The Art of Manliness - #605： The Money Moves You Should Make Right Now

00:00:00.000 Brett McKay here, and welcome to another edition of the Art of Manliness podcast. The shutdowns

00:00:12.020 that have accompanied the COVID-19 pandemic have wreaked havoc on the global economy.

00:00:16.380 Tens of millions of people are out of work, businesses are cratering, and the stock market

00:00:19.880 has tanked. Whether you've been hard hit by these effects or so far weathering the storm,

00:00:23.860 yet feel uncertain about your future, what financial moves should you be making right

00:00:27.380 now. To get some insight, I brought back personal finance expert Ramit Sethi, author of the book,

00:00:31.800 I Will Teach You To Be Rich. Since the pandemic started, Ramit has been hosting fireside chats

00:00:35.920 on his Instagram account, where he covers a financial topic pertinent to the pandemic,

00:00:39.660 as well as answers questions from his community of followers. Today, we discuss some of the ideas

00:00:43.620 Ramit's been hitting on during these chats, as well as the common financial questions he's been

00:00:47.320 fielding. I began our conversation by asking Ramit why he tells people they shouldn't panic

00:00:51.360 or should overreact. We then dig into Ramit's advice for people who fall into different categories as

00:00:55.960 to how the pandemic has affected them, beginning with the survival strategies for those who are

00:00:59.920 out of a job altogether. Ramit then shares the money moves people who do still have income coming

00:01:04.300 in should make, and why he's changed his tune on how much of an emergency fund you should have.

00:01:08.600 We then discuss why now is a good time to find ways to earn more money, and what investing should

00:01:12.540 look like during an economic slump. We end our conversation with Ramit's advice on how to look

00:01:16.440 for a job during a pandemic, and what small businesses can do to adapt to the current climate.

00:01:20.880 After the show's over, check out our show notes at awim.is slash pandemic finances.

00:01:24.840 Ramit joins me now via clearcast.io.

00:01:33.920 All right, Ramit, Sadie, welcome back to the show. 0.98

00:01:40.640 Thanks for having me. It's always fun to be back.

00:01:43.080 Well, we had you on in August, and a lot has happened since then, a pandemic and a pandemic-induced

00:01:51.180 recession. So, I mean, with your work with I Will Teach You to Be Rich, you're really engaged

00:01:56.900 with your audience, fielding questions from them about the stuff that they're struggling

00:01:59.980 with, with their finances, their work. What types of questions have you been getting in

00:02:04.280 the past few weeks about what to do with money during the pandemic?

00:02:08.600 The questions are, what should I do with my money right now? That's a huge one.

00:02:14.200 Another one is, I know I shouldn't time the market, but, and then they say something about

00:02:22.180 timing the market. That's a very common one. Another one is, how do I earn money? Like,

00:02:29.800 either I got laid off or I'm probably going to get laid off. What do I do to start earning

00:02:34.240 more money? So those are the majority of the questions. And then there are some edge cases

00:02:38.800 in terms of, I'm a business owner. Should I do PPP? Should I stop contributing to my 401k?

00:02:44.960 You know, and we can kind of talk about all of those.

00:02:48.040 All right. So one thing, so during this time, you've been doing these things on Instagram

00:02:51.880 called Ramit's Fireside Chats, where you basically do Instagram live, you're fielding questions,

00:02:57.300 talking about just a topic of the night for the, for what to do with your money during the pandemic.

00:03:02.800 And one high level piece of advice I've seen you give during these things is, don't panic,

00:03:06.940 but do overreact. So what's the difference between panicking and overreacting?

00:03:12.440 Yeah. So I wrote a post about this called panic is bad, but overreaction is good very early on.

00:03:20.380 And as soon as I started to see what was going on, I wanted to take action and really overreact. 0.67

00:03:30.100 My greatest hope was that I would end up looking stupid and feel a little embarrassed about overreacting. 0.97

00:03:36.940 Maybe lose a little bit of money and everything was great. But my greater fear was that there would 0.98

00:03:44.680 be a huge quarantine, a national quarantine and mass unemployment, et cetera. So when I say panic is

00:03:53.240 bad, panic is reactive. It's fear driven. It's just running around without knowing where you're going.

00:04:01.040 That's bad. And I don't believe we should be panicking, but I do believe that overreaction

00:04:06.780 in a crisis is good. So what is overreaction? It means making a deliberate decision and then going

00:04:15.100 all in. For example, Hey, I have a good job, but I might get laid off. And if that happens,

00:04:22.020 I probably won't be able to get another job for at least a year. Okay. What plan do I need to create

00:04:28.460 to account for that? One thing I learned when my business took a downturn in general, I'm an

00:04:35.200 optimist. I believe things will over the longterm work out well, but that year when my business took

00:04:41.880 a real hit, I discovered a new philosophy called it can always get worse. And to, to really internalize

00:04:51.160 that means whatever model of how bad you think things can get, double it or triple it. And then

00:04:58.660 you're talking about a real overreaction plan. And because the result is even if it doesn't happen,

00:05:05.680 the worst doesn't get worse. Like you're not, you're not any worse off. In fact, you're probably

00:05:11.420 prepared for the next downturn that comes. Yeah. I mean, what's the worst, you know, you're embarrassed.

00:05:17.220 People make fun of you because you bought too many, you know, Heinz chili cans. And actually maybe

00:05:23.340 you did incur some financial costs. Maybe you canceled your wedding because you were planning

00:05:29.900 for an overreaction and you said, you know, six months away, but I'm just going to cancel it right

00:05:34.500 now out of abundance. Because even though I'm going to eat X thousand dollars in cancellation fees,

00:05:39.900 it's better to have the rest of that money in my pocket now, just in case. So there could be some

00:05:45.320 costs, but you have to balance that against what if you're right? And what if this actually is

00:05:51.820 worse than you think? And I have to say that psychologically and culturally, most of us in

00:05:57.420 America do not spend a lot of time thinking about the worst. In general, we're a very optimistic

00:06:03.400 culture. We think about what can be, we think about possibility, and that's what makes part of our

00:06:09.440 culture so magical. But it also means that we are ill-equipped to evaluate risk. And frankly,

00:06:16.140 everyone is. No one's ever gone through a global pandemic exactly like this. So nobody can expect

00:06:21.860 you or me or anyone to get it exactly right. But my general philosophy in something like this is,

00:06:27.940 don't worry about looking stupid and don't worry about incurring a little bit of extra expense. 0.93

00:06:33.480 You need to focus on overreacting because the worst case might actually come true. 0.99

00:06:38.000 All right. So let's talk about ways we can overreact for different people. And as I've

00:06:42.300 watched your fireside chats and the topics you've hit and the questions that have come in from your

00:06:46.840 viewers, there seems to be a spectrum of financial situations during this pandemic.

