Author Ron Lieber returns to the Financial Grownup podcast to preview his new book "The Price You Pay for College”and share tips on the best ways to control college costs, including debunking some big myths about why college is so expensive and who gets how much aid, and why. 

Tip #1:

There is now a whole separate parallel track of the financial aid system called Merit Aid. Rich people can take advantage of it just as much as low income people can. Figure out whether a school offers it at all and in what volume and for the more selective schools that do offer merit aid, it is often quite difficult to figure out what is going on behind the scenes. You have to go hunting for data that is usually publicly available, but it is not kind of digested or regurgitated in a way that's useful. You have to look at something called the common data set and do a search for section H-2A and there you will figure out, you will see what percentage of people who have no demonstrated financial need, still get scholarships anyway and in what amounts. With merit aid, it's more likely to be a kind of haggling where you go to the admissions office and say, "Look, you're my first choice, but this school that you compete with down the road that I would actually really rather not go to has offered me $6,000 more per year. Can you help me out please? Did I make a mistake in my application to you that maybe may have made you value me less than your competitor."

Tip #2

You can appeal the financial aid package you receive from these colleges. The need-based financial aid packages come from the financial aid office. You may need to make different sorts of arguments because with the need-based crew, you generally need to prove that your financial circumstances have changed since you originally applied for financial aid. That's going to give you the best chance of success.

Tip #3

Save the “right” way. There's this idea out there that you need to make a choice between saving for your retirement and saving for college for your kids. You can do both. Borrowing for college may not be for some families. This idea also implies that you can't borrow for retirement, which is not true. You can borrow for retirement using reverse mortgage if you have equity in your home. Then there's this other one that's more directly college-related, which is that if you save money for college, you will be penalized for that come financial aid time. The financial aid formulas have much more to do with your income than they do with your assets. It is true that your assets will be tapped. And some people think that that means that they will be taxed. But, I would argue if you've got assets, it's only fair that you should have to use them before the school uses its own resources to support you. I have never run into a family that regrets having saved for college. And I know personally that when that 529 statement comes every quarter, opening it up, makes me feel great about myself. It makes me feel great that whatever other failings I may have as a parent or as a human being this I am doing right for my kids.

Tip #4

You can control the way that you frame a college and where you present the choices to your children. We do not have to cede decision-making authority on college to our children. It is not the case that just because they work hard, they should be able to go wherever they want. You don't get, make that kind of choice all by yourself when you're 17 years old. So, we do have some control there and we have some control over how, and when we introduce these concepts to them, because to me, it's only fair that a rising ninth grader ought to know what their parent or parents ability to pay for college might be. What their willingness to pay for college might be too and also, how the system of wheeling and dealing and discounting actually works so that if they so choose, they can position themselves to be in the best possible spot as an applicant.

Tip #5

What we tend to miss as parents is that we are not having emotionally honest conversations with ourselves, our spouses, or even our exes. We're not talking about fear that our kids will go tumbling down the social class ladder if we make the wrong choice or they make the wrong choice. We don't talk about guilt. The guilt that we have, that we didn't save more, or we don't want to spend more, or we're not doing what our parents were able to do for us. We don't have those conversations out loud. And we certainly don't talk about our own elitism and snobbery and how we feel about these institutions. The way we think that an admissions offer might reflect back on us and our family or even about the snobbery and elitism of the institutions that will be in the market for our 22 year-olds when they graduate. And the way in which those elitist institutions might look down on one school as opposed to another.

Full Transcript of Episode:

Bobbi Rebell:

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Bobbi Rebell:

I know I don't like to have to pay interest if I can avoid it. And I also don't want to always be opening new lines of credit, split your payments and live big with the credit cards you already have go to splitit.com today. That's splitit.com. Financial grownup guide, five things you can control about the price you pay for college with author Ron Lieber.

Bobbi Rebell:

You're listening to Financial Grownup with me, certified financial planner, Bobbi Rebell author of, 'How To Be a Financial Grownup.' But you know what? Being a grownup is really hard, especially when it comes to money, but it's okay, we're going to get there together. I'm going to bring you one money story from a financial grownup, one lesson, and then my take on how you can make it your own. We got this.

Bobbi Rebell:

Hello, my friends, for all our talk about budgeting, spending, penny pinching in some cases, looking at the prices of everything we buy. Most of us, our parents, our children, friends, we buy one really big ticket item that we shop for without actually getting to see the real price that we will pay. I am of course, talking about college. And while yes, we can see the full retail price on many university's websites, the majority of us actually, aren't going to pay that price.

Bobbi Rebell:

In fact, I learned in Ron Lieber's new book, "The Price You Pay for College" that only 11% pay that price. So then the question is how much of a discount can we get, and how is that decided? Welcome everyone here on the Financial Grownup podcast, we talk about money issues that matter to us as we move through adulthood and college certainly qualifies.

