Navigating Your Money amid a Pandemic with Jill Schlesinger | B-Well Together | Salesforce

Hello. Hello.

Thank you. Thank you for joining us once again on Be well Together, your weekly program for well being. We spend so much of our time on this show talking about our physical and our spiritual wellness. But one of Camp Be well's newest pillars is prosper. And this focuses in on our finances. And I think that we can all agree that enhancing our financial wellness has a huge impact and a huge effect.

On our overall wellbeing.

So you have dialed in to the right show. If you are looking to avoid the pitfalls of or look for new opportunities in these crazy times that we are in, we have the perfect person here for you today. The very talented friend of Salesforce, Jill Schlesinger has joined us. And in the event that you are unfamiliar with her, she actually started her career on Wall street as a commodities trader and she is an investment advisor and a certified financial planner. But wait, there's more. She is also an Emmy nominated and Gracie Award winning business analyst on CBS News. She hosts a podcast called Jill on Money and she is the author of a phenomenal book, a York Times best selling book called the Dumb Things that Smart People do with Their Money. So today we're going to see how we can prosper with Jill with her tips and help us think about our financial position during these incredibly crazy and uncertain economic times. So Jill, welcome to Be well Together.

Well, thank you so much for having me. I really appreciate it. You know, it seems so weird, Jodi, just because I was at Salesforce in the Salesforce tower just about a year ago, a little over a year ago. And to imagine how much has changed is really startling. It really is. Yeah. And you know, I know that a lot of you watching, you know that you have that feeling inside you which is like, I'm so lucky to have a job. And I get that. Everyone, you know, we're going to acknowledge that we're lucky. We can work from home and we have jobs. It also does not mean that you're going to feel 100% secure about your financial life. So I thought I would put together a quick little like kind of what the hell's been going on here for the last few months amid the pandemic. And then I can answer your questions. And again, part of what I do is try to bring a lot of the big macro stuff that's going on in the world to people's lives and help them distill this information. So I'm going to share my screen which, God willing, this should all work.

You know, you can do this. I know you can do this. You know what?

