Personal Finances Moves for the Coronavirus Pandemic

The shutdowns that have accompanied the COVID-19 pandemic have wreaked havoc on the global economy. Millions of people are out of work, businesses are cratering, and the stock market has tanked. Whether you’ve been hard hit by these effects or are 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 Instagram account where he covers a financial topic pertinent to the pandemic, as well as answers questions from his community of followers.

Today we discuss some of the ideas Ramit’s been hitting on during these chats as well as the common financial questions he’s been fielding. I begin our conversation by asking Ramit why he tells people they shouldn’t panic, but should overreact. We then dig into Ramit’s advice for people who fall into different categories as to how the pandemic has affected them, beginning with survival strategies for those who are out of a job altogether. Ramit then shares the money moves people who do still have income coming in should make and why he’s changed his tune on how much of an emergency fund you should have. 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.

If reading this in an email, click the title of the post to listen to the show.

Show Highlights

The common money questions Ramit is seeing right now
The difference between panicking and over-reacting
What does it mean to overreact?
The money moves to make in order to survive being laid off or a big drop in income
The CEO approach to surviving the downturn
Why Ramit has changed his tune a little bit on how much to have in an emergency fund
How much to really save, and then when to use your emergency funds
Should you be helping your family financially?
How to come out from this pandemic even better than before
Starting a business right now — it may not be such a bad idea after all
The business that Ramit’s mom started
What to do if you made early mistakes with your stocks/investments
Advice for finding a job
Why job market ambiguity can help job seekers

Resources/People/Articles Mentioned in Podcast

Connect With Ramit

Ramit’s website

Ramit on Instagram

Ramit on Twitter

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Read the Transcript

Brett McKay: Brett McKay here and welcome to another edition of The Art of Manliness Podcast. The shutdowns that have accompanied the COVID-19 pandemic have wreaked havoc on the global economy. Tens of millions of people are out of work, businesses are cratering and the stock market has tanked. Whether you’ve been hard hit by these effects or so far weathering the storm yet feeling certain about your future, what financial moves should you be making right now? To get some insight, I brought back personal finances 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 Instagram account where he covers a financial topic pertinent to the pandemic as well as answers, questions from his community of followers. Today we discuss some of the ideas Ramit’s been hitting on during these chats as well as the common financial questions he’s been fielding. I’ll begin our conversation by asking Ramit why he tells people they shouldn’t panic or should overreact. We then dig into Ramit’s advice for people who fall into different categories as to how the pandemic has affected them beginning with the survival strategies for those who are out of a job altogether. Ramit then shares the money moves people who do still have income coming in should make. And why he’s changed his tune on how much of an emergency fund you should have. 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. And we end 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. After the show’s over, check out our show notes at aom.is/pandemicfinances.

Ramit joins me now via clearcast.io.

Alright, Ramit Sethi, welcome back to the show.

Ramit Sethi: Thanks for having me. It’s always fun to be back.

Brett McKay: Well, we had you on in August and a lot has happened since then. A pandemic and a pandemic-induced recession. So with your work with, I Will Teach You to Be Rich, you’re really engaged with your audience, fielding questions from them about the stuff that they’re struggling with, with their finances, their work. What types of questions you’ve been getting in the past few weeks about what to do with money during the pandemic?

Ramit Sethi: The questions are, “What should I do with my money right now?” That’s a huge one. Another one is, “I know I shouldn’t time the market, but… ” And then they say something about timing the market. [chuckle] That’s a very common one. Another one is, “How do I earn money?” Either, “I got laid off,” or, “I’m probably gonna get laid off, what do I do to start earning more money?” So those are the majority of the questions. And then there are some edge cases in terms of, “I’m a business owner. Should I do PPP? Should I stop contributing to my 401 [k]?” And we can talk about all of those.

Brett McKay: Alright. So during this time, you’ve been doing these things on Instagram called, Ramit’s Fireside Chats, where you basically do Instagram live, you’re fielding questions, talking about just a topic of the night for what to do with your money during the pandemic. And one high level piece of advice I’ve seen you give during these things is, “Don’t panic, but do overreact.” So what’s the between panicking and overreacting?

Ramit Sethi: Yeah. So I wrote a post about this called, “Panic is bad, but overreaction is good,” very early on. And as soon as I started to see what was going on, I wanted to take action and really overreact. My greatest hope was that I would end up looking stupid and feel a little embarrassed about overreacting, maybe lose a little bit of money and everything was great. But my greater fear was that there would be a huge quarantine, a national quarantine and mass unemployment, etcetera. So when I say, “Panic is bad,” panic is reactive, it’s fear-driven, it’s just running around without knowing where you’re going. That’s bad. And I don’t believe we should be panicking, but I do believe that overreaction in a crisis is good. So what is overreaction? It means making a deliberate decision and then going all in. For example, “Hey, I have a good job but I might get laid off and if that happens, I probably won’t be able to get another job for at least a year. Okay, what plan do I need to create to account for that?”

One thing I learned when my business took a downturn, in general, I’m a optimist. I believe things will, over the long term, work out well, but that year when my business took a real hit, I discovered a new philosophy called, “It can always get worse.” And to really internalize that means whatever model of, how bad you think things can get, double it or triple it. And then you’re talking about a real overreaction plan.