Bobbi Rebell:

Ron Lieber, the New York Times Your Money Columnist, who was first on the podcast in 2018, talking about how he got into school is now back to give us a peek at his very grownup book, "The Price You Pay for College," an entirely new roadmap for the biggest financial decision your family will ever make. Yeah, that's the truth. Like so much of our lives these days, there are lot of things that we can't control. So I asked Ron to tell us what we can control, and he did a little myth-busting along the way. Here is Ron Lieber.

Bobbi Rebell:

Ron Lieber welcome back to the podcast and congratulations on your new book, "The Price You Pay for College."

Ron Lieber:
It's great to be back. Thank you for having me.

Bobbi Rebell:

What inspired this book before we get into your tips about the things that we can control about the price that we all pay for college?

Ron Lieber:

Well, this book is both personal and professional. It's personal because, I have a 15 year-old ninth grader and a five-year-old kindergartener. I live in New York city with extremely high costs and it's a two journalist household. So we're not exactly rolling at it. So this is going to be hard for our daughters to have the same kinds of choices that my wife and I had albeit for me with a whole bunch of need-based financial aid.

Ron Lieber:

So it's personal, but it's also professional because readers kept getting in touch and expressing marvel, but also alarm at the fact that the rack rate for the most expensive colleges in the country had passed $300,000 for four years and even the flagship state universities.

Ron Lieber:

Many of them are now more than a hundred grand for four years. So you've got a $200,000 gap between them and these readers were saying to me, "Hey, we live in the era of big data, where's the big dataset that explains why NYU is $200,000 better than SUNY Binghamton." I did not know and it felt like a new question to me.

Bobbi Rebell:

Well you answer a lot of the questions in the book? And unfortunately there is a lot about this process that we simply cannot control, but I want to focus for our grownup audience on the things that we can control. And we've got a list of a few things we're going to go through. What is the first one? What can we control when it comes to the price we pay for college?

Ron Lieber:

Well, you can control what you know, right? You can learn how the system works. One of the things that continues to amaze me is the number of sophisticated people who are extremely successful in their own chosen fields of employment who show up in my inbox or in my text messages in March or April of their child's senior year in high school.

Ron Lieber:

And they have no idea what has hit them. They have no idea that there is now a whole separate parallel track of the financial aid system called merit aid. And that rich people can take advantage of it just as much as low income people can.

Bobbi Rebell:

And that's kind of one of the reasons why college has gotten so expensive in fact, is that it's become the sort of vicious cycle.

Ron Lieber:

One of the things that's made it also complicated for the people who run these schools, it's not just the pricing wars going on in the background, although that certainly helps drive down revenue and the net tuition revenue per student. But one of the things that we can't control as individuals and the schools have a lot of trouble controlling, is that people good ones, well trained people cost money, right?

Ron Lieber:

Professors spend, a minimum of five years in graduate training and Economics 101 suggests that, people who need to spend that long learning and training ought to be compensated at an above average rate. There are also more administrators than there used to be for every 1000 undergraduates. But that's mostly because we like it that way, right?

Ron Lieber:

We want disabled kids to have access. We want kids with mental health issues to have access. We want there to be a good counseling center on all of that. So, we get the administrators, we demand in the marketplace. But it is not cheap to run these places and if we made them more efficient, we might not like the result.

Bobbi Rebell:

So for parents that want merit aid, how can we control merit aid and how much we can get for our child or for kids going to college, if you're a teenager listening to this?

Ron Lieber:

Well, the first thing you have to be able to figure out is whether a school offers it at all and in what volume and for the more selective schools that do offer merit aid, it is often quite difficult to figure out what is going on behind the scenes.

Ron Lieber:

I think of schools like, Oberlin or Connecticut College, relatively Tony Brand’s private schools. A lot of fancy kids go there. They don't really want to talk about this. They're ashamed that they've got to, get in there and slug it out in the marketplace.

Ron Lieber:

And so you have to go hunting for data that is usually publicly available, but it is not kind of digested or regurgitated in a way that's useful. You have to look at something called the common data set and do a search for section H-2A and there you will figure out, you will see what percentage of people who have no demonstrated financial need, still get scholarships anyway and in what amounts.

Bobbi Rebell:

Another thing I was shocked about that you talk about in your book that people can control is if they do get a financial aid package, they can appeal it.

Ron Lieber:

It's true. There are a lot of people who don't know that this is the case as well. And it gets a little messy, right? Because the need-based financial aid packages come from the financial aid office. But the merit aid awards come from admissions. So depending on which awards you have, you may need to file your appeal to different people.

Ron Lieber:

And then when you do, you may need to make different sorts of arguments because with the need- based crew, you generally need to prove that your financial circumstances have changed since you originally applied for financial aid.

Ron Lieber:

That's going to give you the best chance of success. With merit aid, it's more likely to be a kind of haggling where you go to the admissions office and say, "Look, you're my first choice, but this school that you compete with down the road that I would actually really rather not go to has offered me $6,000 more per year. Can you help me out please? Did I make a mistake in my application to you that maybe may have made you value me less than your competitor."

Bobbi Rebell:

Let's get into other things that people can control. There's a lot of myths about how to save, where to save and how much to save to get the best opportunity in terms of support from the college. What should people be doing? What can they control there?

