This week, V is talking money, money, money, money – MON-AYYY – with gal pals Jannese Torres-Rodriguez of the Yo Quiero Dinero podcast and First Gen Living financial coach Maria Melchor. At a time when there’s a lot of recession chatter – we will sort out what’s worth worrying about, where you can have fun on a dime, and the “boss babes” MLM schemes to watch out for. They’ll give us advice on what to do when the economy slows down, and why even folks ballin’ on a budget can diversify their income streams. Let’s get financially literate!Follow Jannese at @yoquierodineropodcast and Maria’s work at First Gen Living.
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V Spehar, Jannese Torres-Rodriguez, Maria Melchor
V Spehar 00:00
Hey, friends, it’s Friday, July 15th 2022. I’m V SPEHAR. Welcome to V INTERESTING. As you know, on our Friday episodes, we dive a bit deeper into something that we’re all really curious about. And today, it’s cash money. So real talk, do any of us have any money right now? And if we do, like, how do we get more of it? How do we protect it? What is this savings account that you speak of? Is the government about to take it all away? What is the recession? What is inflation? What is going on here? Hold on to your fancy credit cards with all the points my friends because it is about to get real. I am so excited to welcome two women who are doing what they can to best educate the public on how to make sense of our dollars and cents. First, we have Jannese Torres-Rodriguez, she’s the creator and host of the award winning personal finance podcast, Yo Quiero Dinero. Or I want money. We also have Maria Melchor. She’s the founder of first gen living a lifestyle brand that provides personal finance education tailored to first generation immigrants, students and professionals in the United States. First off, I want to thank y’all so much for joining me, I am so excited for this chat. And secondly, let’s just cut to the chase. What made you interested in money? I mean, maybe start with Jannese, everybody’s interested in money, but specifically, what drew you to finance?
You know, I found myself in my late 20s, early 30s. And realizing that all of the messaging that I got from society, my family friends, was just completely arbitrary, and was not really geared towards what I wanted to do. When I thought about, like, what my actual life goals were. And so I kind of went down the checklist of life, you know, got married, bought the house, got the good career, got the pension and found myself effing miserable. And at that point, I knew there was something wrong. I clearly don’t know enough about money to actually be using it as a tool. I felt like he was controlling my life. And I needed to figure out a way to switch that dynamic.
V Spehar 02:05
That makes a ton of sense to me. And I’m excited to hear more about this journey of like, I did everything I was supposed to do. And I was still miserable, because I think a lot of us are feeling that way right now. Maria, what about for you? What, what brought you to having an interest in money?
Yeah, hi, thanks for having me. And what brought me into the money world was actually very different than Jannese and I had just graduated college and had leftover money after pay my necessary bills, I was brand new to getting that monthly paycheck. And I, as an immigrant from a low income background, I felt this huge responsibility to make the most of it. So straight from my first few paychecks, I started reading books, consuming content and learning more about what I could be doing with this money. So very different.
And you both have platforms that help educate other folks on how to manage money. So, Jannese, just tell me a little bit about when you started yo quiero dinero. What was the goal there?
Yeah, so I found myself wanting to learn about money from a community or a person that I could relate to. So a lot of how folks begin to learn about money. It’s through people like Dave Ramsey, or Suze Orman. And they’re hella problematic for so many reasons. But most importantly, because they’re just like too old white people who are out here like, you know, spewing advice that might not necessarily be relevant to people who are millennials, Gen Z, people who don’t conform to, you know, specific genders. There’s so much nuance when it comes to money. And there’s just not a lot of mainstream personal finance content that addresses all these specific communities. And so I found myself, you know, diving into a lot of content, but again, finding a bunch of white guys talking about money, like, where’s the Latinos, right? Where are the women of color? Where are there people who I can actually resonate with and who have my cultural understanding, they understand where I come from the specific things that I’m dealing with as a first generation Latina. And so, you know, before I did all this personal finance stuff, I was an engineer. I did that for about 14 years. And so I think the way that my brain works is, I was trained to find solutions to problems. And the problem was, there is nobody talking about money on a podcast who’s Latina, first gen where she at, so I decided to become that person. And that’s honestly where the whole idea came from. And it was absolutely inspired by the Cardi B and J. Lo song, […], I was listening to it in the shower one day, and I’m like, that’s the podcast name. And I literally ran out of the shower, did a Google search, find out how to start a podcast and here we are three years later. It’s wild. It’s been a wild ride.
V Spehar 04:46
It is about seeing that need and feeling that need, right, like we think about people who are talking about money into your point. It is typically people who had money which was older White fellows who are like well, if you kids would stop drinking Starbucks, like everything would be six, right?
Jannese Torres-Rodriguez 05:02
It’s not the avocado toast or the Starbucks that’s making you poor. It’s the systematic oppression.
