Morning Brew Daily
2025 Investing, Renting vs Buying, $$$ Planning with ‘Money with Katie’
Wed, 01 Jan 2025
Money with Katie joins Morning Brew Daily to share her best advice to fiscally plan for 2025. What strategies work and what should you prioritize in the new year? If you are looking to move, what is the best way to evaluate renting vs buying? How should your personal finance stance shift, if at all, with a new administration taking office next year? Katie answers all of that and more - happy new years! Listen to The Money with Katie Show: https://open.spotify.com/show/3KyldJHhXZPr8ERjKDASBh?si=d0de916bf1d448f2&nd=1&dlsi=b9df283b96a14039 Subscribe to Katie's weekly newsletter: https://newsletter.moneywithkatie.com/subscribe?utm_medium=podcast&utm_source=mbd Get the 2025 Money with Katie Wealth Planner here: https://moneywithkatie.com/2025-wealth-planner Follow Money with Katie on social: Instagram: https://www.instagram.com/moneywithkatie/ TikTok: https://www.tiktok.com/@moneywithkatie X: https://x.com/moneywithkatie YouTube: https://youtube.com/moneywithkatie Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What are some New Year’s resolutions for financial health?
Don't worry. Money with Katie is here to put you on the path to success. It's Wednesday, January 1st. Let's ride. Neil, happy New Year's. Going to put you on the spot. What is your New Year's resolution for 2025?
Well, I usually don't do resolutions. I don't think I've made a single one or actually committed to one. Maybe those are two different things. But this year, I really want to see the two remaining United States I haven't been to. Those would be Kansas and Alaska. Those are the only two left. During COVID, I just did so many road trips and just worked from Airbnbs all over the country.
So I knocked off a lot of states. I have two left.
Kansas and Alaska. Not a lot of things tying those two together would be a very long road trip as well. Maybe you have to take a cruise up to Alaska. Could be a fun winter holiday thing to do. My New Year's resolution. So last year, I tried to run every single day. I made it about two and a half months in and then got injured, so I'm going to aim a little lower this year.
I think my goal is to just do my first Ironman triathlon. I've done a couple marathons. I think Ironman is the next step. Speaking of the new year, we're very excited for you all to hear this episode. Katie is one of our favorite people here at Morning Brew. She hosts the Money with Katie podcast and is one of the best personal finance thinkers and writers out there in the game right now.
Take out a pen and paper because you're going to learn so much from this podcast. We really hope you enjoy it. Katie, thank you so much for joining us and Happy New Year.
Thank you so much. Happy New Year to you, too.
So we're releasing this episode on January 1st, obviously a popular time to make resolutions for the new year. What are a couple of practical steps our listeners can take in the new year to improve their financial health specifically?
So I just had my friend Ramit Sethi on the show. So his perspective is sort of fresh in my mind right now. But something that I think he really gets right in his personal finance philosophy is this idea that you are not going to, quote unquote, become responsible with money unless you have a vision for the role that you want money to serve in your life.
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Chapter 2: How can I improve my financial vision for 2025?
Like there has to be a more alluring end state that you are working toward than just, oh, I'm going to budget because like adults budget, right? So with that being said, if you are looking to do a little bit of a checkup for 2025, whether you are someone who has this stuff locked and loaded, or you've maybe never sat down and looked at your finances before, I would say pick two different
weekends to do these exercises. Don't try to do it all at the same time. Don't try to do it all at the same day. But in your first sit down with yourself, you are not going to look at your numbers at all, okay? You're just going to spend some time answering the question, where can money improve my life? Where, if I had the money, would my life really genuinely get better?
You're probably not going to sit there and be like, oh, you know, I'd order more stuff on Amazon. There's probably some specific things that you might have never actually like let yourself really dream about before. So this is an opportunity to dream big for a second. about how you would organize your life if money were not an object and then put some numbers around that.
So I had a friend do this and she was like, man, if money wasn't an object, like I would get my hair washed and blow dried professionally every week. I would go into the salon and get it done so I didn't have to wash it all week. That would be amazing. So we start penciling it out and I'm like, This is like a couple hundred bucks a month.