Ron Lieber:

Well, let's go through a couple of the maxims here that are repeated as truths in financial planning and in personal finance, journalism, by people who ought to know better that are not actually true. First of all, there's this idea out there that if you need to make a choice between saving for retirement and saving for college, you should save for retirement because you can't borrow for retirement. That implies a couple of things.

Ron Lieber:

First of all, that borrowing for college is necessarily and always a good idea, and it may not be for some families. But it also implies that you can't borrow for retirement, which is not true. You can borrow for retirement using reverse mortgage if you have equity in your home.

Ron Lieber:

So, I hate things that are presented as maxims. They're actually based in factual inaccuracies. Then there's this other one that's more directly college-related, which is that if you save money for college, you will be penalized for that come financial aid time.

Ron Lieber:

So there's a whole bunch of problems with this. I mean, first of all, the financial aid formulas have much more to do with your income than they do with your assets. It is true that your assets will be tapped. And some people think that that means that they will be taxed. But, I would argue if you've got assets, it's only fair that you should have to use them before the school uses its own resources to support you. And let me also say this, right?

Ron Lieber:

I have never run into a family that regrets having saved for college. And I know personally that when that 529 statement comes every quarter, opening it up, makes me feel great about myself. It makes me feel great that whatever other failings I may have as a parent or as a human being this I am doing right for my kids.

Bobbi Rebell:

And speaking of your kids, that's also something you can control. You can control the way that you frame a college and where you present the choices to your children.

Ron Lieber:

It's true. Look, I mean, we do not have to cede decision-making authority on college to our children. It is not the case that just because they work hard, they should be able to go wherever they want. That's not how it works when this thing that they are chasing costs today, as much as $325,000 for University of Chicago at the rack rate, right? You don't get to make that kind of choice all by yourself when you're 17 years old.

Ron Lieber:

So, we do have some control there and we have some control over how, and when we introduce these concepts to them, because to me, it's only fair that a rising ninth grader ought to know what their parent or parents ability to pay for college might be. What their willingness to pay for college might be too and also, how the system of wheeling and dealing and discounting actually works so that if they so choose, they can position themselves to be in the best possible spot as an applicant.

Bobbi Rebell:

And the final thing I want to talk about is our own emotions. There's the cliche, "Keeping up with the Joneses" and everyone says, "Oh, I just want what's best for my child." But people get pretty emotional. This for many parents, it's a reflection on, it's almost like, did they get an A+ in parenting, depending on where their child goes to school. They want that sticker on the car, right?

Ron Lieber:

I am so glad you bring this up. Obviously the students have a tendency to be emotional. They're getting ready to leave home, they feel like it's competitive. They want to be able to hold their head up in the community. They want what they want and that's normal for adolescents.

Ron Lieber:

But what we tend to miss as parents is that we are not having emotionally honest conversations with ourselves, with our spouses if we have one, with our exes, if we have some of those about the feelings that all of this invokes and evokes, right? We're not talking about fear that our kids will go tumbling down the social class ladder if we make the wrong choice or they make the wrong choice. We don't talk about guilt, right? The guilt that we have, that we didn't save more, or we don't want to spend more, or we're not doing what our parents were able to do for us.

Ron Lieber:

And so therefore we should borrow $150,000 per kid, right? We don't have those conversations out loud. And we certainly don't talk about our own elitism and snobbery and how we feel about these institutions. The way we think that an admissions offer might reflect back on us and our family or even about the snobbery and elitism of the institutions that will be in the market for our 22 year-olds when they graduate. And the way in which those elitist institutions might look down on one school as opposed to another.

Bobbi Rebell:

Very interesting. And it's true in schools, one of the myths that you dispel in the book is that schools, they have all these things you joke about the lazy river and the rock climbing wall. I mean, that is something that is eye candy for students. That's not the reason that schools are so expensive by the way.

Ron Lieber:

No, I mean, these are really fun things to go gawk at and talk about and old school types will snicker and think that everything's gone to rot. But I don't blame the schools for this. I mean, these 18 year olds want to continue to live in the manner to which they become accustomed.

Ron Lieber:

And all of a sudden in a generation we've gone from, having a VCR in your room and a private phone line, and your own camcorder, being a luxury to everybody walking around with this little rectangle that like does all of those things and then some, right?

Ron Lieber:

We just have a way higher standard of living that we used to. And so it doesn't surprise me that a bunch of institutions would want to raise the quality of the lived experience for their undergraduates. I would argue that this is market driven. It's not driven by the institutions and it doesn't actually cost a ton. Again, it's the people who cost money at the schools, not the amenities.

Bobbi Rebell:

Right. And that's a big, big myth that you bust in the book. I loved your book. I hope lots of people pick it up because it is eye-opening about so many things that I thought were true that are not true like that last example. Ron, where can people be in touch with you?

Ron Lieber:

Yeah, I am itching to get back out on the road again, but it's probably not going to happen until November at the earliest. So I will be all over the internet. The best way to catch up with me is to sign up for my newsletter, which I promise I don't send out all that often. But if you go to ronlieber.com and just drop your first name and your email address in there, you can keep up with me and I will continue to send notes and notices about where I will be appearing via zoom. And I'm on all the usual social channels @RonLieber.