V Spehar 05:07
Yes, exactly. So I am excited to get into that. And Maria, tell me a little bit about you said, you were graduating college and had already realized, you know, I’m gonna have to start to really put a lot of emotional capital into what’s going on with my money. Oftentimes, we graduate college, and we’re like, whatever. This is the first time I’ve had adult money, and I just need to spend it and have a little bit of freedom with it. What kind of drove your feelings at that time to say, no, I’m not going to get that luxury of being kind of reckless and young with money.
Absolutely. So that is, what I was thinking is, no, I don’t have the luxury of just spending my money. And that’s where first gen living started. I wanted to talk about money and about feeling this pressure to do more with my money as a first generation immigrant. And I didn’t want to push it on to my friends or the people around me. So I started first gen on Instagram, I said, this is how I can talk about these topics and possibly connect with other people who are going through the similar paths. And a kind of branched into, oh, I’m sharing my own journey as well, and sharing how I’m negotiating these competing interests, right? Like, I want to build wealth, but I also don’t want to leave my family behind, I care about giving back to my communities. I don’t feel like I belong in this stereotype that is associated with caring about money of, oh, you know, I want more money, I want to be rich. But at the same time, like I do kind of want that. But again, I don’t want to make it so that people think that that means leaving behind or forgetting about my community and where it come from. And so that’s what virgin living was born, just talking, seeking out people like me with similar interests and similar conflicts around money.
V Spehar 07:11
And something that’s happening on TikTok that I want to bring up first is there is a ton of chatter about the recession, this looming recession that’s going to like swallow us all hole, right. And there’s some folks out there who present themselves as experts telling us, You got to pull all your money out of the bank, you can’t trust the bank. Other people are saying throw all your money in crypto, right, which is even harder to understand. And it can be difficult for people to decipher, especially if you don’t grow up financially literate. How much do we actually have to worry about recession right now? And I could see you nodding Jannese, maybe let me know what you think?
First of all, yeah, I always tell folks, when it comes to personal finance, information, advice, take everything with a grain of salt, you know, you have to be your own best advocate, you have to be just don’t take what people are saying for, you know, blanket advice, because there’s so much nuance in our own situations that we need to consider. Now, with regards to the recession, you know, some would argue that we might already be in one, will probably confirm that information later this summer, when the Fed meets again, and basically tells us has the economy continued to slow, is the unemployment number going up, or people starting to lose their jobs, are consumer spending less. That’s essentially what we’re talking about when we say the word recession, is a period of declined economic growth, less spending, businesses are seeing less consumers, people might be losing jobs, employers might be cutting back. So all of that being said, I think when the economy slows down, it’s also a good time for you to slow down, take a look around, see what the landscape is for your own personal finances, what’s happening with your own money? Are there talk of potential layoffs that your employer might want to think about maybe revising that resume? Is there talking about, you know, potentially losing your job or your partner losing their job? What’s your emergency fund look like? Have you been kind of lacks on that, because you, you know, just assume that we’re gonna continue to see this period of record growth that we’ve seen in the economy, that might not be the situation going forward. So maybe looking at things like bulking up your emergency fund, looking at your current debt situation, especially with credit card debt and interest rates going up. That means that debt is going to get more expensive. So if you haven’t been prioritizing your credit card debt, now’s the time, what’s the plan? What are we going to do about this? And one of the things that I saw a lot of people do back in the 2007-2008 recession, I graduated right in the middle of that. So that was fun. So I’m kind of like, you know what, I already know what to expect. I have a primer of what I should be doing with my money. And one thing that I tell folks, especially now, diversifying your income streams, finding a side hustle, figuring out how to make extra money that’s going to serve you well because even if you lose your job or your partner loses your job, or you get a reduction in salary, you know, you have to move to a lesser paying career, having ways to make money outside of that 9 to 5 paycheck is going to be really powerful. And it’s going to prevent you from potentially going into financial catastrophe.
V Spehar 10:13
I have to tell you, I was also an elder millennial during the recession, I graduated grad school in 2005. And I had done like a little bit of work. But when that I had just started to feel secure, right around 2007-2008, I had like two years of working experience under my belt, and I was just starting to get a little bit promoted. And I was just starting to feel like I had a little bit more than Starbucks money. And I felt like the recession was actually like, kind of good for me in some ways, because the cost of luxury goods went down so significantly, and so I was able to as a person who didn’t have a lot of money that got lost in the stock market, and who wasn’t like a big finance bro, who was worried about my million dollar salary going away, as just an average person, I felt like I had access to things I didn’t before. Do you think that the average person might benefit in some way from the recession?
