April 14, 2020

How COVID-19 Impacts Your Personal Finance

The thought of getting a $1,200 check in the mail from the government was nothing short of crazy just six months ago. Ask Andrew Yang. But now, that once impossible idea is reality—most Americans will receive a little somethin’ something’ from Uncle Sam as part of the government’s $2.2 trillion COVID-19 relief package.

The thought of getting a $1,200 check in the mail from the government was nothing short of crazy just six months ago. Ask Andrew Yang. But now, that once impossible idea is reality—most Americans will receive a little somethin’ something’ from Uncle Sam as part of the government’s $2.2 trillion COVID-19 relief package.

But what should you do with that money? If your groceries and basic necessities are already covered, should you splurge your Trump Bucks or save them? And what kind of boost—if any—will this program give the U.S. economy?

This week on Morning Brew’s Business Casual podcast, we’re diving deep into personal finance in the COVID-19 age with money expert and author of I Will Teach You to Be Rich Ramit Sethi. In the episode, Sethi covers…

  • Why you need an emergency fund and what you should do if you’re in an emergency but low on the funds
  • How and where we can find opportunity (read: earning potential) in the depths of a painful recession
  • Whether it’s harder or easier to get rich today when compared to our last recession a decade ago


Listen now and learn more about how your personal finance situation could change.




Note: Business Casual transcripts are generated using speech recognition software and human transcription. They may contain errors, although we do our best to avoid them. Please check the corresponding audio before quoting a transcript in print. Questions? Errors found in a transcript? Email businesscasual@morningbrew.com 


Kinsey Grant, Morning Brew business editor and podcast host [00:00:08] Hey, everybody, and welcome to Business Casual on the podcast from Morning Brew, answering your biggest questions in business. I'm your host and Brew business editor, Kinsey Grant. And now, let's get into it. 


Kinsey [00:00:19] I'm certainly not the first to tell you that the last couple of weeks have been a real freakin' drag for anyone invested in the stock market. It feels like for every day we've had in the green, there have been at least two in the red, and those days in the red have felt a lot more dramatic. But beyond worrying about your 401(k) or your Robinhood account, many of us are thinking about even more pressing personal finance stressors, like what it means to lose a job. How we'll react to a recession after 11 years of a bull market in stocks? I'm not a personal finance expert, but I am someone who has the distinct honor of talking to very smart people about money and their finances every day. So, I'm going to take the time to tell you right now it's OK to be a little freaked out, but once you get that out of your system, it's time to mobilize. Just sitting in your bedroom, in the dark, in the fetal position isn't going to fix this. And even if you're not so worried about your job security or personal finance, it never hurts to have a plan, especially today. The last month has changed everything [laughs] from the news cycle to the economy to healthcare. I want to know how those changes should impact the way we spend, save, and approach our personal finances in general. Because, if the government is sending you a check, you want to know how to use it, right? So to help answer that question and many more, I'm sure, I'm very excited to welcome to Business Casual Ramit Sethi, personal finance adviser, entrepreneur, and author of the best seller, "I Will Teach You to Be Rich." Welcome to Business Casual. 


Ramit Sethi [00:01:37] Thanks for having me. 


Kinsey [00:01:39] I'm excited to chat. We are remote, like we are for a lot of our recordings these days, but there are a lot of questions around personal finance right now. I'm sure you've been in high demand for podcasts and just questions in general from people all over the internet. 


Ramit [00:01:52] There's definitely a lot of questions. And on a regular basis, people don't know what to do with their money. But when something like this happens, they especially don't know what to do with their money. But, there is a huge urgency to figure out a plan. So, yes, there has been unlimited demand asking questions about money right now. 


Kinsey [00:02:12] And we actually had this on the books before everything kind of took a turn for the absolute worst. So I was thinking about approaching this interview, what we were going to be talking about, the topics we would be discussing might be totally different if we had this conversation a month ago. But in the last several weeks, like I was saying, a lot has changed. We've experienced massive shifts in money and money management. So from a personal finance perspective, I guess the elevator pitch answer here. What is the most important thing for people to keep in mind when approaching personal finance strategies in this era of extreme uncertainty? 


Ramit [00:02:47] You know, the first thing that I recommend for people to do is to take a look around, accept reality, make a plan, and move. And this is quite opposite of what our natural tendency is to do. Think about it. If you're driving down the freeway, and you see something in the middle of the road. What is the first thing that you do? You slam on the brakes. That is our human tendency. And for most parts of life, that serves us well. But in a situation like this, if you freeze, which is what most people do, if you wait for the government or your boss to tell you what to do, that is exactly the wrong decision. So accept reality. Some jobs are not coming back ever. Some industries will not be coming back for at least several months. Accept it. Make a plan. What are we going to do about it? Let's talk about, you know, what should we do with our money? Should we keep investing? We can discuss all that and then move. You have to move right now because being stagnant is extremely dangerous. 