I want to tell you something. You say that, and yet, you know, it's. You did it. I did it. Hold on a second. Now let me tell you what I. So, okay, first of all, anyone who saw my presentations, and I did some webinars for you guys, and my presentations looked so much better because the file that I needed for my presentation was on a different computer. And. And I hadn't brought it with me when I bolted out of New York City three months ago. So it has like a subpar actual graphic design. So for those of you who are graphically oriented, apologies in advance, but I do, I really am, just want to get through some of this stuff. Jody already did a lot of my background, but that's just to show you that I have a nice headshot. So, see, that's what happens when you work in tv. So my main job is working for CBS News, and I do host both a radio show and a podcast. And I was an investment advisor way back when, 100 years ago. And I did start my career as a commodities trader. But now really, I talk about stuff more than anything else. So. Okay, where are we right now? I'm going to go through just a quick and dirty analysis of what has happened in the last three, four months in these various parts of the economy. So GDP is gross domestic product. That's just the, you know, what's the big economy? All goods and services totaled up. Jobs. We're going to talk about. We're going to talk about the housing market, and we're going to talk about sentiment, how people are feeling. We're going to talk about markets. And this should hopefully get us through kind of the deep dive into what's going on. So if you can look at this, this is the real gross domestic product. And before the pandemic we came into this year. I want to point this out because it's fascinating. If you look over to the left, you see that economic growth was about, let's call it about 2%. That's where we were. That's what we were expecting, about 2% growth over the course of the 2020. And then the pandemic hit. You see that big line down? That is an economy getting a lot smaller. In the first three months of this year, the US Economy shrunk. Not supposed to shrink. Right. That's what a recession is. So we have a contraction there. And the first quarter shows that we got smaller by about 5% on an annualized basis. We don't have the data yet for the second quarter, right. We just. Today's the last day of the second quarter. It will probably come in like that. We've shrunk maybe 20%. This is crazy, you guys. When we have recessions in the past, even the Great Recession, we never had the economy crater like this. And it happened so suddenly. So if you feel like, wow, it felt like we went off a cliff. The economy for sure did. And you'll hear people like me when we're on the news talk about, well, we haven't seen anything like this since the Great Depression. We haven't. Now the big difference, of course, in the Great Depression is that we didn't have the government coming in and doing anything as quickly as we have this time. So we have learned some lessons. That's good. But the economy is on track to basically be about 5 to 8% smaller by the end of this year. And then when we get through all of next year, we, we still may be a little bit smaller. It's likely that it's going to take us some time to get back to where we were at the beginning of this year. Maybe as much as two years. We don't know. But when you hear people talk about a V shaped recovery, it means that you go down deep, you come back up, and we don't know if that's going to happen. You kind of hope it's going to happen. I doubt it. Got to be honest with you, I wish it were the case. I just don't think it's going to happen. So look at the. Now here's the opposite. Wrong way, right? This is the unemployment rate. So if you go back to March in the beginning of the pandemic, we were entering this period in a really wild time because in February we had just come off of a 50 year low in the unemployment rate. It was three and a half percent. The unemployment rate probably went to close to about 20% in April. Maybe it went down to 16% in May. We're going to actually get a unemployment report on this Thursday. And the reason why I'm saying these rates are sort of weird, it's that the Labor Department is having a really hard time figuring out what the actual unemployment rate is. The reason is kind of funky when you go and you look at these rates, the way that they are conducted is there's a survey, it's called a household survey. So let's just pretend that I said to Jody, like, hey, are you working or not? If Jody says, well, I'm absent from work or I'm furloughed from work or I'm temporarily out of work. Then the person who's on the other end of that survey question says, oh, then Jody's not in the labor force. And it can make it look like the unemployment rate is lower than it actually is. So what the Labor Department's trying to do is figure out during this really crazy time who is really unemployed, who's temporarily unemployed and who's just not looking. And these are all getting kind of merged together. And it's giving an unclear picture of what the actual unemployment rate is. So that's why you may have seen a bunch of articles in the aftermath of the last unemployment report which said, oh, the unemployment rate was 13.3%, but maybe it was really 16%. We don't know. Here's what I want you to think about. The unemployment rate is really freaking high right now and it ain't going down anytime soon. We have so many people that are sidelined. You can look at this chart. I find this to be a fascinating one. You see that little line across the bottom? That's weekly jobless claims. The number of people who are filing for unemployment benefits. It was at about 200,000 people for a pretty steady time from maybe back to like years. In the end of the recovery at the end of March, we had almost 7 million people say that they need unemployment benefits. Now that number's been coming down and it'll probably go down below a million by the end of the next month, like by July. But a million is still a staggering number of people. Okay, if I look back in time, if I go back to 1982, that was the previous high in weekly unemployment claims. It was 700,000. So just think, the worst ever on record was 700,000. The worst that we just saw at the end of March was 7 million. That's how sudden and stark this whole process has been. All right, so here's the good news that unlike the Great Depression, we had big time government action. We had the Federal Reserve moving interest rates to zero. And they. Oh, I see a typo. Very nice, Jill. Asset purchases. There's a. Forgive me for my typo salesforce. So the Federal Reserve is going ahead and buying assets. What does that mean? It means they're buying bonds, they're buying mortgage backed securities, they're buying government bonds, they're buying corporate bonds. This is try to keep the liquidity going, going. We also know that Congress has spent about $4 trillion under different phases of the CARES Act. Now what that has done is created a Lot of stability underneath the marketplace. Specifically, what you'll see is that those actions kind of gave everyone some breathing room. Okay. And it was at the time when all of these actions were announced that we started to see a little bit more of a steadying of the stock market. So here is the S&P 500. That's the broad measure of the stock market. Now you can look to the March 23rd. I remember that because it was a very, very, very bad day. And we hit what we call a bear market bottom. Now you see where the market was. We were at all time highs back in February. We dropped over the course of five weeks into a bear market. What does that mean? It means a contraction of more than 20%. So we were in a bull market for all that time, and then boom, in five weeks. It was the swiftest drop in the S&P 500 that we have seen over such a concentrated period of time. Now, what you see