Smart Money Podcast: What Biden May Do for Your Finances and How to Make Money

Liz: Welcome to the NerdWallet Smart Money Podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Liz Weston.

Sean: And I'm Sean Pyles. To have your money questions answered on a future episode, call or text us on the Nerd Hotline at 901-730-6373. That's 901-730-NERD. Or email us at [email protected].

Liz: Hit that subscribe button to get new episodes delivered to your devices every Monday. If you like what you hear, please leave us a review. Now, we've got one last plug before we get on to the episode. We want to know, how has the pandemic changed the way that you deal with money? We want to know all the money lessons you learned this year, and we're going to put them in a special episode. But to make this happen, we need to hear from you.

Sean: Next week, Liz and I will share our money lessons from 2020 with you, but we still want to hear from a few more of you. And to bring this to life, I'd really love to include as many of your actual voices in this as possible, and that means leaving us a voicemail on the Nerd hotline or emailing us a voice memo.

Liz: This episode, Sean and I are answering a listener's question about how they can get their hands on some money, with the help of personal finance Nerd Lauren Schwahn. First though, in our This Week In Your Money segment, we're going to talk about what the incoming Biden administration could mean for your finances.

Sean: That's right. I think that we've seen over the past four years just how much can change in our country during a single administration, and the incoming Biden administration might bring some really significant changes to our personal finances in a few different sectors. And one area that I think people might not have on the radar, but could be a huge change, is the way that the Consumer Financial Protection Bureau functions.

Liz: Yeah. And if people don't know what the CFPB is, this was set up by now-Sen. Elizabeth Warren and it was meant to be the resource for consumers, because consumer protection was spread about the government. It wasn't any agency or department's main priority, hence that led to the birth of this agency. However, the Trump administration did not like it one bit and put someone in charge of it that was trying to dismantle it. So now we've got a chance to basically revive what had been probably the consumers' strongest protector.

Sean: One thing that's incredible about the CFPB is that it's returned billions of dollars to people who have been harmed by financial firms since its inception, but it's really lost its teeth over the last four years. According to a report by the Consumer Federation of America, the average amount of monetary relief per case awarded to victims of illegal consumer financial practices has declined by about 96% over the past few years, which is pretty incredible.

Liz: Wow.

Sean: So under the director from the Obama administration, the CFPB awarded nearly $60 million in consumer restitution per case, and that fell to $2.4 million under the current director. So a huge change.

Liz: Well, and companies, especially financial services companies, learned to pay attention to the CFPB under the Obama administration, and it was actually gratifying when a consumer came to us and they had a knotty problem that they couldn't solve. We could tell them, "Let the CFPB know, make a complaint there." And things happened. Obviously, that hasn't happened in the last four years, but maybe we'll see that again.

Sean: And it's still worth submitting complaints to the CFPB if you find that a company is being deceptive in their practices, especially around debt collection. That's a big area where we encourage people to submit complaints. And in fact, there's been a huge spike of complaints to the CFPB during the pandemic. So I think it shows that people are, unfortunately, dealing with a lot of shady companies and scammers trying to weasel them out of their money. So, hopefully this means that in the new year the CFPB is able to help people when they need it the most.

Liz: And obviously, a lot is going to depend on what happens in Georgia in January, because it will determine whether or not the Democrats take the Senate. With the Democratic majority in the Senate, I think we could see a lot more action on student loans and on other facets of your personal finances. If the Republicans maintain control of the Senate, it's going to be really tough to make any big changes. And obviously, one of the first things that Congress is going to have to take up is some more stimulus, some more relief, some more pandemic assistance. And, again, we won't have any idea what that will look like until we know who controls the Senate.

Sean: Exactly, there are how many billions of dollars between what the Republicans want and what the Democrats want? We know that at the end of the year, a lot of people are going to stop getting these unemployment benefits that have kept them afloat. What makes me really scared right now is the time between the end of the year and when Congress can actually take up some action to help people get these benefits again. That's going to be really hard for a lot of people so I'm hoping that puts pressure on the incoming administration and Congress to get something together quickly so we can get some assistance to those who have been out of work and will have lost this benefit.

Liz: A lot of small businesses have had to close, a lot of jobs have gone away. We're going to start seeing, if we haven't already, state and cities having to cut back because they can't deficit spend like the federal government can, and those effects could ripple throughout the economy for years. Another issue that a lot of people are paying attention to is student loan cancellation or forgiveness.

