake in the game. I think that when kids are, not that they should be taking out more college debt than they can reasonably afford to pay back, and I think that’s a separate issue, but that they are motivated to do well, motivated to get through, that they understand the cost of this.
Kathryn Tuggle: (29:52)
I motivated to apply for scholarships.
Jean Chatzky: (29:54)
Oh, for sure. And motivated to choose a school that wants to have them and that will give them financial aid that doesn’t have to be repaid.
Kathryn Tuggle: (30:03)
Jean Chatzky: (30:03)
That will give them, I mean, your kid’s job as you’re raising them from babies till they’re done with high school, their job is to do well in school, to build a resume, to become the kind of person, if college is in the cards for them. And I don’t believe that it’s in the cards for everybody, but if it is, to become the kind of person that a college wants to have, to the extent that they will give them some money.
Kathryn Tuggle: (30:30)
Yeah. Great point.
Jean Chatzky: (30:32)
Kathryn Tuggle: (30:33)
Our next note comes to us from a listeners signed Confused and Bankrupt. She writes hi Jean. I hope you and the crew are doing well. I have a complicated situation and hope you can give me some insight. Here goes. I’m a 43 year old woman who’s going through a divorce, closing my business due to taking on too much debt and revenue slowing down and filing for bankruptcy. I started saving for retirement at age 40 so I’m way behind the game. I have about $15,000 in my retirement account and $18,000 in a non-retirement account, which is also earmarked for retirement. I’ve been advised that some of the money in the non-retirement account needs to be spent down because it will not be protected in bankruptcy, meaning I’ll lose it. That upsets me because I’m already late in saving for retirement as it is and not only do I have to take the money out, I won’t be able to contribute any money to those accounts until after the bankruptcy cases settled maybe six to 12 months. I have about $180,000 in student loan debt and a $40,000 car loan. I’ve tried selling the car, but it is an underwater. I’ve taken a job but it doesn’t have health insurance or any other benefits. I’ve interviewed at multiple facilities for jobs with benefits, but have not been successful just yet. I have some health issues, so health insurance is necessary for me. I’ve also thought about getting an MBA in finance or accounting at an online university with the hope of understanding the financial side of running a business. I’m just not sure what to do. If I’m honest, I’m very confused and need a step by step plan to turn things around. I’d like to go back into business because I have children. One is three years away from college and the other is five years away. I have nothing saved for their education. My thought is that having a business and understanding the financial aspects may help me do a better job of running it and also help pay for their college. If I was your younger sister, what steps would you tell me to take given the overwhelming financial mess I’ve made of my life. As you can probably tell by my letter, I’m kind of spinning and not sure what to do. After the bankruptcy, what would steps one, two and three be for someone in my position?
Jean Chatzky: (32:37)
First of all, let me just say I am so sorry for everything that’s happening to you. I mean this is just a one, two, three, four, five punch, all at the same time. Starting the divorce, closing the business. Here’s what I would not do. I would not go back to school.
Kathryn Tuggle: (32:55)
I had the same thought.
Jean Chatzky: (32:56)
Whether you go online or not, you’re going to be spending money that you don’t have to accomplish a very squishy goal, because you don’t really know what that goal is. I would look for a job that has health insurance. That’s what I would do. Redo your resume. Take a look at the experience that you have accumulated in your years of running that business. If you need help with that resume, spend a little bit of that money in the non retirement account for a good resume coach, career coach to get your interviewing skills to the point where you feel like you’re on your game and you can go out there and you can sell yourself and sell your story. And then look for a job with really good benefits. If you find a job with health insurance and a 401k, you are young. At 43 years old, you are young and you will be able to accumulate a sizable nest egg just through regular contributions into a retirement account. As for college for your kids, that ship has basically sailed. So don’t beat yourself up about it. Help your kids fill out the FAFSA. They will need your financial information to do that. They will need your ex- spouses information to do that. Help them figure out as we were talking through with the last letter where the colleges are that want them and how they can apply for schools that will give them a sizable amount of aid. The nice thing, if there is a nice thing about your situation, is that because you don’t have money to help them, assuming your ex-spouse also doesn’t have money to help them, they should get decent aid packages. I mean not just student loans but actual grants and the more grants the better. But 43 is young. That’s the big message that I want you to come away from and you can absolutely pick yourself up and move on from this. I think not running the business but being an employee in somebody else’s business is the key to turning this around.
Kathryn Tuggle: (35:16)
I agree and you’re right, 43 is so young.
Jean Chatzky: (35:20)
It’s so young.
Kathryn Tuggle: (35:21)
And for so many people bankruptcy can be that fresh start. Just kind of take a match to it and walk away from the ashes with a brand new plan and a brand new salary with benefits.
