Podcast Episode - Ask Suze & KT Anything: No Savings, No Retirement Plan, What Do I Do?
Investing, Life Insurance, Retirement
March 09, 2023
Listen to Podcast Episode:
On this episode of Ask Suze & KT Anything, Suze answers questions about saving for retirement, when to start investing, car leases, life insurance and more!
Podcast Transcript:
00:00:33
Suze: March 9th, 2023. Welcome everybody to the Women and Money podcast as well as everybody smart enough to listen. And that includes you, Miss Travis.
00:00:45
KT: Tell them why you're laughing.
00:00:46
Suze: I'm not going to tell them why I'm laughing. Anyway, this is ask Suze and KT edition. So
00:00:54
Suze: before we start, anything you want to say?
00:00:56
KT: Good morning, Suze.
00:00:58
Suze: Good morning. But don't you want to wish our friends Happy Birthday
00:01:00
KT: Today's March 9th. It's a really lucky day. First of all, we have a really special fan in Portland, Oregon and that is Mrs Littlehales. I love saying Mrs Littlehales. Happy Birthday and to our wonderful island patriarch Chuck Davis.
00:01:18
Suze: How old is Chuck now?
00:01:19
KT: 85.
00:01:21
Suze: 85. He is something.
00:01:23
KT: And it looks like he's 55. He is so handsome and strong and fishes every day. Out fish is everyone.
00:01:33
Suze: All right. Shall we begin? Wait, I want to say one more thing.
00:01:37
Suze: Yesterday, I don't know if you caught it, but Mika On Morning Joe, was in Dubai and it was Fabulous, right? She had on stage, Gloria Steinem and Hillary Clinton. And you name it all at once? Oh my God. What an incredible 30 50 summit that she's doing. Just want to say
00:02:02
Suze: fabulous, Mika. Fabulous. Alright, KT, let's start.
00:02:06
KT: Alright. So my first question is from Faye.
00:02:09
KT: She says hello, Suze and KT, you gals make me feel unstoppable. I love money.
00:02:17
Suze: Sometimes she makes me feel stoppable. Anyway, go on.
00:02:20
KT: She said I'm a recent graduate. I have just started my career entry level. She said I want to grow wealth and begin investing. But Suze's voice replays in my head. Don't invest if you need the money a year from now.
00:02:35
KT: Which is understandable, but I don't want to wait till I'm stocked with cash to begin investing. So she's stocked with cash at entry level. That's pretty good, Suze.
00:02:45
Suze: How old is this person?
00:02:47
KT: Well, she said with school loans and bills that might not happen till I'm 30. Now, She's 23.
00:02:53
Suze: All right. So
00:02:54
Suze: what is her name? Faye, yes? Faye, listen to me. It pays, Faye, to save money. You say that you have student loans, you say you know that you have other things that are their bills and all don't be in a rush. I have a saying, don't rush to be poor because when you owe student loans, student loans are still not dischargeable in bankruptcy.
00:03:23
Suze: So just go slowly. Now, the good news is because you are so young, you don't need a whole lot of money to start. Why not just start if you have earned income, a Roth IRA put in even if it's just 100 or $200 a month fine, just do it that way. Just make sure that it's diversified. Don't rush though. Just keep money liquid that you know you're going to need
00:03:52
Suze: and sometimes getting out of debt is even more important than investing. Alright.
00:03:59
KT: So Faye, this is from Claudia who's 72. So I just want you to know everyone has questions their whole life long. And this one is, hey, Suze, I'm converting some funds from a traditional IRA to a Roth. I have both cash and stocks in the traditional. Which is best to convert?
00:04:21
KT: So want me to make this a quizzie? A pop quizzie?
00:04:25
Suze: No.
00:04:28
Suze: I don't, right. But anyway, here's the point, Claudia. Cash is cash and when you convert cash, you always know the amount of taxes you are going to owe on the cash because cash is stable.
00:04:45
Suze: So it's not like it goes up and down in value when it comes to stocks. Stocks absolutely go up and down. And there's nothing worse really than when you convert a stock. Let's just say you convert X Y Z stock at $100 a share and you have to pay taxes on that $100. And now all of a sudden X Y Z stock is down at $50 a share after you converted it.
00:05:15
Suze: Not only is it down in value, but you pay taxes on it when it was at 100. So, if I were you, I would little by little as these markets are going down, especially on days, like two days ago, when the markets were down big and maybe your stocks were down big, convert stocks as the stock market is going down, convert cash as the stock market is going up.
00:05:44
Suze: What is that look for?
00:05:45
KT: Because that's... I would have gotten that quizzie wrong.