Sean: That's exactly right. Current federal student loan forbearance is set to expire at the end of this year, and payments are about to restart in January. NerdWallet's student loan expert, Anna Helhoski, was recently on Cheddar News and she described it in a way that I thought was really powerful. She said that borrowers are really about to walk off of a cliff. A NerdWallet survey found that 45% of Americans with federal student loans are not confident that they can make their payments in 2021. There is some talk that Biden could just submit an executive order and erase a certain amount of student loan debt, specifically federal student loan debt, on Day One. Right now, there's talk that, that could be somewhere between $10,000 and $50,000. Again, we don't really know what's going to happen here, but $10,000 seems more likely.

But at the same time, there's some conversation going on about how the Biden administration could erase all student loan debt without having to go through Congress. There's an organization called the Debt Collective that's been digging into this, and they found that Congress actually granted legal authority to the head of the Department of Education to extinguish all federal student loan debt through an action called Compromise and Settlement, which dates back to 1965. And that might sound very historical and technical, but basically what that means is that the president can instruct the education secretary to use this specific authority to just simply cancel all federal student loan debt in one fell swoop, which would be pretty incredible.

And why this is so important is, one, it will help individuals on a monthly basis have more money back in their pockets. Two, it will help close the racial wealth gap in the economy. And three, it will help stimulate the economy, because simply having more money means that people can go out and buy more things, and importantly, pay their rent and buy groceries, which people are struggling to do right now.

Liz: Yeah. I'm not really very optimistic that he will actually do that. Again, he's a moderate, and there's a fairly strong conservative backlash that would happen, because a lot of people did pay off their student loans or, you know, Mumsy and Duddy paid for their education so they didn't have student loans and they don't understand what it's like. I hope that we're going to see some kind of student loan forgiveness. I hope that happens, but I don't think it's going to be on that kind of a scale.

Sean: Yeah, I think that you're right, unfortunately. It's always sad to see how mega corporations and millionaires get tons of tax relief, then it's a cause for celebration in our economy. But when people who are struggling the most get anything it's hard to justify in people's minds, because maybe they didn't "earn it." But at the same time, there are so many benefits that would come to people from having this debt forgiven that I really hope it does happen. And that's not just because I personally have student loans that I would love to not be paying.

Liz: Well, I think that can happen, and something that the bankruptcy judges and attorneys have been pushing for is some relief in bankruptcy court. It is still very, very, very hard to get rid of your student loan debt, even if there's no chance of you ever paying it. And loosening up on that could make a lot of sense.

Sean: One thing that has been really encouraging is that we've seen our representatives be more responsive to calls from their constituents. So whichever way you fall on this, if you want your elected officials to take action, let them know that you will hold them accountable. Give them a call, write them a letter, make it be known that you are going to hold their feet to the fire and that if they don't give you the assistance that you need that they'll probably pay for it come election year. And with that, I think we can move on to this episode's money question.

Liz: This episode's money question comes from Billy. They write, "How do I get my hands on some money?"

Sean: I loved this question when I saw it come in, because it is so very simple, but there's so many possible answers. And the nosy part of me wants a little bit more information here.

Liz: Yes, please.

Sean: When do you need this money? How much money do you need? What do you need it for? Please tell me you're not just going to get some money to buy the new iPhone. What's going on here? But there are a lot of great answers to this question at the same time.

Liz: Yeah. And to talk with us about how people can get their hands on some money we're bringing in Nerd Lauren Schwahn.

Sean: All right, let's get into it. Hey Lauren, welcome onto the podcast.

Lauren: Hi, thank you for having me.

Liz: So let's start by talking about some of the tried and true ways to get your hands on some money. Where do you think Billy should start?

Lauren: Yeah. There are many ways, as Sean mentioned earlier, but I think any time you have that personal finance dilemma or concern, it's always a good time to revisit your budget. So I think a good place to start really would just be to make a list of all your expenses and then see if maybe there's some unnecessary spending you can cut. And I don't want to drone on about getting into cutting your daily latte or your avocado toast or anything like that.

Sean: Right.

Lauren: I mean, you're more than welcome to, if that works for you, but there are some things you can do that might have a little bit better reward for you. So you might want to say, for example, change your cell phone plan. A lot of us, we're home right now. Maybe we don't need that unlimited data package, that we can get by on Wi-Fi, or cutting your subscriptions in your cable package, things like that. I know, at least for me, my husband and I, right now we're spending about $130 a month on our internet and cable. And we really don't watch TV all that much anymore. We have Netflix and Hulu and all those things. So if we are just to remove that half of the equation, we can save something like $70 per month. So that can really add up. Things like that can free up the money in your budget more quickly.