00:06:51.620 At one end of the spectrum, you have folks who have lost their jobs. They have no savings. They're

00:06:56.980 not able to pay rent. They can't pay their bills. I mean, dire straits. At the other end,

00:07:01.320 you have people who still have a job. They still have income coming in. They might even have

00:07:05.060 an emergency fund. So yeah, it's kind of inconvenient, but they're okay. And so in these

00:07:12.660 fireside chats, you've addressed these different groups of people who have tried to. So let's talk

00:07:17.540 about that former group, folks who've lost their job. I mean, you look at the unemployment rates,

00:07:22.240 it's just terrible. People can't pay their rent. People have a problem paying their bills.

00:07:27.560 So for these folks, what are the money moves they should be making now to maintain solvency?

00:07:32.880 Yeah. So for the people that are in tougher financial situations, there are some things that

00:07:39.220 you can do immediately and they can provide you some relief. And I have to say that there hasn't

00:07:46.380 been a really consistent source of information on this. So it's totally understandable that people

00:07:52.440 are frustrated. Like if you got laid off, maybe you have a little bit in savings. Maybe if you were

00:07:57.880 lucky, you got offered a severance package. Okay. Maybe that'll last you a few weeks, maybe even a

00:08:03.260 couple of months. But what then? We have to remember that in recessions, depressions, crises,

00:08:09.300 you're not the only one looking for a job. Millions of other people are too. So there are a few things

00:08:15.140 that you can do right now. And I'm going to give people a framework and then I'm going to give some

00:08:20.200 specifics. So the typical advice is, you know, cut back on everything. And I would rather be a little bit

00:08:26.380 more surgical. So I'm going to advise something called the CEO approach. Cut costs, that's C,

00:08:33.800 E for earn more, and O for optimize your spending. Now let's skip around a bit for the people who need

00:08:41.260 immediate relief. Okay. The obvious thing under C is any large purchases or plans you have for the

00:08:47.380 rest of the year, just cancel them. So I had somebody who asked me about, you know, my wedding's

00:08:52.280 coming up in six months. Do you think I'm going to need to cancel? I was like, without a doubt,

00:08:56.420 cancel it. Doesn't matter if you incur extra fees, the money you need in your pocket now is worth more

00:09:01.720 than the money you could potentially have later. Okay. That's sort of obvious. Any trips, wedding,

00:09:07.480 any gym that you used to be a part of, just cancel it. Even if you're going to incur reinitiation fees

00:09:13.520 later, deal with that later. I think O for optimize your spending is really powerful here. There's a script

00:09:21.660 that I'm going to give everybody. You can call up the companies that you currently pay money to,

00:09:25.880 and you can say this, you can say, Hey, I'd like to discuss my options with you. You know,

00:09:30.140 I've been a good customer for three years and COVID-19 is making it difficult for me to continue

00:09:35.960 my usual payments. So I'd like your help with some options. And you can do this for your car

00:09:43.260 insurance company, your cable company, your credit card. If you owe them money, student loans,

00:09:48.380 cell phone, and even your landlord. Now, not everybody is going to work with you, but I have

00:09:55.900 shared this with my, I will teach you to be rich audience. And many people are making a couple of

00:10:00.200 phone calls and saving a thousand dollars or more. And on your website and in your, in your books,

00:10:05.640 like you were like, I love it. Cause you give like word for word, you know, transcripts,

00:10:09.560 basically scripts to follow. So you can negotiate this stuff down.

00:10:13.040 Yes. And it's amazing. You know, a lot of people don't know

00:10:16.360 why these companies would want to do it. They think these companies are only out to get their

00:10:21.460 money, which may be true, but you have to understand their business model. See, first of all,

00:10:26.740 they spent a lot of money to acquire you as a customer. Second of all, they're taking a huge

00:10:32.740 hit right now. So they want to recover as much money as they can. And three, these companies know

00:10:38.660 that when things get back to normal, they want to make sure they have a strong customer base.

00:10:43.280 So for those reasons, a lot of them are willing to freeze your payments. They're willing to waive

00:10:49.100 certain fees, or in some cases they're actually willing to waive your entire payments, but you have

00:10:53.960 to ask. And this requires picking up the phone. It's not something you can typically do on email.

00:10:58.780 Yeah. I always encourage people to pick up the phone. Yes. Even millennials who are afraid of

00:11:03.080 talking on the phone. I know it's been three years since you called somebody. I'm a millennial too.

00:11:07.480 Come on, grow up. Let's do it. We pick up the phone when we negotiate because there's a few

00:11:14.680 things that can happen. Number one, you build the skills of negotiation. Two, you can ask to be

00:11:19.500 escalated to a supervisor or the term you want to use is customer retention. So I'm a big fan of

00:11:25.660 negotiating and it's certainly worth it because this is potentially worth thousands of dollars.

00:11:30.720 So yeah, I would definitely encourage people to pick up the phone, even though it's something that

00:11:33.460 may be unusual or uncomfortable. All right. So for these folks who've lost their job,

00:11:37.080 have no income coming in, having problem paying the bills, things to cut expenses that you might

00:11:42.000 have had or are going to incur later on, like big travel expenses, wedding, et cetera, and then get

00:11:47.140 on the phone, negotiate some fees down, or at least try to get payments postponed a bit.

00:11:52.500 Yeah. And then can we talk about the E part, the earning more?

00:11:55.100 Yeah, let's talk about earning more.