Bobbi Rebell:
So wonderful. Thank you so much.

Ron Lieber:
Thank you for having me.

Bobbi Rebell:

Okay my friends. I was pretty surprised about how little at a relative basis, all those luxuries amenities costs, but I guess overall, it is a good thing that the money is going in large part to educators. Right? I would love to hear about your experiences with paying for college. You can DM me at @BobbiRebell1 on Instagram, @BobbiRebell on Twitter, and please join the grownup list.

Bobbi Rebell:

We share recommendations of books, podcasts, and other fun things to level up your grownup life, plus we are doing giveaways of books from the authors on the show and exclusive financial grownup merchandise. Just go to my website, Bobbirebell.com to sign up. Big thanks to, "The Price You Pay for College" author, Ron Lieber for helping us all be financial grownups. Financial grownup with Bobbi Rebell is edited and produced by Steve Stewart and is a BRK media production.

The Opposite of Spoiled author Ron Lieber dishes on the underground network he tapped into as a teen to ace the financial aid game- and gives a sneak peak into his next book “What to Pay for College".Plus Ron’s secret to getting hot tickets at below market prices- Including the Cubs.

In Ron’s money story you will learn:

-How Ron got the inside track on how to maximize financial aid for college

-How much Ron took out in loans for school and how long it took to pay it back

-Ron’s theory on how grownup’s can help cut through the information overload and  get to the important information

-Insight into how Ron researches his columns for the NYTimes

-The significance of Ron’s mom taking him to meet with "the guy”

In Ron’s money lesson you will learn:

-Ron’s advice on how to learn about the options to pay for college now

-The one thing you should not do that could hurt your ability to get the maximum financial aid

-Why financial aid applications have become so complicated over time

-Specific resources from Ron to learn more about how to pay for college, before his book comes out

In Ron’s money tip you will learn:

-About his love of experiences like concerts and baseball games

-How he is able to get discount tickets to events

-The specific strategy, including the timeline, that Ron uses to get the best prices on tickets

-The best ticket score Ron ever got, and why he was so excited about the show!

In My Take you will learn:

-How I went on a “Mentor Tour” a few years ago, before launching the Financial Grownup brand

-Why I agree with Ron, that consulting people who know more about something that you do, can be the best way to get an edge on a new venture, whether it is college, or launching a business. 

-The value add of an in-person conversation compared to doing internet research

-The importance of making children aware of the costs of higher education, whether or not they pay for part or all of it. 

EPISODE LINKS

Ron Lieber’s website: http://ronlieber.com

Ron’s NY Times Columns: NYTimes.com/Lieber

Get Ron’s book The Opposite of Spoiled

Learn more about Ron’s upcoming book “What to pay for college”

Resources recommended by Ron Lieber

Paying for College without going Broke by Kal Cheney

SavingforCollege.com

Follow Ron!!

Twitter @RonLieber

Instagram @ronlieber

Facebook.com/RonLieberAuthor

 

 StubHub is where Ron goes to get last minute discount tickets!

---

Transcription

Ron Lieber:
Somebody slipped us a phone number for a guy, the guy to see in the Chicago land area if you did not have enough money for college. Turns out he was the assistant director of financial aid at Northwestern University and he had this side hustle going on where every day at 5:00 p.m. after his colleagues had gone home for the night he would sort of usher you in at the side door of the financial aid office at Northwestern. You'd give him 50 bucks in cash and he would tell you all of the secrets of the financial aid system.

Bobbi Rebell:
You're listening to financial grown up with me, certified financial planner Bobbi Rebell, author of How to be a Financial Grownup and you know what being a grownup is really hard especially when it comes to money but it's OK. We're going to get there together. I'm going to bring you one money story from a financial grownup, one lesson and then my take on how you can make it your own. We've got this.

Bobbi Rebell:
Hey friends. So Ron Lieber, famous, very famous New York Time's money columnist, super nice guy, also the author of the upcoming book What to Pay for College, the best seller The Opposite of Spoiled. He knew a guy. As he describes it it was basically an underground financial aid information network. This really happened. Before we get to Ron's unbelievable story, can't believe this really happened, I do want to welcome new listeners. And of course welcome back those who are returning. The show's been growing and I'm so happy you guys are spreading the word. So thank you in advance for any more spreading the word that you do. Please tell friends about Financial Grownup if you're enjoying it. I'm also happy that you guys are enjoying the video promos that we do for each episode. A reminder if you want one for you or your business we are having a little competition. Whenever you see the video in social media, share it. Whoever shares it the most between now and July 1st I will make a customized video just for you. So a little experimental competition we're having here.