Sean: Well, you raised a really good point there, Lauren, because there is this whole realm of thinking in the personal finance world that it is all around those lattes, all around the avocado toast, but those things aren't going to make that big of a difference. If you can find a way to cut $50, or in your case, $60, from your budget that will add up much faster and will make it so you have more cash in your budget to hold on to.

Lauren: Yeah. And of course, if there are several things like that you can do, then that will add up too — $50 here and $50 there, then that's $100 back in your pocket.

Liz: Yeah, and cable is a good one to talk about. My husband and I went back and forth for months, probably years thinking, "Oh, can we really do this?" When we cut it, honestly, we haven't looked back. It does not really change your life that much. But for a lot of us, there's plenty of those expenses that we can cut. There are some people that are already living pretty close to the bone, and there's not much that they can cut, right, Lauren?

Lauren: Especially in times like this, I think a lot of people probably already have been cutting down their spending and just covering those necessities. So it may not be enough, and then in that case, you probably want to explore some other options.

Sean: What we just talked about are some ways to keep your hands on the money that you do have. But Billy wants to get their hands on some new money. So let's talk about ways to do that. There seems to be a spectrum of options people have, like selling stuff online, they're finding a side gig, maybe getting a new job entirely, or even applying for new lines of credit or seeking government aid. So let's talk through a few of these, and starting with side gigs, what does the current market like for this right now? And how much do you think someone could actually make?

Lauren: Yeah, well that depends. And obviously right now there are still millions of Americans out of work, so the side gig is really popular for that reason. People want that money right now. I think it depends on which category you're looking at. Some of the jobs in the delivery space are really booming right now. People are home, they're ordering their groceries, shopping online. So I think that space might be worth exploring, but also the pay can depend on the platform you might be going through or whether or not you're using your own vehicle, for example. Amazon Flex is a really popular service. Everybody uses Amazon basically. So if you're looking into something like that, the company says you can usually make between $18 and $25 an hour. But there are some caveats with that.

So if you're using your own vehicle, you're still going to have to pay for the insurance you need. You're going to have to pay for your own gas and maintenance on your car. And then, of course, you also have to factor in how long it's going to take you to make some of these deliveries. So if you can go from one place to another really quickly then you might be able to make money at the higher end of that spectrum. But if there's traffic or something, maybe the warehouse is really far away from where you're dropping off an item, then that cuts it down a little bit. So you do have to factor in some of those things.

Sean: You get some diminishing returns when you think about the extra mileage on the car, the wear and tear, the stopping for gas, all of that stuff will make it so that maybe you aren't actually getting that $25 an hour.

Lauren: Exactly.

Sean: So we really can't have yard sales right now in a lot of areas. What are the alternatives for selling stuff if you want to do it yourself and do it relatively fast?

Lauren: Yeah, well, of course, there's good old fashioned eBay and sites like that, but there's also a lot more community marketplaces around now, Facebook groups, NextDoor groups that you might have within your own community. That can be a good way. You can set your own terms. If you're planning to sell something, you could do a contactless drop off for somebody and you might not have to actually exchange something between hands. And then, of course, there are these platforms you can go through as well. And that might cut down on some of the scams. I mean, of course, there's Craigslist, you can make a post or reply to a post there, but you never really know what you're getting into. So some of these sites that are more reputable, they've been vetted, you can look up the reviews. You might want to go through that route, but again, just be mindful that you may have to pay a commission fee or a selling fee.

Sean: I have some friends who've actually made money selling their house plants, which sounds kind of odd. But in Portland, houseplants are very trendy as they are I think everywhere for millennials right now. And I have a friend who loves them and she's been nurturing some of these plants for years now and they've grown pretty large and she's been able to make a profit on it, which has helped her recoup some of her cash that she hasn't been able to earn because of COVID-related job losses. So that might be an option as well. I think you could apply that for almost any specialty item that you're a collector of. If there is a niche market that you're a part of and you know people have a vested interest in it, maybe consider capitalizing on that and selling things that you might be able to get a little more money from versus an old shirt in your closet.

Lauren: And a lot of people are moving right now, so things like furniture that people might be in need of that might be good to consider as well.

Liz: We have reviews of some of these moneymaking sites on NerdWallet, don't we?

Lauren: We do. Another area that we have a lot of reviews for is the online survey space. It's a bittersweet one.

Sean: Right.

Lauren: Because on the one hand, those types of jobs are really easy to come by and you don't need much experience, if any, really to answer some of these questions, on there's Swagbucks and sites like that. But the other hand is that the pay can be sometimes pennies to a dollar. So we really want to sit down and think about how much time you have to put into these things and if that's worth it for you.