Brett McKay: And because the result is, even if it doesn’t happen, the worst doesn’t get worse, you’re not any worse off. In fact you’re probably prepared for the next downturn that comes.

Ramit Sethi: Yeah. What’s the worst? You’re embarrassed, people make fun of you because you bought too many Heinz chili cans. And actually, maybe you did incur some financial cost, maybe you canceled your wedding because you were planning for an overreaction and you said, “Six months away but I’m just gonna cancel it right now out of abundance, because even though I’m gonna eat X thousand dollars in cancellation fees, it’s better to have the rest of that money in my pocket now, just in case.” So there could be some cost. But you have to balance that against, “What if you’re right?” And, “What if this actually is worse than you think?” And I have to say that psychologically and culturally, most of us in America do not spend a lot of time thinking about the worst. In general, we’re a very optimistic culture. We think about, “What can be?” We think about possibility and that’s what makes part of our culture so magical. But it also means that we are ill-equipped to evaluate risk. And frankly everyone is. No one’s ever gone through a global pandemic exactly like this. Nobody can expect you, or me or anyone to get it exactly right. But my general philosophy in something like this is, “Don’t worry about looking stupid and don’t worry about incurring a little bit of extra expense. You need to focus on overreacting because the worst case might actually come true.”

Brett McKay: Alright, so let’s talk about ways we can overreact for different people. And as I’ve watched your fireside chats, and the topics you’ve hit and the questions that have come in from your viewers, there seems to be a spectrum of financial situations during this pandemic. At one end of the spectrum, you have folks who’ve lost their jobs, they have no savings, they’re not able to pay rent, they can’t pay their bills, dire straits. At the other end, you have people who still have a job, they still have income coming in, they might even have an emergency fund. So yeah, it’s inconvenient but they’re okay. In these fireside chats, you’ve addressed these different groups of people who have tried to. Well, so let’s talk about that former group, folks who’ve lost their jobs. You look at the unemployment rates, it’s just terrible. People can’t pay their rent, people having problem paying their bills. For these folks, what are the money moves they should be making now to maintain solvency?

Ramit Sethi: Yeah. So for the people that are in tougher financial situations, there are some things that you can do immediately and they can provide you some relief. And I have to say that there hasn’t been a really consistent source of information on this, so it’s totally understandable that people are frustrated. If you got laid off, maybe you have a little bit in savings. Maybe if you were lucky, you got offered a severance package. Okay, maybe that’ll last you a few weeks, maybe even a couple of months, but what then? We have to remember that in recessions, depressions, crises, you’re not the only one looking for a job. Millions of other people are, too. There are few things that you can do right now, and I’m gonna give people a framework and then I’m gonna give some specifics, so that… The typical advice is cut back on everything.

And I would rather be a little bit more surgical. I’m gonna advise something called, the CEO approach. Cut costs, that’s C, E for earn more and O for optimize your spending. Now, let’s skip around a bit for the people who need immediate relief. The obvious thing under C is, any large purchases or plans you have for the rest of the year, just cancel them. I had somebody who asked me about, “My wedding’s coming up in six months. Do you think I’m gonna need to cancel?” I was like, “Without a doubt, cancel it. Doesn’t matter if you incur extra fees, the money you need in your pocket now is worth more than the money you could potentially have later.” Okay. That’s obvious. Any trips, wedding, any gym that you used to be a part of, just cancel it. Even if you’re going to incur re-initiation fees later, deal with that later.

I think O, for optimize your spending is really powerful here. There’s a script that I’m gonna give everybody. You can call up the companies that you currently pay money to. And you can say this, you can say, “Hey, I’d like to discuss my options with you. I’ve been a good customer for three years and COVID-19 is making it difficult for me to continue my usual payments. So I’d like your help with some options.” And you can do this for your car insurance company, your cable company, your credit card, if you owe them money. Student loans, cell phone, and even your landlord. Now, not everybody is going to work with you but I have shared this with my, I Will Teach You to Be Rich audience, and many people are making a couple of phone calls and saving $1000 or more.

Brett McKay: And on your website, and in your books you… I love it ’cause you give word-for-word transcripts basically, scripts to follow so you can negotiate this stuff down.

Ramit Sethi: Yes, and it’s amazing. A lot of people don’t know why these companies would wanna do it. They think these companies are only out to get their money, which may be true, but you have to understand their business model. See, first of all, they spent a lot of money to acquire you as a customer. Second of all, they’re taking a huge hit right now, so they wanna recover as much money as they can. And three, these companies know that when things get back to normal, they wanna make sure they have a strong customer base. So for those reasons, a lot of them are willing to freeze your payments. They’re willing to waive certain fees, or in some cases they’re actually willing to waive your entire payments. But you have to ask.

Brett McKay: And this requires picking up the phone. It’s not something you can typically do on email.