00:11:56.500 All right. So I want to start off with the people who are in tougher financial situations.

00:12:01.600 So if you have been laid off, then file for unemployment. This is something that I have

00:12:08.220 to emphasize talking about because there's a lot of pain right now for people who as recently

00:12:14.160 as two weeks ago were well-employed. They had great jobs. They were maybe providing for their

00:12:20.760 family and suddenly they're filing for unemployment. It can feel humiliating and it can feel confusing.

00:12:28.000 Still, those resources are there for a reason. They're there for you. So I think it goes without

00:12:34.240 saying that I would encourage you to take advantage of those resources, file for unemployment,

00:12:40.100 use the money. It's there for you. And I say this because I have gotten a lot of messages from my

00:12:47.300 readers who feel humiliated to have to go ask for unemployment, but I don't believe in that at all.

00:12:53.000 Those resources are there for you. So you should absolutely use them.

00:12:56.100 Well, you're the one who paid into it, right? I mean, we've all, it's on your pay stub,

00:12:59.740 unemployment, like a part of it goes there.

00:13:02.160 Yes. Yes. Again, we want to take advantage of every resource available to us.

00:13:06.440 And so I definitely believe in that. And I think that that is also,

00:13:10.520 if you're in tougher financial situations, that's going to be immediate relief for you.

00:13:14.640 And where do people typically need to go to do that? Because that's something like,

00:13:17.300 I'm sure for a lot of people, this is like the first time they've ever had to consider

00:13:20.240 filing for unemployment. So they don't even know how to do that.

00:13:22.680 Well, you're exactly right. And that's why there's a lot of frustration around. It's one thing

00:13:28.020 to be uprooted or lose your job. It's another thing to have your health at risk. And then it's

00:13:33.720 a third thing to not even know where to go. So if you, for example, I'm in New York, if I Google

00:13:40.140 New York unemployment, you're going to see the procedures right there on the website. So I would

00:13:45.000 encourage you to do it. And I have to say that I've been keeping track of a lot of my students who

00:13:50.140 have filed for it. And there are delays. So obviously, the sooner you can do it, the better.

00:13:55.760 Okay. So we just talked about folks who are in that extreme end where they're just

00:13:59.800 really dire financial straits. Let's talk about people who still have a job, have income coming

00:14:03.980 in. What should be their financial priority during the pandemic slump we're experiencing right now?

00:14:09.620 Well, I have recently changed my advice. I used to advise a three to six month emergency fund,

00:14:17.340 and I'm now advising a full one year emergency fund. The reason for that is that, as I said,

00:14:24.740 overreaction is good. And I also think things can always get worse. And we are just now starting to

00:14:32.840 grasp how big the unemployment numbers are. So if you have a job and you're fortunate enough to have

00:14:37.980 income, I would highly prioritize liquid savings. In order to do that, you can do several things.

00:14:45.860 Number one, obviously, cut your expenses like I talked about. Optimize your spending. Do the same

00:14:49.960 things I just talked about. But you also want to consider pausing any automatic investments that you

00:14:56.440 have and redirect those to a savings account. And that's pretty unusual for somebody like me to say,

00:15:03.140 because in general, I'm a big, big, big fan of aggressive investing, especially over the long term.

00:15:09.600 But if you don't yet have a one year emergency fund, I would prioritize that first.

00:15:14.900 Okay. Well, let's talk about an emergency fund. What does it mean for a... Because that's

00:15:18.740 something financial advice you see all over the place in books, blog posts, three to six months

00:15:23.940 or one year. And I think when people hear like, oh, I need to have a one year emergency fund account.

00:15:29.180 Okay. They typically do this. They think, well, I make $60,000. I need $60,000 in cash. Is that

00:15:35.100 what you're talking about?

00:15:36.720 No. Okay. I'm so glad you brought this up because it is one of those things that's kind of tossed around

00:15:41.100 in personal finance, but nobody goes into detail about how much is it. And also, when do you spend

00:15:47.320 it? Nobody talks about that. So let's break it down. I'm going to use some simple example math

00:15:53.600 here. Let's say that in order to live just the basics, my rent, maybe if I have a car payment,

00:16:03.140 the basics, it costs me $1,000 a month. All right. Let's just say for easy math.

00:16:10.960 So how do I calculate that? I want to kind of just do a quick evaluation of what I spent in the last

00:16:16.520 four weeks. And if there's anything I can cut out that would not be critical to me living. In other

00:16:22.860 words, imagine you got laid off. And if you have a partner, your partner got laid off. What would you

00:16:26.520 cut right away? Chop that stuff off. You can typically chop about 15 to 30%, 30%, depending on 0.66

00:16:32.660 how large you've been living right there. So now you're down to a thousand bucks a month for your

00:16:36.960 minimum expenses, minimum expenses. So if we multiply that by 12, 12 months, that's $12,000. That is how

00:16:45.960 much I need to eventually save to have a 12 month emergency fund. Now, what you're going to discover is

00:16:52.840 that that number is probably pretty large for you. And for many people, they don't have that much in

00:16:58.160 savings and it would actually take them a long time to get there. Great. At least we know. Because

00:17:04.220 in a time like this, my framework is accept reality, make a plan and move. You got to accept reality.

00:17:12.200 And that might mean that, you know, you lost your job and that job's not coming back for the next two

00:17:17.500 years minimum. Or it might mean that you need a big emergency fund. So you need to figure out a plan to do

00:17:22.000 that. So what do you do? You follow the CEO strategy I talked about. And because you may have

00:17:31.160 investments that are already being automatically put in, like if you've got a 401k, etc., you may

00:17:36.300 want to put those on pause and redirect that money towards your one year emergency fund. And one final

00:17:42.740 thing, Hey, if it's going to take you a long time to build up that one year, that's okay. Just keep

00:17:49.180 working on it. And it's better to get 80% of the way there than to get 0% of the way there.

