#605： The Money Moves You Should Make Right Now
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Summary
Whether you ve been hard hit by these effects, or so far weathering the storm, yet feel uncertain about your future? What financial moves should you be making right now? To get some insight, I brought back personal finance expert Ramit Sethi, author of the book, "I Will Teach You To Be Rich." Since the Pandemic started, Ramit has been hosting fireside chats on his Insta account where he covers a financial topic pertinent to the pandemic, as well as answers questions from his community of followers. In this episode, we discuss some of the ideas Ramit s been hitting on during these chats, and the common financial questions he s been fielding. We then discuss why now is a good time to find ways to earn more money, and what investing should look like during an economic slump. We end our conversation with Ramit's advice on how to look for a job during a pandemic and what small businesses can do to adapt to the current climate.
Transcript
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Brett McKay here, and welcome to another edition of the Art of Manliness podcast. The shutdowns
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that have accompanied the COVID-19 pandemic have wreaked havoc on the global economy.
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Tens of millions of people are out of work, businesses are cratering, and the stock market
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has tanked. Whether you've been hard hit by these effects or so far weathering the storm,
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yet feel uncertain about your future, what financial moves should you be making right
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now. To get some insight, I brought back personal finance expert Ramit Sethi, author of the book,
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I Will Teach You To Be Rich. Since the pandemic started, Ramit has been hosting fireside chats
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on his Instagram account, where he covers a financial topic pertinent to the pandemic,
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as well as answers questions from his community of followers. Today, we discuss some of the ideas
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Ramit's been hitting on during these chats, as well as the common financial questions he's been
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fielding. I began our conversation by asking Ramit why he tells people they shouldn't panic
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or should overreact. We then dig into Ramit's advice for people who fall into different categories as
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to how the pandemic has affected them, beginning with the survival strategies for those who are
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out of a job altogether. Ramit then shares the money moves people who do still have income coming
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in should make, and why he's changed his tune on how much of an emergency fund you should have.
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We then discuss why now is a good time to find ways to earn more money, and what investing should
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look like during an economic slump. We end our conversation with Ramit's advice on how to look
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for a job during a pandemic, and what small businesses can do to adapt to the current climate.
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After the show's over, check out our show notes at awim.is slash pandemic finances.
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All right, Ramit, Sadie, welcome back to the show.
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Thanks for having me. It's always fun to be back.
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Well, we had you on in August, and a lot has happened since then, a pandemic and a pandemic-induced
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recession. So, I mean, with your work with I Will Teach You to Be Rich, you're really engaged
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with your audience, fielding questions from them about the stuff that they're struggling
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with, with their finances, their work. What types of questions have you been getting in
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the past few weeks about what to do with money during the pandemic?
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The questions are, what should I do with my money right now? That's a huge one.
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Another one is, I know I shouldn't time the market, but, and then they say something about
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timing the market. That's a very common one. Another one is, how do I earn money? Like,
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either I got laid off or I'm probably going to get laid off. What do I do to start earning
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more money? So those are the majority of the questions. And then there are some edge cases
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in terms of, I'm a business owner. Should I do PPP? Should I stop contributing to my 401k?
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You know, and we can kind of talk about all of those.
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All right. So one thing, so during this time, you've been doing these things on Instagram
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called Ramit's Fireside Chats, where you basically do Instagram live, you're fielding questions,
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talking about just a topic of the night for the, for what to do with your money during the pandemic.
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And one high level piece of advice I've seen you give during these things is, don't panic,
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but do overreact. So what's the difference between panicking and overreacting?
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Yeah. So I wrote a post about this called panic is bad, but overreaction is good very early on.
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And as soon as I started to see what was going on, I wanted to take action and really overreact.
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My greatest hope was that I would end up looking stupid and feel a little embarrassed about overreacting.
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Maybe lose a little bit of money and everything was great. But my greater fear was that there would
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be a huge quarantine, a national quarantine and mass unemployment, et cetera. So when I say panic is
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bad, panic is reactive. It's fear driven. It's just running around without knowing where you're going.
