98 Financial Wisdom Amidst COVID-19 and Beyond with Natalie Taylor

98. Financial Wisdom Amidst COVID-19 and Beyond with Natalie Taylor

 

**Transcription Below**

 

Proverbs 21:5 (ESV) “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty."

 

Natalie Taylor is a Certified Financial Planner professional and Behavioral Financial Advisor. She's on a mission to help people cultivate a plan for their finances based on their values and goals. She helps people not only make progress, but find confidence, balance, and peace along the way.

 

Frequently quoted in major publications such as the Huffington Post, Forbes, Business Insider and Lifehacker, Natalie draws on over 15 years of comprehensive financial planning experience, 7 years in fintech, and a decade of professional speaking to share advice that works in real life, not just on paper.

 

After eight years in private practice, Natalie joined LearnVest, a fintech startup on a mission to make financial planning affordable and accessible to the masses. She moved on to be the Director of Financial Advice for LearnVest after they were acquired by a Fortune 100 company, and left in mid-2018 to start a fintech consulting and professional speaking business. She consults for companies like Ellevest and LearnLux, and continues to speak to audiences throughout the country, including speaking for the second year in a row at the annual Beachbody Summit in Indianapolis alongside James Clear and Rachel Hollis to a crowd of 20,000+ business owners.

 

As of February 2020, Natalie opened a financial planning practice to work one-on-one with clients again, returning to her first (career) love.

 

Natalie Taylor’s Financial Website

Sign up for Natalie’s E-mail List Here!

Connect with Natalie on Instagram @natalieanntaylormoney

 

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Gospel Scripture: (all NIV)

 

Romans 3:23 “for all have sinned and fall short of the glory of God,”

 

Romans 3:24 “and are justified freely by his grace through the redemption that came by Christ Jesus.”

 

Romans 3:25 (a) “God presented him as a sacrifice of atonement, through faith in his blood.” 

 

Hebrews 9:22 (b) “without the shedding of blood there is no forgiveness.” 

 

Romans 5:8 “But God demonstrates his own love for us in this: While we were still sinners, Christ died for us.” 

 

Romans 5:11 “Not only is this so, but we also rejoice in God through our Lord Jesus Christ, through whom we have now received reconciliation.” 

 

John 3:16 “For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.”

 

Romans 10:9 “That if you confess with your mouth, “Jesus is Lord,” and believe in your heart that God raised him from the dead, you will be saved.” 

 

Luke 15:10 says “In the same way, I tell you, there is rejoicing in the presence of the angels of God over one sinner who repents.”

 

Romans 8:1 “Therefore, there is now no condemnation for those who are in Christ Jesus”

 

Ephesians 1:13–14 “And you also were included in Christ when you heard the word of truth, the gospel of your salvation. Having believed, you were marked in him with a seal, the promised Holy Spirit, who is a deposit guaranteeing our inheritance until the redemption of those who are God’s possession- to the praise of his glory.”

 

Ephesians 1:15–23 “For this reason, ever since I heard about your faith in the Lord Jesus and your love for all the saints, I have not stopped giving thanks for you, remembering you in my prayers. I keep asking that the God of our Lord Jesus Christ, the glorious Father, may give you the spirit of wisdom and revelation, so that you may know him better. I pray also that the eyes of your heart may be enlightened in order that you may know the hope to which he has called you, the riches of his glorious inheritance in the saints, and his incomparably great power for us who believe. That power is like the working of his mighty strength, which he exerted in Christ when he raised him from the dead and seated him at his right hand in the heavenly realms, far above all rule and authority, power and dominion, and every title that can be given, not only in the present age but also in the one to come. And God placed all things under his feet and appointed him to be head over everything for the church, which is his body, the fullness of him who fills everything in every way.”

 

Ephesians 2:8–10 “For it is by grace you have been saved, through faith – and this not from yourselves, it is the gift of God – not by works, so that no one can boast. For we are God‘s workmanship, created in Christ Jesus to do good works, which God prepared in advance for us to do.“

 

Ephesians 2:13 “But now in Christ Jesus you who once were far away have been brought near through the blood of Christ.“

 

Philippians 1:6 “being confident of this, that he who began a good work in you will carry it on to completion until the day of Christ Jesus.”

 

**Transcription**

 

[00:00:00] <music>

 

Laura Dugger: Welcome to The Savvy Sauce, where we have practical chats for intentional living. I'm your host Laura Dugger, and I'm so glad you're here.

 

[00:00:17] <music>

 

Laura Dugger: Samaritan Ministries is a biblical way to help your family and care for your brothers and sisters in Christ. Every month, Samaritan members help one another with their medical needs by praying for and providing financial support. You can learn more at SamaritanMinistries.org.

 

My friend Natalie Taylor is a trustworthy financial expert and our returning guest today. She is not giving investment advice, but she is offering financial education and perspective. After listening to this episode, I expect for you to feel more hopeful and more equipped to know which financial step is best for you to take next. 

 

Here's our chat.

 

Welcome back to The Savvy Sauce, Natalie. 

 

Natalie Taylor: Thanks so much. Good to be back. [00:01:17] 

 

Laura Dugger: It's so fun to have you on again. For anybody who missed our previous episodes, can you just remind us all who you are and what you spend your days doing?