Like we're not talking about a, you know, a billionaire level change here. It wasn't really insurmountable. But the point is you want to get a holistic vision for like, where would I live? How would I eat? How would I travel? I'm going to put some ballpark numbers around the type of life that I really want to live. And then the next time you sit down with that vision in mind.
Now you're sitting down with your data. So that's your spending data from the previous year. That's how much you earned. That's how much you managed to contribute to your savings and investments. And you're basically going to go, okay, I have this vision. Is there anything here that I could actually have right now if I just made slightly different spending decisions? Or...
Okay, in order to save, say, 20% of my income, in order to make these really serious steps toward this vision for my life, I actually have a new salary target. I'm probably not going to spend a whole lot of time worrying about if I'm going out to eat once a week or twice a week. I actually need to focus a lot of the energy on I'm negotiating for a new job, I'm switching companies.
But the point is you're just going to start connecting the dots between where you are, where you want to be, and it can actually be really, really fun. And the budgeting part, the sitting down and like making the plan part, that comes last because that's just the roadmap to how you're going to make these things happen. And you know what? It might take a while.
When I sat down years ago and decided, hey, I actually I want to have more money. Like I am tired of feeling strapped all of the time. I don't think I should be, but I think I want to have more money. It probably took about 18 months. for the changes to really kick in.
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Chapter 3: What is the Money With Katie Wealth Planner?
So what percentage of my take-home pay am I managing to invest for the future? Both of these questions will allow you to understand what your timeline to total financial freedom is. Now, total financial freedom means like you no longer have to work for income. That's the end state that is probably many years away.
But if you start organizing your life in this way, you are going to achieve some level of financial freedom really, really quickly. So for example, if your savings rate is 10%, you can assume that it means it's going to take you roughly 41 years to become financially independent. If you bump that up to just 15%, you now shave seven years off that timeline.
You're looking at something closer to 34 years to financial independence as opposed to 41. So you get familiar with these numbers, you start to see, okay, the jump from 10 to 15% That's really not that meaningful on a monthly basis. But if it's going to make my working timeline seven years shorter, that is really meaningful.
If you can get up to 20%, 25%, you're talking between 26 and 30 years now. So it's all proportional. These formulas, it doesn't matter what you earn. It just takes what percentage of your income you're contributing to long-term investments with an appropriate risk profile for that timeline. So people that are really hardcore FIRE are saving 50%. 50, 60, 70 percent of their income.
And they're focusing on condensing their expenses as much as possible. So it's a movement that's very compatible with like the minimalist movement, for example.
What is the state of the FIRE movement? Is it growing? Is it shrinking? Like, I just haven't heard so much about it. And I wonder if broader changes have, you know, led more people to seek out this type of lifestyle or less.
My assumption, based on just kind of vibe checking it, is that there's still a pretty devoted micro, you know, there's always going to be that microcosm of people who is very attracted to this. But I do think that with the shift to work from home and telework, I think that there's been a bit of a...
I don't want to say existential crisis, but like, if you're not having to go into an office every day, that is probably going to lower the pressure that you feel. It certainly lowered it for me.
The difference between being physically in an office from eight to five every single day, all week long, that is a different mindset than someone who could, okay, well, I can actually continue to earn money from my house, or maybe I'm going to work part-time. There's a little bit more flexibility now, which I think has maybe taken the, um,
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Chapter 4: How can I achieve financial independence?
Those are the things that I think really move the needle in the long run. So I always kind of tell people like, hey, don't overthink things like savings account yields. Ideally, your short-term savings are on the smaller side when compared to the money that you are saving and investing for the long term. I think probably the only...
The only use case where I would say that's different is if you are saving and investing for something like house down payment, where you are probably going to be accumulating quite a lot of money in this account. But again, in the grand scheme of things, if you're only going to be saving for, we'll say, fewer than five years, that's not really a meaningful amount of time for interest or
your returns to compound anyway. So is it maybe not perfectly ideal or perfectly optimized? Sure, but it's not gonna be, it's not gonna be a game changing change.
Let's shift gears a little bit and talk about time management. You've discussed this need to create these neat time blocked chunks of the day for yourself, even bringing in ideas like industrial capitalism to describe just how regimented your days had become. Take us through, though, how your relationship with time has changed and evolved as you've kind of grown into yourself.