Kinsey [00:03:48] When do you think it is too late to start moving? 


Ramit [00:03:53] [laughs] The candid answer is you should have already had a plan. But if you don't already have a plan that you're executing on, then you need to be doing it right now. 


Kinsey [00:04:00] I want to get into more detail about these plans that we are talking about here shortly. But just in a broader sense, what do you think in this entire story line of coronavirus and the impact on the economy and shutting basically everything down right now? What do you think that impact has most on regular, everyday people? 


Kinsey [00:04:18] From a personal finance perspective, is it consumer sentiment? Is it you getting this check in the mail, which I'm sure we'll talk about? Is it therefore I'm OK with the stock market? 


Ramit [00:04:28] Yes. [indistinct] for all of the above. You know, you have to remember that ordinary Americans do not save a lot of money. So that's the first thing to imagine and to understand is that it's not like people are sitting on a ton of cash. Also, remember that ordinary Americans are not particularly sophisticated about their personal finances. They don't really understand the difference between a 401(k) or an IRA. And by the way, part of it is personal responsibility. But part of it is there are systemic challenges that are quite real. Student loan debt has gone up. You can't discharge student loans in bankruptcy. The cost of housing housing is crazy in part because of NIMBYs. So we can talk about all these things. But I will say, number one, I've been talking about the politics of what is going on, and I routinely get messages that say, Ramit, stay in your lane. I follow you because I want personal finance. What people need to understand is that in pandemics, politics is personal, OK? Politics affects what happens with our money. 


Ramit [00:05:33] And that was true before this happened. And it's even more true now. So that's number one. The second thing is, how is it going to affect people ongoing? Well, in general, we saw what happened in 2008 and 2009. An entire generation became more conservative. It's not the case that people sit down and dissect, oh, wow, I was 65 at that time and my asset allocation was too risk seeking. No, they don't do that. They just say, the stock market is bad and I'm not going to do that anymore. So people become naturally more conservative and that costs them over the long term. 


Kinsey [00:06:07] So let's kind of dive into these in separate buckets. So we brought up a lot in that answer. When we say politics is personal in pandemics. This has become a very starkly political issue. The response to COVID-19, how it impacts the economy especially has become highly politicized. Do you think that it's fair for lawmakers in D.C. to have this conversation? And I've asked several guest in the past couple of days of people I've been interviewing—this idea of lives versus livelihoods. We're talking about keeping people indoors and quarantining because it affects their lives. But also, we're basically steering straight into a recession on purpose and that impacts their livelihoods. Where do you stand in this conversation and should it be a conversation we're having? 


Ramit [00:06:50] It's totally absurd to even be having this conversation at all. We need to make sure that grandma and grandpa are alive before we talk about what is the [indistinct] on our stocks. It's a totally absurd talking point that's been brought up and it's actually quite offensive to ordinary people who are concerned about their parents or grandparents. Meanwhile, you have people saying, what about the returns? What's going on with the economy? How about we get people safe first, and then we discuss what to do about the economy? So that is my answer on that. 


Kinsey [00:07:25] OK. So let's say we have a situation where we know people are safe. Let's take me for an example. I am in Florida right now at my parents' house and quarantining just in case, since I did come from New York. But what should my plan of action be for personal finance? 


Ramit [00:07:40] OK, so step one is you need to build up safety and security first. So you can't be talking about what pivots you're going to make and what are you gonna do about your career if you don't have a roof over your head, food coming in, and safety for you and your family. That's why for the first time, I'm recommending a one-year emergency fund. Typically, the advice is a three- to six-month emergency fund. And most people kind of just wink and nod when they say that, oh, you have an emergency fund. No, the time is now. What does that mean and how do you do it? An emergency fund sits in cash and it is there because some industries are not coming back forever and jobs are gonna be really tough for the next time period. We don't even know long. 


Ramit [00:08:26] So a lot of people listening, alright, Hey, must be nice. How do you get a one-year emergency fund? Well, let's talk about. There are a lot of companies right now willing to work with you. If you have student loans, call up your lender. If you have credit card debt, call up your credit card company. If you have a landlord, call them up. I've been advising all of my students at I Will Teach You to Be Rich to do this. And many of them are sending me notes of success. They got their credit card to put their payments on hold for three months. No interest or finance charges. They got their landlord to accept reductions or even holds on their rent. And same for student loans. So that's the first thing, and that can give you some protection in the short term. 