00:17:54.920 No, that's an important principle that you hit in the book. 80% is better than nothing. I think

00:17:59.280 oftentimes we have this idea in America. It's like, well, I can't do it perfect. Then there's

00:18:03.680 no point in doing it at all. Yeah. I mean, we see this in fitness. We see this in business. We see

00:18:09.080 this in so many things. There's a, there's an old story from one of my readers who wrote me many years

00:18:13.780 ago. And she said, you know, I've been trying to go for a run four days a week, but I can't ever

00:18:19.620 seem to motivate myself to do it. And I said, why don't you just go once a week? And then she wrote

00:18:24.120 back and said, once a week, well, that's not going to accomplish anything. That's pointless. Why would

00:18:28.360 I do that? And I thought to myself, she would rather dream about four times a week than actually

00:18:33.740 do it once a week. And that is true for emergency funds. Many of us would rather dream about a one year

00:18:39.640 emergency fund, then start building week by week. And what are some mistakes you see people make

00:18:45.820 when they're trying to get that one year emergency fund? Number one is they get overwhelmed and do

00:18:51.620 nothing. They don't know what their expenses are. And they just think I make 60K. So my emergency fund

00:19:00.100 has got to be 60K. That's not correct. Your emergency fund will typically be less than your income.

00:19:05.380 That's almost always the case. Then when they actually calculate it, which is a very small

00:19:11.320 percentage of people, we're talking about single digits. Now they look at that number, they go, Oh,

00:19:16.040 wow, that's going to take me years to build up, forget it. So they do nothing. Those are the biggest

00:19:21.680 mistakes on the real fringes or on the margins. One mistake is that when people have it, they don't use

00:19:30.360 it. And this is more the purview of hyper frugality people, people who are like, they love living in the

00:19:39.800 spreadsheet and they love accumulating, but they typically have a spending problem, not an overspending

00:19:45.560 problem, but they underspend and they feel really guilty about spending money. That's a small percentage

00:19:51.940 of people, but it is a problem nonetheless. Well, let's talk about that because as you said earlier,

00:19:56.520 I've read all the books about financial books where they say, Hey, I have an emergency fund, but they

00:20:00.360 never tell you how to spend it or when you're supposed to start spending. So like, when do you

00:20:04.280 start tapping into that? And how do you, how do you spend that emergency fund? Okay. So this is a pet

00:20:09.880 peeve of mine in the personal finance world because everybody teaches you how to save, but nobody teaches

00:20:14.480 you how to spend. And that is something I've been spending a lot of time on in the last few years,

00:20:19.420 talking about concepts like money dials and conscious spending and really encouraging people to spend

00:20:25.280 extravagantly on the things they love. Well, in the case of a crisis, if you have an emergency fund,

00:20:34.400 I have heard stories about people who make a lot of money and they were still going to their job

00:20:41.120 while everybody else was quarantined. And I was like, why are you going? And they're like, well,

00:20:46.560 I need to make money. And I was like, don't you have a bunch of savings? I happen to know about

00:20:52.120 their finances. I'm like, don't you have a bunch of money already saved up? They're like, oh yeah,

00:20:55.540 but I don't want to spend that. That's my emergency fund. And I'm like, there's a global pandemic going

00:21:00.860 on. That is an emergency. It's time to tap that fund. Use it. So if your safety is at risk,

00:21:09.800 that's the time to use your emergency fund. And you should remember that that money was saved up

00:21:15.500 for a reason. You better use it now instead of lying on your deathbed feeling really good. Oh,

00:21:21.020 I had a 39.6% savings rate. Nobody cares. The money is there to be used. And so if you have it

00:21:27.860 and you need to use it, especially for safety or for your family or for the people who you love,

00:21:33.620 then it's time to use it.

00:21:35.300 Gotcha. So tap into it. Don't be afraid to tap into it. And then when you spend it,

00:21:39.000 you're not spending it on extravagancies. You're spending it on the basic things you need to live,

00:21:43.760 rent, car insurance, groceries, et cetera. Yep. Yeah. One other thing that I've been

00:21:49.820 spending a lot of time these days talking about, I've gotten questions from people about how should

00:21:54.080 I help my family or should I help my family? And a little bit of my decision-making process in terms

00:22:00.460 of how I overreact. And so this is what I did. First thing, make sure my family's okay. So we got

00:22:06.540 out of the city. We made sure we had a roof over our heads and I checked in with all my other family

00:22:11.080 members. Is everybody okay? I believe that if you have the ability, if you have money saved up,

00:22:17.940 if you've been following, I will teach you to be rich, or you've been saving or investing now is

00:22:22.180 the time to help anyone around you. And you have to remember that in ordinary times, you writing a

00:22:29.440 check to somebody would be very well appreciated in times like this, it can be truly life or death.

00:22:35.840 And so I absolutely am encouraging all of my readers, especially the high earners to start

00:22:42.900 asking the people around them if they need help. And in some cases, just send them the money.

00:22:48.940 Forget about counting every last dollar. There's a time for that, but there's also a time like now

00:22:54.200 to write those checks. So that was step one was my family. After that, I started doing a series of

00:22:59.900 other things to make sure that the other people around me were taken care of. My employees,

00:23:03.960 we did a $1,000 stipend for them, anything relating to coronavirus. If they wanted to buy

00:23:10.260 groceries for their family or their parents, send us the bill. Then we went out to our customers and

00:23:16.120 we said, if you have any financial difficulties, we'll do a two month grace period proactively.

00:23:23.220 So just let us know. And after that, we did a couple more things. We did all these fireside chats.

00:23:29.120 I put them on Instagram and YouTube. And then finally, we just raised about $46,000 for feeding

00:23:34.880 America. So I'm sharing these because I want to show you what it looks like in a crisis to move.