 

Natalie Taylor: Sure. I'm Natalie Taylor. I'm a certified financial planner and behavioral financial advisor. I have two little boys, five and seven, and a husband, Ryan. We live in Santa Barbara, California. When I'm not with my kids, I spend time as a financial planner, working with people in their 30s and 40s, usually families who have kids and are juggling all the things from retirement to college to getting a house or paying down a mortgage and are trying to find the balance between all of those things and trying to enjoy life a little bit as well. 

 

Then I do some consulting work for financial technology companies, and I also speak professionally around the country.

 

Laura Dugger: And you are incredible at all of those roles. You're in California, like you said, and we're in Illinois, and currently, both of us, with COVID-19, are under a stay-at-home order. [00:02:19] So just wanting to check in, how is your family making this work as you're currently under this order?

 

Natalie Taylor: You know, it's kind of... I don't want to say it's funny because there's so many serious things right now. But this is my normal life. I work from home, I run my businesses from home, and every minute that I'm not working I'm with my kids and I'm parenting and taking care of all the household stuff. So I feel like if anything now my husband is also living my life as well. Instead of getting to go to the office and travel the world for his work, he's now working from home. 

 

And every minute that he's not working, he's doing childcare because we've been doing shifts of work between the two of us. We each get a five-hour chunk every day and then whoever's most behind, we kind of rock, paper, scissors and get to work in the evening. But yeah, I mean, it's certainly been different and we've certainly had to keep our spirits up and make some adjustments in all parts of life, juggling childcare and homeschool and work and all the things, and toilet paper, and trying to get my parents to take this all seriously. Because I don't know if you're in that boat, but man, it was a little hard to get them to take it seriously, but we finally got them there, so they're taking good care of themselves now. [00:03:29] 

 

Laura Dugger: I'm so thankful to hear that you guys are adjusting well. I know that this virus, obviously, like you said, it has a dark side, but what have been your most positive learnings from this unique season?

 

Natalie Taylor: You know, I think for me, it's just been a great opportunity to be able to serve my clients, serve the companies that I consult for, and to be able to serve my friends and my community. I think it's a really important time to focus on what's important. 

 

For us, I'm going to be honest, that's not homeschool. My kids are five and seven. They're in transitional kindergarten or pre-K and second grade. And we're learning things like how to ride a skateboard and how to ride a two-wheeler and how to vacuum and how to clean a toilet. Those are the things that we're focusing on and building some self-sufficiency since we're all home and we're all sharing the load a little bit more than normal. And I think those are going to be really positive things for my kids to understand. [00:04:29] 

 

Laura Dugger: I love that. And it's an out-of-the-box picture of it because I know a lot of us are feeling all of this pressure. Like you said, we're all becoming homeschooling parents. That's really helpful. One of my friends, Allison, encouraged us when this all started, just, what can we all be teaching our kids that they aren't learning at school? And it sounds like you and Ryan are doing exactly that.

 

Natalie Taylor: I love that. That's said so well. 

 

Laura Dugger: This entire conversation today is actually taking place as a result of your recent email. I just found it to be so grounding and helpful. I just want to encourage listeners, if you haven't already signed up for Natalie's email list, I would highly recommend you do that right away. We will link to all of that in the show notes, but Natalie, could you tell us right now what your website is where they can sign up for that? 

 

Natalie Taylor: Yeah. Thanks for that, Laura. My website is natalieanntaylor.com. [00:05:31] If you log in there, I have some blog posts there that hopefully are helpful. If you want to follow me on LinkedIn, I posted the client letter on LinkedIn. Business Insider actually published it as well. So that information is there. And I sent it out to my email list, which is, Laura, how you saw it. 

 

So if you want to sign up for my email list from my website, you certainly can. I'm not someone who emails everyone all the time. You might hear from me once a month. But I really email when I have something meaningful to share. And I don't when I don't. So that's how the email list works.

 

Laura Dugger: And yes, as the recipient of those emails, I would affirm everything you just said, and I find them all to be helpful. So as this most recent email related to finances, during this season with COVID-19, what do you think is a healthy financial perspective?

 

Natalie Taylor: I think a healthy financial perspective is sort of balanced between the big picture and the kind of micro things that we deal with every day. So I think it's important to understand and know enough about what's going on in the big picture of the economy and the healthcare system and the virus and all of those things. [00:06:46] 

 

But to filter that through to, Okay, what does that mean for me each day? And keeping in mind, is this a short-term thing or a long-term thing? Because a lot of the news we're hearing is sensationalized, and it really plays to some emotions and for many of us, some fears, some deep-rooted fears that maybe we weren't even aware of.

 

When we have the risk of taking away some everyday things we depend on, like being able to go to the market, being able to get toilet paper, being able to buy rubbing alcohol, all of these normal things, when those feel at risk, it can be really unsettling. So I think to have a healthy financial perspective, it's important to spend a little bit of time understanding what you're thinking and feeling before you think about taking any action.

 

Laura Dugger: Just from the people that you've been interacting with then, how have you witnessed the stress of the coronavirus affecting people's financial decisions? 

 

Natalie Taylor: I think some clients are worried that their income will decrease. [00:07:46] I've had some clients who have gone from making $100,000 a year to making nothing until we get out of this season. So I've definitely seen some stress and concern around income. 