Well, I think it’s interesting to think about, because one of the big areas that we saw hit hard during the recession were home prices, right? So a lot of people were foreclosed on, homes were being sold for less than what folks purchase them for. I don’t know if we’re going to see that same situation this time around, because there’s a couple of different things in play that are not necessarily related to what was going on back then, primarily that the origin or a big part of what contributed to the last recession was subprime mortgages and predatory lending practices by the financial institutions, right. So they were giving people who were not qualified, who didn’t have the amount of money they needed to really make these mortgage payments on a consistent basis, a lot of folks were unable to keep up with their mortgage payments, especially because a lot of these mortgages were adjustable rates. So as the interest rates went up, they would become more expensive. People originally thought they could afford it, then they couldn’t. Now what we’re seeing is interest rates are being pushed up by the Federal Reserve in order to tamp down inflation, which is another thing that we’re dealing with now. So they’re basically trying to have folks slow down, because the housing market has been spiking, because interest rates have been so low. And because people had so much reserved capital from the pandemic, people are crazy about spending now. It’s like their rage spending, we’re gonna buy all the homes, we’re gonna buy all the vacations, we’re gonna do all the things that we couldn’t do in the past two years. So it’s definitely a different environment that we’re in right now. But that being said, you know, I have started to see home prices start to decline from their highs. So that might be a good sign. But then again, you know, because interest rates are going up, it might not be as affordable as it could have been in the past when interest rates were lower. So we’ll have to wait and see.
V Spehar 12:42
for the average person who let’s say, listen to this podcast and doesn’t own a home, they’re just renting, they have a job. That’s like a decent job. Like they’re making enough to kind of cover their bills. What expectation should, what should they be thinking about as we’re approaching this recession? They’re not at risk of losing their home. But they are a renter, they have a little bit of money, like, what might it feel like for them?
Yeah, so I’m a renter to I’m a reformed homeowner, I realized it was just not the thing for me at this time. And so if you’re renting, that’s perfectly fine. Don’t let anybody convince you that, you know, renting is a waste of money, you need a roof over your head, and however you can get it is how you can get it. So that being said, I think if you’re in a relatively stable situation, income wise, and you are not looking to purchase a home in the next few months, or maybe even the next year, focus on the things that can push your financial goals forward, faster. Things like, again, finding out ways to make extra money, because who doesn’t need that in any way, shape, or form, and then use that money to invest. Investing at any point is a good idea. But especially when we’re in an environment where stock market has gone down, prices are cheaper than they were, and you have time ahead of you, if you’re in your 20s 30s 40s 50s, even you know, you could be 60 years old right now, if you have at least five years until you need this money. Investing is a really great thing for you to get involved in, if that’s not already part of your normal budget. So making it a monthly goal, investing a certain amount of money every year, that’s a really good way to start practicing the discipline that it takes to become a long term investor and a long term wealth builder.
V Spehar 14:21
Yeah, I know, I’m so terrible at that I like get an extra gig and I’m like, oh my god, okay, I’m gonna go spend it right now, instead of investing it, because it’s like, so easy to look at that extra gig that you pick up and be like, okay, I can improve my immediate quality of life tonight. By doing this one thing that I feel like I’ve been locked out of before, but having that discipline to say, okay, I can also, you know, put this money in a space that I’m going to save or I’m going to invest in later, I’ll have more to deal with. Celebrating that as a little impulse buy, if you will, but it’s not an impulse buy, it’s an impulse save. That is definitely something that I need to get better about. And I’m glad to be reminded of Maria, what’s happening with Gen Z. What are they chat Think about this will be your first recession, but not your first historic catastrophic event live through, what are the kids saying?
I’m thinking about my clients. So I actually do financial coaching. So I work with people on educating them on finances, on budgeting, saving, investing. And if I’m somebody who, you know, is struggling to make ends meet already, that inflation costs are already hitting my household? Well, I’m thinking about, okay, you need to diversify your food pantry, right? It’s okay to go to the local food bank and diversify some of what you have at home with what you can get there. You can also, if you’re in the cities, go to your local ethnic food shop and get some discounted groceries there. If you’re in the suburbs, there’s usually discount food stores there. I’m also thinking about reducing your gas prices, right. So if you own a car, switching to public transportation, taking the bus few days a week, carpooling with your friends, or even cycling in New York City, you see a lot of e-bikes, these e-bikes are great right now, they can get you around for much more cheaply than if you’re in a car. And then I would look at your last three credit card statements and really scrutinize any recurring charges. So those recurring charges like a gym membership that you haven’t used in a year, or a service subscription that you use maybe a couple times a year. For most of my clients, this usually opens up $100 to $300. And one last thing I would say is to avoid credit cards, start switching from heavy credit card usage to low or no credit card usage for people who are struggling already. But if you do have ongoing discretionary income, I mean, of course bulking up your emergency fund to at least three months’ worth of living expenses, ideally up to six months. And many of my clients asked me, well, what is an emergency fund, like what is 1, 2, 3 months of living expenses, and I would again, look at the last three credit card statements that you have and just see how much your lifestyle costs, right? Somebody living in New York City versus somebody living, I don’t know, in some lower cost living area is going to have a very different lifestyle costs. So look at how much it takes for you to live month to month, and then multiply that times the number of months that you want to have in your savings. So it’d be number one emergency fund. And number two would be credit. And of course, I do want to make a pitch for investing. Investing is a long term game, continue investing in diversified, regulated stock market products that are tailored for that long term growth that is designed to ride out the set ups and downs of the market.
