Smart Money Podcast: Financial Fitness for Big Moves: Achieving Your Goals without Sacrificing Security (Video Episode)

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

A certified financial planner offers a listener actionable advice to help him save for a big move while maintaining financial stability.

How much should you save before you move to a new city? How can you reach your savings goals while also spending on your lifestyle? Recording in-person from a studio in Chicago, host Sean Pyles sits down with Magda Doemeny, a certified financial planner with NerdWallet Advisors, to host an actual financial planning session with a listener. Jim, a 36-year-old nonprofit worker, joins them to share his aspirations of moving to a higher cost-of-living area without a job lined up. Magda advises him on how much money in living expenses he should consider saving before making the move, the practicality of high-yield savings accounts, and the benefits and limitations of using a Roth IRA for a down payment, among other practical strategies for reaching his goals while maintaining financial stability.

NerdWallet Advisory LLC, dba NerdWallet Advisors, is an SEC-registered investment advisor and wholly owned subsidiary of NerdWallet Inc. The advice provided in this episode of Smart Money was for illustrative purposes only and not intended as financial or investment advice specific to your personal facts or circumstances.

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Episode transcript

This transcript was generated from podcast audio by an AI tool.

Sean Pyles:

Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius Nerds. I'm Sean Pyles. This episode, we're continuing our series where we're doing something pretty unusual for Smart Money. At the request of NerdWallet's brilliant legal team, we say often and explicitly that we are not here to give you individual personal finance advice. What we talk about is food for thought, for educational and entertainment purposes only. But this episode, our listener is getting specific personal finance advice for their money question.

A few weeks ago, you may remember that we put out a call inviting you, dear listener, to contact us if you wanted some free financial planning and allow us to record that planning session. Lots of you wrote in and today we're going to hear from one of you. We're coming to you live from a studio in Chicago and we'll be talking in person with a listener. But before we get into that, I'd like to bring back Magda Doemeny. She's a certified financial planner with NerdWallet Advisors. One thing I want to be clear about is that Magda and NerdWallet Advisors are a distinct platform from NerdWallet. Magda will give our listeners some specific individual personal finance advice and that advice will be given on behalf of NerdWallet Advisors, not NerdWallet. Also, in exchange for coming on and talking with us, our listeners are receiving a free one-year membership to the NerdWallet Advisors platform. Magda, welcome back to Smart Money.

Magda Doemeny:

Thanks, Sean.

Sean Pyles:

So we've talked with you before, but can you give us a refresher on who you are and what the NerdWallet Advisors platform is?

Magda Doemeny:

Yeah. So I'm an advisor with NerdWallet Advisors, and what we offer is affordable financial planning memberships with access to a certified financial planner like me at a low monthly cost. What we do is review your finances as a whole, and ultimately, create a financial plan that has action items in there that are pretty bite-sized for you to break down. And then we'll check in with you periodically throughout the year. And ultimately, if you ever have a question, you can always schedule a call and/or send us a note, and you really just have unlimited access to us.

Sean Pyles:

Great. So a lot of people have not gone through the financial planning process before. What's something that people might not expect about going through this?

Magda Doemeny:

I think the thing that folks aren't usually ready for is the commitment aspect of this. Kind of like if you decide to update your health and fitness regimen, going to the gym or going to the doctor, if that's all that you're committing to, that's not really going to change your life. And so what we really want is for folks to understand that we can break this into bite-sized pieces so that it is one day and one month at a time so it's a lot less daunting. But it does take commitment for you to make sure you want to go through this process.

Sean Pyles:

It's about the small regular actions beyond one big meeting with you.

Magda Doemeny:

Exactly.

Sean Pyles:

All right. Well, let's get to some financial advising in a moment, our financial planning session with a listener here in Chicago. Stay with us. Let's get to the guest star for this episode. Jim is a Smart Money listener who is 36 and lives in Milwaukee, Wisconsin. And he's here with us now in studio. Jim, welcome to Smart Money.

Jim:

Thanks for having me.

Sean Pyles:

So tell us a little bit about yourself. What do you do for work? What are your hobbies, all that sort of stuff.

Jim:

I work for a nonprofit. I manage grants that go out to education programs. I'm a former journalist and middle school math teacher, actually. And for fun, I play a sport. I play a sport called hurling, not curling on the ice with the brooms. Hurling is like Irish lacrosse. And I love, love, love to kayak for the very few number of weeks that it's fun and comfortable to do that and the weather's nice.