Jean Chatzky: (35:32)
Absolutely. Absolutely. I got divorced at 40. I mean I’ve talked about this before that my whole life was turned upside down basically at 40 and rebuilt my savings, rebuilt a lot of different things and you can absolutely do that too. I think the future is going to be much brighter than what you’re coming from.
Kathryn Tuggle: (35:52)
Wonderful. Our last question comes to us from Kelly. She writes, I would love to find out more about what kind of specialist to contact when you want to get one on one help with budgeting. The online tools, apps, and online classes that are out there today are great, but I’d love to be held more accountable and walked through my specific budgeting situation in a more step-by-step way. I do have a financial planner, however, outside of general advice on planning for my future, it does not seem like she’s there for budgeting. What I really want is to set up something easy that allows me to make sense of exactly how much money I have coming in and get help allocating the funds for each month and each week. I’d then like to meet with someone periodically, perhaps once a quarter for accountability and questions. I should also mention I live in Maine, which doesn’t exactly have a lot of options, like a bigger city like NYC or Boston. What’s your advice here? Thanks so much.
Jean Chatzky: (36:46)
First of all, Kelly, I hope that you’ll keep your eyes peeled for our online coaching program, which will launch very shortly and where you will have a person to work with. You wouldn’t meet with them face to face, but you would meet with them on the phone and you can get that sort of targeted advice as well as the accountability that you’re looking for. But in the meantime, I want you to look in an organization called the AFCPE. That’s A like apple, F like Frank, C, P like Paul, E like Edgar. They’re an organization of certified financial coaches and educators and they focus on the budgeting part of the equation where financial advisors, not all of them, but many of them tend to focus more on the investment side of things. There’s a website, it’s AFCPE.org. You can find one in your area and you can work with them again in person or remotely. And I’ve known of this organization for a long time. I’ve spoken at their conference. I think that their training program is really, really good. So I think you’ll be able to find someone to help you.
Kathryn Tuggle: (37:58)
Jean Chatzky: (38:00)
Thank you so much Kathryn, and thanks everybody for writing in. If anybody wants to send us an email, what’s the best way to do that?
Jean Chatzky: (38:12)
Excellent. Thank you Kathryn.
Jean Chatzky: (38:15)
And in today’s Thrive, let’s talk life insurance. I know, I know most people avoid thinking about life insurance for as long as they possibly can. But let’s set our emotions about this topic aside for a moment and answer a simple question. Would anyone suffer financially if you weren’t around to provide them? If the answer is yes, then you need life insurance and you should consider buying some type of life insurance. But what type makes the most sense for you and for your family? Here’s a crash course. First type, term life insurance. Term life provides coverage for a specified amount of time, often in increments of five years. You can buy a policy for 10 you can buy a policy for 20 and it’s usually the most inexpensive form of life insurance. There aren’t any bells or whistles. If you die during the term your designated beneficiary collects the death benefit and if not the policy ends once the term is over. Type two, employer-sponsored life insurance. Many of us carry some basic term life insurance coverage through our employers and we don’t even realize it. Check with your HR department to understand what may be available to you if you’re unsure. The downside is that this type of insurance isn’t usually portable, meaning that when you leave your job you lose the coverage. Type number three, permanent life insurance. Permanent life insurance provides coverage for life, as in your lifespan, as long as the premiums are paid. It can also accumulate a cash value. A portion of your premium goes to building cash value, which can then grow tax deferred from policy dividends, from interest, from investment earnings, and you can borrow or withdraw the cash whenever you need it. There are three major types of permanent life insurance. There’s whole life, there’s variable life and there’s universal life. With whole life, you’re guaranteed a certain death benefit and rate of return on your cash value, which comes from the premiums you’ve paid and the interest they’ve accrued. Variable life provides a death benefit and a cash value that rises and falls with the performance of underlying investments. You choose how to invest your premiums and you, not the life insurance company, assumes the risk. Universal life has adjustable premiums, meaning you’ll have the option to pay more or less as long as you’re maintaining the cost of the insurance. You can also choose how your money is invested. You have the option to pay your premiums with the cash value that has built up, so instead of writing a check to your insurance company every year, you can draw down the cash value to pay the premiums and maintain the policy. The policy is self-sustaining unless the cash value runs out. Lots of information in there. I know. We are going to post this information on HerMoney.com. So if you need a refresher, you can just go there, you can pull it right down and you’ll be ready to shop for the sort of life insurance that makes sense for you.
Jean Chatzky: (41:28)
Thanks so much for joining me today on HerMoney. Thank you to Celeste Headlee for the inspiration to take more pauses in our life and to assess what’s really serving us day to day. 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 Video Helper and our show comes to you through PRX. Join us next week. We’ll sit down with another great HerMoney guest. Thanks so much for listening and we’ll talk soon.