 

I've also seen a lot of stress and concern around the stock market. You know, for those who follow it, you've seen that it's been dropping and it's been wild. There's been days that we've dropped 12% and days that we've been up 9%. So it's been totally wild and choppy. 

 

But when you're looking at your portfolio, those ups and downs mean I lost dollars, I gained dollars, I lost dollars, I lost more dollars. And we're wired to want to take action and to want to stop the bleeding, if you will, when we see that kind of thing. So I've seen clients really concerned about their portfolio and wondering, should I be taking action here? Is there something that I should be doing to protect myself?

 

Laura Dugger: That leads me to another question. So they may be asking what action to take. But because you are a financial expert, what other questions are people asking you right now? [00:08:49] 

 

Natalie Taylor: I think the question on sort of everybody's mind underlying all of it is what does this all mean for me? And am I going to be okay? I think the answer to that is a little bit complicated and it's different for everyone. You know, we are all gonna be impacted in different ways, some of us more than others because we're in industries that are more impacted or less impacted. 

 

So I think it's important not to take on the emotions or the behaviors of those that are in different situations and to really make sure that you focus on, Okay, let me think through what this actually means for me and how I can reasonably respond to take action on the things that I can control. And maybe, you know, make some changes in the realm of things that I can influence and how can I identify and then let go of the things that I cannot control.

 

Laura Dugger: That's such a great mindset. Would you mind taking it a step further and maybe sharing what that would look like for two different clients, one who is going to be significantly impacted financially through this and someone else who may not be? [00:09:54] But what would that look like to walk through this in a healthy way? 

 

Natalie Taylor: That's a great question. For a client who is going to be significantly impacted, I would say that's probably because their income is gonna be significantly impacted. And so to that client, I would say, let's do our best to estimate if any income will be coming in. Let's look at your next best places to get cash to supplement your income if your income drops. By that I mean, how much do you have an emergency savings that we can use to temporarily fill in for your income while your income is lower, or maybe your income is eliminated for a short period of time? So how much do we have an emergency fund and how long do we think that will last?

 

And then we want to make a list of the next best places to get money. So any other savings that you can use, any personal loans that might be available to you from family members where the emotional cost of the loan would not be greater than the value of the loan for you. [00:10:58] 

 

Then looking at, you know, if you have a home equity line of credit that you could potentially draw from. Home equity lines of credit are generally under five, six percent right now. So that is a reasonable place to be able to access money if you need it temporarily to support your family while your income is reduced or maybe even eliminated for a temporary period of time.

 

Then after that, we get into some places that have more cost to them, one of those being credit cards, because the interest rates are higher. And another one being Roth IRAs. So, a Roth IRA, you can always access your contributions. So the money that you put into your Roth IRA, you can always get that money out with no taxes and no penalties, which is a really great, flexible benefit of a Roth IRA.

 

We don't focus on it as financial planners because we want those dollars to be saved for retirement. But in times like these, if you need to access that money, it's good to know that you wouldn't have taxes or penalties when you did it. [00:12:01] 

 

The downside is that your Roth IRA is probably invested in the stock market. And the stock market has dropped 30 plus percent at this point in the last month or so. And so it's not a great time to sell investments.

 

So I would put that toward the bottom of the list of places to access cash, not because there would be taxes or penalties, but because it's not a great time to sell investments when the market has gone down. So for that client who's going to be significantly impacted, I think that's sort of the exercise that we would go through to say, okay, where are the next best places for cash if your income is going to be reduced or eliminated for a temporary period of time. 

 

And then the second place we would look is expenses. Whether the income has dropped already or whether you're anticipating that income will drop, I think it's important to adjust expenses as you can right away. So I would walk through your budget and think through what expenses can you change for the next, let's say, three to six months, to reduce expenses and reduce the pull on your income. [00:13:06] And if we're having to use savings, reduce the pull on savings. I wouldn't think of these expense changes as forever, but I would think about what can I reasonably do in the next three to six months?

 

If you're making extra payments on any debt, I know this is probably the first time you've heard a financial planner say it, but stop doing that. If you're saving towards retirement and you're anticipating your income is not going to be sufficient to cover expenses, then hold off on saving for retirement for a temporary period of time if there are expenses that you can adjust downward. 

 

And you know, some of us who pay for childcare or other services that aren't available right now, our expenses have been reduced for us. Whether we like it or not, they've been reduced for us. So try to capture those dollars and reduce expenses. 

 

So those are kind of the first two places I would say for somebody who's going to be significantly impacted. In terms of their investment portfolio, I would still recommend that they stay invested. [00:14:06] 

 

Laura Dugger: And now what about the other person who is still feeling a lot of emotions, even though they will not be financially impacted or they don't expect to be significantly financially impacted?

 

Natalie Taylor: I think for those that do not expect to be significantly impacted, it's still prudent to store up a little extra cash and to reduce expenses to some extent as you can. So, in terms of income, if you don't think your income will be impacted, that's great. I still think it's important that you maintain an emergency savings and if you can add to it in this season, I think it's a good idea to do it. Even if that means temporarily deferring dollars from debt reduction. 