Sean Pyles:

I bet. Okay. So how would you describe your current mode of managing your finances? Are you active? Are you passive? Somewhere in between?

Jim:

I would say extremely active.

Sean Pyles:

Okay.

Jim:

Yeah.

Sean Pyles:

What does that mean for you?

Jim:

I track all of my expenses. I rebalance my accounts as best as I can about every quarter. I'm very, very, very cognizant of where my money's going and if it's doing the most that I can make it.

Sean Pyles:

Great. And that's why you're a Smart Money listener.

Jim:

That's right.

Sean Pyles:

So how would you very broadly describe your finances right now?

Jim:

I would say stable, but maybe precarious. So I make enough to do what I'm doing now, but I don't make enough to be working towards some other really big goals. So what I'm really interested in learning is what kind of financial risks might be worth it for me to take so that I can pursue some big goals that I have.

Sean Pyles:

Okay. Well, tell us about your current financial goals. From what I understand, you're hoping to move from Milwaukee to San Diego potentially, and you're considering even maybe dipping into your retirement accounts to fund that move. Talk with us about that.

Jim:

That's right. I am a Midwestern boy, born and bred. I was born in Chicago. I absolutely love the Midwest and I absolutely love Milwaukee. Everyone should visit. It's a wonderful place to live. It's affordable, it's got this gorgeous lake. It's got friendly people, and I am so sick of winter. I never want to be cold again for the rest of my life if I can avoid it. And while I'm pretty sure that if I did move to a warmer place, I'd eventually see that maybe the grass isn't greener, but I would feel a lot more peace of mind if I'd given it a shot. So I've been on the job hunt for a while to try and make that feasible. And San Diego is kind of my prime target, but it's been slow-going.

And I've had a couple of close calls and I've got some traction right now with a few things, but it's an expensive place. I don't have a lot of connections, and I've put a lot of time in and I'm getting older and I'd like to start a family and buy a house one day and stuff like that. So I'm trying to weigh how important is it to me based on my financial security, if it's a risk that's wise to take.

Sean Pyles:

Right. Well, making such a jump, moving to a new place and maybe even using retirement funds to make that move is pretty risky. So how are you thinking about the tradeoffs of the risks and potential rewards for your life?

Jim:

Absolutely. So I have a Roth IRA that I've been saving and I'd originally used it as a way to save for a down payment. I have a really generous retirement plan through my work when I put 5% in, another 9% comes back. So about 14% of my pay is going into my retirement fund through my employer. So extra stuff has been going into this Roth IRA that I've had for a couple of years. And it's because I've done some research and I know that you can use a Roth IRA without paying penalties and without paying taxes. And even on the earnings of that, I know that there's a limit that you can use even toward a down payment on a first home.

So I've been saving for that, but because I really, really, really want to make this move and I haven't gotten a job to do that yet, I would feel more secure and not like I'm going to deplete all my emergency funds and all that if I knew that it wasn't a terrible idea for me to tap into that Roth. And I might even be willing to go without a job and work service industry things just to get out there, and maybe that would advance the job hunt faster. But I don't want to do that if I think that that's going to put me in an unwise situation. I would say that I'm very, very cautious about my finances because I took on a lot of student loan debt in my undergraduate degree, so I never want to be in that position again. And being stable financially is really, really important to me.

Sean Pyles:

Right. Okay. And so you're hoping to get maybe a second opinion to bounce some ideas off of and see if this isn't so crazy an idea?

Jim:

I would love someone to give me permission to do something a little scary.

Sean Pyles:

Okay. Well, have you ever used a financial advisor before?

Jim:

No.

Sean Pyles:

Okay. Well, Jim, I know you have been sitting here across from Magda for a little while, but let me officially introduce you to each other. Jim, Magda, Magda, Jim.

Magda Doemeny:

Hello.

Sean Pyles:

So Magda, I'm curious if you have any initial thoughts about Jim's financial situation based on what we just talked about?

Magda Doemeny:

Yeah, I think this is not uncommon. There are folks who want somebody to talk to them about where they are financially today and what kinds of decisions they can make, whether it be moving across the country or halfway across the country, buying a home, how much can they actually afford when it's so expensive? Can they actually afford a little bit more than they think? So when I look at your situation, I think you're doing all the right things by asking all of these questions. And what it really boils down to is what do we do? Do we actually make that move with your current financial situation or not? I think I am a firm believer that your retirement is intended for retirement and we want to do everything in our power not to touch that mostly because we can't undo it.