Bobbi Rebell:
And if you have a great money story, you want to be on the show, we want to hear from you. E-mail us at info at financialgrownup.com, tell us what your money story would be and what your everyday money tip would be and maybe you'll be selected to be featured on the program. We have our first listener episode coming up soon. Now to Ron Lieber. My first exposure to his writing came when I read his bestselling book The Opposite of Spoiled, Raising Kids Who Are Grounded, Generous and Smart About Money. And yes I have used his strategies in my own home. I am also now an avid fan of his New York Times column, Your Money. In it Ron sheds light on issues that touch so many of us and with real solid reporting behind it. So that's something as a journalist I really value and appreciate. He's really good at what he does and as a parent I can't wait to read his upcoming book What to Pay for College. An entirely new guide to the biggest financial decision your family will ever make. But first you get to hear this story about a guy. Here is Ron lever.

Bobbi Rebell:
Hey Ron Lieber, you're a financial grownup. Welcome to the podcast.

Ron Lieber:
Thank you for having me.

Bobbi Rebell:
We're so excited to have you. You are the author of one of my favorite books, The Opposite of Spoiled which has set the standard for so many families including my own. We have our three save/spend/give jars in our house for my 10 year old. So thank you for that. And I know you have a new project.

Ron Lieber:
Yes I'm working on a book right now called What To Pay For College which is all about when if ever it is worth paying more than whatever your flagship state university costs for a private college or an out of state public university or something else entirely.

Bobbi Rebell:
Something we all need to be thinking about. What I want to hear for your money story though is about your experience when you were younger visiting the financial aid consultant with your mom when you were a senior in high school. Tell us what happened.

Ron Lieber:
So there I was. 1988. Chicago, Illinois. Already a scholarship kid at the K to 12 private school I attended back then. We didn't know very much about financial aid, somebody slipped us a phone number for a guy, the guy to see it in the Chicago land area if you did not have enough money for college. Turns out he was the assistant director of financial aid at Northwestern University and he had this side hustle going on where every day at 5:00 p.m. after his colleagues had gone home for the night he would sort of usher you in at the side door of the financial aid office at Northwestern. You'd give him 50 bucks in cash and he would tell you all of the secrets of the financial aid system.

Bobbi Rebell:
No.

Ron Lieber:
[crosstalk 00:04:26] God forsaken FAFSA form. Yeah, he knew exactly what he was talking about. I got into college at Amherst early decision, got a fantastic financial aid package and graduated with under $10,000 in student loan debt which wasn't all that much at the time and got it paid off in 10 years.

Bobbi Rebell:
Wait, but we got to go back Ron. So what are some of the secrets that he told you?

Ron Lieber:
It was a reminder that there is always some financial grownup out there in the world who has the information that you seek and quite often if you just had the guts to pick up the phone or show up in their office maybe with a little bit of cash on the barrel that person will tell you the secrets of whatever code you're trying to crack, whatever system you're trying to beat. There is a grownup out there somewhere who can help you. And you know every time I go out and write a column for The Times I'm looking for that one financial grownup who has the answer and they're always out there somewhere.

Ron Lieber:
But the second thing and maybe the most important thing here came from the fact that my mother took me there in the first place. She could have left me at home. She might have felt anxiety about the situation we were in or ashamed that we were going to have to go hat in hand to all these schools you know asking for money. But she felt like I at the age of 17 ought to have a front row seat for that process because it was going to be my education and my debt. And I tried to remember that when I'm tempted to shield my older daughter who's now 12 from whatever financial dilemma that my family is facing. She's old enough to hear a fair bit of this and I want her to understand.

Bobbi Rebell:
Have you ever circled back to your mom and asked her why she took you in and what was going on in her mind at that time?

Ron Lieber:
You know I did a couple of years ago as I started thinking about this guy again. I actually tracked him down on the plains of Colorado where he's gone to retire from financial aid. And he remembered me and we chatted about it and he said the thing that always surprised him was when the parents came without the kid. So you know he gave my mom great credit. And you know my mom to her credit to this day you know doesn't shield me from you know any financial dilemma she's facing.

Bobbi Rebell:
How did she find this guy?

Ron Lieber:
The people at my private high school in Chicago just did not know a ton about financial aid and how it worked. But they said there's this guy. And you know it was literally a slip of paper with the guy's phone number on it, I'm not even sure there was a name and you know I just dialed the suburban Chicago area code and he picks up and he said yeah you know come to this address next Tuesday and bring me my money and we'll talk. And it was like a financial aid underground.

Bobbi Rebell:
For our listeners now in 2018, what is the lesson from that? What's the takeaway?

Ron Lieber:
I think you always have to turn over every rock and talk to every person who might have information that can help you. Don't be ashamed of the fact that you don't understand. Every single last one of these financial systems that we encounter in our daily life is complex. Often they are complex by design. Sometimes they're complex by accident right. In the case of the financial aid industry loan systems, you know layers of people over the decades have layered you know different levels of complexity onto this. All in the hope that they can help some or another student who might be disadvantaged by the last layer that was laid on right. What we end up with is you know eight student loan programs and nine different income driven repayment plans and you know two different ways the financial aid is calculated at most colleges and it's really confusing so ask for help, you know express your ignorance and demand information. Right. I mean if you're approaching a system that has a sticker price of over $300,000 now at the most expensive selective colleges. You have a right to demand more information and to get some answers so don't be sheepish about it.