00:23:42.380 Now you don't have to do the same things I did that worked for my loved ones and my team and my

00:23:47.300 community. But I would just ask everyone here, think big. What if instead of just playing small

00:23:52.780 and defensively, you could actually say, you know what, I'm going to take care of myself and my family

00:23:56.820 first, but then I'm going to see how I can help other people, whether it's through money or whether

00:24:01.540 it's through other methods, whatever that my time calling up an elderly care home and just spending

00:24:08.060 time with people there, whatever the case may be, how can you help serve other people right now

00:24:13.480 and not just focus on playing small? We're going to take a quick break for your words from our

00:24:17.860 sponsors. And now back to the show. All right. So for those folks who are doing,

00:24:24.380 they got a job, income coming in, focus on that one year emergency fund. You're going to put

00:24:30.040 investments on hold for a bit. You're not going to put anything in there. And then if you've gotten

00:24:34.360 that, start looking around and see how you can help others around you. Yeah. So that's where you

00:24:39.000 start looking for opportunities. And I think there are two kinds of opportunities. One is the opportunity

00:24:43.140 to help other people. Second is your own opportunities. It's very, very likely that some people will come out

00:24:49.920 of this pandemic even stronger. And so you want to ask yourself again, if you've done all the other

00:24:56.240 things, you have your emergency fund, you've helped out your family, et cetera, what are the

00:25:00.460 opportunities for you? And is it for your career? If you're a business owner, are there investments you

00:25:07.060 can be making now so that you grow? You know, it's amazing when this first happened, of course,

00:25:13.340 predictably, everyone was terrified. And I had a lot of business owners who within the first week,

00:25:18.560 they're just like, it's over. Like, I can't sustain myself like this. But interestingly,

00:25:23.040 I also had other business owners who within 72 hours told me how they had adapted their businesses.

00:25:30.740 And, you know, nobody can promise if they're going to make it or not. But at least they were moving.

00:25:36.440 And so that is something I would encourage. Once you've done all the basics, you've covered your

00:25:40.940 defense, really go on offense and think about the opportunities. Well, that's something that you've

00:25:46.460 hammered on with your work is that a lot of times people focus so much on saving money,

00:25:50.180 which people should be doing right now, but they often overlook earning more. That's how you're

00:25:54.700 going to actually get in a good place financially is you can't basically, you can't frugal your way

00:25:59.320 into wealth. You have to, you have to actually earn more. And so like right now, I mean, is now a good

00:26:05.620 time to thinking about earning more money? Oh, absolutely. I mean, again, if we've covered the basics,

00:26:10.480 then, you know, it's interesting that so many people have been playing defense for so long

00:26:16.000 that they actually lack the skills to think on offense. So they're worried about all the things

00:26:23.900 that can go wrong, but they never stop and ask themselves, what if everything went right?

00:26:30.280 What if instead of playing not to lose, I play to win? And so right now could be an amazing

00:26:37.300 opportunity to start a business. I've had a whole bunch of people join our earnable program.

00:26:43.000 And I'm going to give you a couple of examples of people who have started their businesses just in

00:26:48.540 the last few weeks. You ever hear of those, uh, those things you go to on date night where you

00:26:54.580 paint and drink wine. Have you ever heard about that? Yeah, no, I've been to one before. I didn't

00:26:59.140 drink the wine, but I've been to one. Yeah. Oh, okay. Interesting. So first of all, I just want to say

00:27:03.780 painting in a group is my nightmare. I definitely do not want to do that. It's not my thing,

00:27:09.240 but one of my students in earnable started this and did it virtually through zoom. Now you can sit

00:27:17.940 here and say, well, nobody would do that. And they're not going to have paint and all the,

00:27:21.160 all the reasons it can go wrong. But this person said, you know what, what if I'm right? And so they

00:27:26.320 did it. And she just launched it last week. She made a hundred dollars for her first time.

00:27:31.560 Now, isn't that amazing? A hundred dollars can turn into 500, 500 could turn into 5,000

00:27:37.200 and on and on and on. And what a beautiful idea to say, you know what, what are you doing

00:27:41.920 tomorrow night? Oh, nothing. That's what all of us are doing. So why don't we get on zoom

00:27:47.060 and let's do this together. And we'll have an event that we can remember. Would you be willing

00:27:51.080 to pay like 30 or 50 bucks for that? Of course. And boom, there we go. So you have to remember

00:27:57.360 that in times like this, people have spent thousands of years paying for entertainment,

00:28:04.500 for clothing. They've paid for their children to be entertained and to be taken care of.

00:28:10.440 There are so many parents right now who are desperate for lesson plans for their kids.

00:28:14.720 There are a million things that you could do right now to start a business. And although

00:28:19.040 we cover them in detail in earnable, I just want you right now to be thinking offensively,

00:28:23.760 think creatively about how you might be able to earn more.

00:28:27.360 Well, an example that I saw on your Instagram was your mother. She started a cooking class.

00:28:32.120 Yeah. Right. So this is amazing. My mom who came here from India many, many years ago,

00:28:37.500 she cooked for us basically every night while we were growing up. And like to her, that's second 1.00

00:28:43.900 nature. That's just, you know, she's done that for 40 years. So a little while ago, my wife went

00:28:51.240 to visit my mom and dad and she went to learn how to cook Indian food. So I was like, this is awesome.

00:28:59.320 And my wife was sending me photos of her making tandoori chicken and all these favorite childhood

00:29:05.440 meals that I used to have. And I just posted those on Instagram. And of course, you know,

00:29:11.000 people go crazy when they see pictures of food, especially it being made. And so suddenly people

00:29:17.300 were like, Oh my God, is your mom, will your mom ever teach a cooking class? And I said,

00:29:22.140 uh, I don't know who here would be interested in that. And I got all these people who were like me,

00:29:28.140 me, I'm in. So it was getting pretty late in New York. So I said, you know what, if you guys are

00:29:33.240 interested, send me an email subject line, Indian cooking class, it'll be 99 bucks. And if I get enough

00:29:39.740 people, we'll do it. By the way, I hadn't even told my mom yet. So I wake up in the morning,

00:29:43.940 there's like 30 or 40 emails right there. And I was like, okay, let's do it. So I called my mama

00:29:50.140 like, mom, all these people saw you on Instagram. They want to know how to cook Indian food. So they

00:29:56.180 want to pay you to teach a class. And my mom was like shocked. She was like, what? And then she goes, 0.96

00:30:04.320 the cutest thing. She goes, well, I don't know any of that IT stuff. I said, mom, don't worry about any

00:30:10.580 of that. So my mom came to New York and I, I kept it super simple. My wife designed the logo

00:30:17.800 called cooking with auntie. Just so simple. We used event bright just to handle the payment stuff.