 

Let's say you're making an extra $1,000 payment on a credit card that you're paying off or on your mortgage or something like that. I would say for the next three to six months, you might want to take those extra dollars and put them towards your emergency savings just in case. [00:15:04] 

 

If you don't expect your income to be impacted, I would still continue to save into your retirement accounts. I would keep that going, but I would maybe slow down on debt reduction to preserve some extra dollars. I would still take a look at your budget and see, are there some reasonable changes that we can make short term to find some extra dollars to pad our emergency savings? And again, I would say stay invested in your portfolio. 

 

The other thing I would say, if your income isn't going to be impacted, is interest rates have gone down. So there's been some really great opportunities to refinance debt. The biggest debt for most people is their mortgage. And so interest rates on 30-year mortgages got down to like 3.1% in the last six weeks, which is really just remarkably low.

 

Because so many people were excited to refinance when they dropped that low, there's been so much demand for refinance that actually mortgage rates have gone up a little bit. [00:16:06] But I would say keep an eye on mortgage rates. And if you do have a mortgage, especially if it's over maybe 3.75%, but definitely if it's over 4%, there could be a really great opportunity in the coming weeks to refinance your mortgage, especially if your income isn't impacted, and especially if you have a great credit score. 

 

You may be able to get in the very low 3%, or if you could do a 15-year, you might even be able to get under 3% on your mortgage. So it could be a great opportunity for you to take advantage of lower rates.

 

Laura Dugger: These are all such wise approaches. Are there any other questions that we can begin asking ourselves or any certain ideas that you think we should consider before impulsively reacting financially? 

 

Natalie Taylor: Yeah, that's a great question. When we're in times of stress, a couple things. So, one, stress doesn't usually compartmentalize itself. Stress usually seeps into all of our interactions. [00:17:08] So if we're stressed about work, we may end up blowing up at our kids because when we're stressed, we're stressed. We don't really compartmentalize stress to one area of our life, even if that one area is where it came from. 

 

So in times like these, I would be exceptionally aware of where your stress is coming from and what your level of stress is. For example, my husband will read an article that says, you know, there's a chance that within eight weeks, half of Americans will have the COVID-19 virus. And then he'll immediately start talking about, Well, should we make changes in our finances or should we not let our kids outside? 

 

And I think it's important to just recognize, "I'm right now from a stress perspective being influenced by this article I just read. Let me check in with myself and know that. Let me spend a little bit of time thinking and feeling through this to decide whether this is the right action to take or whether I'm actually just reacting to this stressful thing or this anxious spot in my heart that was triggered by this article I read or by this thing I heard." [00:18:10] 

 

So I think that's one thing is just to be self-aware and slow yourself down to go through the thinking and feeling before you get to the doing. So yeah, the first one is just recognizing that stress invades all the areas of our decision-making, and the second one, pausing and thinking and feeling before you start doing.

 

Laura Dugger: Yes. And that was something that really stood out in your email that's so true. When we're stressed, we go into action mode and we jump to that doing. But I love that you're saying pause, slow down. Just because you feel that impulse to react with an action, it's, like you said, not the most prudent.

 

Natalie Taylor: That's right. Our brains are wired to want us to protect ourselves and our loved ones. I've had to explain the mama bear to my kids sometimes because we are wired to protect ourselves and we are wired to protect our families. It's innate in us. And it's not a bad thing. [00:19:08] But we have to channel it into the right places and make sure that it's not circumventing good decision-making in other places. 

 

So that innate desire to protect will lead us towards very good paths to protect our kids from getting sick, to protect ourselves from getting sick, to make sure that we're able to put food on the table for our families. 

 

But it will not lead us the right direction when we let that desire to protect invade our investment decision, you know, in normal circumstances outside of the COVID-19 stuff. Sometimes that desire to protect can harm us when we're trying to do something big and new for entrepreneurs, for business owners, for solopreneurs, for those that are trying to do something out of the box.

 

Sometimes that desire to protect wants to keep us in a box when really that's not the right place for us to be. So there are good ways and bad ways that that desire to protect and to protect from loss impacts us, but we just have to make sure that we're applying it in the right areas of our life and not just letting it invade all the areas of our life. [00:20:12] 

 

Laura Dugger: That's good. That we'll require some discernment. That's such a good word. Let's take a quick break to hear a message from our sponsor.

 

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Laura Dugger: I want to circle back that something that you've mentioned in multiple scenarios is that you encourage people to stay invested in the markets. So will you unpack and just share more about why you encourage people to stay invested, even if they're feeling a little bit anxious right now with their investments? [00:22:14] 

 

Natalie Taylor: Absolutely. I mean, I think the first thing is if you're feeling anxious about your investments and you don't like seeing them go down, that is totally normal. I feel the same way. I think it's kind of impossible to not feel those feelings. 

 

And I will say specifically for the people that I typically help, which are generally people in their 30s and 40s with young families, I'm going to kind of make the assumption that we all have more than 10 years until we retire. And so those funds that we have set aside for retirement, we're not needing to use those for 10 plus years. So I want to kind of make sure that that assumption is clear as I talk about what you might or might not want to do in your investment portfolio. 

 

So since we don't need the money for 10-plus years, I think it's important for us to reflect on how the market works. Every shock to the market in order for it to be a shock to the market, and usually shocks like this lead to a recession, which means slower growth for a while, and then we recover. That's when growth comes back. [00:23:16]  

 

Every shock in order for it to be a shock has to be shocking, which I know sounds silly. But the point of it is every time we have this feeling of this one feels different. We never had a global pandemic like this one before or you know, I managed money in the great recession in 2008, 2009 as well all the way before it, during, and after it. There was a lot of talk of this one's different. We've never had a credit crisis like this one before. 