Bobbi Rebell:
Are there specific resources that you would recommend?

Ron Lieber:
Well here's the problem right and the reason I'm working on What to Pay for College is that I don't actually believe that the perfect resource exists. But if you're looking for like nuts and bolts of financial aid I really like Cal Cheney's book Paying for College Without Going Broke. It's about the best book that I've seen about the financial aid system. And if you're thinking about saving for college and how to do that the book that the folks at savingforcollege.com published is quite good if you want to know about the ins and outs of 529 plans and all of the various complexities there and there are a fair number.

Bobbi Rebell:
All right well this is why we need your book. I'm going to hear more about your book in a second but I want to just get to your money tip because we talked before we started recording and you apparently have a concert ticket problem. And I think a lot of people can relate to this, especially coming into the summer, it's time we all like to go see our favorite artist. Tell us Ron.

Ron Lieber:
I'm constantly wrestling with you know how much should I spend for the possibility of you know close up literally experience that's going to make me happy. I do often snipe my way through StubHub. So instead of buying tickets you know weeks or even months ahead of time if it's something where I'm pretty sure there's still going to be a lot of tickets at the end I will wait and I will wait and I will wait until sometimes less than an hour before showtime or before play ball. You know and buy my tickets as I watch the prices fall in ten minute increments, you know every five minutes. You know that was how I saw Phish on New Year's Eve a couple of years ago for not very much at all. Of course there's always some risk involved that all the tickets will disappear. But you can watch and see. You know are there dozens left, hundreds or thousands. Right. Are the tickets disappearing quickly or not. You know you can keep track, make a little spreadsheet for yourself as you watch as the date or the hour approaches. You know but what I often see with concerts is that you know the price will start falling relatively quickly you know within a couple hours of showtime. You know then you just grab the point at which you feel comfortable paying the price. And at that point you can generally download the tickets instantly.

Bobbi Rebell:
So what's been your best score?

Ron Lieber:
I think the best score was probably those Phish tickets on New Year's Eve. Although whenever the Cubs come to town to play the Mets as they are doing in a week or so here in New York City I'll often use this method as well.

Bobbi Rebell:
Alright. So you are actually on a break from your full time job at the New York Times because you're working on your new project. Tell us more about that.

Ron Lieber:
Sure. So the book is called What To Pay For College, it will be out sometime in 2020. No pre-orders yet. You know for anybody who's interested in kind of where I'm heading with it you know you can find hints of it in the columns that I've written for The Times about higher education. You know I read a handful each year and my archive is at nytimes.com/lieber and the book questions I'm asking are born of really a half decade of observation where without anyone really noticing the rack rate at the most expensive private schools top $300,000 for four years, flagship state universities now regularly cost $100,000 dollars or more for four years. You've got a $200,000 difference between those two things. That's per child after taxes. Almost nobody can save that much money. This is insane.

Bobbi Rebell:
Wow. It is insane.

Ron Lieber:
Yeah so the question then becomes what if anything are you actually getting for that $200? And if you go asking those questions at the more expensive colleges they will look at you cross-eyed and if you ask for data to prove that the extra $200,000 is worth it and there are a lot of different ways to potentially define worth, which I'm exploring in my reporting, if you just ask that right, well why do you think it's worth it and show me some numbers right. Here we are in the era of big data where you can get a ton of information about your social plan or about your car or about the house you want to buy, you can just round in data on all that stuff. There is almost no data about what happens to you when you're at college and what happens to you afterwards. And it is my suspicion that the colleges actually like it that way because in the absence of data we make decisions on the basis of snobbery. Private is better than public.

Bobbi Rebell:
So true.

Ron Lieber:
Right, you know ivy covered walls are better than you know concrete 1970s Britos architecture. Right. So I'm going down all these rows and asking all of the impertinent questions and I'm going to have a lot to say about it very soon.

Bobbi Rebell:
All right well I'm hoping you can hook me up with a preview sometime soon because I will need to read that. I've got kids in college so I am very excited about this new project. Where can people find you and learn more about what you're writing in the meantime?

Ron Lieber:
Sure. Www.ronlieber.com, there's a big fat contact button for anybody who has a story to share about how they and their family decided what they should pay for college.

Bobbi Rebell:
And on social media?

Ron Lieber:
@RonLieber all over the place, you know on Twitter, on Instagram and the Facebook community that I run on parenting and money is at Facebook.com, Ron Lieber author.

Bobbi Rebell:
Awesome, thank you so much Ron. This has been amazing.

Ron Lieber:
It was a pleasure.

Bobbi Rebell:
So Ron's sincerity is contagious and his book is definitely needed. As he mentioned he wants to hear from all of you about your experiences. So share yours with him, as he said all the info is at his Web site, ronlieber.com. Here's my take on what Ron shared with us. Financial grownup tip number one. As Ron said, there is a grownup there who can help you. Don't be afraid to reach out to older and/or more experienced people for help. Yes, the internet does have a lot of information but not always context. Sometimes just getting the scoop from a person, someone, who's got the dirt on whatever you need to know can be really meaningful, they can cut through a lot of the junk out there. Ask someone, call someone you know, ask someone who they would recommend that you talk to, set a meeting.