Yeah. Well, I am quite type A, but to put it simply, I had gone down this rabbit hole learning about how the historical introduction of industrial capitalism evolved fundamentally changed human beings' relationship to their time. And it goes something like this.
When we shifted as a society from like craftsmen and people that were working for themselves or, you know, working in this way that they were like, it was like artisanal, right? You're picturing someone like a cobbler with shoes. You're shifting from that to like wage-based factory work. We began to be paid by the hour.
Now, this is different from someone who, again, used to make a living by like working for themselves, like a craftsman or something. If you are being paid by the hour, that means you are clocking in, you are clocking out. Suddenly the hour becomes a commodity.
And this was a big a big thing kind of in the dawn of industrial capitalism that like workers wouldn't be allowed to have their own clocks in the factory because the person that controlled the time was kind of in control of how much was getting done.
And so there would be, I read stories about like factory people that control the factory floor, kind of like, you know, setting back the clock a little bit to make them stay a little bit longer. Anyway, your time becomes something that someone else can pay for. And so by extension, it becomes something that can be wasted or something that can be optimized.
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Chapter 5: What is the current state of the FIRE movement?
Yeah. I think because we tend to have a lot of recency bias about what political and economic forces are driving the ship right now. So a lot of the analysis that I was reading, it was comparing, say, the last four years to Trump's first term and really like the beginning of the history of. And a lot of these analyses seem to start around the time of the pandemic.
I think because the pandemic was such a paradigm shifting event and there was a lot of change that followed, also because inflation had become such a huge headline. But I think as I zoomed out and I really thought about, OK, why are we in this position right now? Why did right wing economic populism have such a moment in this last election?
It occurred to me that I think the real story of the economy that we're in right now did not start four years ago. It started 40 years ago. That's when we started cutting corporate tax rates and tax rates for the highest earners for the first time and started associating those tax changes with this will bring growth, this will bring prosperity.
That's when stock buyback regulations were loosened pretty substantially. So before 1981, I think it was something like less than 5% of all corporate profits were used for stock buybacks. Now it's something like half. Obviously, that's going to lead to an increase in financialization. And finally, the death knell, I think, was probably Citizens United.
So when corporations were basically granted personhood in the United States such that corporate interests really fully like enveloped our political system. So if you're just talking about this election at the rhetorical level. And you are considering those 40 years of changes and how they have led us to where we are now.
And, you know, these appeals are being made to this deep seated sense that I think a lot of Americans feel that something has gone very, very wrong. I think if you have one candidate who seems to represent the status quo insofar as they're coming from the incumbent administration, and then you have another who is promising to blow it all up and saying literally, I'll fix it.
I don't think we should be surprised that the all fix it rhetoric was effective. And so going over those 40 years, pulling it all together, trying to weave those threads together, connecting those dots. It was actually very cathartic for me, honestly. So I'm really happy that it resonated with so many people.
I do want to drill a little deeper on something you just said, which is like the financialization of our world. One of the byproducts of that is just this explosion in the availability and ubiquity of personal debt, student loans, car loans, credit cards, mortgages. These are all things that our listeners are no doubt very familiar with.
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Chapter 6: How should I approach saving in a lower interest rate environment?
How does that fit into and shape, in your opinion, just like the current economic landscape that we find ourselves in right now?
Oh, man. Yeah. Well... Okay, at the most microcosmic level, I think we perceive and experience a lot of policy failings as personal finance problems. Like, okay, I can't afford to buy a house. My car payment is too expensive. Childcare is too expensive. These are personal finance problems, yes, but with perhaps different housing, with maybe the median home not costing $400,000.
Maybe you don't need a car anymore if you have public transit options. Maybe you don't need $2,000 a month for daycare if we treated childcare like infrastructure. So... I would say before we even talk about debt, we have to talk about the fact that a lot of the most intractable personal finance problems that feel the hardest to solve are often downstream of policy failure.
