Buying homes, retiring early, & achieving other financial goals

Plus what to do with your money in 2023.

Apr 07, 2023

Hi friends,

I’m writing a story about the money and career advice you’d give to your 20-something self (if you’re in your 20s now, just your younger self). If you have anything you’d like to share, you can do so here! It may be featured in a future Fortune story.

In a similar vein, I’m looking for some members of Gen Z to interview about their thoughts on retirement and money in general. If you know someone, please pass on my info to them! They can email me at alicia.adamczyk@fortune.com.

By the way, the latest in my ambition series published a couple weeks ago. It’s about three women who left the workforce to recover from burnout/figure out what they really wanted to do with their lives. I found them all pretty inspiring!

And here is my latest chips review. ChipsChipsChips is back! (Maybe.)

In this week’s issue:
1. Some good money convos
2. New(ish) money rules
3. Links

Getting personal

Over the past few weeks, I’ve profiled a handful of (very different) women on various aspects of their finances. One of the hard things about writing about personal finance is many readers take every article as prescriptive, as saying “hey this person did this, and therefore you should be doing it too.” That’s not what I meant with any of these stories, but I did want to highlight a few people I thought were doing interesting things. So here are some of my favorite parts of those interview/stories.

Christine Hill is a 33-year-old who bought a house on her own last year. She’s not rich and didn’t have help from family — she did it on her own, using her life savings.

I really loved talking to her about the challenges she faced, as well as why she created what she called a “Single Bitch, New House” registry. There was a lot we covered that didn’t make it into either piece I wrote featuring her, including the resources she used in the home-buying process. First, she saw a financial advisor.

Second, she took a course on home buying through the Champlain Housing Trust, a local organization that essentially helps to subsidize the cost of a home for some people. This set her up with a counselor who basically walked her through the process and helped her set up financial goals. Her advice: Take a similar course (credit unions also offer them) and don’t be afraid to ask a million questions and “look stupid.”

Next up we have Charmagne Chi, a 44-year-old living in Buffalo, New York, and retired early a few years ago with her husband. Now she spends her days acting, writing, and volunteering at her local community theater. To say I’m jealous is an understatement.

I loved talking to Charmagne because she was such a breath of fresh air when compared to the more standard/hardcore early retirement people. Those people are certainly inspirational, but their opinions can often be alienating. Charmagne acknowledged her privilege is a big reason she was able to get so far in life and save so much money, which I really appreciated. She also hasn’t cut out every luxury from her life, which is common with certain FIRE disciples.

Of course, she worked hard too. I appreciated everything she had to say about prioritizing your budget and cutting out what’s not serving you. It really made me reflect on my own spending (….yet again). There is no way I’d ever be able to retire early at the salary I make and considering I live in NYC, and it is harder for millennials (and now Gen Zers) to get ahead, especially with the current cost of living (more on that below). But there’s no doubt I could make some lifestyle changes to save more and feel more comfortable. Both things can be true! #Nuance

Speaking of saving more…Alexis Howard is a 28-year-old trying to spend just $50 on non-essentials a month this year. I loved talking to her and watching her TikToks because she really is walking the walk. Of course she has privileges too—and as Charmagne noted, all of this stuff is easier to do when you have no children or other family members to support—but she really is cutting back dramatically this year. I don’t feel inclined to cut back to the extent she has, but I still think there’s inspiration to be found if you’re struggling to save/meet your financial goals.

The cost-of-living crisis

What is there to say about the cost-of-living crisis that hasn’t been said. This tweet pretty much nails it for me: “‘I make more money than I ever have before and I live in a shittier, smaller place than I did when I was in my 20s’ is a disturbingly common experience for our generation.”

One of the reasons I liked talking to the women above is because they are succeeding, in various ways, despite all of the economic difficulties normal people are facing right now. In the coming week, I’ll have two stories that get at the absurdity that is our current economy in different ways. Stay tuned!

What to do with your money in 2023

I appreciated this article from Bloomberg that tries to address all of the economic craziness alluded to above. Real estate, savings, investments, the cost of living, everything feels a little wacky right now, doesn’t it?

Parts of the article worth highlighting:

So I should be putting my cash under a mattress right now, right?

The fall of Silicon Valley Bank might have you nervous, but at least from my POV there’s no reason not to trust your bank at the moment. One thing I do think is important, as Bloomberg points out: The Fed has been hiking interest rates, which is, theoretically, good for your savings account APR. If your bank isn’t offering you something, then it’s time to find a new one.

[Y]ou can get about 3.75% in FDIC-insured high-yield savings accounts from online banks such as Ally Bank and Goldman Sachs Group Inc.’s Marcus. Insured certificates of deposit are paying around 4.5% if you’re willing to lock up your cash for 12 months. Series I savings bonds from the US government (available at treasurydirect.gov) adjust their yield with inflation and currently have a 6.89% interest rate. Finally, many money-market mutual funds are also paying more than 4% now—but remember that while these funds invest in short-term instruments and should be low risk, they’re not FDIC-insured.

At least look into a high-yield savings account if you haven’t. And on a personal note, I bought some I bonds because why not. I feel very mature and wise.

What’s all this I hear about a recession?

TL;DR, the economy wouldn’t be adding so many jobs if we were in a recession…right? The longer answer:

The chatter has certainly gotten louder since those banks got into trouble. Although their collapse hasn’t set off a broader financial contagion, the strain they fell under was a sign that the Fed’s tighter policy is starting to bite in the real economy. Goldman Sachs recently increased its estimate of the odds of a US recession in the next 12 months to 35%, up from 25%. Meanwhile, the median estimate of economists surveyed by Bloomberg News is 65%. Right now the economy is stable: US employers added more than 300,000 jobs in February, and the unemployment rate is only 3.6%. But analysts such as Matt Maley, chief market strategist at Miller Tabak + Co., worry the banking crisis could cause banks to tighten their standards, leading to less credit availability and slower economic growth.

Is it crazy to buy real estate for the first time now?

I really feel this one. It’s hard not to look at home prices/mortgage rates/inventory and feel like you’ll never be able to buy a reasonable enough home. A separate Bloomberg story noted that the average down payment in Austin was basically the same as in New York City last year. Yikes!

Home prices across the country are starting to cool after the tremendous pandemic surge. But for those who’ve spent years saving for a down payment and finally have the cash, it’s hard to take the plunge with borrowing costs so high. The average rate for a 30-year, fixed loan is now 6.45%, up from 4.72% at this time last year. That means the monthly payment on a $500,000 home with 15% down would be about $3,100 now, up from $2,600, according to Bankrate. The key factor is your long-term plan, says Sideris. “Even if you purchased a home at the 2007 peak, right before the financial crisis, as long as you had the ability to comfortably afford the payments, your home value is way higher today than it was back then,” he says.”

Still, talking with Christine put my mind at ease, somewhat. It’s not easy, and it’s not even necessarily a “good” deal, but it is possible if it’s something you want. To that end, my coworker Megan recently reported that the number of millennial homeowners is finally outpacing the number of renters. Crazy!

Money Moves

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