are these lines starting to jiggle up to your right. I know you guys, you like it jiggling up to the right, right? So does everybody. I want to point out to you that during the worst part of the stock market dropping and uncertainty around the pandemic, that's when I started getting a ton of people freaking out. So I host. I said, I host a podcast right up until March 10th. My podcast was released twice a week. But right around the beginning of March, I started to get hundreds and then thousands of emails every single day. It was insane. So we moved it to a daily podcast where I absolutely was just hyper focused on all the questions that people were asking. Then I just decided, well, you know, I'm going to read these emails and answer them in real time every single morning. So I give a little recap and then I answer questions. And what I realized was that throughout this period, the uncertainty over the pandemic, the uncertainty over the stock market, the uncertainty about the economy, about people's jobs, about what was coming next. It was overwhelming and it made people feel. Feel like they wanted to do something. And oftentimes I think of a friend of mine who's a shrink, and she likes to tell her clients, there's a great acronym for people when you feel like you want to fill air. And she says, just think of the word wait. And then you turn it into, why am I talking? Like, why am I talking right now? Why am I picking a fight with my spouse? Why am I doing that? So I now have decided that wait is also a perfect acronym for all of us about our financial Lives, especially amid a crisis. The real question is why am I trading instead of why am I talking? Why am I taking action? Why am I doing something? Because we're human beings, we have emotions. We let these emotions really guide what we do. And I want to express to you how vital it is that in these times that you pull back from taking action. Whether it's a trade, whether it is making a decision about a house, or whether it means that you're abandoning something that you are going to do and really think about. Let me get back to basics. Let me think about what's my game plan. Here I am, I've got a great job. I work at Salesforce. They care about me. I can work from home. Why am I thinking about moving my allocation around? Why am I thinking about doing something different than my long term game plan? Has my life changed in such a way that I should take action? And the thing that's become really clear to me is that this chart tells you exactly why doing nothing is often the very best thing. Because whether you were smart enough to sell in February and smart enough to buy in March, it didn't really matter. What mattered was, could you stick to your game plan? Could you allow yourself to take that moment and say, I don't need to do anything. It's really freeing not to take action. It's really freeing to rely on the game plan that you've put in place. Allow yourself the ability to say, I'm sitting still with my feelings around what I should be doing and instead say to yourself, I've got my game plan, I'm good. And you know, now we're closing out the quarter. You know, one of the things that I think is really instructive is to think about why timing the market is so hard. Now, for those of you who were part of the webinars that I conducted at Salesforce, you're going know this. I have this thing called the big three. And the big three is essentially these three steps that I think will pretty much cure most anxiety in people. The first step of the big three, and that is have six to 12 months of your expenses in a safe cash equivalent account. That means a checking, a saving, a money market or a CD, six to 12 months of your living expenses. Now just imagine if every American entered the pandemic and had that emergency reserve fund that would have led to far fewer people freaking out, really. The second aspect of the big three is to pay down your consumer debt and your student loan debt. And the third aspect is to try to fully Fund your retirement plan, at least to the best of your ability. The second part of creating the second part of your investing success relies on creating some sort of game plan. Hey, why am I investing? I need a retirement plan. I need a college funding plan. Figure that out. The third is that once you have a plan, you allocate your assets. Some in stock, some in bonds, some in cash, maybe some in commodities or real estate. Whatever it is, you create that allocation plan. You stick to that plan. And here's the critical aspect. You don't revisit the plan when the market's falling apart. You try to revisit the plan when something happens in your life. Meaning I would revisit the plan when there was a life event, a birth, a death, maybe a divorce, maybe a new job. You look at your plan. Or maybe something has happened. You might revisit the plan. If you say, I'm working at Salesforce and my partner is self employed and has no business, hey, let's go and look at that plan right now. Is that plan still the right plan for us? And you revisit your allocation. Depending on what's going on in your life, maybe something really good happened. Maybe you need to get some money to work. Maybe you need to really be more conservative. And then you create a plan to rebalance. So here it is. It's June 30th, by the way. Happy pride. I had to do that. Yeah, yeah, yeah, yeah. Okay, so I think my pride flag is up there, but it's sort of wilted right now. So the time to rebalance is. Well, you could, you could two different ways to rebalance. One is you could set it up automatically. That, like inside of your Salesforce 401k, there's a box that says, do you want us to rebalance this? And then a computer algorithm will rebalance your portfolio on a quarterly or semiannually or annual basis. And there are other people who like to rebalance when their asset allocation gets out of whack by a certain percentage point. I usually just use the calendar kind of because it's easier. I. I think that what's really important here is something that I talked about for a long time in the process of managing money. Is that the point of having a game plan and allowing an automatic rebalancing is that it can help avoid you trying to futz around with your investments. Perhaps at the wrong time. Maybe it'll be the right time, but chances are it's the wrong time. And timing the market is just really hard. I just want to go back to this slide for a second. It is really tough to figure out that you're at the bottom or you're at the top. And that, to me, is why we stick to the do not time the market last little bit. Because I promised Kathryn that I would do this, that I am Dr. Doom. Sometimes one of the realities of the pandemic is that people did not realize that they didn't have all of their estate documents in place. And I would just encourage all of you, talk to your parents and your loved ones. This is really a kick in the butt to tell you that your will, your power of attorney, your health care proxy, you talk to your family members about what they would want at end of life. You double check insurance. You do these things now, hopefully when things are actually going okay. So I hate to end on a downer, but. Well, here's it. Let me end on an up note. Buy my book. I'm just kidding. You don't have to buy my book. But what I really would say to you is that you should know I'm here for you guys. I love Salesforce. I know we're going to open it up to questions, but if you don't want to ask a question or you haven't submitted your question, just shoot me an email@askjillillmoney.com I am answering them every single day on my podcast, and I encourage you guys to look within yourselves and be honest about what this period felt like for you and to try to make better decisions going forward. I hope that we've seen the worst of this for the economy, but we may not have. So, all right, now I'm going to stop sharing. Hi, I'm back.