Ramit Sethi: Yeah. I always encourage people to pick up the phone. Yes, even millennials who are afraid of talking on the phone. I know it’s been three years since you called somebody. I’m a millennial, too. Come on, grow up, let’s do it. We pick up the phone when we negotiate because you can… There’s a few things that can happen. Number one, you build the skills of negotiation. Two, you can ask to be escalated to a supervisor, or the term you wanna use is customer retention. I’m a big fan of negotiating and it’s certainly worth it because this is potentially worth thousands of dollars. So yeah, I would definitely encourage people to pick up the phone even though it’s something that may be unusual or uncomfortable.

Brett McKay: Alright, so for these folks who have lost their job, have no income coming in, having problem paying the bills, things to cut expenses that you might have had or are going to incur later on like big travel expenses, wedding, etcetera. And then get on the phone, negotiate some fees down or at least try to get payments postponed a bit.

Ramit Sethi: Yeah, and then can we talk about the E part? The earning more.

Brett McKay: Yeah, let’s talk about earning more.

Ramit Sethi: Okay. I wanna start off with the people who are in tougher financial situations. If you have been laid off, then file for unemployment. This is something that I have to emphasize talking about because there’s a lot of pain right now for people who… As recently as two weeks ago were well-employed, they had great jobs, they were maybe providing for their family, and suddenly they’re filing for unemployment. It can feel humiliating and it can feel confusing. Still, those resources are there for a reason, they’re there for you. I think it goes without saying that I would encourage you to take advantage of those resources. File for unemployment, use the money. It’s there for you. And I say this because I have gotten a lot of messages from my readers who feel humiliated to have to go ask for unemployment, but I don’t believe in that at all. Those resources are there for you, so you should absolutely use them.

Brett McKay: Well, you’re the one who paid into it, right? We’ve all… It’s on your pay stub, unemployment like a part of it goes there.

Ramit Sethi: Yes. Yes. Again, we wanna take advantage of every resource available to us. And so I definitely believe in that, and I think that that is also if you’re in tougher financial situations, that’s gonna be immediate relief for you.

Brett McKay: And where do people typically need to go to do that? ‘Cause that’s something like… I’m sure for a lot of people this is the first time they’ve ever had to consider filing for unemployment so they don’t even know how to do that.

Ramit Sethi: Well, that’s… You’re exactly right. And that’s why there’s a lot of frustration around. It’s one thing to be uprooted or lose your job. It’s another thing to have your health at risk, and then it’s a third thing to not even know where to go. For example, I’m in New York. If I Google, New York unemployment, you’re gonna see the procedures right there on the website. I would encourage you to do it. And I have to say that I’ve been keeping track of a lot of my students who have filed for it. And there are delays. So, obviously the sooner you can do it, the better.

Brett McKay: Okay. We just talked about folks who are in that extreme in… Where they’re just at really dire financial straits. Let’s talk about people who still have a job, have income coming in. What should be their financial priority during the pandemic slump we’re experiencing right now?

Ramit Sethi: Well, I have recently changed my advice. I used to advise a 3-6 month emergency fund, and I’m now advising a full one-year emergency fund. The reason for that is that, as I said, overreaction is good and I also think things can always get worse. And we are just now starting to grasp how big the unemployment numbers are. So if you have a job and you’re fortunate enough to have income, I would highly prioritize liquid savings. In order to do that, you can do several things. Number one, obviously, cut your expenses like I talked about. Optimize your spending, do the same things I just talked about. But you also wanna consider pausing any automatic investments that you have and redirect those to a savings account. And that’s pretty unusual for somebody like me to say because in general, I’m a big, big, big fan of aggressive investing, especially over the long term. But if you don’t yet have a one-year emergency fund, I would prioritize that first.

Brett McKay: Okay. Well, let’s talk about an emergency fund. What does it mean for a… ‘Cause that’s something, financial advice you see all over the place in books, blog post, 3-6 months or one year. And I think when people hear like, “Oh, I need to have a one-year emergency fund account.” They typically do this. They think, “Well, I make $60,000. I need $60,000 in cash.” Is that what you’re talking about?

Ramit Sethi: Yes. Okay, I’m so glad you brought this up because it is one of those things that’s tossed around in personal finance, but nobody goes into detail about how much is it. And also, when do you spend it? Nobody talks about that. So let’s break it down. I’m gonna use some simple example Math here. Let’s say that in order to live, just the basics, my rent, maybe if I have a car payment. The basics, it costs me $1000 a month. Alright, let’s just say, for easy Math. So how do I calculate that? I wanna just do a quick evaluation of what I spent in the last four weeks, and if there’s anything I can cut out that would not be critical to me living. In other words, imagine you got laid off and if you have a partner, your partner got laid off, what would you cut right away? Chop that stuff off. You can typically chop about 15-30%, 30% depending on how large you’ve been living right there. So now you’re down to a $1000 a month for your minimum expenses. Minimum expenses. So, if we multiply that by 12, 12 months, that’s $12,000. That is how much I need to eventually save to have a 12-month emergency fund.

Now, what you’re gonna discover is that that number’s probably pretty large for you. And for many people, they don’t have that much in savings and it would actually take them a long time to get there. Great. At least we know because in a time like this, my framework is, “Accept reality, make a plan and move.” You gotta accept reality, and that might mean that you lost your job, and that job’s not coming back for the next two years, minimum. Or it might mean that you need a big emergency fund, so you need to figure out a plan to do that. So what do you do? You follow the CEO strategy I talked about and because you may have investments that are already being automatically put in, like if you’ve got a 401 [k], etcetera, you may wanna put those on pause and redirect that money towards your one-year emergency fund. And one final thing, hey, if it’s gonna take you a long time to build up that one year, that’s okay. Just keep working on it and it’s better to get 80% of the way there than to get 0% of the way there.