00:30:23.920 And I have this old webcam camera. I used that and we put everybody on zoom. My mom cooked three

00:30:30.600 dishes. She taught everybody how to do it. People were there from around the world. I think Australia,

00:30:35.140 U S everywhere. And in that one hour, they did end up making three different dishes. 1.00

00:30:42.220 And my, and I got the chance to give my mom a check for something like 2000 bucks.

00:30:48.400 So just think about what's going on there. This is a skill my mom has had for decades.

00:30:52.660 She just never thought that anyone would care. I showed her how to package it, right? Cooking with

00:30:59.440 auntie. More importantly, she realized that this is something people care about. And especially at

00:31:07.500 a time like this, when everybody else thinks nobody's spending money on anything, you have to

00:31:12.760 realize that there are people who will spend on entertainment, on skill development, on just pure

00:31:18.340 distraction. And so if my mom could do something like that, then you could probably do it as well. 1.00

00:31:24.700 So yeah, start thinking about side hustles, easy things you can do. And I think one of the benefits

00:31:28.320 that come from trying to start a business during an economic downturn like this, I mean, of course

00:31:32.000 it's hard, but I think one of the benefits is, is because there's less money, like you can't afford 1.00

00:31:37.300 to be stupid, right? Like, Ooh, what do you mean by that? I love that. Well, you know, it's like if 0.99

00:31:42.480 you're not getting VC, like people, all these companies get VC funding. They often just do stupid 1.00

00:31:46.080 stuff. They blow it on just stuff. They don't even need products that the market doesn't even need. 1.00

00:31:51.440 But you know, if you're starting during a recession, you have no money. Like you got to be like your mom,

00:31:55.600 like, okay, what's the bare minimum I need to get this going. And, and then you kind of carry that

00:32:00.380 with you. I feel like through the rest of your business career, hopefully.

00:32:03.740 Yeah, I think you're right. You know, and I I've seen that in my own business. So once this happened,

00:32:08.860 I was like, okay, I want to serve my community. What is the way that I know how to do it? Well,

00:32:13.320 I can give advice about money, business careers, and psychology. So I started these fireside chats,

00:32:18.660 but the problem is I don't have all this fancy equipment and a camera crew. I don't have any of that.

00:32:23.940 So I used my iPhone. My wife was my awesome videographer. And I learned, by the way, how to

00:32:33.220 start a fire, which we don't learn in Manhattan. And that was it. And you're right that sometimes

00:32:41.280 at a time like this, it forces us to focus on simplicity and what people care about. And nobody

00:32:46.900 really cares about my DSLR, whatever camera equipment and my fancy boom mics. They don't care

00:32:52.860 about that. They're just like, hey, we like this guy. He's telling some jokes and he's giving some

00:32:57.220 advice. Perfect. So I'm really glad you said that. This is a time to be able to be creative,

00:33:03.260 to experiment, and to get down to what people care about. You can actually eliminate a lot of

00:33:07.980 the fluff that you might normally spend time on in ordinary times.

00:33:12.020 So, okay, we've talked about getting an emergency fund, focusing on earning more. What about investing

00:33:17.540 during a pandemic? I'm sure you're getting a lot of questions about people looking at their

00:33:21.180 retirement account and seeing that just super big dip and just freaking out.

00:33:27.260 Yeah. Times like this bring out the worst investing behavior that you can possibly see.

00:33:33.540 So I want to start off with a really terrible story. Terrible stories, they are bad, but they

00:33:39.340 also serve as a lesson for all of us. And depending on how deranged you are, they also serve as

00:33:45.320 entertainment. So let me just share this one. This person DMs me about a week and a half

00:33:49.520 ago. They go, Hey, Ramit, I need your advice. I finished your book. And I logged into my

00:33:57.000 investment account where I've been investing for a few years. And I decided to sell everything

00:34:01.440 two days ago. Unfortunately, the market went up like 15% in the last two days. What can I

00:34:08.060 do? I was like, Oh my God. So, you know, the first thing I did was I post, I anonymized it

00:34:15.240 and I posted it on Instagram and I said, what would you advise this person? Cause this is

00:34:20.080 a teachable moment. And you know, of course the answer is the money's gone. You lost it

00:34:25.840 because you sold low and now you're going to buy high. The larger problem, which is less

00:34:32.980 commonly known about is that there's a great study showing that in a 10 year period that

00:34:39.520 they researched, if you missed the 10 best days of investing, your return dropped from

00:34:46.180 about 7.7% to roughly 2.8%. Let me, let me repeat that for everyone to understand in 10

00:34:54.520 years, in a 10 year period, if you miss the 10 best days, your investment dropped from about

00:35:01.200 seven and a half percent to about two and a half percent. That's hundreds and hundreds of

00:35:06.620 thousands of dollars, but there's the one catch. You don't know what those 10 days are

00:35:11.700 going to be. So that's why it's important to focus on time in the market, not timing the

00:35:19.380 market. And unfortunately this person did exactly the wrong thing. They logged in, they panicked

00:35:24.120 and they let their emotions get the best of them. If you, so I'll give you the quick rundown

00:35:30.820 on what you should do with your investing. And then we can talk about any specifics. If you've

00:35:35.480 already covered your, one, your emergency fund and all that stuff. Yeah. Follow your investing

00:35:39.800 plan, right? This is the plan I talk about. And I will teach you to be rich. If you believe

00:35:43.500 that over the longterm, the market will continue to return, then you're just seeing the market

00:35:50.460 on sale. And it's interesting that we, we all get excited if, you know, we go to the store

00:35:55.140 and milk is on sale or pasta, but when the market drops 20%, we suddenly freak out. If you're

00:36:02.540 young and if you believe that the market will continue to go up over the longterm, then you

00:36:08.500 have an opportunity to continue investing at lower prices. So that's exactly what I've

00:36:13.760 done. And if you have additional money, you can also put that into the market as well.

