Personal Finance By Chris Hill 196 Views

Money Girl on Personal Finance

In this episode of MarketFoolery, host Chris Hill sits down for an interview with award-winning writer and personal finance expert Laura Adams. Adams reflects on what led her down the personal finance advocacy path; the early, early, early days of podcasting back in the mid-2000s; what college kids these days ask her when she talks at universities; the most alarming trends in the U.S. personal finance world today; a few ways we might start bridging the huge money knowledge gap in our education system; and much more. To learn more about Money Girl, you can check out https://www.quickanddirtytips.com/money-girl, or find Money Girl wherever you listen to podcasts.

A full transcript follows the video.

This video was recorded on Feb. 28, 2019.

Chris Hill: It's Thursday, February 28th. Welcome to MarketFoolery! I'm Chris Hill. As you can probably tell from the ambient noise, we're not in the studio at Fool Global Headquarters. We are hanging out at the Capitol Sheraton in Austin, Texas, home of food trucks, great barbecue, great music. It is also the home of the award-winning writer and personal finance expert, Laura Adams, the host of the top-rated Money Girl podcast. So great to meet you!

Laura Adams: It's great to meet you, too! It's fun to put voices and faces together!

Hill: Absolutely!

Adams: I've heard your voice for a long time.

Hill: Likewise! I want to get into a couple of personal finance things that have been in the news lately. But I want to start with just how you got started in all of this. Let's go way back. You grew up in South Carolina. What did your parents do? 

Adams: My parents have always been very entrepreneurial. They've always owned businesses, multiple businesses, but they were primarily involved in the telecommunications business. This is kind of a dying thing now, but an answering service was kind of a big deal back in the day. A lot of companies needed somebody to answer phones off hours. Whether it's a plumber or a doctor, somebody who is looking for management of their incoming calls, they had a business to manage that. They were one of the leading answering service telecommunication companies in the little town where I grew up, which is Somerville, South Carolina, right outside of Charleston. 

They were growing, developing that business, really, my whole life, I remember that. They have very entrepreneurial spirits and roots, and so did their parents. That's the atmosphere that I grew up in.

Hill: You go to college at University of the South in Tennessee?

Adams: That's right.

Hill: What'd you study there? 

Adams: I studied something that you would probably never guess. I studied natural resources. I was a Trees and Rocks major, they called it. 

Hill: Really?! 

Adams: Yes! [laughs] 

Hill: What did you think you were going to do with that degree?

Adams: My idea at that time was environmental law. That was a big career when I was in school. When I started studying dendrology, biology, chemistry, I really enjoyed it. I didn't know for sure what I would do with it. I was at the University of the South, which is a huge, beautiful campus. It's 10,000 acres on the Cumberland Plateau. You couldn't imagine a better place to study natural resources. Labs out in the woods, taking hikes. It was really a fantastic place to study. 

Long story short, I get out of school and decide, "I don't want to be a lawyer." [laughs] "This is not my path." So I began at that point thinking about what were my kind of natural talents and abilities. And it always came back to finance. It always came back to math and numbers. So I began working in finance jobs, low-level accounting positions, then studying accounting, and then eventually going back and getting an MBA. And that's where things took off for me. At that point, I made a major pivot into the personal finance world. 

Hill: I'm thinking about the combination of watching your parents building their business and then you starting in some jobs, eventually going to get your MBA. At that point, are you thinking "OK, I've watched enough of what my parents have done. I've experienced enough and I've seen enough of how other people run their businesses." At that point, are you thinking, "I may not know what it is, but I know I want to run my own business someday"?

Adams: Absolutely. I do think that level of freedom, that level of control, also the level of risk -- you do have to be very comfortable with risk -- all of those really resonated with me and just felt like a natural part of life. 

Hill: So, MBA, that's 2005. I just learned this this morning -- you started another podcast before Money Girl.

Adams: I did. 

Hill: What was that?

Adams: 2007, I started a show called... I'm trying to remember the name of it. You may remember. [laughs] Why can't I even remember the name of the show? MBA Working Girl. I started a show called MBA Working Girl, that was it. This was a long time ago, 12 years ago. I didn't do it very long. I had that show about six months before I was approached by the Quick and Dirty Tips network to join their growing group of hosts. At that point, I think it was just one. Grammar Girl was the main, and the original host, and eventually the owner of that podcast network, Mignon Fogarty. I have a lot to thank her for in my career. 

But yeah, that got me into the world of podcasting. At that point, it was all about, how do you podcast? How do you create an RSS feed? Blogging? All of these things were brand new to me in 2007. It was so funny because I felt late to the game in podcasting in 2007. And I look back now, and I think, "That was just the seeds of it. It was just beginning." But at that point, I really felt behind the 8 Ball. 

But that podcast was my experiment in figuring it out. How do you do it, technically? How do you create a show? How do you link it to blogging? It was my way of recording the types of topics that I really wanted to remember from my MBA. So, it was a combination of personal and corporate finance topics. I quickly figured out that it was the personal topics that I like the most. 

Hill: See, it's amazing to me because I've been to a couple of podcasting conferences, and you meet all these different people. Invariably, at some point in the conversation, once you get beyond "what show do you work on," that sort of thing, it's, "when did you start?" We started our first podcast in early 2009. On average, that's still early to the game. You're the first person I met who's started well before we did. Do you even remember, what was the first thought, on the first show, on the MBA Working Girl, that made you think -- because that really was early days. It wasn't like a lot of people knew what podcasting was. You really had to explain it to people. And really, for the first few years we were doing ours, we would still have to explain, "No, this is what a podcast is. This is how you get it." Do you remember that first seed of an idea? 