Kinsey [00:09:05] That's like the worst thing that they can say is no, right? 


Ramit [00:09:07] Exactly. So this exactly goes back to accept reality. Nobody's coming to rescue us tomorrow and make a plan and execute. Make those phone calls. Build that emergency fund by also looking at your expenses and really dramatically cutting. 


Kinsey [00:09:22] So let's consider the fact that for some people, it might be too late to build this emergency fund, that you might be out of a job. You didn't think about this ahead of time. 


Kinsey [00:09:31] Are there any reactionary steps we can take, as opposed to these more precautionary steps, like taking the time to build one-year of emergency fund? 


Ramit [00:09:38] Yes, of course. And also, if you can't build one year, hey, build three months. Let's not focus on being perfect. Let's focus on moving. But if you've done that and you're working on that, what do you do next? Well, we have to think about earnings. How do we earn more money? Now, for most Americans, they go to a 9-to-5 job and they receive a paycheck once or twice a month. And we will recover. I believe this economy will recover into a new normal, but we can't wait. So if you have rent payments, if you have other family members that need food, you need to figure out what to do about earning now. So I've been talking quite a bit to my readers about thinking how they can create earnings right now. 


Ramit [00:10:19] There's a lot of people starting businesses, even in economies like this, and adapting their businesses so they can earn more. I'll give you a couple of examples. We have people, every night now, who are teaching, cooking on Instagram. Listen to how simple this example is. My mom actually did this. She's been cooking for 40 years. She cooks Indian food. I said, Mom, teach this online. People signed up, paid her. She has a tiny business now. So there are so many things that people actually want to pay for, even in economies like this, that I'm encouraging people to step up and start exploring how they can create their own earnings. 


Kinsey [00:10:59] Right. Because even though a recession basically affects everybody, there are people who will face a less outsized impact with the recession. 


Kinsey [00:11:06] They might still have the disposable income that they did at least five, six months ago. OK, so let's let's move forward from now. You get some some more earning potential under your belt here. How are you thinking about investing and earning? 


Ramit [00:11:21] Great question. So let's assume you have your emergency fund and you feel comfortable with that. Then the next step is if you have been investing with a plan, you keep following the plan. So that means, for most people, it's simply automatic investing every single month. Target date fund. That has not changed. In fact, it's a little interesting that most people, if they go to the grocery store and they see toothpaste on sale for 30% off, they're happy. But when stocks go down 30%, they get really freaked out. We want to recalculate and rethink about this, particularly if you are young and you believe that the next 40 years of the economy will be strong. Then you have the opportunity to continue investing at a discount now. 


Kinsey [00:12:08] Do you believe that the next 40 years will be strong? 


Ramit [00:12:10] Not only do I believe it. I've been investing additional onto what I usually do. 


Kinsey [00:12:16] So on top of your automated investments, you've been going in manually? 


Ramit [00:12:19] Yes. 


Kinsey [00:12:20] Can you share what you're investing in or what kind of sectors you're excited about? 


Ramit [00:12:24] Yeah. I do simple target date funds or all-stock funds. So it's basically total stock market. 


Kinsey [00:12:32] OK. I want to take a second to talk more about the macro effects of all of this and the timing and some of the more psychological impacts. But really quickly, let's take a short break to hear from our sponsor. —


Kinsey [00:12:44] And now back to the conversation with Ramit Sethi on personal finance and this very unprecedented time of change and coronavirus. So we were just talking about some of the more specific steps that we can be taking regarding our personal finances as we move forward and understand this new normal for everybody. 


Kinsey [00:13:01] One of the big questions that you bring up in "I Will Teach You to Be Rich" is about psychology. It's a core tenet of what you're doing and willpower especially. Do you think that the timing of this specific downturn, that it sort of came out of nowhere? There was very little way for us to predict that this pandemic would shut down the entire economy, Has that had an impact, you think, on the psychology of our responses? 