V Spehar 18:14
We’re going to take a quick break right now. And when we get back, we’re going to talk more about some tips and tricks when it comes to budgeting, saving and finding money. But also, we’re going to break down what this interest rate thing is because to me, it sounds I can’t get it. So my friends here are going to help explain to us what does it mean that the Federal Reserve is raising interest rates, all that right when we get back. And we are back. Thank you guys so much for being here with me. This has been so helpful. I have like pages and pages of notes already. But what I want to jump into next is a little bit of the nitty gritty helping the listeners understand what is all of this business as it relates to interest rates. We heard that the Federal Reserve last month raised the interest rate, raise three quarters of a percentage point that equates to the most aggressive hikes since 1994. That means nothing to me that sounds like gibberish. I have no idea what that means. Can you just explain to me what raising the interest rate means to like the average person who just is really, you know, the most basic kindergarten version of this, please?
Okay, so yeah, this is why you know, personal finance is something that we have to continuously educate ourselves on, because so much of the terminology is kind of like, What the hell is this talking about? And how does this affect me, right? That’s what we all care.
It feels intentional. It feels like they use these words to make me bored and then I don’t pay attention and then all of a sudden, I’m like, shit, what happened to my bank account?
Exactly. If you don’t know how interest works, it can negatively affect you when you’re, you know, borrowing money, and you have no idea what you’re actually going to pay for it. So that’s what we’re talking about when we say an interest rate, an interest rate is just a reflection of how much it’s going to cost you to borrow this money. And so that if affects everything from individuals with credit cards, mortgages, personal loans, car loans, but it also affects businesses and then being able to take out money to, you know, grow their business or invest in some sector that they’re trying to, you know, to do. So when the Federal Reserve raises interest rates, essentially, what that means is that they are increasing the cost of credit throughout the economy. And so higher interest rates make loans more expensive for both businesses and consumers. And everyone ends up paying more in interest. Okay, so how that affects us on a day to day is, basically, if we are spending money on credit lines, it’s going to be more expensive, and that might encourage folks to spend less. And so when we’re in an inflationary environment, what the Federal Reserve is trying to do is actually encourage people to stop spending so much money, because that is part of what is causing all the prices of goods to go up. There’s a lot of demand, there’s not a lot of supply. And so folks are driving up the price, because they want to buy things that are not in readily available for folks.
V Spehar 21:09
I gotta ask with the interest rate going up. Does that mean it’s up pre pandemic level? Or is it up even further than that? Because they dropped everything for the pandemic to try and get people to spend money?
Yeah, so we are, we haven’t seen these high interest rates since the last recession essentially, okay. But back in 2007 2008, interest rates were essentially brought to zero. And they’ve been slowly taking up, up until COVID-19. And the whole pandemic, they went back down to close to zero to encourage folks to spend, because at that point, the economy was crashing, but now we’re somewhere, we’re hovering somewhere around like, five, five and a half percent for a mortgage where, you know, less than a year or two years ago, you could get a mortgage for like two and a half percent, 3%. So, I think it’s important to see like, from an example how this would affect you, if you’re, for example, home shopping. So let’s say that you wanted to purchase a home $300,000, 30 year fixed rate mortgage, and the bank was offering three and a half percent, which was not unheard of before the Fed started raising the rates, the total lifetime cost of that mortgage would be approximately $485,000. So you’d pay $300,000 for the home, 185 in interest, okay. And your mortgage payment would be somewhere around $1,300. Now, purchasing that same home, four and a half percent, over that 30 years, you’re going to pay instead of $485,000, in interest, you’re going to pay $547,000. So instead of $185,000 of interest, you’re going to pay $247,000 in interest, and your mortgage payment would instead of being $1,300 would be over $1,500. So you can see how you know on a monthly basis, it’s going to affect you, because you’re coming out of pocket more on that monthly basis. But even in the overall span of you owning that home, let’s say you do own it for 30 years, you’re gonna pay an extra almost $50,000 in interest for the same exact thing. It’s still the same house. So that’s how interest rates affect us.
How do you ever resell the house was my question, right? Like, my parents bought a house in the 90s for like, I don’t know, $12. And they just sold it during the recession for like $300,000. And my dad was like, this is great, it was such a great investment. I often wonder now is it such a great investment to buy a house, because when you’re buying it at 400,000, for the same house, my parents would have paid like, again, $12 in the 90s for or 64,000 or whatever, trying to resell that for what you end up paying for it. I mean, that is just like mind bending, I can’t imagine how they’re going to sell my childhood home again, for $500,000, for half a million dollars. And that’s kind of what’s happening.