 

We could have huge companies going under overnight like Lehman Brothers did because of over-leverage. And if credit locks up, then the whole economy doesn't work anymore. And that was super, super, super scary. But this is sort of everyone feels different at each time. Each shock feels different. But that's sort of exactly how it works. 

 

That's also exactly what we anticipate, that it's going to be something that no one saw coming, or virtually no one saw coming, and that we're not going to be exactly sure how it's going to sort out or how long it's going to take. [00:24:19] And then eventually, businesses adjust, people adjust, and things get better. 

 

So I can't guarantee that the market's going to go back up. But if we look at history, the market has always recovered eventually. And so I think for those of us with the benefit of a ten plus year time horizon in our investment portfolios, I think it behooves us to strategically stay invested. We are proactively making the decision to stay invested based on historical data that we can see that gives us a very good, logical, reasonable reason to believe that the market will eventually recover and that our portfolios will eventually recover with it. 

 

Laura Dugger: I've heard you say before, Let markets do what markets do. That really helps to hear the reasoning behind it. I do want to touch on the other age group, though. Would this council change then for someone who is around the age of 65 and ready to retire this year? [00:25:23] 

 

Natalie Taylor: It would change to some extent. So for those who are about to retire or who have just retired, I think it's important to make sure that your investment portfolio is balanced between more conservative bond type investments and more aggressive stock type investments. 

 

And I think for those in that demographic, it's really critical to kind of bucket out the money in terms of what money am I going to need to draw in the next year, in the next two years, in the next three years? And what parts of my portfolio are for much later? 

 

Because even if you're 65 now, there's still a substantial part of your portfolio that is for 10-plus years from now. Because you have a long life ahead of you still. And so not all of your money is needed tomorrow. And so I think it's important to not react as if you need all the money tomorrow.

 

So what that means is that part of your portfolio should be invested more for the long term, and we should expect that it would participate in an eventual recovery. [00:26:28] No guarantees, but that's what history has shown us that the markets do. 

 

For the money that you need in the next six or 12 months, many advisors, and I would absolutely agree, recommend that you have one to two years of cash available at any given time in retirement in your portfolio so that you're never having to sell investments when the market is down. 

 

So the hope would be that your portfolio has a slice of either extremely conservative funds or cash for the next 6, 12, 24 months, now would be the time to use those funds instead of having to sell out of the market to support your income.

 

If that's not the situation that you're in, I would talk with a financial advisor and determine what can you do to allow some of your portfolio to grow for later and participate in the upside that is not guaranteed to come, but that we think will come, and what part of your portfolio may need to be in cash or in more conservative investments so that you can have access to the money that you need to create your retirement income. [00:27:39] 

 

Laura Dugger: When you say having access to cash for one to two years, what are some examples of what that looks like? 

 

Natalie Taylor: So within your IRA or your 401k, Roth IRA, 403b, within your retirement portfolio, I'm just going to use easy numbers. If you live on $5,000 a month, that's $60,000 a year. So the idea would be that you have $60,000 to $120,000 of your retirement portfolio in cash. 

 

Now let me caveat that and say if you have social security that's coming in, which most do, and you have a pension which most don't but for those that are in their 60s right now many still do, the cash that you need is only to make up the difference that you need to pull from your portfolio to create your overall income. 

 

So let me restate that a little bit. If you need $5,000 a month to live on, and $3,000 of that comes from Social Security and pensions, you really only need $2,000 a month from your portfolio. [00:28:40] So if you're only needing $2,000 a month from your portfolio, then that's $24,000 for one year and $48,000 for two years.

 

So the idea would be that in this scenario, $24,000 to $48,000 would be in cash within your retirement portfolio, Roth IRA, traditional IRA, 401k, 403b. And right now, instead of slowly liquidating investments over time to create that $2,000 a month from your portfolio, the best thing to do would be to use the cash that's in your portfolio to draw from so that you don't have to sell investments during this downturn.

 

I'm going to caveat all of that, though, very importantly, that this is not official recommendations to you to go buy or sell any specific investment. I'm giving theoretical hypothetical examples to give you some context and understanding. But it's important that you consult with a financial advisor or a financial planner to make these sorts of decisions. [00:29:42] I just want to be super clear that I'm not telling you go buy this or go sell this. I just want to help with the understanding.

 

Laura Dugger: That's a great disclaimer because the responsibility really is on each of us. This is just helpful knowledge that you have that you're willing to share, but then we're responsible for what we choose to do with that knowledge and follow up with our own research.

 

But let's just kind of cover two extremes then. What would your conversation look like with people who a) want to right now before listening to this, they want to pull all their money out of the stock market? And b) what would your conversation look like with a client who is coming into COVID-19 pretty financially healthy and they have some extra cash on hand? What would that conversation look like if they wanted to invest that money as soon as possible? 

 

Natalie Taylor: That's a great question. I've gotten both, to be honest. So the first one, those who want to sell out and kind of stop the bleeding in their portfolio, I totally get it. [00:30:46] Honestly, I've had those same exact feelings. I really do relate and I really do get it. And you've worked very hard for the money that you've put away. So it's really difficult to see it drop.