Brett McKay: Now, I think that’s an important principle that you hit in the book, 80% is better than nothing. I think oftentimes we have this idea in America, it’s like, “Well, if I can’t do it perfect, then there’s no point in doing it at all.”

Ramit Sethi: Yeah. We see this in fitness, we see this in business, we see this in so many things. There’s an old story from one of my readers who wrote me many years ago. And she said, “I’ve been trying to go for a run four days a week, but I can’t ever seem to motivate myself to do it.” And I said, “Why don’t you just go once a week?” And then she wrote back and said, “Once a week? Well, that’s not gonna accomplish anything. That’s pointless. Why would I do that?” And I thought to myself, “She would rather dream about four times a week than actually do it once a week.” And that is true for emergency funds. Many of us would rather dream about a one-year emergency fund than start building week by week.

Brett McKay: What are some mistakes you see people make when they’re trying to get that one-year emergency fund?

Ramit Sethi: Number one is they get overwhelmed and do nothing. They don’t know what their expenses are and they just think, “I make 60k, so my emergency fund has gotta be 60k.” That’s not correct. Your emergency fund will typically be less than your income. That’s almost always the case. Then, when they actually calculate it, which is a very small percentage of people. We’re talking about single digits now. They look at that number, they go, “Oh. Wow. That’s gonna take me years to build up. Forget it.” So they do nothing. Those are the biggest mistakes. On the real fringes or on the margins, one mistake is that when people have it, they don’t use it. And this is more the purview of hyper-frugality people, people who are… Like they love living in the spreadsheet and they love accumulating but they typically have a spending problem not an overspending problem, but they underspend and they feel really guilty about spending money. That’s a small percentage of people but it is a problem nonetheless.

Brett McKay: Well, let’s talk about that because as you said earlier, I’ve read all the books about financial books for instance, I have an emergency fund but they never tell you how to spend it. Or when you’re supposed to start spending. So, when do you start tapping into that and how do you spend that emergency fund?

Ramit Sethi: Okay. So this is a pet peeve of mine in the personal finance world because everybody teaches you how to save, but nobody teaches you how to spend. And that is something I’ve been spending a lot of time on in the last few years, talking about concepts like money dials, and conscious spending and really encouraging people to spend extravagantly on the things they love. Well, in the case of a crisis, if you have an emergency fund… I have heard stories about people who make a lot of money and they were still going to their job while everybody else was quarantined. And I was like, “Why are you going?” And they’re like, “Well, I need to make money,” and I was like, “Don’t you have a bunch of savings?” I happen to know about their finances. I’m like, “Don’t you have a bunch of money already saved up?” They’re like, “Oh, yeah, but I don’t wanna spend that. That’s my emergency fund.” And I’m like, “There’s a global pandemic going on. That is an emergency. It’s time to tap that fund. Use it.”

So if your safety is at risk, that’s the time to use your emergency fund. And you should remember that that money was saved up for a reason. You better use it now instead of lying on your death bed feeling really good, “Oh, I had a 39.6% savings rate.” Nobody cares. The money is there to be used. And so, if you have it, and you need to use it, especially for safety, or for your family or for the people who you love, then it’s time to use it.

Brett McKay: Gotcha. So tap into it. Don’t be afraid to tap into it. And then when you spend it… Like, you’re not spending it on extravagance, is you’re spending it on the basic things you need to live, rent.

Ramit Sethi: Yeah.

Brett McKay: Car insurance.

Ramit Sethi: Groceries.

Brett McKay: Groceries, etcetera.

Ramit Sethi: Yep. Yeah. One of the thing that I’ve been spending a lot of time these days talking about, I’ve gotten questions from people about, “How should I help my family?” Or, “Should I help my family?” And a little bit of my decision-making process in terms of how I overreact, and so this is what I did. First thing, make sure my family’s okay. So we got out of the city, we made sure we had a roof over our heads, and I checked in with all of my other family members, and everybody, okay. I believe that if you have the ability, if you have money saved up, if you’ve been following, I Will Teach You to Be Rich, or you’ve been saving or investing, now is the time to help anyone around you. And you have to remember that in ordinary times, you writing a check to somebody would be very well appreciated. In times like this, it can be truly life or death. And so, I absolutely am encouraging all of my readers, especially the high earners, to start asking the people around them if they need help. And in some cases, just send them the money. Forget about counting every last dollar. There’s a time for that, but there’s also a time like now to write those checks.

So, that was step one, was my family. After that, I started doing a series of other things to make sure that the other people around me were taken care of. My employees, we did a $1000 stipend for them. Anything relating to coronavirus, if they wanted to buy groceries for their family or their parents, send us the bill. Then we went on to our customers and we said, “If you have any financial difficulties, we’ll do a two-month grace period proactively. So just let us know.” And after that we did a couple more things. We did all these fireside chats. I put them on Instagram and YouTube. And then finally, we just raised about $46,000 for Feeding America. So I’m sharing these because I wanna show you what it looks like in a crisis to move.