00:36:19.040 But I think the big rule don't sell no matter what, unless the only time you would absolutely

00:36:24.780 have to sell at a time like this is if you truly need the money. But I can tell you that

00:36:30.540 of the people who write me totally desperate, like fewer than one half of 1% have gotten

00:36:36.980 to that level. Very few people have filed for unemployment, have used the CEO strategy,

00:36:43.860 have called up all those companies, have gotten all these refunds and still need to sell their

00:36:49.020 investments. It almost never happens. It's way more common that they get freaked out.

00:36:54.440 They log in. They're like, Oh my God, I lost $20,000 or $200,000 or whatever. And then they sell.

00:37:00.840 And they almost always come to regret it over the longterm.

00:37:04.560 No, I made that same mistake as that girl, like during, at the last recession.

00:37:08.260 Really? What happened?

00:37:08.900 It was the same thing. You know, I started investing. I was in my early twenties. I didn't

00:37:12.800 really know what I was doing. And then I remember when the recession, so like the stock market was

00:37:16.660 crashing. I was like, Oh my gosh. So I sold. And then I, you know, I got back in and I lost all the

00:37:23.380 money and I was like, Oh, that's not smart. I don't do that again. So like now, I mean, this is my second go

00:37:28.960 around. I'm not freaking out about it. I'm like, yeah, it's down. No big deal. I'll just keep

00:37:34.020 plowing money.

00:37:35.260 Good. So that's a good, that's a good lesson learned. And it also reminds us that, you know,

00:37:39.420 the money you have in there, you don't need it for a long time. And, you know, I want people to get

00:37:47.020 better educated about investing. It's interesting that when people get in their forties and you ask

00:37:52.380 them, what's your number one concern, they almost always say money. And yet almost nobody has read

00:37:58.900 a single book about money. Just think about that. It's a total mismatch in attitudes and behaviors.

00:38:05.580 So read, I will teach you to be rich or read another good book. And over the course of about a week,

00:38:11.060 you're going to learn how money works. And then you're going to understand why freaking out and

00:38:17.200 selling and then trying to time when you get back into the market is a futile task. And it would be

00:38:24.840 better if you instead, just don't even log in, keep your automatic plan going. And if you don't

00:38:32.060 have one, now's a great time to set it up and then focus on the other things that you can control.

00:38:37.400 Got it. All right. So we've talked about an emergency fund. We've talked about earning more.

00:38:41.960 We've talked about focusing on your investments. Keep doing that if you've got that emergency fund in

00:38:46.420 place. Something you also have done with your work is talking about finding a job or your dream job.

00:38:51.920 And I know this is a question that you've been getting, particularly from recent grads who are

00:38:55.600 entering into the job market during this time. So any advice to these folks who are having a hard

00:39:02.940 time finding a job, whether they're right out of college or they're just trying to find another job

00:39:06.880 because their current job sucks? Yeah. I mean, I think the first thing is just to acknowledge that this

00:39:12.440 is going to be a tough market for a long time. And it's not your fault if you're graduating right

00:39:18.320 now or if you just lost your job. That is not your fault. And for what it's worth, a lot of other

00:39:23.920 people are going through it. And I don't want anyone to blame themselves. So I just want to acknowledge

00:39:29.140 that this is a tough one and there's no easy answers. With that said, I have asked the people in

00:39:36.760 my community, what's going on with their job searches. And I also ask the hiring managers

00:39:42.920 to tell me what are they seeing on there? So the obvious answers were, uh, I had four interviews

00:39:50.360 going and three of them just ghosted me. Like they won't even respond to my emails. Okay. So that's

00:39:55.340 happening. Interestingly, a lot of the hiring managers wrote me and said, we're still hiring.

00:40:01.140 We can't find people. And a couple of them told me that their applications are weighed down. I was

00:40:07.980 like, why do you think that is? They're like, I don't know. Maybe people are too intimidated to

00:40:11.240 apply right now. So my advice that I'm giving to my readers is number one, if you need to find a job,

00:40:19.280 it's time to make it a serious initiative in what you're doing. So what percentage of your calendar

00:40:25.360 is focused on that job search? Number two, don't assume that there are no jobs out there. There are

00:40:32.120 always jobs for top performers. And of course it is hard, but you don't have any other alternative.

00:40:38.520 You can't just wait. And then the third thing is expand your search. I love ambiguity. I love

00:40:47.020 ambiguity. Like right now where you're like, Oh, I don't know. Like this job says I need six years

00:40:52.040 years of experience. This job says it's Washington DC only. My, when it comes to times of ambiguity,

00:40:59.180 I love it because I get to create my own future. So I would look at that Washington DC job posting

00:41:05.440 and I would just email him. I would say, look, I live in Seattle. I'm the best for this job. Here's

00:41:11.200 my resume. Here's my cover letter. I can work remotely and we can discuss what ongoing work looks

00:41:16.760 like. I'm not going to move to DC, but I'm going to be so good that they're going to let me work

00:41:21.320 remotely for the next five years. So use this ambiguity in your favor and just ignore if

00:41:29.940 something doesn't make sense to you, like you have to work in Kansas city. No, you don't send

00:41:34.660 him an application, be good enough to get the interview and you can turn that ambiguity in

00:41:39.380 your favor. Uh, yeah, I think remote work is going to become a big thing. That's like the one big change

00:41:44.120 that my friends and I all think is going to happen, that more companies are going to shift to remote

00:41:47.680 work. Hmm. And you've worked remotely forever, right? Yeah. Since the beginning. Yeah. Yeah. Same

00:41:54.300 for me. So for us, it's like the difference in lifestyle right now is minimal compared to, you know,

00:42:02.480 if you used to go to an office and, uh, and you, and things have changed, you know, it's interesting

00:42:08.700 though. I think you're right. I think companies are, I've spoken to my friends who run companies

00:42:14.000 and, and a lot of them are like, Oh wow, this is like remote work thing is now being forced

00:42:19.120 on everyone. And I think companies are starting to see it. I will say though, working from home has

00:42:24.500 a lot of subtle skills that people don't think about, like how to run a zoom meeting and all

00:42:31.260 just these basic things that if you work from home, you take them for granted. But if you've done it

00:42:35.900 for a while, it's a huge leg up right now. Okay. So I think the big takeaway from there is don't

00:42:41.560 assume that the people aren't hiring, but let's say you're in a field where for whatever reason,

00:42:46.160 no one's hiring. Yeah. Um, what can people do so that they can kind of hustle while they wait?