 

We look at increases in our portfolio and percentages. "I made 8% this year." We look at losses in dollars. "I lost $80,000. I lost $30,000." Because our brains are wired to care more about the losses than to get excited about the gains. We love gains. It's great to see your portfolio go up. But the excitement of seeing a portfolio go up is not as strong as that feeling of wanting to protect and fear from loss that we get from seeing our portfolios drop. 

 

So I just want you to know that I'm not here to tell you like, Oh, don't make dumb decisions, just stay invested. That's not it at all. These are real feelings that we all have. So I just want to validate how you're feeling. 

 

In terms of what to do with your portfolio, you know, like I said before, this is what we expect markets to do. Theoretically let's say you got out now and the Dow Jones, which is a good kind of gauge of how the overall market is doing, or the S&P 500 you could use as well. [00:31:56] But the Dow Jones is at about let's say 20,000. 

 

So let's say that you do sell your portfolio and then the market drops and the Dow is at 15,000. So it's dropped another 25%. Are you going to get back in? Because we know that if we're trying to get out, then we're trying to protect from loss, but we need to be in on the upside. So when you see the market drop to 15,000, are you going to get back in or are you going to be afraid that it might drop further?

 

Maybe you get back in at 15,000 and then it drops to 12,000. Do you get out to protect yourself or do you put more in because it's dropped more? Every time the market drops the sale is getting deeper. It's like the sale racket anthropology when it's an extra 25% off for an extra 40%. That's what's happening in the market.

 

So if you buy something at full price, you sure as heck don't want to return it at the sale price when the sale price is 40% off sale. So the point is, if you're going to get out, what's your strategy for getting back in? [00:32:56] Because we need those market returns to get you to your goals. 

 

Unless you just have a boatload of money and you can just fund retirement from cash, which probably means saving about seven times what you're currently saving for retirement, we need the market to get you to your goals. And this is the price we pay for long-term gains, is that there is short-term heartache and short-term losses in the market. But that is what gives us the opportunity for potential long-term gains.

 

I guess what I would ask you to consider if you're thinking about getting out is what's your strategy for getting back in? And are you going to be able to stick to it? Is your heart and your head going to allow you to actually get back in when the market looks even worse than it does now? 

 

Laura Dugger: That's good. And now what about the other side? If they do have some extra cash and they want to get back in, what would your conversation look like with that person?

 

Natalie Taylor: Cash is wonderful to have right now. So if you happen to be in this situation where you have extra cash, I would first say, let's make sure that it's really extra. [00:34:01] So is your income secure? Is your emergency fund topped off? And topped off means, you know, if you're a family and you've got kiddos, it probably means six plus months of income. 

 

So let's use the number from before. If you need $5,000 a month to make your family go, $5,000 for six months is $30,000. So if your emergency fund is well-stocked, your income is extremely secure, and your expenses are under control, and you're in really, really good shape, and you've got extra money lying around, and you have goals that you want to achieve that are long-term, like retirement, or maybe your kids are super young and you're wanting to save for college, which is 10-plus years away. Right now and the next several months are probably a great time to deploy those dollars into the market, to buy into a market that's on sale.

 

There may be deeper discounts coming. So we just don't know. I have no crystal ball. I don't know what the market is going to do. But what we do know is that it's dropped already quite a bit, 30 plus percent. [00:35:05] So if you're looking to get into the market, I would suggest that you consider doing something called dollar cost averaging into the market. 

 

That means investing a specific dollar amount every month for a period of months. So maybe it's, I'm going to put an extra $1,000 in per month over the next six months. I have $6,000 to put in, so I'm going to do $1,000 a month over the next six months. Adjust those numbers to whatever it needs to be for you. But dollar cost averaging can protect you from the possibility that you put all of it in now, and sure, you got a good discount. but maybe tomorrow, or the next few weeks, it drops another 30%. So that six grand that you put in has now immediately dropped 30%. 

 

Long term you're still buying the market on sale, you'll still be fine. But dollar cost averaging can help protect you from putting all the money in and then facing an immediate drop with those dollars. So again, I'm not giving you specific investment advice, I'm giving you some ideas to contemplate and consider as you figure out what's right for you based on your financial situation. [00:36:13] 

 

Laura Dugger: Wow, that's such a creative idea that I had never heard of before. So thank you for sharing that. If you've been around The Savvy Sauce for a while, you have heard our invitation to join our support team of patrons.

 

Patreon is a platform created for the community to financially support people who offer creative content. Our team gladly spends a lot of time and money to produce episodes that we're excited to share, but the reality is this is an expensive endeavor. We would be so grateful if you would think about what role you could play to support us. It's super easy to join with only a few clicks. As you visit thesavvysauce.com, click the Patreon tab, and then click "Join Patreon here". We hope you're rewarded for your generosity. 

 

You said you've worked before, during, and after the 2008 recession. So is there anything specific that you learned from that that can be helpful to everyone right now in light of what's going on in our world today? [00:37:15] 

 

Natalie Taylor: Yes, I did. I managed money before, during, and after the Great Recession. I managed tens of millions of dollars for clients. And most of my clients were pre-retired at the time, so they were in their 50s and early 60s, which is a really critical time for clients and for their portfolios.