Now, you don’t have to do the same things I did. That worked for my loved ones, and my team and my community. But I would just ask everyone here, think big. What if instead of just playing small and defensively, you could actually say, “You know what, I’m gonna take care of myself and my family first, but then I’m gonna see how I can help other people, whether it’s through money or whether it’s through other methods, whatever that my time… Calling up an elderly care home and just spending time with people there, whatever the case may be.” How can you help serve other people right now and not just focus on playing small?

Brett McKay: Alright, so for those folks who are doing… You got a job, income coming in, focus on that one-year emergency fund, you’re gonna put investments on hold for a bit. You’re not gonna put anything in there. And then if you’ve gotten that, start looking around and see how you can help others around you.

Ramit Sethi: Yeah. That’s where you start looking for opportunities, and I think there are two kinds of opportunities. One is the opportunity to help other people. Second is your own opportunities. It’s very, very likely that some people will come out of this pandemic even stronger. And so you wanna ask yourself again, if you’ve done all the other things, you have your emergency fund, you’ve helped out your family, etcetera. What are the opportunities for you and is it for your career? If you’re a business owner, are there investments you can be making now so that you grow? It’s amazing when this first happened, of course, predictably everyone was terrified. And I had a lot of business owners who within the first week, they’re just like, “It’s over,” like, “I can’t sustain myself like this.” But interestingly, I also had other business owners who within 72 hours told me how they had adapted their businesses. And nobody can promise if they’re gonna make it or not, but at least they were moving. And so that is something I would encourage. Once you’ve done all of the basics, you’ve covered your defense, really go on offense and think about the opportunities.

Brett McKay: Well, that’s something that you’ve hammered on with your work is that a lot of times people focus so much on saving money, which people should be doing right now, but they often overlook earning more. That’s how you’re gonna actually get in a good place financially is you can’t frugal your way into wealth, you have to actually earn more. And so, right now, is now a good time to thinking about earning more money?

Ramit Sethi: Yo, absolutely. Again, if we’ve covered the basics, then… It’s interesting that so many people have been playing defense for so long that they actually lack the skills to think on offense. So they’re worried about all the things that can go wrong but they never stop and ask themselves, “What if everything went right? What if instead of playing not to lose, I play to win?” And so right now could be an amazing opportunity to start a business. I’ve had a whole bunch of people join our Earnable program, and I’m gonna give you a couple of examples of people who have started their businesses just in the last few weeks. You ever hear of those things you go to on date night, where you paint and drink wine? Have you ever heard about that?

Brett McKay: Yeah. Yeah, no. I’ve been to one before. I didn’t drink the wine but I’ve been to one. Yeah.

Ramit Sethi: Oh, okay, interesting. So first of all, I just wanna say painting in a group is my nightmare. I definitely do not wanna do that, it’s not my thing. But one of my students in Earnable, started this and did it virtually through Zoom. Now, you can sit here and say, “Well, nobody would do that, and they’re not gonna have paint and… ” All the reasons it can go wrong. But this person said, “You know what, what if I’m right?” And so they did it and she just launched it last week. She made $100 for her first time. Now, isn’t that amazing? A hundred dollars can turn into 500, 500 can turn into 5000 and on, and on and on. And what a beautiful idea to say, “You know what, what are you doing tomorrow night?” “Oh, nothing. That’s what all of us are doing.” So why don’t we get on Zoom, and let’s do this together and we’ll have an event that we can remember? Would you be willing to pay $30 or $50 for that? Of course. And boom, there we go. You have to remember that in times like this, people have spent thousands of years paying for entertainment, for clothing, they’ve paid for their children to be entertained and to be taken care of. There are so many parents right now who are desperate for lesson plans for their kids. There are a million things that you could do right now to start a business and although we cover them in detail in Earnable, I just want you right now to be thinking offensively, think creatively about how you might be able to earn more.

Brett McKay: One example that I saw on your Instagram was your mother. She started a cooking class.

Ramit Sethi: [chuckle] Yeah.

Brett McKay: Right?

Ramit Sethi: So this is amazing. My mom who came here from India many, many years ago, she cooked for us, basically every night while we were growing up. And to her that’s second nature, that’s just… She’s done that for 40 years. A little while ago, my wife went to visit my mom and dad, and she went to learn how to cook Indian food. So I was like, “This is awesome.” And my wife was sending me photos of her making tandoori chicken and all these favorite childhood meals that I used to have, and I just posted those on Instagram. And of course, people go crazy when they see pictures of food, especially it being made. And so suddenly people were like, “Oh, my God. Will your mom ever teach a cooking class?” And I said, “I don’t know. Who here would be interested in that?” And I got all these people who were like, “Me, me. I’m in.” It was getting pretty late in New York. So I said, “You know what, if you guys are interested, send me an email. Subject line: Indian cooking class. It’ll be $99 and if I get enough people, we’ll do it.” By the way, I hadn’t even told my mom yet.