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That's bad. And I don't believe we should be panicking, but I do believe that overreaction
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in a crisis is good. So what is overreaction? It means making a deliberate decision and then going
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all in. For example, Hey, I have a good job, but I might get laid off. And if that happens,
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I probably won't be able to get another job for at least a year. Okay. What plan do I need to create
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to account for that? One thing I learned when my business took a downturn in general, I'm an
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optimist. I believe things will over the longterm work out well, but that year when my business took
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a real hit, I discovered a new philosophy called it can always get worse. And to, to really internalize
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that means whatever model of how bad you think things can get, double it or triple it. And then
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you're talking about a real overreaction plan. And because the result is even if it doesn't happen,
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the worst doesn't get worse. Like you're not, you're not any worse off. In fact, you're probably
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prepared for the next downturn that comes. Yeah. I mean, what's the worst, you know, you're embarrassed.
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People make fun of you because you bought too many, you know, Heinz chili cans. And actually maybe
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you did incur some financial costs. Maybe you canceled your wedding because you were planning
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for an overreaction and you said, you know, six months away, but I'm just going to cancel it right
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now out of abundance. Because even though I'm going to eat X thousand dollars in cancellation fees,
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it's better to have the rest of that money in my pocket now, just in case. So there could be some
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costs, but you have to balance that against what if you're right? And what if this actually is
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worse than you think? And I have to say that psychologically and culturally, most of us in
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America do not spend a lot of time thinking about the worst. In general, we're a very optimistic
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culture. We think about what can be, we think about possibility, and that's what makes part of our
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culture so magical. But it also means that we are ill-equipped to evaluate risk. And frankly,
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everyone is. No one's ever gone through a global pandemic exactly like this. So nobody can expect
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you or me or anyone to get it exactly right. But my general philosophy in something like this is,
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don't worry about looking stupid and don't worry about incurring a little bit of extra expense.
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You need to focus on overreacting because the worst case might actually come true.
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All right. So let's talk about ways we can overreact for different people. And as I've
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watched your fireside chats and the topics you've hit and the questions that have come in from your
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viewers, there seems to be a spectrum of financial situations during this pandemic.
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At one end of the spectrum, you have folks who have lost their jobs. They have no savings. They're
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not able to pay rent. They can't pay their bills. I mean, dire straits. At the other end,
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you have people who still have a job. They still have income coming in. They might even have
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an emergency fund. So yeah, it's kind of inconvenient, but they're okay. And so in these
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fireside chats, you've addressed these different groups of people who have tried to. So let's talk
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about that former group, folks who've lost their job. I mean, you look at the unemployment rates,
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it's just terrible. People can't pay their rent. People have a problem paying their bills.
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So for these folks, what are the money moves they should be making now to maintain solvency?
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Yeah. So for the people that are in tougher financial situations, there are some things that
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you can do immediately and they can provide you some relief. And I have to say that there hasn't
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been a really consistent source of information on this. So it's totally understandable that people
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are frustrated. Like if you got laid off, maybe you have a little bit in savings. Maybe if you were
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lucky, you got offered a severance package. Okay. Maybe that'll last you a few weeks, maybe even a
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couple of months. But what then? We have to remember that in recessions, depressions, crises,
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you're not the only one looking for a job. Millions of other people are too. So there are a few things
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that you can do right now. And I'm going to give people a framework and then I'm going to give some
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specifics. So the typical advice is, you know, cut back on everything. And I would rather be a little bit
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more surgical. So I'm going to advise something called the CEO approach. Cut costs, that's C,
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E for earn more, and O for optimize your spending. Now let's skip around a bit for the people who need
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immediate relief. Okay. The obvious thing under C is any large purchases or plans you have for the
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rest of the year, just cancel them. So I had somebody who asked me about, you know, my wedding's
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coming up in six months. Do you think I'm going to need to cancel? I was like, without a doubt,
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cancel it. Doesn't matter if you incur extra fees, the money you need in your pocket now is worth more
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than the money you could potentially have later. Okay. That's sort of obvious. Any trips, wedding,
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any gym that you used to be a part of, just cancel it. Even if you're going to incur reinitiation fees
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later, deal with that later. I think O for optimize your spending is really powerful here. There's a script
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that I'm going to give everybody. You can call up the companies that you currently pay money to,
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and you can say this, you can say, Hey, I'd like to discuss my options with you. You know,
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I've been a good customer for three years and COVID-19 is making it difficult for me to continue
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my usual payments. So I'd like your help with some options. And you can do this for your car
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insurance company, your cable company, your credit card. If you owe them money, student loans,
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cell phone, and even your landlord. Now, not everybody is going to work with you, but I have
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shared this with my, I will teach you to be rich audience. And many people are making a couple of
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phone calls and saving a thousand dollars or more. And on your website and in your, in your books,
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like you were like, I love it. Cause you give like word for word, you know, transcripts,
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basically scripts to follow. So you can negotiate this stuff down.