That’s what happens. And real estate typically grows in value 2% to 3% a year. So you can just imagine, if you own a piece of property for 10, 20, 30 years, you know, it could double in price, potentially. And a lot of that is also based on where it’s located, you know, the features of the home what the current economic situation is, there’s so many things that play into, you know, what you can sell a home for at any given time. But I think it’s safe to say that real estate will always be in demand. Because we’re humans, right? We need somewhere to live. So whether it’s you owning the home, as you know, a homeowner or that’s you renting a home that someone else owns, somebody’s always going to be making money on this stuff, it’s just one of those expenses that all of us need in life, you know, and so there’s a guaranteed consumer market for homes forever.
V Spehar 24:44
The way that the Fed has increased the interest rate, this is a temporary thing. How is this economic picture for the average American going to look over the next 10 or 20 years? Is this going to really bury us or is this something that we’re going to be able to overcome? How do we overcome it?
Yeah, I think it’s simple possible like, if you know the answer to that question, I’m like, please let me know what the lottery numbers are, because I think it’s really hard for us to predict what’s going to happen in the future. But it’s safe to say that the economy works in cycles. So, recessions are a part of the normal economic cycle, the same way that booms like we’ve experienced for the past 10 plus years are. So I think when it comes to something that you can do, whether there’s a recession or whether things are great financially, living below your means, goes a really long way to, you know, basically immunize yourself as much as possible against what’s happening in the market. What I think happens to a lot of us and I know I was definitely a victim of this is lifestyle cretin, or like trying to keep up with the Joneses. Right? So as we’re making more money, I’m like, Well, I gotta show off that I got this new job, I gotta get this new car, I got to upgrade my home. And a lot of the times, those are not things that we necessarily need to do. We feel a lot of external pressure to show off the success of our hard work. And that’s very American, that’s very capitalist. And I encourage folks to like, really think about what are their needs that you have versus the wants. It’s not to say that you have to live frugally. You can’t ever go to dinner, you can’t ever you know, upgrade your home or your car. But like do it in a way that you’re not sabotaging your future self. For the current joy, you know, the fleeting joy that comes with a lot of these decisions that we make.
V Spehar 26:25
I’m adding that to the notebook, lifestyle creep, that is definitely something I need to paint on the wall in here. Maria, I want to ask about, like commodities that go up in value, you know, like, should I start hoarding my mint plants? Because someday I’ll be able to barter with them. Or like, I found the silver dollar from the 50s and my grandpa’s wallet the other night, like, what will this buy me with the boomer overlords someday, is there is there a real potential or opportunity in converting paper money or digital asset to things like silver or gold?
So I have to say that when I think about items, products that go up in value over time, I am too big of a fan of mutual funds, index funds, and other long term stock market investment products, that I Don’t dabble at all into anything outside of that, in the way that Jenny’s was talking about the ups and downs of the market and just the cycles of our economy. One, I like to look at the data and like to look at historical data precedent. And I have seen a research right that if we look at the data, we know that investing in the stock market in a diversified product can get me some pretty moderate, and for me, pretty meaningful returns. And I am also have this mentality of a balanced financial life, of having kind of a sustainable financial life. And when I think about it that way, I want to minimize the amount of time that I spend trying to really like, make the most out of any potential financial tool out there. And so for me, if you were to look inside my wallet, look inside of my bank accounts, all you would see is my planning for these short term goals, medium term goals and long term goals. And I love to have fun, I just came back from vacation, I definitely want to be spending my money. But I consider these short term medium term financial goals. They’re just as important as saving. But I’m also thinking about those long term goals. And that’s where investing in the stock market comes in for me. So if you were to look into my money, you would see some cash for these, these short medium term goals and then some index fund investments for my long term wealth building goals. So I wouldn’t focus on that at all actually.
You’re saying like mutual funds, index funds, like where how could somebody get involved in learning more about that?
Yeah, absolutely can follow me first gen living I love to talk about mutual fund index fund investing long term investing, you know, I have a low risk tendency, I like to know where I’m putting my money before I do it. And I like to do my research before I proceed with anything that involves my money. And so I talk a lot about these topics. And if I were to be very, very new to these topics, I would pick up a book, my favorite book on money and it covers investing in the stock market is I Will Teach You To Be Rich by Ramit Sethi. That’s my favorite book for personal finance and investing.
V Spehar 30:09
Nobody’s nodding. So I feel like that’s a good one. What was the name of that again?
I Will Teach You To Be Rich.
Okay, we’re going to look at that. We’re going to take a quick break, and then we’re going to come back with a warning for folks. In my experience during the recession last time, we saw a lot of people start a side business. But this was really kind of the ethos of the boss babe era for millennials. So we’re gonna give you a little warning, stuff to look out for when people are giving you opportunities to start a business to make sure that you don’t end up in the boss, babe, MLM, we’ll have that right when we get back.
Okay, we are back, thanks for supporting the products and services that support this podcast. And speaking of products and services, let’s talk about starting businesses. There could be a lot of predatory folks out there who are trying to build you into their pyramid scheme, build out their line, and that can end up really taking you out, especially during a recession, when you don’t have the opportunity to maybe recover as quickly. What are some red flags when you’re looking to start a side hustle that folks should maybe be aware of?