00:42:51.300 All right. So this is a, this is a really great question because remember when I said earlier,

00:42:56.680 we have to accept reality and then make a plan and move. Like if you're a waiter, you need to accept

00:43:03.680 reality that you're probably not going to get another job for another year, minimum being a waiter.

00:43:08.700 And that's a really hard pill to swallow. And whether it is being a waiter, whether it's being

00:43:15.600 in the hospitality industry, whatever industry you're in, you know, it better than I do. You have to

00:43:20.960 be very candid with yourself and say, is it likely that I'm going to get a job in the next three months,

00:43:26.620 six months, 12 months. And I can tell you that a few industries that I happen to know, there's still

00:43:32.580 a lot of mistaken beliefs going on. Like, especially as I mentioned, we are culturally oriented towards

00:43:38.680 optimism. Oh, everything's going to get better in two months. Okay. I hope it does. But if it doesn't,

00:43:44.700 what do we plan for? If you are in an industry like that, then, then you have a couple of options.

00:43:51.160 Number one, you can start hustling. You can start earning more on the side, whether it's through an idea,

00:43:56.760 whether it's through tutoring, whatever the case may be, that may tide you over that plus your

00:44:02.620 unemployment. But ultimately, you're probably going to want to look for another job in another

00:44:07.160 industry. And that takes time to ramp that up, to look at what the resumes look like.

00:44:13.000 So I would start looking now. And I would also tap your network, ask your friends, hey, I'm looking

00:44:19.240 for a job. These are my skill sets. Do you have any industries you'd recommend? Do you have any

00:44:23.240 positions you know about? I'm very flexible, and I'm willing to work. That's how I would approach it.

00:44:29.280 All right. So let's talk about a little bit on small business. We've kind of hit on that a little

00:44:33.220 bit. And you've been talking to small business owners. What's the general advice you have for

00:44:37.260 people who have small businesses that have been affected by the pandemic?

00:44:40.880 You know what? It's interesting. So I have a lot of small business owners in my earnable community

00:44:46.040 and my I Will Teach You To Be Rich community. And I tell them two things. I say,

00:44:51.280 first off, you must believe that your business is important. And I say this because a lot,

00:44:59.900 you know, I got an email from a woman who said, you know, Ramit, I've been following you for three

00:45:03.980 years. And she's like, I've been thinking about starting a business. I haven't yet. But I'm a nurse.

00:45:11.140 And now when I think about, you know, designing logos, it just are following my passion. It just sounds

00:45:18.820 so foolish. Like who cares? And I said to her, you know, I appreciate you working in the healthcare 1.00

00:45:24.700 field. But if somebody is a business owner, and they need a logo designed, that's not foolish for

00:45:31.460 them at all. That's really serious. And they're willing to pay money for it. So you must believe

00:45:38.000 that as a business owner, your business is important. And whether that you're a personal

00:45:44.040 stylist, like my wife, or whether you design logos, you must believe the second thing is once you

00:45:52.120 believe, you must also accept that your business might not survive. It doesn't matter how much you

00:45:59.740 believe. But if, you know, if for example, you go into homes and custom paint stuff, your business

00:46:07.260 might not survive. But at least you're going to give yourself a chance. So I'm going to give you

00:46:14.140 an example of a business that reached out to me, because I asked all the people in my community,

00:46:19.040 I was like, hey, business owners, tell me what you're doing to adapt. And I got these amazing

00:46:23.260 responses. There's a running store in New Jersey called Runner's High. They're like a specialty

00:46:28.740 running shoe store. And within 72 hours of this happening, they had offered free shipping. And

00:46:38.120 they also had offered curbside pickup. This was way before anyone else was doing it.

00:46:43.380 They sent an email to their community. And one of the owners who wrote me, he said that their

00:46:48.520 community is really recognizing the difference between them and these sort of big box stores.

00:46:53.860 Another person I know who's a reader is a Pilates instructor. And she had resisted going online

00:47:01.200 forever because she has a studio. She, within 72 hours, she went online and she was achieving 50%

00:47:07.460 of her prior revenue within four days. Now that's still 50% down. That's a lot. But 50% up from zero

00:47:16.080 online. So that is how business owners can start to adapt.

00:47:20.760 I love it. Well, Rami, this has been a great conversation.

00:47:23.080 Where can people go to learn more about these fireside chats you've been doing and your other

00:47:26.800 work you've got going on? So if you're interested in earning more,

00:47:30.900 you can go to iwt.com slash earn. I've got all kinds of case studies and all that stuff. Just sign

00:47:37.580 up right there. I'm on Instagram at Ramit. And I am on YouTube at Ramit Sethi.

00:47:45.340 Fantastic. Ramit Sethi. Thanks for your time. It's been a pleasure.

00:47:47.880 Oh, it's always fun. Thanks for having me back.

00:47:50.140 My guest today is Ramit Sethi. He's the author of the book,

00:47:52.160 I will teach you to be rich. It's available on amazon.com and bookstores everywhere. You can

00:47:55.920 find out more information about his work at his website, iwilteachyoutoberich.com. Also check

00:48:00.140 out our show notes at aom.is slash pandemic finances. We can find links to resources. We can

00:48:04.220 delve deeper into this topic.

00:48:05.260 Well, that wraps up another edition of the AOM podcast. Check out our website at artofmanliness.com

00:48:17.000 where you can find our podcast archives. Well, it's thousands of articles rewritten over the

00:48:20.060 years about pretty much anything you can think of. And if you'd like to enjoy ad-free episodes

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00:48:44.620 always, thank you for the continued support. Until next time, this is Brett McKay, reminding you

00:48:47.940 not only to listen to the AOM podcast, but put what you've heard into action.

The Art of Manliness - April 27, 2020

#605： The Money Moves You Should Make Right Now

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