Ramit [00:13:27] I think that it was totally unpredictable as of three to four months ago. And in terms of how does it affect our responses? Well, I speak to thousands and thousands of people every day through email, social media, and my customers. And the first question is really one of shrinking and fear. It's what do I do with my money and how do I save? That's the first question. It is the very rare person—I'm talking about maybe 3% of the questions I'm getting—who are saying, hey, how do I see this as an opportunity? Where should I invest? What should my strategy be going forward? And those are the absolute top students that I have. One of the things in personal finance is that there are a lot of things we should do, just like we should floss every night. But most of us don't do that. And it's OK to admit that. As long as you get a few big things right in personal finance, you actually don't need to worry about cutting back on lattes. That stuff is—it's actually nonsensical. It doesn't really move the needle. But if you get the four or five big things right, then right now you are still in fairly good shape to be able to execute on a financial plan. 


Kinsey [00:14:41] Yeah. This idea in personal finance that if you stop going to Starbucks or stop drinking your lattes, that you're going to retire wealthy, I think is, frankly, [00:14:49]bullshit. [0.0s] Like we have talked about it on this show before that you should be smarter than that. And hopefully people listening to this [laughs] are smarter than that. 


Ramit [00:14:56] Well, let's talk about why that advice is so popular. Because that is the advice that's now being peddled again. So what the experts tell you is cut back on lattes, don't buy lattes, don't buy jeans, don't go on vacation. And then one day when you're 85 living in a cave, maybe you can walk out of that cave and go on a nice vacation to Tahiti once. All right. Not the kind of life I want to live. So I believe that you can spend extravagantly on the things you love as long as you cut costs mercilessly on the things you don't. And when you ask people, what do you love to spend money on? Everybody's got one—I call it a money [indistinct]—everybody's got one thing. The most common answers: eating out, health and wellness, travel. Those are the three most common ones, but there are several others. 


Ramit [00:15:42] But most people have never actually answered the question. If you could double, triple, quadruple your spending on that, what would your life look like? Why? Because most of personal American personal finance advice treats us like we are stupid, treats us like we should be asking $3 questions when in reality, we should be asking $30,000 questions. And those questions are just as applicable today as yesterday. Questions like, do I automatically save? Do I automatically invest? What is my asset allocation? Do I have a secure job or if not, what am I doing next? And what are my relationships like? It's really hard to be financially successful if your relationships are in shambles. So these are a few of the big wins. You get these right, you never have to worry about $3 questions again. 


Kinsey [00:16:31] So let's peg a price tag here on the question of getting a check in the mail from the government with the stimulus package that was recently passed and should soon be signed into law at the time that we're recording this, pass the Senate, and go in to the House. The legislation would send payments of about $1,200 to Americans earning up to $75,000 a year gradually phases down. You get a smaller check up until people who make $99,000 a year, who then are not getting a check, [laughs] but they're already making a lot of money. What is the impact of something like that? Is it a $3 question or is it a $30,000 question like you were bringing up before? 


Ramit [00:17:13] I think the impact is that for a short period of time, people will feel that there is a little bit of relief, but what effect does $1,200 really have on the average American? That is a small amount for a one-time payment. So while I applaud that the government has stepped in to help, which they should—that is their role—1,200 bucks and capped is not nearly enough for what people need. What people will do with it is they will spend it on bare necessities because many people are seeing the unemployment numbers coming out, their astronomical and only getting worse. So again, I applaud it. It's not enough, and people will use it as a one-time opportunity of infusion of cash. But will it make a change over the long term? Probably not. 


Kinsey [00:18:02] Will it actually be effective to stimulate the economy? Because that is the goal here—is let's get the economy revved up again. 


Ramit [00:18:09] Wait a second. Wait a second. Is that the goal, or is the goal to actually allow people to have enough to buy groceries, because I think that is the goal. The economy comes second. Letting people afford to buy food is way more important than the economy. 


Kinsey [00:18:24] But somebody who's making say, I'm gonna get a check, I have enough saved that I can buy groceries. I think there's a scale here —


Ramit [00:18:32] You do — 


Kinsey [00:18:34] Of how it impacts people. 


Ramit [00:18:36] But most do not. You do. You run a business podcast. You're more sophisticated than most people. Most people are not sitting on a ton of cash and they don't understand how to tap into this account, and what is the effect of their Roth IRA, they can actually withdraw the principal, penalty—they don't understand this stuff. I think that we should absolutely deal with the economy. The economy affects you directly. Me directly. All of us directly. But the purpose of getting money to Americans is to allow them to live. First of all, people have real needs. 


Ramit [00:19:11] Their families need medicine and food. And that is where I want people to be focusing on the conversation. And I think it's a little bit myopic for people who live in the business world and follow all these business people on Twitter—they go back to the one note that they know how to play, which is the economy. What about growth rates? No. What about actually stepping back and saying, as a country, we have a value placed on allowing our citizens to live. And in order for that, they need basic necessities like being able to afford their rent and food. So let's talk about the economy—fine. But that's not the purpose. The purpose is to get immediate relief into people's hands. 