Oh, I’m so glad that we’re talking about MLMs. Because I think especially for, you know, communities of color, and women, they are the primary targets for these companies, stay at home moms, single moms, people who are struggling to make ends meet, and they sell them on this idea that like, you’re gonna be a business owner, you’re gonna be an entrepreneur. But honestly, you’re just an independent contractor that has no benefits, that is typically going to be asked for money in order to start your business. I think that’s the biggest red flag, when you have to pay into something to become a quote unquote, business owner, that’s a huge red flag to me. Because a legitimate business, the only things you would have to pay for are like fees to the government to establish your entity, right? Filing an LLC, or, you know, getting a business license. Those are legitimate business activities, paying someone for a membership that’s going to get you access to discounted products that then you sell at wholesale prices. It’s all a scam. And I think the best thing to do is when someone approaches you with this opportunity, and I say this in air quotes, go on Google and Google this company, find out what their business model is, if you see anything along the lines of network marketing, multilevel marketing, that is all a pyramid scheme, stay far away. 99% of people who get involved with these businesses do not make any money, they actually end up losing money.
Do we see a lot of this with Gen Z too, Maria, or you were nodding along to what are some things folks should look out for?
I get really upset when I see some of these viral take togs of MLM people and see that people are falling for it, right? I mean, it sounds like an exciting opportunity. And, you know, these TikTok’s go viral. And what I’m thinking about is, yeah, following up, doing research, and just when you are researching or doing a quick Google, I always recommend running these names by one of the consumer protection agencies of the federal government. So for example, if you see something that you think, Oh, I don’t know if this is legitimate or not, go on the Consumer Financial Protection Bureau. So that’s CFPB, or the Business Protection Bureau, whose acronyms I can’t remember right now. But these are two agencies that are going to be super helpful for helping you really discern between these potential, quote unquote, business opportunities that are out there. And for investing or for anything that has to do with growing your money, I would go to investor.gov. This is the regulatory agency for investing in the United States. And surprisingly, they have a really helpful and user friendly website full of resources. Believe it or not there. Twitter is also really helpful. I was surprised to see that. But maybe that’s something that not a lot of people think of is going to these government agencies that whose job it is to help you not get scammed.
V Spehar 34:53
I want to ask you guys about the banks that often do a lot of targeting on social media that say things like, hey, we’ll pay you three days in advance if you bank with us, or this particular app will give you $20, just for downloading our service. How much of that is good? How much of that is are you just selling all your data to, and it’s not really going to be the place that you need to grow your money with?
Yeah, you know, I think there’s more productive ways of making extra money. I know there are some people who decide to do like these bank account churning, right, where they will open up new bank accounts for their opening bonus, they’ll get a couple $100. But you want to make sure you understand like, what the fine print is, like, what are you going to have to do with the account? Are you going to have to have some number of deposits go in? Do you have to have an open first or number of months, like, get all the details, because you might just be doing this for no reason. A lot of people do that, too with credit cards, they’ll open credit cards for like those sign on bonuses, where you get like 100,000 points, but then you have to spend like $6,000 to get those points. So do you actually need to spend $6,000? Do you have a purchase that makes sense for you to allocate towards getting that bonus? Or are you just gonna start buying all the shit that you don’t need to make that $6,000 requirement, get 100,000 points, but then have like $6,000 worth of shit in your house that you didn’t even need? Right. So I always like approaching these things with a plan to make sure that if you’re already going to make a big purchase and you want to take advantage of this introductory offer, cool, but don’t just like start spending money to quote unquote make money because then it can end up being way more costly in the long run.
V Spehar 36:27
Yeah, doing it for the points might actually end up hurting you, want to bet. These are the things I tell myself. That’s why it’s so easy for me to recall them. We’re gonna take just one more quick, tiny break, this will be a fast break. Because when we come back, we are going to talk about actual money saving tips, we’re going to break down what FIRE is, Financial Independence Retire Early, and just hopefully give some people some solid advice so that they can move forward and relieve themselves of some of the drama and pressure we’re feeling with this looming recession potentially coming our way. So of all that, right when we come back.
Okay, friends, we are back. Thanks for sticking with us. And now we’re going to get to the meat of this conversation, the thing that everybody was waiting for, which is how do you save money? You know, we often hear pay down your credit card debt, save six months’ salary, but those things can be unattainable for many people, can be really difficult. So what are some things we can do to budget and save? And I wanted to ask you all, you know, my wife is incredible, she does all of our money stuff. There have been times when she’s just called the bank to ask for a lower interest rate is that normal?