Bobbi Rebell:
When I was figuring out what I wanted to do after years of being a television anchor I went on what I jokingly called a mentor tour, setting up face to face meetings with anyone I admired who would generously give me their time and asking them who else I should talk to. And trust me mo internet research can take the place of the kind of information download that you can get from sitting face to face with somebody and asking them what they think, what their experience has been and what they think you should do. People are generous so take advantage of that. That will be good.

Bobbi Rebell:
All right. Financial grownup tip number two. Ron points out the significance of the fact that his mom took him with her to meet the guy. Ron learned that financial aid wasn't going to just appear. He knew that he was a stakeholder in the process and he appreciated the money that much more. We all want to shield our kids from the reality of our financial fragility but if we can get past our egos we do them a service by keeping them in the loop and making them aware of what it really takes to pay for college.

Bobbi Rebell:
Thanks to all of you for spending part of your day with us. We make these podcasts relatively short to fit into your busy schedule but also so you can listen to a few in a row when it makes sense like during your commute, if you're watching your kids do an activity or just chilling out and you want to listen to a little bit more. You can listen to three or four at a time, make 45 minutes, listen to four, it could be an hour. Whatever works for you. The goal is to make it fit in with what you're doing and fit your life. If you enjoy the show please help us grow. We need you. Tell a friend, write a review on Apple Podcasts and follow us on social media. I am @BobbiRebell on Twitter, BobbiRebell1 on Instagram and Bobbi Rebell on Facebook. Ron's new book can't come soon enough but I'm glad he gave us a sneak peek. And by the way also a great strategy for discount tickets so thanks Ron for getting us all one step closer to being financial grownups.

Bobbi Rebell:
Financial Grownup with Bobbi Rebell is edited and produced by Steve Stewart and is a BRK media production.

This episode with Her Money podcast host and Today Show financial editor Jean Chatzky is about getting the most value for your work. 

In Jean’s money story you will learn

• the impact her divorce had on her financial strategy

• how the loss of her dad changed her perspective on money

• the loss of her job and the career change that followed

• how to assess your financial needs, especially your savings goals

• how focusing on her money created emotional and psychological security

• her  post-divorce college savings plan pivot

 

In Jean’s lesson you will learn:

• how to evaluate your financial needs at different life stages

• which professional advisors she has used at key points in her life

• how to know what to charge clients for your professional services or products

• why and how she shares information about pricing

 

In her money tip you will learn:

• the power of automatic savings

• mental accounting and why it works for her

• using different pools of money for different goals

• guilt free spending

 

In my take you will learn:

• my advice on knowing your worth in the market

• why socializing and making friends in person and online is key to growing your business

• Why you must choose clients that value your work

• How to deal with clients that lowball you on price

• How to grow low paying clients into higher paying ones

Links related to this episode

The Today Show

Jean Chatzky

Her Money with Jean Chatzky

Stacy Tisdale

This Financial Grownup episode with Her Money podcast host and Today Show financial editor, Jean Chatzky, is about getting the most value for your work. We also discuss how to assess your savings goals and how to know what to charge clients for your professional services or products. #SavingsPlan #ChargeYourWorth #Author

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Transcription

Jean Chatzky:
We were talking about how much we charge for speeches and creating content for various people and various companies. In the last year, I've become much more conscious of sharing these kinds of numbers with people in my circle, because this is the way we are all going to get paid more.

Bobbi Rebell:
You're listening to Financial Grownup, with me, certified financial planner, Bobbi Rebell, author of How to be a Financial Grownup. And you know what? Being a grownup is really hard, especially when it comes to money. But it's okay, we're going to get there together. I'm going to bring you one money story from a financial grownup, one lesson, and then my take on how you can make it your own. We've got this.

Bobbi Rebell:
That was NBC today show financial editor Jean Chatzky, host of the Her Money podcast, and author of countless bestselling books, most recently Age Proof. The clip is part of the lesson that she will share with us, in just a few minutes, about getting paid more. But first, we are going to start with her money story, which has to do with a rocky time in Jean's life, and how she found financial security. Here is Jean Chatzky.

Bobbi Rebell:
Jean Chatzky, financial grownup, welcome to the program.

Jean Chatzky:
Thank you Bobbi, so happy to be here.

Bobbi Rebell:
Yes, and happy 2018, and happy almost 100 episodes of Her Money. Congratulations.

Jean Chatzky:
Thank you, and congratulations on the launch of this podcast, I think it's so much fun.

Bobbi Rebell:
Thank you, it's been quite a year. I remember I think my second time ever as a guest was on Her Money, so it holds a very special place in my heart, and it's really just wonderful content that you're bringing to people, so thank you for that.

Jean Chatzky:
Sure.

Bobbi Rebell:
And everyone of course should check out Her Money.