Once we remove the funds from a retirement account, you can't really put them back. And there's so many tax benefits specifically to those types of accounts. So I want to talk a little bit more about the details of what your income is, talk about those expenses, talk about other ways we could increase income, if at all. Because when we do something big like this, I want to plan for it. And that means not taking the resources necessarily that we have and seeing what we can do with it, but instead saying, I'm going to do this in X amount of time. How do I get myself there? What do I do now?

Sean Pyles:

Let's look into some more specifics. I know when you do financial planning, you need some specific numbers. You're looking for balances of savings accounts. Let's really dive into that nitty-gritty. So when it comes to something like a savings fund for a move, what would you maybe want to see from Jim here? Or what other options might there be for Jim to make this move if there isn't a lot of liquid cash available?

Magda Doemeny:

I think if you are going to be making a move without a job, I want at least a year's worth of expenses. I really want a year's worth of expenses where you're going, not where you are today, right? Because what we want to know is if it takes you a year to find a job that can pay you somewhat near your cost of living, I don't want you to have to incur high interest debt, which is what could happen, right? Ultimately, if you need to pay for something, it goes on a credit card and if there's not cash to support it, that stays there. You get a rolling balance, and that could just be for your day-to-day expenses potentially. So we need ideally at least a year if you're quitting your job and moving.

Sean Pyles:

And so Jim, what is your emergency savings like right now, or your move savings fund? Do you have anything like that put aside?

Jim:

I do. So my emergency fund right now, I've been aiming to have about six months and I don't have that yet. So I'd say right now I just wanted a big trip, but I've gotten reimbursed for my company. So I would say I've got something like 6,000 in emergency savings and my low cost of living in Milwaukee, I'd say that would just barely cover three months.

Sean Pyles:

Okay. And are you putting aside a certain amount monthly to build that up or how are you thinking about increasing your emergency savings?

Jim:

Yeah, I save about $850 a month, although I've had a couple of big expenses lately and I have a car that I love, but she is at the end of her rope. She's put in a good hard life and she deserves a rest. So knowing that I have this car that serves me fine now, but would absolutely not make a cross country move. I've been delaying doing anything about the car in hopes that I might be able to move somewhere where that's not a necessity and that would save me a lot of money, but I don't know those circumstances until I've made that change.

Sean Pyles:

Okay. So talk with us a little bit about the car. Are you willing to take on some debt? I know you mentioned that you're not really keen on debt at this point after all of your student loans. It seems like it might be an inevitability unless you really prioritize living somewhere that's more central, which could mean higher rent payment, especially in a more expensive place like San Diego.

Jim:

Sure. I mean, of course if I bought a car I would absolutely need a car loan, but my bigger more important priority is the move. So if I could move somewhere where I didn't need a car, I would happily forgo a car so that I could pursue that.

Sean Pyles:

Okay. Well, Magda happens to live in San Diego. Can you speak a little bit about how walkable certain parts might be? What are your thoughts around the necessity of a car in that city?

Magda Doemeny:

Yeah. I've been there for just over a year now, and I live more in the suburbs since I have two kids. I think it's possible, but generally California is not very public transportation friendly, I'd say, born and raised in California. So part of what's fun about California is all the places you can go. Beach, mountains and those things will need a car. And so outside of you moving there to restrict your life to your area, you can expect to need a car to get places which is $100 Lyft here or something like that. I mean, it costs me $50 here to the airport. So you'll probably need a car.

Sean Pyles:

So I'd like to hear your thoughts around Jim's savings in terms of emergency savings and savings for a move like this. Do you have any tips for how he could potentially increase the cash that he has to make a move like this possible on the timeline that you have? Do you have a set timeline, by the way? Do you want to move within a year?

Jim:

Yesterday.

Sean Pyles:

Yesterday. Yeah. So as soon as possible, what do you think are some good ways to accelerate savings?

Magda Doemeny:

Yeah. So I have a little bit of context on your situation, which includes how much you have in retirement savings, which for your age is actually pretty good relative to how much your income is. And this is more something that we use to gauge just general progression around how much you're saving for retirement, but it is based on your income and your living expenses because it means you've saved enough to cover your current lifestyle. But with a move to San Diego, the assumption would be you'd have to increase your income and increase your savings if that was your permanent home forever.