Adams: I really thought about, how do I give back to the community? Because I had been consuming podcasts since about 2005 like a mad person. There weren't that many shows, particularly in finance at that time, and I was subscribed to probably over 100 shows. And I was just listening to this variety of content and thinking, how do I give back to this community? What can I do? And so I thought, well, I'm going to blog about my MBA experience. Well, that makes perfect sense. Let's just turn it into audio and go from there. It was really the listener feedback that I got in those early days that kept me going, because there was no reward, right? [laughs] There was really no reason to be doing it. There were no sponsors. 

Hill: Right. [laughs] 

Adams: There were no monetary gains. It was really a hobby and thinking about, A, can I figure it out? B, what is my voice? What can I contribute? So, that's what I was really trying to figure out. 

Hill: Obviously, the Money Girl podcast has grown exponentially. You do a fair amount of speaking, that sort of thing. We were talking right before we started taping, in addition to corporate speeches that you give, you also speak to college students. What kind of questions do you get from college students? It really does seem like, for all of the education that students get in college, there really does seem to be some basic things about handling money that a lot of kids just never get.

Adams: I never got it, either, in high school or college. I really had to seek it out. I was fascinated by it. I mean, I was one of these kids that was begging my parents for a checking account at age 14. I couldn't wait to have my own money and manage it. But I don't think everybody is like that. Obviously, there are a lot of kids that are just muddling their way through. Parents are muddling their way through. 

The questions that comes up the most with college students, a lot of them have very idealistic ideas about investing and you probably see this all the time. "What can I invest in that's going to make me rich tomorrow?" [laughs] So, you have to step back and lay the foundation for them, really figuring out things like, "Sometimes it's just contributing small amounts of money over time that's really the secret to wealth. There is no golden bullet, key that's going to unlock this world of wealth for you." So, those fundamental basics of contributing small amounts over time, the time value of money is very powerful for college kids. Even retirement questions. When can I retire? What is a 401(k)? They've heard about these benefits as they're job searching, and they're really not very clear on what they are. So, a lot of those basics seem to come up. 

They also have questions about debt, of course. Student loan debt is weighing on them very heavily. They're trying to figure out, "What do I do? Do I try to pay that off first and then go for investing?" I think the timing and the priorities, the to-do list, is weighing heavily on them as well. 

Hill: I'm glad you mentioned the student debt. The mounting student debt in this country continues to get headlines, and rightfully so. I'm curious what catches your attention when you're reading the news. We had talked recently on our show about the headline, seven million Americans are 90 days late on their car payments. Are there things that you've seen in the news over the last six months or so that give you pause, that give you genuine concern above and beyond the basics of people trying to learn how to handle their financial lives? Are there things that you've seen that make you think, on a macro level, "Wow, this is pretty bad!"

Adams: The student loan debt is certainly an issue. It's certainly something that we've got to address in this country. But those people are relatively young. They've got time in their horizon to get that debt paid off, hopefully begin saving aggressively. I get more concerned about statistics showing the lack of emergency savings for emergency expenses. We're talking about people in their 50s and 60s that don't have more than a few thousand dollars saved! We're talking about median net worth of less than $100,000 for folks in their 50s and 60s. That concerns me. The clock is running out for those folks. They can't get any retirement loans. They can't get any financial assistance, for the most part, to live perhaps another 30 years of their life. So, I do get concerned when I look at savings rates for particularly middle-aged and older folks. 

Hill: I'm going to give you the mythical magic wand. You get to make one financial change in the world. It could be anything. It could be a way to reduce debt. It could be a way to make it mandatory that anyone who starts a job automatically contributes to their 401(k). What's the wish that you grant for America and the world in terms of finance?

Adams: I do think that the retirement accounts that we have, we need to revisit those. A lot of people don't have 401(k)s. They don't have 403bs. They may have them, but maybe they're also looking at, what can I do on the side, the side gig economy. I would love to see IRA contribution rate limits increased. I would love to see more opportunities for the self-employed to contribute at even higher rates. I would love to see the rate for 401(k) increased. But I do think if you don't have a 401(k), maybe you work for a small company that doesn't offer it, and you're looking at an IRA maximum of $6,000 or $7,000 per year, that's not going to get you where you need to go. Increasing those would be one thing on my wish list.

Of course, education. Gosh, you think about, when I started in this, we were in the recession. There were people who were dealing with a lot of the real estate fallout and issues there. And it was so exciting because a few years after that, we actually started talking about education in schools and colleges. It was like everybody was a little motivated to think about, "Wow, maybe we do need to educate people about personal finance." And now we've seen that die off and we're not having that conversation anymore. We have very short memories as Americans. So, revisiting that conversation about education, I think, is key. I would love to see it mandatory in every high school. I would love to see it incorporated in more colleges. But I think specifically in high school, if we could have all 50 states require at least six months of personal finance education in the curriculum -- not make it optional, not give them a choice to make it a little two-week addendum on an economics class or math class -- I think that would go a long way.

Hill: If you haven't already checked out the Money Girl podcast, you absolutely should! It's available everywhere you find podcasts. Laura Adams, thanks so much for doing this! This was great!

Adams: Thank you, Chris! It's been my pleasure!

Hill: As always, people on the program may have interest in the stocks they talk about -- although we didn't really talk about stocks -- and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of MarketFoolery. The show is mixed by Rick Engdahl. I'm Chris Hill. Thanks for listening! We will see you on Monday!