Your wife sounds like an amazing human. So kudos to her because I think so many more of us could benefit from being a little ballsy with our money, right? Like we’re so okay with folks, just nickel and diming us but like, you can actually negotiate a lot of things. One of the things that I always do when one of my introductory offers for like, let’s say cable, or insurance, or whatever is coming due, I will call them and be like, I want to keep this introductory offer or I’m just going to cancel this service. Because if you actually care about retaining me as a customer, you give me this like $10 off a month shouldn’t be a big deal. And if it is, then we don’t need to work together, right? So doing things like that, I think is a great way to exercise your negotiation muscle, which is so important because we know women don’t negotiate anything, our salaries, how much we pay for stuff, we gotta get comfortable asking for what we want.
V Spehar 38:36
Because it is your money and you do have control of it. I think we are often taught that we have to be so submissive when it comes to money, but call those people up. The cost of retention is so valuable to companies, t cost them less to keep you then like you said to extend that introductory offer, what are some other things they can be doing?
When I was thinking about starting to pursue financial independence, and I know we’re going to talk a little bit more about that, I started looking at like, where are the big areas that I am bleeding money. For me, that was student loans, student loan payments, were killing me, I was paying $600 a month. I’m like, how am I ever going to afford a house and pay this off, you know, before I’m dead. So the thing that I started looking at was I was at the time living in a really high cost of living area in the New Jersey metro area. I was making six figures, but I was living paycheck to paycheck because again, wasn’t really aware of my spending, didn’t have a budget, keeping up with the Joneses just not really knowing what my money was doing. So the first thing I started doing was budgeting you know I hate, I know everybody hates the word budget. It sounds like dieting it’s very much associated with like restriction deprivation struggle, oh my god, I hate this. I don’t want to do it. But when I started to reframe my perspective around budgeting and realizing that if I give my money a plan, versus just kind of letting it do whatever it’s doing, maybe it can start doing something different. And so when I started thinking about like, what could I actually be doing with my money to get out of debt faster, it was paying attention to like, what is happening? I started side hustling back in 2013. I started a food blog, I started monetizing that with some sponsored content with ad revenue with affiliate marketing. And instead of using that money to take trips and buy designer bags, which I was doing initially, I said, what if I took this extra like $1,000 a month, and put it towards my student loans. And so I started doing that, I started seeing the value of making that temporary sacrifice because I knew it was not going to be something I had to do forever. But seeing that progress is really psychologically motivating. And it kept me on that path to then eventually become debt free in 2020.
V Spehar 40:50
Maria, what are some other ways that folks can be finding money, let’s say?
I would say that, of course, trying to scrutinize what you’re spending on and seeing what isn’t as valuable to you. That’s where I would start. That’s where, you know, you’ll find things that you know, it’s okay to let go of, but actually, the way that I like to go through the process of saving is by looking at what I do want to be spending on. So if I know that I want to take a $3,000 vacation to Italy next year, I know that if I divide 3000 by 12, that’s 250 per month over the course of 12 months. So I know, okay, it takes 250 per month over the next year for me to cash flow that vacation. And I think that’s much more powerful, much more powerful way to save because I can visualize what this money is for. And I like to treat this money as a savings bill. So in the same way that I treat my water bill as a bill or my rent as a bill, I treat my 250 annual vacation bill as a bill. And I do this for anything else I want. So back in a few years ago, I wanted […], I needed to save for this and did the same thing, treated how much I needed as a bill saved up for it over the course of about 18 months. And that’s how I got there. So one powerful tool is actually to brainstorm or journal, what you want your savings to add up to. Because a lot of people think saving is money you’re never gonna see again, or that saving is saving for the sake of saving. It’s a goal in and of itself. But it’s actually for something right, it’s money that you’re going to spend just not right now maybe in 12 months, 18 months or even 6 months. But it’s money that you’re putting away for something and I want you to have a really clear vision of what that is, turn it into that monthly bill and commit to it. And it’s easier to say no to something like a gym membership that you haven’t used for like seven months, when you’re like oh wait, this money that I am getting no value out of is actually going to be cash flowing my vacation to Italy in September 2023. As far as medical care, I would suggest looking into a health savings account or a flexible spending account. So these are accounts savings accounts that let you save for big medical bills, and save on the taxes that you would pay for those bills. So for example, with any type of surgery, if you know about how much you need, you can put that money in there and not have to pay taxes on it. So it can be really helpful for more like medium term goals, flexible spending accounts, health savings accounts, and you will find these through your employer. And if you do have a high deductible plan, health insurance plan, you can find an HSA on your own. But these are ways to save in the way that I saved for my […] procedure is by using this account.
V Spehar 44:11
The last thing because we’re running out of time and I promised my favorite viewer that we would get to this is the concept of FIRE, Financial Independence Retire Early. How can we implement fire concepts into our everyday life?