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Yes. And it's amazing. You know, a lot of people don't know
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why these companies would want to do it. They think these companies are only out to get their
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money, which may be true, but you have to understand their business model. See, first of all,
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they spent a lot of money to acquire you as a customer. Second of all, they're taking a huge
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hit right now. So they want to recover as much money as they can. And three, these companies know
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that when things get back to normal, they want to make sure they have a strong customer base.
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So for those reasons, a lot of them are willing to freeze your payments. They're willing to waive
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certain fees, or in some cases they're actually willing to waive your entire payments, but you have
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to ask. And this requires picking up the phone. It's not something you can typically do on email.
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Yeah. I always encourage people to pick up the phone. Yes. Even millennials who are afraid of
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talking on the phone. I know it's been three years since you called somebody. I'm a millennial too.
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Come on, grow up. Let's do it. We pick up the phone when we negotiate because there's a few
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things that can happen. Number one, you build the skills of negotiation. Two, you can ask to be
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escalated to a supervisor or the term you want to use is customer retention. So I'm a big fan of
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negotiating and it's certainly worth it because this is potentially worth thousands of dollars.
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So yeah, I would definitely encourage people to pick up the phone, even though it's something that
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may be unusual or uncomfortable. All right. So for these folks who've lost their job,
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have no income coming in, having problem paying the bills, things to cut expenses that you might
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have had or are going to incur later on, like big travel expenses, wedding, et cetera, and then get
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on the phone, negotiate some fees down, or at least try to get payments postponed a bit.
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Yeah. And then can we talk about the E part, the earning more?
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All right. So I want to start off with the people who are in tougher financial situations.
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So if you have been laid off, then file for unemployment. This is something that I have
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to emphasize talking about because there's a lot of pain right now for people who as recently
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as two weeks ago were well-employed. They had great jobs. They were maybe providing for their
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family and suddenly they're filing for unemployment. It can feel humiliating and it can feel confusing.
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Still, those resources are there for a reason. They're there for you. So I think it goes without
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saying that I would encourage you to take advantage of those resources, file for unemployment,
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use the money. It's there for you. And I say this because I have gotten a lot of messages from my
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readers who feel humiliated to have to go ask for unemployment, but I don't believe in that at all.
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Those resources are there for you. So you should absolutely use them.
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Well, you're the one who paid into it, right? I mean, we've all, it's on your pay stub,
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Yes. Yes. Again, we want to take advantage of every resource available to us.
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And so I definitely believe in that. And I think that that is also,
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if you're in tougher financial situations, that's going to be immediate relief for you.
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And where do people typically need to go to do that? Because that's something like,
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I'm sure for a lot of people, this is like the first time they've ever had to consider
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filing for unemployment. So they don't even know how to do that.
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Well, you're exactly right. And that's why there's a lot of frustration around. It's one thing
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to be uprooted or lose your job. It's another thing to have your health at risk. And then it's
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a third thing to not even know where to go. So if you, for example, I'm in New York, if I Google
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New York unemployment, you're going to see the procedures right there on the website. So I would
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encourage you to do it. And I have to say that I've been keeping track of a lot of my students who
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have filed for it. And there are delays. So obviously, the sooner you can do it, the better.
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Okay. So we just talked about folks who are in that extreme end where they're just
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really dire financial straits. Let's talk about people who still have a job, have income coming
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in. What should be their financial priority during the pandemic slump we're experiencing right now?
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Well, I have recently changed my advice. I used to advise a three to six month emergency fund,
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and I'm now advising a full one year emergency fund. The reason for that is that, as I said,
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overreaction is good. And I also think things can always get worse. And we are just now starting to
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grasp how big the unemployment numbers are. So if you have a job and you're fortunate enough to have
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income, I would highly prioritize liquid savings. In order to do that, you can do several things.