Sean: This seems like the kind of job that you would maybe want to take on when you're already watching Netflix, something that's basically mindless and can replace scrolling through social media while you're already watching a show. So this way you don't have to dedicate hours on end to doing something that will give you very little money, but you can have it going in the background with very little mental energy.

Lauren: Exactly, yeah. It's something you can do, like you said, in your spare time, but probably won't be replacing a full-time career for you. But something else to consider with a lot of these side gig type jobs is how often you do get paid or how you get paid. With the survey sites, for example, you may not be able to cash out until you make a certain amount and it can take a really long time to make that amount.

Sean: And is it still the case that some of these companies will only pay you in gift cards?

Liz: It is. A lot of them now seem to have multiple options so you can cash out or have direct deposit to your bank account. But it's often more enticing, or they make it more enticing, for people to choose that gift card option. There might be lower thresholds to cash out that way, or you might be able to convert, so if you've done $20 worth of work, maybe you can get a $25 gift card.

Sean: I do want to throw in one mention about these work-from-home jobs. There are a lot of them out there that make it seem like you can just sit at home in your PJs and post on social media and get some money. And a lot of these are multi-level marketing schemes, also known as pyramid schemes, also known as jobs where you have to pay to make money. And there's been a lot said about these companies, and we could do an entire season of this show about that, but I would direct folks to a podcast called "The Dream" if they want to learn more about this. I need to say, if there's a company that is requiring you to pay money to earn money from them, just back away, turn around, don't get into it, because it's not going to make you a lot of money.

Liz: Yeah, and Lauren, we should talk a little bit about, because of the pandemic, a lot of people are not comfortable going out and doing delivery jobs or things that require them to be face-to-face with the public. Do they have any other options?

Lauren: That's one good thing that's come out of the pandemic, is I think a lot more jobs are going virtual. So you can do some of these things online now or from home that you never could before. You might even want to look into a regular professional-type job that before you had to go into an office and that might not have appealed to you if you wanted to do something more flexible. But now we're seeing a lot more of that flexibility and a lot of these other virtual type side gigs that have existed for a while are picking up more, too. You could be a virtual assistant, you can set people's schedules, things like that. And tutoring jobs and teaching jobs can also be really good, and they tend to pay more as well. So you don't necessarily have those same fees or they might be lower, but you don't have to pay expenses like gas, because you're not leaving the house.

Sean: Right. The more you can think about your own skill set and how you can adapt them to the new way that jobs are being presented online, I think the more money you'll actually make. It'll probably require more time, of course, to do it because you have a specific skill set and in the case of tutoring that can be a few hours a week, if not more. Again, you'll make more because you do have a specialized skill.

Lauren: Exactly. And I think that being said, there might be a little bit more demand in this space now, because, as we've talked about, people might not feel comfortable ride sharing right now or having somebody come clean their home.

Sean: Mm-hmm.

Lauren: So a lot of people are going to end up looking at these same kind of jobs. You also might want to consider ways you can make yourself stand out. So you can polish up a skill, you can get an online certification. And if you have any sort of virtual or remote experience in the past, that might be something worth putting on a resume or in your cover letter, because maybe not everybody has that, and that can help you stand out a little bit.

Sean: All right, so we've touched on a few ways that people can earn some money by selling things online or maybe getting a new job. I want to talk about ways to get money through new lines of credit. And let's say someone, say Billy, is in a cash crunch right now. How do you think they should think about getting a new line of credit right now? And what should they maybe avoid?

Liz: Well, it's really easy to talk yourself into a need for getting cash when it might not be as acute as you think, so obviously you want to go through all the potential alternatives before you borrow money. And then if it's pretty clear you need to get your hands on some money, your options are going to depend in large part about what your credit score is and what your job situation is. If you have good credit scores and a steady income, the world's your oyster. If you don't, you can easily find yourself in one of those debt traps, like getting a payday loan and winding up paying triple digit interest and not being able to cover the loan when it comes due and getting farther and farther into that. Sean, you've written a lot about the potential for debt traps, so you know what I'm talking about.

Sean: Right. Yeah, car title loans are another one where folks who maybe don't have a steady income and can't get that payday loan will put their car title as collateral. And it's similar in structure to a payday loan where the fees are pretty exorbitant, and then you can find yourself without a car. So I guess the bottom line with this is be really careful and be very thoughtful before you apply for a line of credit that you might not be able to afford. And I would say make that one of your final options.