 

I will say one of the things that stuck with me of the about 200 clients that my partner and I served, there was one client that we couldn't convince to stay invested. As I look back, the day that they sold out of their portfolio was March 8th, and the absolute bottom of the market was March 9th.

 

We didn't know that at the time. We didn't know that we were one day, 24 hours from the bottom. But our recommendation was to stay invested because we anticipated, we expected, based on what history shows us, that the market would recover, that liquidity would come back to the credit market, that the economy would right itself, that consumer spending would eventually come back, and unemployment would eventually go down, and that we are much more resilient than we feel like we are when we're in the midst of a downturn. As people, as communities, as economies, as a globe, that we are resilient. [00:38:30] 

 

And I will never forget they sold and so they locked in losses of like 40% in their portfolio. And then they never got it back because they didn't get back into the market. And if they would have just stayed in, the market would have given them that 40% back within a few years. So that was heartbreaking to me. 

 

But it also really, you know, watching what went on in the Great Recession and kind of seeing the inside of how scary that really was, and then seeing us recover gives me a lot of hope for how we can recover from this recession that we are just entering. Because again, as people, as families, as communities, as economies, and as a globe, we are resilient, we are creative, we will figure out how to come back from all of this. There will be some short-term heartache for some more than others, but the economy will recover and people will recover. The economy is just made up of people, and people are resilient. 

 

Again, I'm not crystal balling and saying that we're headed for recovery immediately. [00:39:32] But I'm just saying in general, that was a real lesson for me from the Great Recession is seeing sort of the depth of the fear of what was going on at that time and then seeing how we recovered at so many levels from that situation has given me a lot more resilience and hope for situations like the one that we're in now.

 

Laura Dugger: I really appreciate that hope. Are there any other practical steps that you could list out for us in hopes of encouraging more wise financial decisions? 

 

Natalie Taylor: I think going through the sort of checklist of, and we've already covered most of them, but I'll just sort of review them, is income first. So doing some thinking about your income. And if your income has the potential of going down or has already gone down, then thinking about what is my list of next places to get money and how much will I need to take on a monthly basis to supplement my income to make it through this short-term period. [00:40:32] 

 

The second one after income is expenses. So thinking through expenses and adjustments that you can make proactively to reduce expenses. One thing that I didn't say earlier but I will add now is, Laura, you back me a couple times about what about those who are not expecting any income impact, you know, that are thinking that they'll make through this just fine. I would encourage those people to look around them and see what they can do to support others around them. And I don't mean just handing out dollars. 

 

For example, if you have a housekeeper that cleans your home, are you able to still keep them paid even though they're probably not coming to your home right now? If you're going to go buy two pounds of coffee at Costco, could you buy two pounds of coffee at a local coffee shop and support that coffee shop? They probably only need to bring in a couple hundred dollars a day to stay afloat. Could you stock up on coffee locally instead of at Costco? 

 

I think it's important to remember that it's not your responsibility to single-handedly bring the economy back in your community. [00:41:32] So I wouldn't go overboard with it, but could you sign up for a CSA box instead of having to go to the market and fight for bananas and try to get greens if you can find them? Could you sign up for a local CSA box so that you can get your fruit and veggies, and many of them also offer bread and eggs, so that you could avoid having to go to the store? You could support local businesses.

 

I would emphasize that more for those who are more protected from an income standpoint. Certainly, all of us have things that we could do, but I would encourage you to be creative in how can I spend my dollars most effectively to be a good steward of the dollars that I have and make prudent spending decisions, but also are there trades that I can make to support my local community and local small businesses through this season? So sorry for the sidebar. I hope it's helpful, but...

 

We were talking through kind of what the steps are. So we talked about income. We just talked about expenses. The next one I would say is cash. So how much cash do you have? How much is in your emergency fund? [00:42:32] Is it stocked up? If it's not fully stocked, what can you do to get it stocked up in the short term? Maybe it's reducing paying down debt for now. Still, please make your minimum payments.

 

If you are in an income situation where your income has gone down substantially, if you have student loans and you're on income-based repayment, you can ask them to reassess your income earlier than they normally do so that your payments can go down. You can also request forbearance on student loans. So there are some options with student loans that you can take advantage of to get some payment relief. And finding other ways to stock up on cash. 

 

The next one is your portfolio, which I think we've talked about in-depth, but in general, staying invested at times like these is a great strategy so that you can participate in what we think will be an eventual recovery without any crystal ball promises. But history has shown us that there will be an eventual recovery and it would be nice for you to be able to participate in that for the market to give back what it's taken away. [00:43:33] 

 

And then the last one would be debt. So are there things that you can do to optimize your debt right now? Like refinancing your mortgage when interest rates are super low, or maybe refinancing private student loans at a lower interest rate since interest rates are low. So I would say those five things would be your checklist. Income, expenses, cash, investments, and debt.

 

Laura Dugger: That is so helpful. Great summary. I love that encouragement to support our small business owners and keep them afloat where it's possible for us to do that. Natalie, all of this has been incredibly helpful. Where can everyone go to learn more from you online? Again, just a reminder, how can they sign up for that email list?