Bobbi Rebell:
But you have brought with you a really important and compelling money story. Do tell.

Jean Chatzky:
I feel like I was thrust into the real world of financial grownups when I got divorced.

Bobbi Rebell:
And how old were you?

Jean Chatzky:
I was about 40. I mean that's when it hit, and it hit at a time when a lot of things hit. I lost my dad, who had been sick for a while. I got fired from Money Magazine, I mean they didn't actually say fired, but that's what happens when you get laid off. I had to take a whole new look at my life, knowing that I was going to be doing it on my own, knowing that I was going to be a freelancer rather than an employee, starting a business, maybe hiring my own employees.

Bobbi Rebell:
Which you have now.

Jean Chatzky:
Which I have now. And all of it caused me to really take a hard look at the inflows and outflows of money, at what I really needed. And most importantly, at what I needed to meet my savings goals, because when I got divorced, I started saving money like crazy, because nothing else made me feel as safe, and I was not feeling particularly safe in the world at that point.

Jean Chatzky:
And so it took the form of doing everything from buying a smaller house than I could really afford, and just shoving more money every single month into savings, to starting new college accounts for my kids, because the plan that my ex-husband and I had about how we were going to pay off the mortgage and then use that money to pay for college had gone out the window, to really taking a closer look at all of the bills every single month, and seeing what was not necessary.

Bobbi Rebell:
And you weren't doing that before?

Jean Chatzky:
I was doing it, but I wasn't doing it in such a diligent and type A way. I was saving up to the guidelines that I give people, but I just wanted to do more. That's what made me feel safe, was not shoes in the closet, it was just money in the bank.

Jean Chatzky:
So my lesson is a little bit different from that story, but no matter what stage you're at in life, we all need help. And I think asking for help, which I did during that period in my life, from financial advisors, from lawyers, from estate planners, from friends who had been through it before me. We've got to ask for help to figure out how to chart the right course at the right time.

Jean Chatzky:
And I thought about this lesson because I had lunch yesterday with Stacey Tisdale, who is another financial expert/journalist/colleague, who you should absolutely have on this show.

Bobbi Rebell:
Absolutely.

Jean Chatzky:
And we were talking about how much we charge for speeches and creating content for various people and various companies. In the last year, I've become much more conscious of sharing these kinds of numbers with people in my circle, because this is the way we are all going to get paid more. And doing this feels to me like we are really helping each other.

Bobbi Rebell:
Give me a money tip, something that you are using yourself, with your family, that is really making a difference, that people can implement right now.

Jean Chatzky:
Going back to what I told you about saving like a crazy person around the time of my divorce, I save automatically for every goal, even the small ones.

Bobbi Rebell:
Do you separate different accounts you mean?

Jean Chatzky:
I separate. I am a huge believer in mental accounting for which Richard Thaler just won a Nobel prize. I find when you have different pools of money for different things, it's easier to reach your goals. I've got a big trip coming up, I've got that money isolated. I'm saving ahead of time, and it means I will not be looking at big credit card bills that I don't have money to pay off, after that trip happens.

Bobbi Rebell:
And it also takes away the guilt of feeling like maybe I shouldn't treat myself to this trip, because the money is there for that.

Jean Chatzky:
Absolutely. And it doesn't matter if it's a trip, or a handbag, or a spa weekend, or college. Just knowing this is the job that this money has been set aside to do is really, really helpful.

Bobbi Rebell:
Great advice, thank you Jean Chatzky.

Jean Chatzky:
Sure.

Bobbi Rebell:
I love that advice about pricing. Information is power when it comes to pricing your services, especially as we seem to move more and more into the gig economy, not to mention side hustles.

Bobbi Rebell:
So I'm going to just expand on Jean's great advice about knowing what you're worth in the market and getting it. Financial grownup tip number one, get social. Think of others in your field not as the competition, but as your teammates, your allies. Spend time with your people. This can be in person, like Jean does, or even online. There are countless groups these days, especially for example on Facebook, where you can ask people specifically what do they charge?

Bobbi Rebell:
They may not say it publicly in the App itself, but a lot of people are willing to DM you with some actual numbers and helpful tips about what you can and should be charging.

Bobbi Rebell:
Financial grownup tip number two, do not work with clients that don't value your work, aka don't pay you enough. Good clients want you to stay in business, that can't happen if you are in a race to the bottom with price. If someone does not want to pay the right price to work with you, odds are this is not the last argument you're going to have with them. If they truly have a budget that is still too small, see if you can limit the scope of what you're doing. If you believe they're going to grow into a client that can eventually afford you, make a judgment call. But make it clear that you are working below rate, and that the numbers are unsustainable and need to grow when their business grows.

Bobbi Rebell:
If it really can't work, consider referring them out to someone who does work with people with smaller budgets. They will appreciate it.

Bobbi Rebell:
Thank you all for listening to this episode of Financial Grownup. We are loving all the amazing feedback. Please subscribe, share, rate, review. It matters, and is truly appreciated.

Bobbi Rebell:
Financial Grownup with Bobbi Rebell is a BRK media production.