If you end up moving back to Milwaukee, great, then you're saving higher. So because of that, I think something that I could suggest is one, we want to take a look at your expenses in general. It sounds like you track them pretty closely, which is great, but we can always, if we set a goal which is I need to save X dollars, which for you would definitely be six months, but if you didn't have an income, I'd want it to be a year, and we can work backwards from that number. One thing I could suggest is that we actually decrease some of your retirement contributions, but I want to learn a little bit more about your match. So in order to get that 9% match, is there a minimum contribution you have to put in to get the 9% match?

Jim:

So we are a unionized office, so there's actually two employer contributions. So when I put in 5%, that gets matched to 3.5%, but then there's a 5.5% that is not a match, it's just put in. But my 5% that I put in now is necessary to get the full 9%. Yeah.

Magda Doemeny:

Got it.

Sean Pyles:

And this is 5% on what salary?

Jim:

Well, I just got a raise, so about 74.

Sean Pyles:

Okay. Congrats on the raise, by the way.

Jim:

Thank you. Thank you.

Sean Pyles:

And so you mentioned that Jim was in a pretty solid place in terms of his age for retirement savings. What was that balance and how do you think about these benchmarks? Because there are certain numbers people see around, okay, one time is your salary, one you're 30, that sort of thing. So can you provide some context and details around Jim's situation for that?

Magda Doemeny:

Yeah. So correct me if I'm wrong, Jim, but I have that in terms of retirement savings, about 125,000 or so, which is spread between a Roth IRA and a 403(b) at your employer. So that's about 97,000 in one and 26,000 in the other.

Jim:

It's like 120 in the employer and then another 27 or so in my Roth.

Magda Doemeny:

Oh, okay. So 120.

Sean Pyles:

Which just for context will put you ahead of the vast majority of people in this country. So even though these benchmarks are very aggressive, one time your salary at 30 is impossible for many, many people, you're doing fantastic in that regard. So you should be proud of that.

Magda Doemeny:

Exactly.

Jim:

Older me will thank me, but younger me really wants to be warm.

Magda Doemeny:

Right. And that's true. So that I tend to use, there's a number of different ways you can just figure out if you're on or off track. I tend to not use the very detailed method until you're really close to retirement because then we're actually making a decision to cut off your salary, which the best ways for you to increase your saving is really only two ways. It's increase your income or decrease your spending. And so for you, I think that your retirement savings is great, which is why potentially we could trim back a little bit, but I really hate giving away free money, so I don't know that I'd want to do that. So I would want to prioritize two things. The first one would be is there any other way we can increase your income, whether it's gig work or contracting at what you do? If there's a way for you, I think you had mentioned at some point that you have a journalism background. Is there a way you can start picking up some writing?

Jim:

Sure.

Magda Doemeny:

Something like that.

Jim:

Fun fact about me, I'm a giant nerd and I actually am a seasonal tax preparer.

Magda Doemeny:

Oh, fun.

Jim:

So I've done that the last couple of years. People look at me like, what is wrong with you that you could do this for fun? But I love it. But part of the reason why I haven't spent more time on side gig work, even though I have plenty of time for it, is because I've been using that time for the job hunt. So I've been trying to spend my time making connections and networking and finding roles that I might want to do that would increase my income and my full-time job. So it's tricky to be able to find the time to do that when you're working at night as well.

Magda Doemeny:

And what's the target salary range you're looking at, where are you finding it?

Jim:

I would love something in maybe the 110s, but I think I would accept a role that would be anything from 95 on up.

Magda Doemeny:

Okay.

Sean Pyles:

Okay. Which sort of specific jobs are you looking for?

Jim:

That's a great question. So my background is in nonprofits, that's where I have the most experience and I think it's most likely where I'd go. One reason why I've stayed in nonprofits so long is not only do I love it and it is very meaningful work and I work with good people and I like the causes that I work for, but I was on the public service loan forgiveness plan, so about half of my student debt was forgiven in April because I had worked for a nonprofit for 10 years. So now that that's happened, the financial incentive isn't there for me to stay in nonprofits. So I'm very open to going into something else. For a while, I really like the analytical parts of my job and I take classes in SQL and R and Python for fun.