So I wake up in the morning, there’s 30 or 40 emails right there. And I was like, “Okay, let’s do it.” So I call my mom, I’m like, “Mom, all these people saw you on Instagram. They wanna know how to cook Indian food, so they want to pay you to teach a class.” And my mom was shocked. She was like, “What?” And then she goes… The cutest thing she goes, “Well, I don’t know any of that IT stuff.” I said, “Mom, don’t… Don’t worry about any of that.” So my mom came to New York and I kept it super simple. My wife designed the logo called, “Cooking with Auntie.” Just so simple. We used Eventbrite just to handle the payment stuff. And I have this old web cam camera. I used that and we put everybody on Zoom.

My mom cooked three dishes. She taught everybody how to do it, people were there from around the world. I think Australia, US, everywhere. And in that one hour, they did end up making three different dishes. And I got the chance to give my mom a check for something like $2000. So just think about what’s going on there. This is a skill my mom has had for decades. She just never thought that anyone would care. I showed her how to package it, Cooking with Auntie. More importantly, she realized that this is something people care about. And especially at a time like this, when everybody else thinks nobody’s spending money on anything. You have to realize that there are people who will spend on entertainment, on skill development, on just pure distraction. And so if my mom could do something like that, then you could probably do it as well.

Brett McKay: So yeah, start thinking about side hustles, easy things that you can do. I think one of the benefits that come from trying to start a business during an economic downturn like this, of course it’s hard, but I think one of the benefits is, is because there’s less money, you can’t afford to be stupid.

Ramit Sethi: What do you mean by that? I love that.

Brett McKay: Well, if you’re not getting… All these companies get VC funding. They often just do stupid stuff, they blow it on just stuff they don’t even need, products that the market doesn’t even need but if you’re starting during a recession, you have no money. You’ve gotta be like your mom, like, “Okay, what’s the bare minimum I need to get this going?” And then you carry that with you, I feel like, through the rest of your business career, hopefully.

Ramit Sethi: Yeah, I think you’re right. I’ve seen that in my own business. Once this happened, I was like, “Okay, I wanna serve my community. What is the way that I know how to do it? Well, I can give advice about money, business, careers and psychology.” So I started these fireside chats. But the problem is, I don’t have all this fancy equipment and a camera crew. I don’t have any of that. So I used my iPhone, my wife was my awesome videographer and I learned by the way, how to start a fire, which, [chuckle] we don’t learn in Manhattan and that was it. And you’re right, that sometimes at a time like this, it forces us to focus on simplicity and what people care about. And nobody really cares about my DSLR whatever camera equipment and my fancy boom mics. They don’t care about that. They’re just like, “Hey, we like this guy. He’s telling some jokes and he’s giving some advice. Perfect.” So I’m really glad you said that. This is a time to be able to be creative, to experiment and to get down to what people care about. You can actually eliminate a lot of the fluff that you might normally spend time on in ordinary times.

Brett McKay: So, okay. We’ve talked about getting an emergency fund, focusing on earning more. What about investing during a pandemic? I’m sure… You’re getting a lot of questions about people looking at their retirement account and seeing that just super big dip, and just freaking out.

Ramit Sethi: [chuckle] Yeah. Times like this bring out the worst investing behavior that you can possibly see. I wanna start off with a really terrible story. Terrible stories, they are bad, but they also serve as a lesson for all of us. And depending on how deranged you are, they also serve as entertainment. So let me just share this one. This person DM’s me about a week and a half ago. They go, “Hey, Ramit, I need your advice. I finished your book and I logged into my investment account where I’ve been investing for a few years. And I decided to sell everything two days ago. Unfortunately, the market went up like 15% in the last two days. What can I do?” And I was like, “Oh, my God.”

So the first thing I did was I anonymized it, and I posted it on Instagram and I said, “What would you advise this person?” ‘Cause this is a teachable moment. And of course, the answer is: The money’s gone. You lost it because you sold low and now you’re gonna buy high. The larger problem, which is less commonly known about, is that there’s a great study showing that in a 10-year period that they researched, if you missed the 10 best days of investing, your return dropped from about 7.7% to roughly 2.8%. Let me repeat that for everyone to understand. In 10 years, in a 10-year period, if you missed the 10 best days, your investment dropped from about 7 1/2% to about 2 1/2%. That’s hundreds and hundreds of thousands of dollars, but there’s the one catch. You don’t know what those 10 days are gonna be. So that’s why it’s important to focus on time in the market, not timing the market. And unfortunately, this person did exactly the wrong thing. They logged in, they panicked and they let their emotions get the best of them.

I’ll give you the quick run-down on what you should do with your investing, and then we can talk about any specifics. If you’ve already covered your one-year emergency fund and all that stuff, yeah, follow your investing plan. This is the plan I talk about in, I Will Teach You to Be Rich. If you believe that over the long term, the market will continue to return, then you’re just seeing the market on sale. And it’s interesting that we all get excited if we go to the store and milk is on sale or pasta, but when the market drops 20%, we suddenly freak out. If you’re young and if you believe that the market will continue to go up over the long term, then you have an opportunity to continue investing at lower prices. So that’s exactly what I’ve done. And if you have additional money, you can also put that into the market, as well.

Brett McKay: But I think the big rule, “Don’t sell, no matter what.”