Kinsey [00:19:49] This is a financial life raft, not an economic stimulus. 


Ramit [00:19:53] Yes. And so when people talk about this with the only lens that they typically have in the business world of the economy, I just want to shake them and say, are you listening to yourself? The economy? Yes. We need to deal with it. It's a huge issue, but we're talking about people's lives here. Let's start there. 


Kinsey [00:20:11] Right. And with consumer spending, I think it makes sense. Something like 30% of the U.S. economy—they need that. If we even want to have the conversation about will the economy recover, we need to make sure that people have money to spend. Why do you think that the conversation in this sort of business media bubble, that I will be the first to admit I am a part of, why do you think the conversation is so much around the economy and not everyday people? 


Ramit [00:20:37] That's the crux of why there have been so many angry people over the last 20 years, isn't it? Is that the people who are giving us information view the world through one single note—and that is money—and it's quite reductionist to only look at people in the view of headcount and in the view of contributing to the economy as opposed to saying what kind of values as a country do we want to have? Do we want to have a country that works together? Do we want to have a country that takes care of people? Or, do we want to listen to some of the media that are out there right now saying, you know what? Let's go ahead and send grandma and grandpa out to work because they're unproductive members. 


Ramit [00:21:19] And if 1% of them go away, then it's not so bad, is it? I mean, can you imagine someone actually talking like this? No, but they are. And that's what happens when you take the financialization of life to its logical extent. You stop looking at anything else, including relationships, value in human life, and suddenly the world is made up of dollar signs to you. 


Kinsey [00:21:43] Do you think it's possible to achieve the kind of society that takes care of each other and puts people first? Is it realistic in this day and age? 


Ramit [00:21:52] That's a great question. Is it realistic? I don't know. Do we have to fight for it? Yeah. 


Kinsey [00:21:58] Do you think that it's let's say, in the wake of the most recent financial crisis and a lot of listeners minds in 2008, 2009, do you think that we succeeded in doing that back then? 


Ramit [00:22:09] Hell, no. Are you kidding? We became more polarized since 2008, 2009. What we should have done is we should have put in place automatic investment procedures, automatic protections for ordinary workers so they wouldn't be expected to crawl through the minutia of understanding what a Solo 401(k) and a Roth 401(k) is. It should have been automated, and it should have been focused on we're gonna protect people and you can always opt out if you want, but by default we're going to direct you in the right ways. There are a few things that people in the financial world understand or the quote right things to do for people. 


Ramit [00:22:47] You want to encourage saving. You want to encourage investment. And we know the general allocations for people by age. Now, of course, you can choose to change those if you want. But what we see and what we know from the research is that when you automatically set up things like 401(k) contributions, people do the right thing, and they end up with a lot of money in investments. But instead, what have we done? We've deregulated. We have allowed the banks, like Wells Fargo and Bank of America, to get away with predatory behavior. 


Ramit [00:23:21] By the way, I named those banks specifically. I name them in my book. I name names, good companies and bad companies alike, because there's no way that the average mom and pop in this country can understand the complicated strategies that these financial companies use. There's no way. So what we need to do is protect them with organizations like CFPB and others. And instead, we've done actually the opposite. 


Kinsey [00:23:46] It's hard to imagine the Consumer Financial Protection Bureau and similar entities actually succeeding in protecting people. It feels like even if you log onto the websites now, it's just a bunch of jargon and not necessarily a lot of help for people. 


Ramit [00:24:02] Well, there's two reasons for that. Number one is [laughs] number one is that they have been systematically wiped off the map by this administration. That's not an accident. They were actually quite strong, but they have been systematically wiped off the map. And for young people in particular, you should be offended by what administrations like this have done. Why do you think student loans are so high, in part because they can't be discharged in bankruptcy. That is not both political parties. That is one. So that's number one. And that's the biggest lion's share. But the second one is, most people don't know how to communicate about money in a way that reaches ordinary Americans. 


Ramit [00:24:41] I have been in financial classes where some expert comes out. He—and it's almost always a he—pulls out a 60,000-page folder and says, all right, let's talk about annuities. Let's talk about expense ratios. You think the average American understands what expense ratios are? Or a 23-year-old is listening to the inheritance tax? No. Most 23-year-olds want to know, how do I go out, get a round of drinks for my friends? How do I make my money go where it needs to go? Can you show me some magical words to negotiate a raise? You do that, and you've got them. If you don't, they start ignoring you like everybody else. 