But because I'm sort of in a middle career, it's tricky to find a role where I'm not taking a low step, a step downward, and I've got a lot of ad hoc do-it-yourself learning that is a little trickier to sell, especially in tech right now, which seems like it's had a lot of layoffs. So I have a very, very broad net, which has its pros and cons. It means I'd be willing to do a lot of things, but then it's really hard to know how to network or find something. So I'd say right now I've been looking in largely government jobs.

Magda Doemeny:

And I will say that you ultimately want to look at what your goal is here, which if it is to increase your income. We as financial planners will tell people all the time, you can stop working to go and get a degree if that's going to increase your income over time. And so even you mentioned taking a step down from maybe career level where you are, but ultimately, if you're stepping into an industry that will 2 to 3x your salary, that might not be a bad decision, especially if some of these positions being in the engineering tech space, their entry level positions could be not too far below your current one and sure it might be below, but it's probably remote, which is great.

And you'll still be a W-2 employee, which we care a lot about. Not that you can't be a contractor, but that comes with benefits when it comes to being fully remote. And so that could be something that you shouldn't shy away from if you can actually get into that industry and then start to really progress your career a lot higher versus in one that might be a little more stagnant.

Jim:

I have no problem with that and applying elsewhere. And I love learning, but I have such a hate-hate relationship with the higher ed industrial complex. And the thought of taking on more student loan debt makes me want to jump out a window. It's not to say that I would never do it, but it would be very hard to maintain the feeling that this is...

Magda Doemeny:

Really going to help you.

Jim:

Right. Really going to help me. That it's not going to cause a lot of the same kind of anxiety that it's caused me for the past 18 years.

Magda Doemeny:

And could you get into the industry without additional education?

Jim:

I'd like to think so.

Magda Doemeny:

Yeah. But that's where you're struggling.

Jim:

People keep saying that I can, but they haven't given me an offer yet.

Sean Pyles:

Well, I want to turn to talking about a different type of debt, home debt, mortgage debt. You're hoping to become a homeowner at some point. How have you begun to plan for that?

Jim:

Limited. So I used to be married. I got divorced last year and I had been using the Roth IRA combined with my partner. We were saving together in different vehicles, but the Roth was a way where I could save this money. I had worked in a lot of other sketchy nonprofits before that I didn't really trust how they were managing their finances. So I did my retirement savings myself through my Roth. So after doing some research, I learned that with a Roth IRA, as long as it's at least five years old, you can use all the contributions toward whatever you want without a penalty or taxes and even 10,000 of the earnings for first-time home purchase. So the way that we were saving for a home together was she was using her savings vehicle and I was using the Roth IRA as my savings vehicle.

So that's been there. I'm not contributing to that Roth right now because I've got other priorities in my budget, but it's been there as well. When it's time for a down payment, I'll draw from that. But I don't intend to buy property anywhere until I have proven to myself that whether or not living somewhere with a really, really wonderful miraculous climate like San Diego would be worth it. So I guess my savings is in the Roth IRA and that's part of why I'm interested in talking today is like, well, I don't think buying a home is in the very near future and I don't think it will ever feel like something that I would feel good about until I made this other change, if that makes sense.

Magda Doemeny:

Yeah. And that absolutely makes sense. I want to weigh, I think it's okay to use a Roth IRA for something that I would view as an investment. Not to say that you moving to San Diego and bettering your life and the way that it would better your life isn't an investment. But the problem with doing it not into an asset like a house is that if you decide that this isn't for you and you don't like it and you move back, it is money that was depleted that didn't have the potential to turn into something more. And so for something like living expenses, that is something that I'd prefer we save for outside in some capacity versus depleting a retirement account to use for effectively an emergency fund really is what we would be using it for. And I do think that we could, ultimately, find a way to do that.

We would just probably extend your timeline a bit, but you had mentioned that you're saving typically around 880 or so a month in a year's time, and especially if there's any way we can even trim back expenses even more, that can be a good chunk of money that we can set aside to say, this is your getting to San Diego. I know a year might be too long of a timeline, so we could figure out how to adjust that if we can figure out how to make more money and then we can really hoard a lot of cash that we can use for a move.

Jim:

Music to my ears, making more money.

Sean Pyles:

So I want to turn to specific advice on an even monthly basis potentially for Jim in a moment. But I also have a question around accounts because we're NerdWallet, I'm all about getting people the best products for their goals. What sort of savings account are you using? Do you have a high-yield savings account? Talk with me about that.

Jim:

I chose my savings account based on NerdWallet's recommendations.

Sean Pyles:

And it is high-yield?