Liz: And if you're really up against the wall, there are charities out there that have emergency grants. If you need to cover your rent so you don't get evicted or really put food on the table, there are a lot of resources out there to help people. And we typically tell them to start at 211.org, or simply calling 211 on your phone. That connects you to a United Way charity that can point you in all kinds of directions to get some help.

Sean: Well, that brings me to another question I had for you, Lauren, which is about how to get government aid. What are some options that people have for that?

Lauren: Of course, there's things like filing for unemployment benefits, if you qualify for those, and that also may apply to your situation if your hours have been cut. So you don't necessarily have to be fully unemployed to receive those. There also are some government programs that might be worth looking into. And sometimes the savings might be a little bit more minuscule, but things like cell phone plans, and if you're a senior or a veteran, then there might be more options available. There are programs that can help you save on your electric bill or cell phone bill, so it's really worth doing a quick Google search for some of those.

Liz: We should also mention something that was the topic of a previous episode, which is missing money.

Sean: Oh, yeah.

Liz: This is a case where in every state they have an Escheat Office, which is basically unclaimed property. And there are sites, it's unclaimed.org, I think, and missingmoney.com. And basically you just put your name in and you see if there's unclaimed property waiting for you. And typically there is, I mean, most people will find something.

Sean: I got around $5 from an overpaid credit card bill. So it's not a ton, at least in my case, but you might have some money waiting out there so you might as well look it up and see if you can get something.

Liz: Yeah. There's a couple of hundred bucks waiting for us apparently that I didn't know about.

Sean: Ooh.

Liz: Yeah.

Sean: Yeah, OK.

Liz: Oh, and the other thing, a lot of plans are getting canceled obviously from the pandemic, and if you haven't gotten refunds for various things, whether you bought tickets to an event or travel, or whatever it is, it's worth pursuing that to see if you can shake some money out of some of the companies that have your cash.

Sean: Yeah, I have a feeling that when you call them they're going to try to not give you back that money, because they're pretty hard up for cash themselves. But I think this would be an opportunity to be very nice to whoever's working on the phone with you. That can take you really far, I say, as someone who used to work at a call center.

Liz: Ah, OK.

Sean: Give them a ring and, yeah, just a little bit of smooth talking and treating people like fellow humans can take you very far.

Liz: Absolutely, because it's so rare. They're going to be so happy to hear you.

Sean: Yeah, yeah.

Lauren: And it's worth trying all these things too, because the worst they're going to do is say no.

Sean: And there's probably not going to be one single option that gets you all of the cash that you need, so it can be worth trying a little bit of something, a little bit of something else to get a patchwork of solutions to fill your money gap.

All right, well, I think we've run through most of the options here. Lauren, do you have any final advice for Billy or anyone else who's looking to get their hands on some money right now?

Lauren: Yeah. I would say, just keep your options open. There are a lot of things, be it little things, that you can do to get your hands on some money. So it might be worth trying a few, sticking with the ones that work for you. And if they don't, then move on to something else. And again, I think it's really important, if you're exploring a side gig, especially if it's something you're planning to do maybe medium or long-term, just be aware of how that pay works, what time you're going to have to put into it, what you're going to get back, if there are expenses you're going to have to cover. Something that we didn't really talk about before is the distinction between being an independent contractor or being an employee.

Sean: Mm-hmm.

Liz: Mm-hmm.

Lauren: And that's going to affect a lot of finances for you. So if you're a freelancer or an independent contractor, you're going to have to set aside your own money in your own time for your taxes, whereas an employer is going to automatically do that for you. You may not get a 401(k). You may not get paid time off, so those are other things you have to think of. And also really important during a pandemic, if you don't have things like health insurance and you have to front that expense yourself, that's something to consider.

Sean: Right.

Lauren: And then some of these also are going to have other requirements. So you might have to have a certain type of insurance or a certain type of car if you want to be a delivery driver. So really just pay attention to all those details and make sure you know what you're getting into before you dive in.

Sean: All right. Well, thank you so much for joining us, Lauren.

Lauren: Yeah. Thank you both.

Liz: All right, and with that, let's get to our takeaway tips. First, look for cuts. You might be able to get your hands on some cash by cutting your expenses. See where you can make the biggest budget cuts to retain more of your money.

Sean: Next, look for the catch. When looking for an easy way to earn money at home or online make sure you fully understand what you're signing up for and how to spot a scam.

Liz: Finally, borrow with caution. If you need money immediately and don't have great credit, look to family and friends before you turn to riskier options like payday or car title loans.

And that's all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us 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 information on this episode. And remember to subscribe, rate and review us wherever you're getting this podcast.

Sean: And here is our brief disclaimer, thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.