The Prosp(a)rity Project's President & Chief Executive Officer, Bri Franklin, interviews Gaby Olya, a lead writer at ConsumerTracks Inc. During this interview, Gaby speaks to personal finance and how to build up a healthy savings.
Bri: If you could just start, well I’ll just preface overall and just say thank you again for taking the time to speak with us and be featured on our blog for the Prosp(a)rity Project. Thank you also for the opportunity to provide an interview for you and your team a couple weeks back. Really cool to see things come full circle.
Gaby: Yeah, I love it.
Bri: Yeah, and you know, just kind of… what is it? Cross pollinate.
Bri: You know, help each out get the coverage and the exposure around these really important discussion points and just efforts. I will let you give a more thorough and brief background intro on yourself and your work.
Gaby: Yeah, sure. So my background has been in journalism, not necessarily in personal finance journalism. It’s something I kind of fell into after my last job I was working as an entertainment journalist. And I started working in personal finance journalism, it will be, I just hit my four year mark.
Gaby: Thank you! I realized when I started writing about personal finance, how little that, how little I knew personally about personal finances. And so, yeah part of the reason I started my column that I interviewed you for was that I realized that there’s this financial literacy gap. And so even though I’m not a financial expert, I feel like you know I want to take my voice and shine a light on the gap and empower women specifically to take control of their financial lives cause I do think it has to just do with understanding and knowledge rather than an ability like anyone like anyone can take control of their finances. It’s just a matter of knowing how to start, knowing what to prioritize and there’s definitely lessons I’ve learned through writing about finance that I’ve been able to incorporate into my own life.
Bri: Very awesome. Yeah, I really think that’s a really big pointed thing to touch on it’s just the fact that it’s not, you know, that women aren’t capable of learning these things it’s just that you know we’re always given everything but what we actually need so it’s like you know to put it out there philosophically is one thing, but to actually give it someone practically and you know to translate it into their specific situation that makes all the difference. Could you speak a bit to like if there are any particular experiences that really open your eyes to the magnitude to the inequity and imbalance in womens’ financial literacy and just you kept mentioning that gap. Was there a certain moment that really like set you off and made you realize oh my gosh this is really a problem?
Gaby: I think it’s just more of just been like conversations i’ve had with friends. You know it’s like I have friends who are in their thirties and don’t have any retirement savings plan. Like nothing, Not a 401K not an IRA and you know that to me is alarming. And cause I’m talking about women who are like educated women with good jobs who make enough money that they could be setting something aside for retirement and they’re not. I think a lot of my friends are not actively invested in the stock market. Even if they do have a 401K I think there’s also a tendency to kind of normalize like credit card debt and attitude that like you know like buy the bag you deserve it.
Gaby: I feel like that’s like not the way to go. Like you should only you know charge what you can afford to pay off at the end of the month. But I think especially around like women in their twenties and thirties there’s kind of this like you know we deserve an attitude. So there’s just been some like troubling things that I’ve noticed just like around my own friends and like I said these are well educated women who are working full time like making enough money but they are not always making the smartest financial decisions. And I think it’s just because it’s not something we really prioritize like talking about. Financial literacy is not something currently taught in schools which I think is kind of crazy cause we learn the most, like you know, stuff that’s not really gonna help us in our lives, but there’s not anything that’s like, you know, how to open a brokerage account, like how to track your spending on your credit card, like how to build a budget. And I feel like those are all things we’re sent off into the real world like not knowing. And it’s so easy to make mistakes around those topics because we just don’t know. And then, you know, once you start getting into a whole, it’s harder to get out of it than if you just knew how to avoid it in the first place.
Bri: Yes, it is such a slippery slope. And my team and I actually had a meeting yesterday that touched on this very subject. We’re, you know, just through our program, we have a financial literacy component and so we’re trying to just make sure that it meets all of our expectations because we’re outsourcing for it. So there’s quite a bit that’s like you know somewhat beyond our control so the extent that we’re able, we want to make sure that the curriculum and the content is sharply aligned with our views and our philosophy. I admittedly am very draconian when it comes to debt. I kind of have like a anti-debt attitude and that’s just because of you know having been at that peak, crushed by $128,000 in debt of all kinds, but the bulk of that being student loans.