But if you make a society very challenging to thrive in, you have to give people some way to pay for the things that they need, right? And what better way to structure a system like that than making the way that they pay for these things that they need done so with for-profit financing. And I think it sounds kind of conspiratorial, but it's really not.
I think the availability of credit is why we haven't reached a tipping point sooner. But that's why I believe personal finance education becomes ultimately very critical because...
If you're aware of these conditions and you understand that the system is sort of set up to guide you toward a lot of debt, a hyper competitive individualist mindset, but you can see that there is a better way, I think it can shift the decisions that you make. It might also allow you to have a more accurate perception of what you have control over and what you don't have control over.
So I think you'll interact with, for example, convenience, discretionary consumer purchases differently. If you can see the connection between, as Gia Tolentino writes, the relief that that experience is going to bring you and the entirely connected squeeze that you are experiencing. And I think that that context matters. So for me,
having that realistic understanding of the system that I exist within allows me to make better financial decisions in the short term. And that applies to the way that I interact with debt. Um, I don't want to engage in rampant consumerism anymore. I, I, if I can see that like, okay, corporate interests have a really outsized influence on like the policies that are affecting me.
Well, I don't really want to make those corporations all that richer. I don't want to funnel my money back to them. I don't want to see my fellow worker as my competition, um, Yeah. So I think ultimately our current system does make personal finance education necessary to thrive, particularly that around the way we engage with debt.
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Chapter 7: What changes can I make to optimize my time management?
And that means that we're talking about not just the choices that we have, but why those are the choices that you have. What political norms or cultural norms are the reason that those are your choices? So I think that that is something that I really tried to bring into this book and really in this book basically is like, this is my philosophy that is inclusive of all of these things.
I think I got frustrated with personal finance advice that didn't seem to acknowledge the elephant in the room. Like in my mind, it feels really weird to discuss something like negotiating tips for women without really understanding the state of gender pay gap data, the state of US childcare policy or lack thereof.
It's really hard to talk about consumption habits and budgeting without talking about cultural norms around like your physical presentation. If you're a woman in the workplace, what's actually expected of you? and your appearance in order to treat you with dignity and respect. Those were the themes that I wanted to explore while also being like, okay, all of these things are true.
And here's where the rubber meets the road today. So here's how you should think about your long-term financial planning so that you can be set up for success.
So the people want to know, when is it coming out?
June 10th, 2025.
Wow.
It's coming down the pipeline.
It's coming down the pipe.
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Chapter 8: What is the economic overview of the last 40 years?
But I know rent is going to be rising by, I don't know, you can actually look in your zip code what the historical rents, you know, increases or decreases are. Rents do go down. But if you want to be, you know, really safe and get, okay, I'm going to assume that this is going to go up by about 3% per year. And you can just compare at what point does the rent begin to exceed the price of ownership?
And in the meantime, what... is that margin that I could be investing? What is the opportunity cost of that margin? If I could be putting that in the stock market, what is the opportunity cost of that money going to be as well as the opportunity cost of your down payment?
You really can't get into a house these days or be competitive in this market unless you have a large down payment in most cases and in most markets. And that's also money that could be earning more for you elsewhere.
So I think there's like a great New York Times rent versus buy calculator that'll include all of these factors in it and really wrap it up for you and kind of spit out the path that might make the most sense for you that is inclusive of all these different variables. But... I've lived in several different places in the last couple years.
My husband's in the Air Force, and so we move every two years. And we're finally settling in Colorado now. But the math just really has been super warped, really, since we've begun looking. And that would have been, what, 2020, 2021? Yeah, 2021. So... I would just encourage people, like if you feel like it's impossible to buy a home, that's because it kind of is.
And like, there's no shame in renting. The only thing that I would say is if you're going to rent instead of buying, you should be looking at, okay, what should I be investing then to kind of make up that difference? If I'm not going to be, even if there's just a tiny sliver of equity that I would be building in those monthly payments, I do want to make sure I'm building equity in some asset.
And that's where public markets can be a really good alternative.
Toby, how often do you think about opportunity costs on a daily basis? I mean, every time I have breakfast, I was like, I could have had this for breakfast or that for breakfast. All right, you passed. Katie, what are you going to miss most about California?
Proximity to Lake Tahoe, I think.
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