Jodi, that was awesome. Your energy is such a breath of fresh air. I really, really appreciate and love how much you do for Salesforce. And so thank you for being there.

Sure.

I do have a couple of questions. I think it was really interesting. I love what you said about waiting. I think that is really so powerful because I do think that a lot of people have, like, feel this need to try to take control, to try to improve it, to make it better. And so I guess there's two areas around that that I want to ask about. One is that I'm seeing a lot of people moving right now that they're making that. They're like, why am I living in this really expensive urban setting when I can't access any of the urban amenities? And I'm gonna move. I'm gonna move to a cheaper market. If All I'm gonna do is sit inside all day or you know, the new national pastime of going on walks. So I'm curious to hear from you, your thoughts about like it seems like, wow, that could be a really financially responsible thing to do. But that's a really big movement in a time when you might be recommending to wait.

Oh yeah, this is great because I wanted to talk about housing and this is a perfect entree into that. I know that for a lot of you you may have entered the pre pandemic period saying I want to buy, I want to buy and you get shut out of the market and then all of a sudden this happens. We just got some analysis by the American Enterprise Institute. It's pretty wild. I mean it's early days, right? But check out this little factoid. Over the last month, home purchases in non urban areas have increased by a third more than in urban areas. And what does that tell me? It tells me that you're right. People are making some big decisions. I want to tell you a story about how that decision can bite you in the tushy. My brother in law and sister in law after 911 were really freaked out and they left New York City and they went to the suburbs and they said that was it and that was the last time. I remember feeling this way, that right after 9 11, as a new Yorker, a lot of people were like, oh my God, being in the city is really scary. It's sort of depressing, right? And so there was a movement out to the suburbs. Well, my brother in law and sister in law lasted I think exactly 19 months in the suburbs. They got killed on the house, getting moving and moving back. They went back to the city. Before you make a big decision like moving, I think that time is your friend. And if you, what I don't know is whether this is a temporary tick up in the non urban or it ends up being a longer term trend. And what I think is important is that as you said, a house is a huge decision. It's the probably the biggest asset in most people's lives, especially when they're younger. Making this decision amid the pandemic seems crazy to me. That said, you know, if you were ready to buy a house five months ago and you freaked out and said I'm not going to buy a house until I know what's going on, maybe now's the time to resume your job, that search for a house, because mortgage rates are at basically all time high.

But it's still kind of aligned to.