I am obsessed with the fire movement. And when I first found out about it back in 2016, again, it was sort of all a bunch of White guys. Yeah, who were living in Silicon Valley making $300,000 a year and we’re opting to live off of $30,000 eat rice and beans and invest all the rest of that money. Now nothing wrong with rice and beans as a Latina, you know, eat all the rice and beans. Okay, they’re delicious, but it’s also like I don’t want to live like a college student in my 30s it’s not a vibe, not doing it. So, the first time I heard about the financial independence movement, it was really associated with frugality and living below your means, but like to an extreme, where you know, you would like be planting your own garden and like, you know, harvesting your own vegetables. And I’m just like, wait a minute, I don’t have time for this. Is there another option? And so nowadays, there are so many different versions of financial independence and retiring early, that it’s really up to you to decide what kind of lifestyle do you imagine for yourself? When I started thinking about what I wanted my FIRE journey to look like, I’m like, I want to not be forced to work for money. If I work, I want to do things that I love. And so I started thinking about how can I lean out of corporate America, lean into entrepreneurship, find a way that I can make money from home doing something that I love, and that’s also going to pay my bills. So that’s what’s called cashflow fi, where you’re basically looking to replace your paycheck with cash flow from passive income, investments, entrepreneurship, a mix of those things, it can be real estate income, there’s a lot of different ways to make money outside of a 9 to 5 paycheck. So I think the first thing to do when you want to learn more about financial independence is to start following podcasters. Or start reading books that talk about this stuff, I Will Teach You To Be Rich is a great book for learning about money. But it’s also a good thing to learn about, you know, the power of investing, I think is central to the movement, and living your life in a way that you’re not sabotaging your future self. And so thinking about starting to educate yourself by going on Google, do a search on financial independence, find out what the whole movement is about, start from there, and then calculating your FIRE number. So your FIRE number essentially represents how much money do you need to have either invested in a portfolio or as a monthly recurring thing that’s going to allow you to walk away from your 9 to 5. So figuring out what that number is, is then going to let you kind of reverse engineer how you’re going to get there, whether that’s through investing, entrepreneurship, real estate, or a combination.
I would say that thinking of it on a day to day, the way that has changed the way I approach money is now I think about big milestones in my life, like when I have enough money to take annual vacations or to live in a place that I want to live or eventually to live off my savings. When I think of these milestones, I think of them as financial numbers, not as ages as like a particular age or time period in my life. And this is important, unfortunately, for Gen Z, or millennials who, you know, we have not, will not have the chance to just be afforded these milestones, because they were built into our societal fabric and built into societal programs that helped put us here, no. And so sadly, then we have to take these matters into our own hands and kind of reverse engineer these milestones by looking at well, running our numbers and figuring out what financial number it’s going to take for me to be able to achieve X, Y and Z. Because it’s not just going to happen overnight.
V Spehar 48:29
Is there anything you’d like to let the listeners know before you go?
You know, I think it’s important to remember that your financial literacy journey is a journey. It’s not like you’re gonna read one book, you’re gonna listen to one podcast, and you’re going to be an expert, your life and your money will change as you grow as you evolve, as you know, life happens. And so just being eager to be curious, I think will get you really far. Money is just a tool, and it’s going to do whatever the hell you tell it to do. If you tell it to do nothing, it’s going to do a lot of nothing. But if you actually put it to work to help you achieve the goals that you want, it can be completely transformational. So stay encouraged. Stay curious. Stay learning.
Perfect. Yeah, money is energy. Right, Maria? Anything for folks?
That’s great advice. Small steps, I would say small steps is they add up over time.
Makes sense. Thank y’all so much for being here. We appreciate you greatly and we will catch up with y’all soon.
Yeah, thank you so much for having me. So you can find me @firstgenliving on Instagram and TikTok. I don’t have a podcast sadly. But I will also be listening to Jannese and her podcast.
Thank you V so much for having me. So you can find Yo Quiero Dinero podcast wherever you’re listening to this one. And you could find me all over social at @yoquierodineropodcast.
Thanks so much to our guest today. Jannese Torres-Rodriguez, the creator and host of the award winning podcast Yo Quiero Dinero and Maria Melchor. She is the founder of first gen living. I learned so much today I don’t feel afraid of money anymore. And that truly is the greatest gift because money can be scary guys. You guys know that. Be sure to tune back in this Tuesday when we’ll be covering the headlines you were most interested in. Please leave me a voicemail with your good news at 612-293-8550, Subscribe to Lemonada Premium on Apple podcasts and follow me at under the desk news on Instagram and TikTok we’ll see you on Tuesday.
V INTERESTING is a Lemonada Media Original. Our producers are Rachel Neel, Xorje Olivares, Martín Macías, Jr. And Dani Matias. Executive Producers are Stephanie Wittels Wachs and Jessica Cordova Kramer. Mixing and Scoring is by Brian Castillo, Johnny Evans and Ivan Kuraev. music is by Seth Applebaum. Please help others find the show by rating and reviewing wherever you listen and follow us across all social platforms at @VitusSpehar and @UnderTheDeskNews, also, @LemonadaMedia. If you want more be interesting, subscribe to Lemonada premium only on Apple podcasts.