Ramit Sethi: Unless… The only time you would absolutely have to sell at a time like this, is if you truly need the money. But I can tell you that, of the people who write me totally desperate, fewer than 1/2 of 1% have gotten to that level. Very few people have filed for unemployment, have used the CEO strategy, have called up all those companies, have gotten all of these refunds and still need to sell their investments. It almost never happens. It’s way more common that they gets freaked out, they log in, they’re like, “Oh, my god, I lost $20,000 or $200,000 or whatever,” and then they sell and they almost always come to regret it over the long term.

Brett McKay: Now, I made that same mistake as that girl. During… At the last recession.

Ramit Sethi: Really? What happened?

Brett McKay: Well, it’s the same thing, I started investing. I was in my early 20s. I didn’t really know what I was doing. And then I remember when the recession… The stock market was crashing and I was like, “Oh, my gosh,” so I sold and then I got back in, and I’d lost all the money and I was like, “Oh, that’s not smart. Don’t do that again.” So now this is my second go round. I’m not freaking out about it. I’m like, “Yeah. It’s down. No big deal. I’ll just keep plowing money on.”

Ramit Sethi: Yeah. Good. That’s a good lesson learned. And it also reminds us that the money you have in there, you don’t need it for a long time. And I want people to get better educated about investing. It’s interesting that when people get in their 40s and you ask them, “What’s your number one concern?” They almost always say, “Money.” And yet almost nobody has read a single book about money. Just think about that. It’s a total mismatch in attitudes and behaviors. So read, I Will Teach You to Be Rich or read another good book. And over the course of about a week, you’re gonna learn how money works. And then you’re gonna understand why freaking out, and selling, and then trying to time when you get back into the market is a futile task and it would be better if you instead just don’t even log in. Keep your automatic plan going, and if you don’t have one, now’s a great time to set it up and then focus on the other things that you can control.

Brett McKay: Got it. Alright. So we’ve talked about an emergency fund, we’ve talked about earning more, we’ve talked about focusing on in your investments, keep doing that if you’ve got that emergency fund in place. Something you also have done with your work is talking about finding a job or your dream job. And I know this is the question that you’ve been getting particularly from recent grads who are entering into the job market during this time. So any advice to these folks who are having a hard time finding a job, whether they’re right out of college or they’re just trying to find another job ’cause their current job sucks?

Ramit Sethi: Yeah. I think the first thing is just to acknowledge that this is gonna be a tough market for a long time. And it’s not your fault if you’re graduating right now, or if you just lost your job. That is not your fault. And for what it’s worth, a lot of other people are going through it, and I don’t want anyone to blame themselves. I just wanna acknowledge that this is a tough one and there’s no easy answers. With that said, I have asked the people in my community, “What’s going on with their job searches?” And I also asked the hiring managers to tell me, “What are they seeing on there?” So the obvious answers were, “I had four interviews going and three of them just ghosted me. They won’t even respond to my emails.” Okay, so that’s happening. Interestingly, a lot of the hiring managers wrote me and said, “We’re still hiring. We can’t find people,” and a couple of them told me that their applications are way down. I was like, “Why do you think that is?” They’re like, “I don’t know. Maybe people are too intimidated to apply right now.” My advice that I’m giving to my readers is, number one, if you need to find a job, it’s time to make it a serious initiative in what you’re doing. What percentage of your calendar is focused on that job search? Number two, don’t assume that there are no jobs out there. There are always jobs for top performers. And of course it is hard but you don’t have any other alternative. You can’t just wait.

And then the third thing is, expand your search. I love ambiguity. I love ambiguity right now where you’re like, “Oh, I don’t know. This job says I need six years of experience. This job says it’s Washington, DC only.” When it comes to times of ambiguity, I love it because I get to create my own future. So I would look at that Washington, DC job posting, and I would just email them. I would say, “Look, I live in Seattle. I’m the best for this job. Here’s my resume, here’s my cover letter. I can work remotely and we can discuss what ongoing work looks like.” I’m not gonna move to DC, but I’m gonna be so good that they’re gonna let me work remotely for the next five years. So use this ambiguity in your favor and just ignore if something doesn’t make sense to you. Like you have to work in Kansas City, no, you don’t. Send them an application. Be good enough to get the interview and you can turn that ambiguity in your favor.

Brett McKay: Yeah, I think remote work is gonna become a big thing. That’s the one big change that my friends and I all think’s gonna happen, that more companies are gonna shift to remote work.

Ramit Sethi: And you’ve worked remotely forever, right?

Brett McKay: Yeah, since the beginning.

Ramit Sethi: Yeah, same for me. So for us it’s like the difference in lifestyle right now is minimal compared to if you used to go to an office and things have changed. It’s interesting, though, I think you’re right. I think companies… I’ve spoken to my friends who run companies and a lot of them are like, “Oh, wow, this remote work thing is now being forced on everyone, and I think companies are starting to see it.” I will say, though, working from home has a lot of subtle skills that people don’t think about like, how to run a Zoom meeting. And all… Just these basic things that if you work from home, you take them for granted. But if you’ve done it for a while, it’s a huge leg up right now.