What Your plan was exactly. You really want to say, like, I kept my job. Life is good. I would be very careful about moving to the burbs immediately. Moving out of a city where you have been very comfortable for a long time without really understanding what it was like. I got a question from somebody who said, I'm going to buy a house. Da, da, da. And they told me the whole story and I said, but that's. You're an hour and a half away from the city that you really love. Are you sure that's going to be okay 18 months from now?

Yeah. And we don't like maybe no new plans. If your plan was always to exit stage left and get into the suburbs, then maybe, you know, maybe the accelerated timeline is okay. But if that wasn't like what your original goal was, then this may not be a time to, to set a new life goal.

Right. And I would also mention that for a lot of people, and you know, I know that Salesforce is talking about, you know, how and when people go back to work. A lot of people are thinking, hey, I'm going to move to a tertiary city and work remotely no matter what. That's great. Some people may think that's fantastic. Some people may not. But I would not alter my plan this moment and make that big zig or zag until I had more information.

Yeah, that makes sense. That makes sense. Okay, one more quick question for you. A lot of us were hunkered down, not going to restaurants, not going on summer vacations, not paying for summer camps. And so there's actually just inherently in this lifestyle, quite a few savings that we may be coming across. And is your advice still to kind of, let's assume that we have our big three taken care of, you know, is your advice to kind of still wait and maybe not reinvest or take something and put it somewhere?

I would say this. If you don't need this money for a long time, like, you know, you don't need the money for more than a year, then it's time to think about what do I do with this money? So let's say you've got some extra money right this second, and you're already maxing out your retirement account. Right. You're already putting $19,500 into your retirement account. Then start a non retirement investment account. Just get that money to work, and you may choose to have it invested more conservatively than your retirement account. But this is a great time to accelerate your, your investing. Think of it as a supplemental retirement account, basically a Little extra money on the side. Maybe it's the account that you always wanted to place play with. Even though I hate play accounts. But let's just say it's an account you wanted to experiment buying some stocks. You may see that basically trading and buying stocks and little slivers of stocks and through various investment houses is really cheap. Maybe this is the time to do it. But just remember, if you need money within the next 12 months, then it doesn't get to be at risk. No way. No risk.

Got it.

Got it.

Kathryn, anything from you? I know we're at the time, but I want to make sure that we've got such a pro on the line here.

I know, I know you've been talking about no actions, but if there were some actions you would suggest people take during these times, what are the top three things you would suggest? Okay, so top three is if you have not created that financial plan, you're at home. This is a perfect time to do it. I would also make sure that if you're, you know, I know. I do the estate plan stuff a lot. The reason why this has come up and become such a hot issue is that we know that a lot of older people became ill so quickly that they did not have time to actually even get their documents. So this is a time where if you have had parents or you have adult children who have been. You're reluctant to talk to, it is the icebreaker of the century. You cannot go wrong saying, mom, Dad, I love you. I don't want anything bad to happen. But listen, we've got to have this conversation. So I would say have the conversation. And I think the third thing, especially for people who are fortunate and continue to work, is to actually ask yourself, am I on track to do the things I want to do? Am I saving money for the sake of saving money? Am I saving money with a game plan in sight? Is there something that I want to think about in my own career that I could do? Because I have this beautiful time that is horrible and great at the same moment, right? Which is I am home and I can contemplate things about my own life and my own career. All the money that we talk about saving and investing, it's not for some, like, major league, oh, my God, I'm gonna go on the trip around the world. It's usually to give you opportunity, and that opportunity is your opportunity. So take this strange moment in time, assess what's going on in your life, and really make a decision that you think is most appropriate for you. But the one that I think is so important is the money that you put away today. It's not for some far off crazy goal. It's for opportunity tomorrow. And that tomorrow can come sooner than you think. I love it.

Thank you, Jill. Thank you so, so much. You've given us great things to think about. Totally unique perspective that I honestly hadn't.

Thought about the whole weight thing.

And that is kind of a little bit just relaxing in and unto itself, just to pump the brakes a bit. So thank you for joining us. I hope we'll get to see you again soon. And thank you for all of you who took the time to prioritize your own well being, your well being, as the case may be today. Be happy out there. Be well, and we'll see you back here again soon.

Bye. Bye.