 

Natalie Taylor: So if you go to my website, and Laura, it sounds like you'll link to it in the show notes, you can sign up for my email list. There'll be a little pop-up that allows you to download a values guide that we talked about in our last episode together, Laura, a couple years ago. And then you can sign up for my email list and I will send out periodic information like the letter that Laura has been referring to, to be helpful. [00:44:39] So you're more than welcome to do that. I would love to have you on my email list to stay in touch. 

 

I also work in... I have an individual financial planning practice. So that means that I help clients one-on-one with all of these decisions and walking through balancing all of the goals that they have and the things that they want to accomplish. So if you want to email me, I'm hello@natalieanntaylor.com or you can go to my website and it's easy to contact me from there as well.

 

Laura Dugger: Wonderful. And Natalie, you know that we're called The Savvy Sauce because "savvy" is synonymous with practical knowledge or insight. So as my final question for you today, what is your savvy sauce? 

 

Natalie Taylor: I love this question, Laura. I would say my savvy sauce right now is being intentional about what I call wide lens, narrow lens. Being intentional about before I take action or before I make any decision is going wide and saying, okay, what are all of the things that I'm considering right now? [00:45:40] What are the things that I'm thinking? What are the things that I'm feeling? Let me take in all of that macro information.

 

And then once I do my kind of wide lens assessment, then I go narrow and then I say, okay, what do I need to focus on today? What do I need to focus on in the next hour? What do I need to focus on in my business to make the highest and best use of my time and my money? 

 

I think that practice of going wide lens, narrow lens has been a lifesaver for me and has helped me stay really steady and positive and efficient and effective in my work and in my home life with all of this going on, to be able to acknowledge the big picture of what I'm thinking and feeling and what's going on in the world and not stick my head in the sand.

 

But at the same time, then use that as I discern where do I need to be narrowly focused in this moment? What work can I do that is most helpful to the people that I serve, whether that's in my business or in my house? So I think that practice of wide lens, narrow lens has been my savvy sauce right now. [00:46:41] 

 

Laura Dugger: Oh, that's so good. Natalie, I just appreciate getting to be friends for so many years now. There is so much I admire about you. But today, I admire that you were willing to generously share all of this wisdom, simply in hopes of being helpful to everyone listening. And that's in line with your life because you have the most generous approach to life in the way that I see you using your time, your talents, and your finances. 

 

I just want people to know and for you to know that I fully trust you. And I just want to say thank you for sharing some sound and peaceful counsel with us today. I loved having you as my returning guest.

 

Natalie Taylor: Thank you, Laura. Thanks for having me. I think it's really important that we support each other in this time, however we can. And I think we all have gifts and talents to share with the—maybe not share with the world. [00:47:41] Some of us are supposed to share it with a lot, and some of us are supposed to just focus on a very few. So not to say that all of us have to be shouting from the rooftops. I think we all have work that God's given us to do in the sphere that He's placed us in. 

 

So thank you for giving me the opportunity to share. And I really do hope it's helpful. And thank you for your kind words. And I also treasure our friendship and it's wonderful to be back. 

 

Laura Dugger: One more thing before you go. Have you heard the term "gospel" before? It simply means good news. And I want to share the best news with you. But it starts with the bad news. Every single one of us were born sinners and God is perfect and holy, so He cannot be in the presence of sin. Therefore, we're separated from Him.

 

This means there's absolutely no chance we can make it to heaven on our own. So for you and for me, it means we deserve death and we can never pay back the sacrifice we owe to be saved. We need a savior. But God loved us so much, He made a way for His only Son to willingly die in our place as the perfect substitute. [00:48:47] 

 

This gives us hope of life forever in right relationship with Him. That is good news. Jesus lived the perfect life we could never live and died in our place for our sin. This was God's plan to make a way to reconcile with us so that God can look at us and see Jesus. 

 

We can be covered and justified through the work Jesus finished if we choose to receive what He has done for us. Romans 10:9 says that if you confess with your mouth Jesus is Lord and believe in your heart that God raised Him from the dead, you will be saved. 

 

So would you pray with me now? Heavenly, Father, thank You for sending Jesus to take our place. I pray someone today right now is touched and chooses to turn their life over to You. Will You clearly guide them and help them take their next step in faith to declare You as Lord of their life? We trust You to work and change their lives now for eternity. In Jesus name, we pray, amen. [00:49:52] 

 

If you prayed that prayer, you are declaring Him for me, so me for Him, you get the opportunity to live your life for Him. 

 

At this podcast, we are called Savvy for a reason. We want to give you practical tools to implement the knowledge you have learned. So you're ready to get started?

 

First, tell someone. Say it out loud. Get a Bible. The first day I made this decision my parents took me to Barnes and Noble to get the Quest NIV Bible and I love it. Start by reading the book of John. 

 

Get connected locally, which basically means just tell someone who is part of the church in your community that you made a decision to follow Christ. I'm assuming they will be thrilled to talk with you about further steps such as going to church and getting connected to other believers to encourage you. 

 

We want to celebrate with you too. So feel free to leave a comment for us if you made a decision for Christ. We also have show notes included where you can read Scripture that describes this process. [00:50:53] 

 

Finally, be encouraged. Luke 15:10 says, "In the same way, I tell you, there is rejoicing in the presence of the angels of God over one sinner who repents." The heavens are praising with you for your decision today. 

 

If you've already received this good news, I pray that you have someone else to share it with today. You are loved and I look forward to meeting you here next time.