Jim:

It is high-yield. [inaudible 00:24:29] income. Yeah. So I think right now my savings account is at 4.6%.

Sean Pyles:

Okay, great. So what do you think about trimming expenses to be able to save more? Do you have anything in mind that you think, okay, that'd be an easy expense to trim right off the bat?

Jim:

Honestly, no. So sure, I go out often. I am a pretty extroverted person and it's been very good for just my mood to be able to see a lot of my friends. I don't always have to spend money when I go out, but it's pretty tricky to go out into a bar or a restaurant with friends and not spend some money. So I can imagine if I was really disciplined I could shave a couple of hundred dollars a month off of that. But like I said about my car, I feel like anything that I would save by doing that would just get gobbled up when this car, ultimately, crosses the Rainbow Bridge.

Magda Doemeny:

And it is something that we want to plan for when we look at cash. We don't want anyone to have too much cash. I don't know if that's crazy to say out loud, but cash is not great. Cash is for specific purposes, which is your emergency fund and any short-term goals that you have, your car being one of them. So we would want to pre-fund whatever we think a down payment would be, so you'd want to do some research on what car you would want, and then we'd figure out roughly how much we'd want to put down for something like that and that we'd want to set aside in cash. So if you're saying that you don't think that you could trim expenses too much, which is fair, I mean, I don't want to say go live with 10 roommates and find a way to never go out and enjoy life. That's not what your finances are all about.

It's about meeting you where you are within the means of getting to your goals. I do think the next priority would have to be focusing on increasing income, which it sounds like you're doing. But then my goal for you would be that we wouldn't move to San Diego until we at least knew where your income could get. Because if we find out that your income is 110 or 120, that's very different than if we find out your income would stay at 75, which we know for certain...

Jim:

Would not.

Magda Doemeny:

Would not cut it.

Jim:

Would not be possible.

Magda Doemeny:

Yeah, because I mean right now your housing expense is $1,000 a month, correct?

Jim:

Which is incredible.

Magda Doemeny:

It's incredible. And no roommates, I assume.

Jim:

That's right.

Magda Doemeny:

Yeah. So I think in San Diego I would guess that you could do $1,000 with maybe two or three roommates or something. I don't know if I'm being extreme. And so right now, based on your ability to maintain your contributions to retirement, which I'd love to do. Like I said, you're a little ahead of the game, so if you change jobs and they didn't have this incredible match, I think I'd be okay with you trimming down your retirement contributions and we could reallocate those funds to maybe a cash account or just a standard investment account so that you can liquidate that anytime. There could be penalties associated with if you've made money on them, but no penalty, that would just be taxes. So we could reallocate funds that we could say this is towards building towards a future home or something like that. So I would be okay with that, but I think we really need to figure out what your next job is going to be.

Jim:

You and me both. Yeah.

Magda Doemeny:

Yeah.

Sean Pyles:

Well, that brings me to the next part of this conversation, the actual specific recommendations, Magda, that you would have for Jim. So when you're thinking about a financial planning session like we're having now and this ongoing relationship that you will have with Jim going forward, what would you say is maybe the first best thing that Jim should do to get to that goal? Moving to San Diego, hopefully, within a year, maybe two years.

Magda Doemeny:

I think the first thing would be that we get a better idea of what the cost is actually going to be in San Diego. So that means really doing some research and finding real places on rent. We could talk about the other parts of the cost of living, obviously, but there's ways to do research and just find out how much is it going to cost to buy your groceries down there. And then accommodating for lifestyle change of just going out and about potentially a lot more in a new city. So I'd want to get a better handle on that so then we could figure out how much do you need to make to support that lifestyle. I also want to make sure we figure out how much we need for a down payment on a car. If we need one, which I think in San Diego you would, I wouldn't want to anchor on not needing a car because if you do, we got to find that money somewhere once we've already done that.

Sean Pyles:

I imagine it'd be cheaper to buy a car in Wisconsin than San Diego.

Magda Doemeny:

And driving it all the way through. I don't know if there's income tax you guys...

Jim:

We do.

Magda Doemeny:

Or do you guys have sales tax there?

Jim:

We do.