Kinsey [00:25:20] Yeah. And I have a degree in business journalism. I went to a good college. I work in business news. And still a lot of this to me is very confusing and it takes a lot of research to even get a baseline understanding of what's going on in D.C., so I can only imagine what it's like for people who aren't lucky enough to have access to the information and to the people that I do. The big underlying theme here, and part of the reason that we're talking about this in the first place, is uncertainty—that we are in an era of uncertainty. We're not sure what comes next or how to move forward. How do you think that the uncertainty we're experiencing today—and I say we as the general zeitgeist—how do you think that is comparing or contrasting to the uncertainty around 2008, 2009 financial crisis? 


Ramit [00:26:06] I think we'll know about five to 10 years from now. Looking back, we will have a much clearer understanding. Right now, we don't even know where we are in the midst of it, but we do know that these types of crises have lasting effects. People who go through these, whether they be the Great Depression or 2008, they tend to be much more conservative financially. And that is to their own detriment. So it really hurts people. What happens is they they look at the market, they look at the headlines, and after two weeks, four weeks, four months, they say, you know what, this stock market thing is not for me. It's just a Ponzi scheme. It's just some random lottery. I'm out. And so they withdraw their money, they stop investing, and they feel at least I have some control, at least I can see that amount in my savings account. 


Ramit [00:26:59] Now, to them, it seems logical. But if you actually understand money, you know that by doing that, yes, they might feel safe today, but now they are invisibly losing money every single day due to inflation. And so they were worried about the possibility of losing money in the market, but now they have exchanged that for a guarantee that they will not have enough in old age. So it's going to be a very large generational problem. 


Kinsey [00:27:25] Right. This idea—and you tweeted about it recently—about super-savers—a generation of super-savers. We read all the time about how millennials are so risk averse because so many of us came of investing age during the deepest depths of the financial crisis, this super-saver generation beyond just losing money for themselves, what's the impact for everybody else in the economy in general? 


Ramit [00:27:48] Well, that is a hard question to answer. You know, the American economy is being very, very resilient. Trust me, if there's one thing Americans know how to do, it's to get other Americans to spend money. So I don't doubt that. I do think that saving—even after 2008, guess what happened? Real estate completely crashed. By the way, that's another myth in America that buying a house is the best investment you can do. We could talk about that—it's a total—largely a myth. And we thought, oh, nobody is gonna buy a house because now they understand that as an asset class, real estate actually underperforms, in general, other asset classes. 


Ramit [00:28:25] Three or four years later, what happened? I got to buy a house because now I'm an adult. So what we learn is that, number one, in America, real estate is religion. And number two, religion is very resilient. So these core beliefs—I call them invisible scripts—that we have, even cataclysmic shocks are very difficult to change our view on them. And so I do believe that consumer spending will go back. How much it goes back, how long? I don't know. But it will be very hard to convince Americans in American culture to stop spending. That is one of the core beliefs we have. 


Kinsey [00:29:02] Right. I wonder what the the next religion, to borrow your words, is going to be coming out of this crisis. Back then, it was we proved to ourselves that religion, real estate was religion. But now I wonder what the next —. 


Ramit [00:29:15] What do you think it will be? That's a great one. 


Kinsey [00:29:17] Yeah, I don't know. I mean, this is a crisis of consumer spending, I think, more than anything. But I don't know. I wish I had the answer. [laughs]


Ramit [00:29:25] I think that there are probably some behavioral changes we'll see as it relates to health. Maybe handshakes will be dramatically decreased. Maybe large gatherings will go downward, maybe in-person events will become more of a luxury. You know, there's lots of those things that will happen. As for the business side, that remains to be seen. 


Kinsey [00:29:47] Yeah, we've spent some time talking, just both in this podcast and just in my general life, about what the first weekend is going to be like when everybody can leave their hiding and get back to as much normal as we can. Some people have said it's going to be crazy. Others have said it's going to be super-timid and everybody's gonna be a little bit afraid. [laughs] I don't know. I guess we'll have to wait and see. 


Ramit [00:30:13] I definitely think that the ramifications will be wide-ranging and unpredictable. Imagine what will happen in the dating world. Imagine what will happen in the restaurant world. And certainly live event world, like concerts. I mean, these are profound changes. So we'll see. 