Brett McKay: Okay, so I think the big takeaway from there is, don’t assume that the people aren’t hiring, but let’s say you’re in a field where for whatever reason, no one’s hiring. What can people do so they can hustle while they wait?

Ramit Sethi: Alright. This is a really great question because remember when I said earlier, we have to accept reality, and then make a plan and move? If you’re a waiter, you need to accept reality that you’re probably not gonna get another job for another year, minimum, being aware. And that’s a really hard pill to swallow, and whether it is being a waiter, whether it’s being in the hospitality industry. Whatever industry you’re in, you know it better than I do. You have to be very candid with yourself and say, “Is it likely that I’m going to get a job in the next three months, six months, 12 months?” And I can tell you that a few industries that I happen to know, there’s still a lot of mistaken beliefs going on. Especially as I mentioned we are culturally oriented towards optimism, “Oh, everything’s gonna get better in two months.” Okay, I hope it does. But if it doesn’t, what do we plan for? If you are in an industry like that, then you have a couple of options. Number one, you can start hustling, you can start earning more on the side, whether it’s through an idea, whether it’s through tutoring, whatever the case may be. That may tide you over, that plus your unemployment.

But ultimately, you’re probably gonna wanna look for another job in another industry and that takes time to ramp that up, to look at what the resumes look like. So I would start looking now and I would also tap your network. Ask your friends, “Hey, I’m looking for a job. These are my skill-sets. Do you have any industries you’d recommend? Do you have any positions you know about? I’m very flexible and I’m willing to work.” That’s how I would approach it.

Brett McKay: Alright. So let’s talk about a little bit on small business. We kinda hit on that a little bit. And you’ve been talking to small business owners, what’s the general advice you have for people who have small businesses that have been affected by the pandemic?

Ramit Sethi: It’s interesting. I have a lot of small business owners in my Earnable community, and my, I Will Teach You to Be Rich community, and I tell them two things. I say first off, “You must believe that your business is important.” And I say this because a lot… I got an email from a woman who said, “You know, Ramit, I’ve been following you for three years,” and she’s like, “I’ve been thinking about starting a business. I haven’t yet but I’m a nurse. And now, when I think about designing logos, it just… Or following my passion, it just sounds so foolish. Like who cares?” And I said to her, “I appreciate you working in the healthcare field. But if somebody is a business owner and they need a logo designed, that’s not foolish for them at all. That’s really serious and they’re willing to pay money for it. So you must believe that as a business owner, your business is important and whether that it you’re a personal stylist like my wife, or whether you design logos, you must believe.”

The second thing is, once you believe, you must also accept that your business might not survive. It doesn’t matter how much you believe but if for example you go into homes and custom paint stuff, your business might not survive, but at least you’re going to give yourself a chance. I’m gonna give you an example of a business that reached out to me. Because I asked all the people in my community, I was like, “Hey, business owners. Tell me what you’re doing to adapt.” And I got these amazing responses. There’s a running store in New Jersey called, Runner’s High, they’re a specialty running shoe store. And within 72 hours of this happening, they had offered free shipping and they also had offered curbside pickup. This was way before anyone else was doing it. They sent an email to their community and one of the owners who wrote me, he said that their community is really recognizing the difference between them and these big box stores.

Another person I know who’s a reader is a Pilates instructor and she had resisted going online forever ’cause she has a studio. Within 72 hours, she went online, and she was achieving 50% of her prior revenue within four days. Now, that’s still 50% down, that’s a lot, but 50% up from zero online. That is how business owners can start to adapt.

Brett McKay: I love it. Well, Ramit, this has been a great conversation. Where can people go to learn more about these fireside chats you’ve been doing and your other work you’ve got going on?

Ramit Sethi: So if you’re interested in earning more, you can go to iwt.com/earn. I’ve got all kinds of case studies and all that stuff. Just sign up right there. I’m on Instagram @ramit and I am on YouTube @ramitsethi.

Brett McKay: And that’s it Ramit Sethi. Thanks for your time, it’s been a pleasure.

Ramit Sethi: Yo, it’s always fun. Thanks for having me back.

Brett McKay: My guest today is Ramit Sethi. He’s the author of the book, I Will Teach You to Be Rich. It’s available on amazon.com and bookstores everywhere. You can find out more information about his work at his website iwillteachyoutoberich.com, also check out our shows at aom.is/pandemicfinances. You can find links to resources, where you can delve deeper into this topic.

Well, that wraps up another edition of The AOM podcast. Check out our website at artofmanliness.com, where you can find our podcast archives with thousands of articles rewritten over the years about pretty much anything you can think of. And if you like to enjoy ad-free episodes of the AOM podcast, you can do so on the Stitcher premium. Head over to stitcherpremium.com, sign up, use code MANLINESS at check out, you get a free month trial. Once you’re signed up, download the Stitcher app on Android or iOS, and you can start enjoying ad-free episodes of the AOM podcast. And if you haven’t done so already, I’d appreciate it if you take one minute to give us a review on Apple Podcast or Stitcher, it helps out a lot. If you’ve done that already, thank you. Please consider sharing the show with a friend or family member who you think will get something out of it. As always, thank you for the continued support. Until next time. This is Brett McKay reminding you all to listen to the AOM podcast but put what you’ve heard into action.