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Number one, obviously, cut your expenses like I talked about. Optimize your spending. Do the same
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things I just talked about. But you also want to consider pausing any automatic investments that you
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have and redirect those to a savings account. And that's pretty unusual for somebody like me to say,
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because in general, I'm a big, big, big fan of aggressive investing, especially over the long term.
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But if you don't yet have a one year emergency fund, I would prioritize that first.
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Okay. Well, let's talk about an emergency fund. What does it mean for a... Because that's
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something financial advice you see all over the place in books, blog posts, three to six months
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or one year. And I think when people hear like, oh, I need to have a one year emergency fund account.
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Okay. They typically do this. They think, well, I make $60,000. I need $60,000 in cash. Is that
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No. Okay. I'm so glad you brought this up because it is one of those things that's kind of tossed around
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in personal finance, but nobody goes into detail about how much is it. And also, when do you spend
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it? Nobody talks about that. So let's break it down. I'm going to use some simple example math
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here. Let's say that in order to live just the basics, my rent, maybe if I have a car payment,
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the basics, it costs me $1,000 a month. All right. Let's just say for easy math.
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So how do I calculate that? I want to kind of just do a quick evaluation of what I spent in the last
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four weeks. And if there's anything I can cut out that would not be critical to me living. In other
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words, imagine you got laid off. And if you have a partner, your partner got laid off. What would you
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cut right away? Chop that stuff off. You can typically chop about 15 to 30%, 30%, depending on
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how large you've been living right there. So now you're down to a thousand bucks a month for your
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minimum expenses, minimum expenses. So if we multiply that by 12, 12 months, that's $12,000. That is how
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much I need to eventually save to have a 12 month emergency fund. Now, what you're going to discover is
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that that number is probably pretty large for you. And for many people, they don't have that much in
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savings and it would actually take them a long time to get there. Great. At least we know. Because
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in a time like this, my framework is accept reality, make a plan and move. You got to accept reality.
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And that might mean that, you know, you lost your job and that job's not coming back for the next two
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years minimum. Or it might mean that you need a big emergency fund. So you need to figure out a plan to do
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that. So what do you do? You follow the CEO strategy I talked about. And because you may have
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investments that are already being automatically put in, like if you've got a 401k, etc., you may
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want to put those on pause and redirect that money towards your one year emergency fund. And one final
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thing, Hey, if it's going to take you a long time to build up that one year, that's okay. Just keep
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working on it. And it's better to get 80% of the way there than to get 0% of the way there.
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No, that's an important principle that you hit in the book. 80% is better than nothing. I think
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oftentimes we have this idea in America. It's like, well, I can't do it perfect. Then there's
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no point in doing it at all. Yeah. I mean, we see this in fitness. We see this in business. We see
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this in so many things. There's a, there's an old story from one of my readers who wrote me many years
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ago. And she said, you know, I've been trying to go for a run four days a week, but I can't ever
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seem to motivate myself to do it. And I said, why don't you just go once a week? And then she wrote
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back and said, once a week, well, that's not going to accomplish anything. That's pointless. Why would
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I do that? And I thought to myself, she would rather dream about four times a week than actually
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do it once a week. And that is true for emergency funds. Many of us would rather dream about a one year
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emergency fund, then start building week by week. And what are some mistakes you see people make
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when they're trying to get that one year emergency fund? Number one is they get overwhelmed and do
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nothing. They don't know what their expenses are. And they just think I make 60K. So my emergency fund
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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
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percentage of people, we're talking about single digits. Now they look at that number, they go, Oh,
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wow, that's going to take me years to build up, forget it. So they do nothing. Those are the biggest
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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
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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,
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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
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peeve of mine in the personal finance world because everybody teaches you how to save, but nobody teaches
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you how to spend. And that is something I've been spending a lot of time on in the last few years,
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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,
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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,
00:21:35.300
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
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,
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.
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.
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
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
00:31:42.480
you're not getting VC, like people, all these companies get VC funding. They often just do stupid
00:31:46.080
stuff. They blow it on just stuff. They don't even need products that the market doesn't even need.
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.
00:37:08.900
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
00:37:35.260
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
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
00:48:05.260
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
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00:48:44.620
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00:48:47.940
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