00:05:49
Suze: Oh, really? All right.
00:05:51
KT: Next question is from Ed. After maximizing purchase of I bonds in our trust account, I opened a separate account in my own name to purchase additional I bonds, Suze in the event of my death, will that additional personal account require my estate to go through probate? There you go.
00:06:12
Suze: No. What's interesting, Ed is that for whatever reason, Treasury Direct does not allow a trust to be a beneficiary or a joint owner with you, you can do it in a trust, KT and I both have them in our trust names. But here's the thing. Just go back and add either a primary beneficiary or a joint owner to it.
00:06:36
Suze: And then if anything were to happen to you, you don't have to go through probate. But if you only own an I bond
00:06:44
Suze: in your individual name and you have not designated a primary beneficiary or a co owner, then, yes, it will go through probate and you don't want that to happen. Since inflation seems not to be quite taming so much. We'll do an update very shortly on whether I think we should continue investing in I bonds or not. Alright.
00:07:11
KT: Go on next question, Suze is from Alex. Hi, Suze and KT. I've been a fan since reading the money book for the Young Fabulous and Broke and watching the Suze Orman Show and Alex has been binging on past episodes on freevee. You have to tell everyone to watch the Suze Orman Show on freevee. It's there.
00:07:30
Suze: You just told them.
00:07:31
KT: So here's the question. Should I pay off my mortgage or purchase a C D? My mortgage principal is about $84,000 at 4.75% interest. I've owned my town home almost 13 years, but I plan to sell
00:07:52
KT: and purchase a single family home in two years. I'm 39 single with no children. I have a one year emergency fund in a money market account at 3.50%.
00:08:03
KT: I fund my Roth IRA to the max each year and I have no debt.
00:08:08
Suze: Alright. So, Alex, this is a hard one for me to answer because I don't really have enough facts when you ask a question like this, I need to know what are your original mortgage payments and things like that. However, overall, because your mortgage interest is at 4.75% and you're going to be selling in probably two years or so.
00:08:28
Suze: I would be investing right now in either C D s or Treasury bills because very shortly here you could be even making more than 4.75% you could be making 5% right now. So if I were you, I would be doing that. Alright, go on.
00:08:47
KT: Suze, next question is from Paolo. I'm 27 years old. We live in a 31 year old home which has less than a year left on the mortgage.
00:08:58
KT: It was built in 1992. My father had $30,000 in credit card debt and my mom had to work two jobs from 1996 till 2008 to help pay off the debt. A friendly co worker helped pay off the rest of the debt so she wouldn't have to work the two jobs. The house should be paid off this year.
00:09:22
Suze: But my dad claims she has to go out and get a second job again. She's 58 years old. I take care of the home as well as the maintenance yard work, Blah, Blah, Blah. And then she said we have a combined income of probably 80,000 or more. I don't want my mom to get a second job again. I don't know where all the money is going.
00:09:48
KT: And then she said we have not bought new furniture vacation. Nothing. They haven't done anything and she said I need financial assistance on this situation.
00:09:59
Suze: So Paulo, let's talk here. You say you don't know where all the money is going,
00:10:06
Suze: but I think you do.
00:10:09
Suze: With the utmost of respect. You say that your father had $30,000 in credit card debt. You did not say that your mother had it. What you said is that your mother had to work two jobs for approximately 10 years to pay off that debt. And now it's your father who wants your mother to go out and get another job as well.
00:10:39
Suze: Now here's the thing. Why do I think that it's your father who is the spender here? Why do I think that it's your father that is irresponsible with money here.
00:10:53
Suze: Where does the money go in a situation like this? And I'm not saying that this is true for you but sometimes it is a gambling problem.
00:11:04
Suze: Sometimes it is places that money is spent where you don't even know. But I think at the age of 27 since you are helping to take care of the house and everything else and that nobody is splurging or anything that you sit down as an adult with your mother and father and you say to both of them. Alright, I want you to take out all the bills.
00:11:31
Suze: I want to see where all the money is going because I don't like that mom has to work two jobs. I don't want her to, I'm able to work and you can always work, Paulo and also contribute. But all the money in the world won't solve a problem
00:11:49
Suze: unless you know where that money is going. So when there is debt
00:11:58
Suze: and you don't know why there's debt and why there's no money, you can find out. Numbers do not lie. People do, but numbers don't. So I'm asking you to sit down with your family and go through every single bill, every amount of money that comes in credit card statements, everything, check credit reports, fico scores all of it and you will find the answer and you'll be able to solve this problem.
00:12:27
KT: Next question is from Patricia.