Magda Doemeny:

Yeah. Okay. So I'm sure it's probably cheaper than California. So I think those would be the first few things, and then we would want to figure out how to create an actual budget for you once you moved so that we could decide how much can you be spending while you're there on non-housing so that we don't go too far over budget. And then we would figure out if we need to, how much we can contribute to your retirement once you started your job. My biggest thing that I actually haven't mentioned is moving somewhere without a job. One of the most important things that you're losing is your healthcare. And I don't know about other states, but being in California, it's not cheap. And this can be several hundred dollars a month just so that you have healthcare coverage, which you have to have. And so that's another reason why it's just important for you to have some source of employment, whether it be that they provide it or you have an income to pay for the healthcare. So we'd want to make sure that got set up as well.

Sean Pyles:

Accomplishing financial goals. One thing Magda and I talked about before this recording is about making changes. It's like going to therapy. You don't just go for the conversation. It's about having some proactive differences that you're going to make in your day-to-day life. Are you prepared to make some significant changes to maybe how you manage your income and expenses, maybe working a little bit more to be able to get to where you want to be in a year?

Jim:

I very much am. The challenge is making the changes that are going to yield the biggest benefit. So like I mentioned, I have no problem working two jobs. I've done that for a lot of my career, but lately I've been using that second job time to find a different first job. And so it's hard to know what the payoff is, like where's the most lucrative place to spend my time. That also aligns with my goals and also takes into account just how much time I've already put in. I don't want to look too much at all this time that I've worked on it, but the fact that I've put so much time in and it's still this important to me kind of makes me want to look more boldly at what kind of risks am I really willing to take.

Sean Pyles:

Well, Jim, do you have any other specific questions for us that you haven't asked yet?

Jim:

Anybody's selling a car for really cheap?

Sean Pyles:

Unfortunately, no. Not here, not me. Great. Well, Magda, let's turn to what some listeners can get from this conversation. At a high level, what do you see in Jim's situation that might be applicable to our audience?

Magda Doemeny:

I think it's very common for people to not really understand exactly what their money can do for them. And frankly, even as a CFP, I find this to be the case sometimes too, where I want to take risks, which is taboo, but sometimes I want to do that and I know folks want to be able to stretch their dollars. It is possible to be too conservative sometimes. I want to encourage folks to take risks sometimes that are something you've at least thought through and have a plan for. I know I've said plan a thousand times right now, but that's really what this boils down to is when you want to take a risk, you just have to do the research to put it together so that you have a plan. Because too many times what we see is I might talk to somebody on the back end of that non-existent plan and I say, well, let's talk about how you got here.

And it comes along with such and such was going on and I just didn't want to do it anymore, and I did X and now I'm here. And that's not always the case for everybody, but if you have a plan and a direction, it also helps you decide when it's not working. You get there and you're bleeding cash and you say, wow, I can only make it here six months. So you have an exit point to say, I can only spend this much money in six months. Now I need to go back to my cheaper lifestyle. If we don't at least plan things through, then we don't know our entry, our exit, and we don't know when things are really turning in the wrong direction. I know that's more of a negative way of thinking about it, but the positive spin would be true as well.

Like I mentioned, when you want to make a change, I want people to be empowered by that change. The same is true if you decide to go back to school and get an education. I want you to know that this is bettering your future, and that's why you're willing to take the risk and slow down your career temporarily to speed it back up. The same is true for making this move. I want you to get there and enjoy it and not have money be the thing that's just constantly in your background saying like, oh, is this a bad decision? I can't afford it. And so I think that's pretty applicable to most people who want to take risks.

Sean Pyles:

Great. Well, Jim, I hope this was helpful. Keep us posted on how things are going for you, and thank you so much for coming on Smart Money and talking with us.

Jim:

This is fantastic. Thank you so much.

Sean Pyles:

Great. And, Magda, thanks as always for sharing your insights.

Magda Doemeny:

Of course. Happy to be here.

Sean Pyles:

And that's all we have for this episode. Remember, listener, that we are here to answer your money questions. So turn to the Nerds and call or text us with your questions at 901-730-6373. That's 901-730-NERD. You can also email us at [email protected]. Also visit nerdwallet.com/podcast for more info on this episode. And remember that you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes. To learn more about NerdWallet advisors, go to https://nerdwalletadvisors.com/smart-money.

Here's our brief disclaimer. I am not a financial or investment advisor. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

This episode was produced by Tess Vigeland, Cody Gough, and myself. And a special thank you to Magda Doemeny, Georgia McIntyre, and Emily Canedo, and a big thank you to NerdWallet's editors for all their help. And with that said, until next time, turn to the Nerds.