Kinsey [00:30:31] Right. Right. OK, well, let's take a quick break to hear from our partner. And when we come back, we'll talk more about the specifics in the stock market. — And now back to the conversation on personal finance with Ramit Sethi. So we were just talking about some of the next steps after all of this gets back to what we hope will be a new normal. One of the big things that I realized in researching you and your strategies is all about getting rich off investing in the stock market. I have a quote: "No matter your income, you will get rich off stocks as long as you start investing early. Keep investing and never sell." When do you think that the same will be true? Or is the same true today? 


Ramit [00:31:14] I believe the same is true. I believe it enough to be continuing to aggressively invest my own money. And let's add some context around that statement, because there's a little bit of layers before and after it. One of the things that has become really popular on Twitter—it's one of the Twitter sayings du jour is—Nobody gets rich from a 9-to-5. Nobody. That's one of them. Another one is, nobody goes to college anymore. College is stupid. That's another myth. So, first of all, most Americans generate their wealth through investing. And so that is really important to realize. And there's this concept online, especially in the entrepreneur world, that anyone who works at a 9-to-5 kind of can't cut it as an entrepreneur. 


Ramit [00:31:58] I don't believe that. I think that there's lots of great reasons to work at a great company and to work with a great team. Now, what is important is to be able to create an asset. And your asset, if you're a business owner, it's your business. If you're a 9-to-5 employee, you can still create an asset. It is your portfolio. So I do believe that in every 35+ year period of American history, the market has returned enviable returns. Enviable. And so if you believe that, and you believe that the future of the American economy is bright, particularly if you're young, then it is a great sign to be able to keep investing. I believe that, and I'm proving it not just by talking the talk, but by walking the walk and putting my own money in there. 


Ramit [00:32:45] So I do want people to remember: It's natural to be scared right now. It's natural to see these 10% drops, 11% gains, and say I'm out. But that's actually the worst possible thing you can do. Assuming you can afford to continue investing, this is a great time—just like any other time—to continue automatically investing. Nothing fancy. Target date fund, low cost, and focus on the long term. 


Kinsey [00:33:14] OK, you bring up the idea of getting rich off of a 9-to-5. A lot of people might be wondering how to get richer off of that 9-to-5. Is there a way to tactfully ask for more money? 


Ramit [00:33:26] Yes. But the common misconception is that you just go on a phone call or you go into your boss' office and you kick down the door and say, give me money. That's not how it works. [laughs] You have to set the context. You have to explain. Let's discuss the role. Let's discuss the expectation. What is it? What is excellent look like in this role? I'm not interested in doing a good job in this role. I'm interested in excellence. Tell me what that looks like. Establish that as what you were going for. And once you get aligned on that and those core KPIs, then discuss compensation. Trust me, bosses are willing to pay more for the best. Even right now, as opposed to trying to cut costs on everything. 


Kinsey [00:34:05] And it costs money to try and hire a new person too. [laughs]


Ramit [00:34:08] An extra $10,000 on average. So they don't want to waste their time with average. They have the opportunity to get better, and they will pay more for the best. 


Kinsey [00:34:17] So beyond just, you know, we talked about it earlier in our conversation about figuring out what you're good at and getting people to pay you for it like your mom cooking on on the internet. What else do you recommend for people who are trying to maybe rake in a couple extra bucks right now? 


Ramit [00:34:31] OK, so this is the core of what I do. So after personal finance, after you get your money in order, you have your investments automatically working. What's next? And for a lot of people, it's I want to earn more. And so I have a whole program earnable on how to start a business. And there's a couple of big objections. The number one is, I don't have an idea. So what do I do? The simplest thing to do is to text your friends right now. Text five to 10 of them and say, hey, I'm doing this thing. I was listening to this podcast. Can you tell me three things you think I'm good at? What do you come to me for advice on? 


Ramit [00:35:05] And suddenly you're gonna discover these crazy things you would never imagine. Oh, wow, I guess I am really good at keeping my apartment organized. I guess I am really good at dressing appropriately when we're doing a Zoom call for work. I guess I am really good at lesson plans for my kids. Guess what? Each of those can be a six-figure business. So first is generating those ideas. The second one is finding people who are willing to pay. And I just want to give a couple of examples, because again, right now, the objection is nobody's willing to pay. Ho-ho-ho-nobody. Wrong. For thousands of years, we have paid to entertain ourselves. We've paid to adorn ourselves. We've paid just because we want something. And that still remains right now. 


Kinsey [00:35:49] All right. I like ending on that optimistic note—that all is not lost. There is still room out there for optimism and for making more money, which everybody likes to do. OK. We are now going to pull out the wheel. Like I mentioned before at the top of the episode, this is a remote recording, so I have the app here and I'll show you since we are on video so you can see it. 