Bri: It just put an irrevocably sour taste in my mouth and I was like never again. But I respect and understand that some people were able to have a healthy relationship with it. So I have, one part is a question and then another is like sort of a jumping off piece. So my first bit of that, the question is, what are your views towards debt?
Gaby: So one thing that my parents was to always pay off my credit card in full and that was something that was instilled in me from the very beginning of like having a credit card. And I personally am like pretty responsible when it comes to money so I always paid off credit cards in full. And then I was like pretty lucky in terms of like student loan debt where I had a very generous financial aid package so I didn’t really have to take on debt in a way that like crippled my life so I’m very fortunate in that way. But yeah. Credit card debt for me was always something that like I was warned against having and I think I didn’t really understand why I had to pay off my credit card in full until I started writing about credit card debit. And now that I see the interest rates on credit cards, I’m like okay, I’m happy my parents taught me that early, so that’s always been something that I personally practice. And I think it’s just helped me so much. Just that one bit of information cause that helps you, you know, build credit and have a good credit score which helps when you want to rent an apartment or apply for more credit cards. So I’ve been very, I’ve been fortunate in that I’ve been able to avoid debt for the most part, but a lot of it does come down to discipline spending and, you know, telling people yeah I don’t think I can go on that vacation this time or you know I’m gonna not order that second drink and dinner. So there’s definitely a discipline component, but it’s just something that’s like, was instilled in me. So that’s always been in the back of my mind to not spend more than you have. So that’s been my approach.
Bri: I love that. And it’s refreshing because, and it’s sort of like what got me thinking about this from yesterday’s conversation is there… how do I say this delicately? So basically, there are pieces of the curriculum where it was, you know, the focus was just like helping people understand how to best manage credit. And you know, while that’s perfectly well intention, we want to be careful of not, you know, not reinforcing the mindset that one must be so beholding to that FICO or to that credit score that they’re not practicing good financial sense. Like staying in debt ridiculously long because I don’t want to close that account or I don’t want to pay more than the minimum because that’s going to drop my score. It’s like even if it does, it’s temporary. But also think of the money you’ll be saving and interest you won’t have to pay because you’ve cut down the principal and you’ve paid it off early. I mean, I feel like, as a culture, like as an American culture, we are like so fixated on just doing everything to make that score jump up, but you know, sometimes, that can be you know simultaneously reeking havoc on your spending power and your financial potential. And I go back to that whole slippery slope mentality and people are like yeah well you know getting a credit card, you know, just be responsible which, I’m so glad to hear that you’ve actually been that cause so many people just put that out there, but they’re not backing it up with actual experience or understand that life happens. And you know it takes just one missed paycheck or one forgotten payment you know to fall behind the eightball and then they’re calling you up and ringing on your door like where’s our money? You know, potentially getting into default and then it just snowballs like you know into these behemoths that people are like how did a TV turn into a $35,000 bill? You know?
Gaby: Yeah. I think that also ties into the importance of having an emergency fund. There’s definitely been months where I have spent more than I have made and fortunately I have had enough money in my bank that I can just transfer funds to my checking account and been able to pay off my credit card in full. Obviously no one likes withdrawing from savings, but you know that’s what that money is there for, it’s there to be a cushion for you when you need, and it’s better to not take on debt that’s gonna have a high interest rate than to have your debt spiral out of control because you spent too much one month. The thing is, once you get behind, it’s so easy to stay behind, you know, so it’s like having that emergency fund in place, it’s like you know I know when I have to make a down payment on my lease for a new car for three years like that’s a tough one for me financially, but I know that I have that emergency savings. There is a backup where if I didn’t have enough in my checking account I can put some of that money there, you know. So I think it’s just important to always have backup cash.
Bri: Yes. Like hashtag a credit card is not an emergency fund. (laughter)
Gaby: No, no. (laughter)
Bri: Yeah, that needs to be amplified from the mountain tops because it’s just, I think, going back to something that you said even earlier of just this kind of care free I can have it all without earning it all attitude, Definitely this sense of entitlement and you know just wanting instant gratification for everything. I know that that’s really big with our generation and it just kind of, you know, goes against, and lies in the face of better judgement, you know, like with working out it’s a consistent effort and that you have to earn your gains, right? And whatever that looks like for a person, so it’s like why don’t people realize that it’s the same deal with money? Like…
Bri: And even I don’t know, I would love to hear your thoughts on this too, it’s not quite credit, but it’s building that same b