Ramit [00:36:14] OK. I trust you. 


Kinsey [00:36:16] I'm going to press the middle button so you can take it virtually for a spin. OK? 


Ramit [00:36:20] OK. 


Kinsey [00:36:24] [sound of wheel spinning] Alright. [sound of a ding] And we landed on oh, shit. So what is a moment in your career that you feel like was a big oh shit moment, either in a good way or a bad way? Thought everything was gonna change or you think you really messed up. 


Ramit [00:36:35] My God, there's so many. I think one of the toughest times was when our business declined by 20, 30, over 40% in a month. And that was when we looked at it and said, oh, shit. What are we going to do? And we thought, that's the worst it could get. But I developed a new model that year, which is, it can always get worse. Which is kind of really dark. And I'm an optimist by nature. But now I have a new view on life too, which is when things get bad, they can get worse and worse and worse. So plan for it. 


Kinsey [00:37:15] So be prepared. OK. OK. Take another spin around our virtual wheel here. 


Ramit [00:37:19] Let's do it.  


Kinsey [00:37:25] [sound of wheel spinning] [sound of a ding] You are at home now. What is your day in your social distancing life look like right now? 


Ramit [00:37:33] So my schedule continues to be largely the same because our company works remotely. So all of our employees are remote. We're very grateful that we're safe because of that. But I've added something new as soon as this happened, starting about 10 days ago. I said, you know what? I got to figure out how I can help and the best way I know how to help this to teach. So every night, I do these fireside chats and I do mean fireside. There's a fireplace here. So I learned how to light a fire. Please don't judge. I live in Manhattan. [Kinsey laughs]


Ramit [00:38:01] There's no reason why I should know how to light a fire. 


Kinsey [00:38:03] [laughs] Not a lot of fireplaces there. 


Ramit [00:38:03] They're like critters rolling around everywhere. I'm like, what are these noises right now? [indistinct]


Ramit [00:38:09] Yeah. I'm like, I gotta get back to the high-rise life. But what I do is every night on my Instagram page and then I crosspost it to YouTube. I do a new topic. So one day, it's how to handle money during coronavirus. Another time was how do you convince your parents to take this seriously? Every day a new topic. And it has been amazing because number one, this is how I know how to help—is to teach. Number two, people want some sort of normalcy in times like this. And if you can be there for your community, your customers, whatever it may be, that is more trust than you can buy. And so that is my new scheduled day in the life. 


Kinsey [00:38:53] I like it. OK. One last spin around our wheel here. [sound of wheel spinning]


Ramit [00:38:57] Let's do it. 


Kinsey [00:39:00] [sound of a ding] All right, we'll take it. We got it again, we'll take one more spin. [sound of wheel spinning]


Kinsey [00:39:04] Truth or truth is that you just have to tell me the truth. [laughs] What do you think is the worst money mistake that you've ever made? 


Ramit [00:39:13] We signed up for an enterprise email service and I delegated the decision-making to somebody. And the day we finally signed the contract, I logged in and we realized that it couldn't do one thing, the one thing that we need to do in our business, which generates millions of dollars. So I wrote the salesperson. I was like, hey, I think we made a mistake. Can you guys refund us? They're like, no way. And we're like, look, look, look, we'll pay. We know we already paid like 10% down. Keep the money. We made a mistake. It's our fault. But can you just cancel the rest of the contract? And they were like, no. And so we ate the $100,000 fee, we logged in once and only once. And we have nobody to blame except myself. 


Kinsey [00:40:04] That sucks. That really does suck. [laughs]. 


Ramit [00:40:07] Thank you. Thanks.


Kinsey [00:40:08] So don't make the same mistake for anybody out there listening. Use it before you sign —. 


Ramit [00:40:11] Yeah. And also, misery loves company. So thank you for saying that, because now I feel better. [laughs]. 


Kinsey [00:40:17] OK. Well, thank you so much for coming on Business Casual. 


Kinsey [00:40:21] I had a fantastic time. I really enjoyed this conversation and I feel like we have some actionable insight. So that is the best thing we can get out of this. Thank you very much. 


Ramit [00:40:29] Thank you. 


Kinsey [00:40:34] Thank you so much for listening to this week's episode of Business Casual. Do you have any other personal finance questions or maybe some stories of creative ways that you're making extra money right now? I want to hear it. Email me at Kinzie@morningbrew.com. 


Kinsey [00:40:48] That's k i n s e y @morningbrew.com. And let me know. I'll see you next time.