00:12:30
Suze: You have no comment on that answer?
00:12:32
KT: Yeah, I think that I would... It's like asking her to be an undercover agent for the money. Where is it going?
00:12:39
Suze: I'm asking her to a responsible adult. When a child is worried about their parents or parent.
00:12:50
Suze: All of you parents out there need to understand that your actions with money seriously emotionally affect your children. They can sense it. They don't understand it. It can always add to ruining their financial habits as well. So don't think your actions don't have ramifications on your kids because they absolutely do. Next question, KT.
00:13:19
KT: Okay. Patricia. Suze, I'm 48 years old and married. No mortgage. About $3,000 in credit card debt, $20,000 auto loan.
00:13:32
KT: I have no retirement account, no savings account, no life insurance and no 401(k). My daughter is 24 is in college, no college loans to pay. My husband is 46 no retirement plan and no savings. No investment. No 401(k).
00:13:53
KT: Then, then here's what Patricia is asking you, Suze. I'll be receiving $40,000 as a settlement for an injury. I would like to use these funds to set up a retirement plan,
00:14:06
KT: earn money with savings and investment accounts and set up a life insurance policy. So she's asking you to do, she wants to do three things, right, Suze? And Suze, this is what I feel I need to be financially safe and protected
00:14:22
KT: for life's unfortunate events. What would you do?
00:14:27
Suze: Patricia? Here you go. Somehow you got $40,000. But because you don't have any other money, none at all. You can't really invest this money
00:14:45
Suze: because investments go up and investments go down and I know that you would like this money to grow, but I would like you to grow it conservatively and in a guaranteed way. Therefore,
00:14:59
Suze: if I were you, I would leave at least $5000 in an account. What you should really do is set up the Alliant Ultimate Opportunity Savings Account where you simply put in $100 a month every month for 12 consecutive
00:15:17
Suze: months and they'll give you $100 after that. They're also currently paying a 3.10% interest rate. You should do one, your daughter should do one. Your husband should do one because that's a fabulous return on your money. So, if I were you, I would start there and that would get you in the habit of saving.
00:15:41
Suze: The main reason I want you to do it. Believe it or not, is not just because of the extraordinary return you will get on your money, but once you get in the habit of actually putting money away every single month.
00:15:56
Suze: All of a sudden that habits becomes your destiny because you like it. You see the accounts building and the three of you need to do that. But besides that, if you want to put in an extra few $1000 in the account just to do what? As an emergency fund besides the $100 a month? Alright,
00:16:18
Suze: I'd like to see you put the rest in a three month treasury bill or certificate of deposit. You can do that at Alliant Credit Union as well, where you will earn a 4.85% annual yield. And let's see what happens because I think interest rates will probably be going up. So you'll probably be able to renew that at a higher interest rate.
00:16:44
Suze: That's what I would be doing, and that is all that I would be doing. Also, I don't know about your relationship with your husband or how that's going. But the CD I would personally set up in just your individual name so that it's your money and no matter what happens, you know, that's yours and nobody can take it from you.
00:17:11
Suze: Also, what you might want to do, since you don't have any life insurance and there is no money there in case one of you were to die. Why not take out 100 or $200,000 life insurance policy on each one of you? So you have maybe 100 or 200,000 on you. Your husband has one or $200,000 on him.
00:17:35
Suze: And it's a term policy and just do a 20 year level term policy for that kind of death benefit that would help get you by. What would happen is it might cost you just a few dollars, 10 $20 really a month to have that. So to quote it, to get a good quote on that, go to select quote dot com
00:17:59
Suze: and put in your facts and figures and see how much a 20 year level term policy would cost you. All right. Go on KT.
00:18:07
KT: Okay. Next question's from Danielle. I know that right now. We don't like I bonds as much as the Alliant CDs, but I still have a remaining question about the I bonds I purchased last year.
00:18:22
KT: I am the primary owner and my husband is the secondary owner on the I bonds. What happens when both my husband and I die or become incapacitated. At the same time, we do have a joint trust and all other must have documents from Suze. My understanding is that Treasury Direct doesn't allow a trust being the beneficiary. So Suze, what should she do?
00:18:49
Suze: It doesn't allow a trust to be a beneficiary, but it most certainly allows the trust to be an owner. Before I had created a trust years and years ago, believe it or not. And I was buying I bonds. I bought them in my individual name. A while ago, quite a while ago, I transferred them to my trust account.
00:19:12
Suze: So you can buy, I bonds in a trust account. You can also transfer your I bonds from individual name to a trust account. Also, I just want to say something, which is, it's not that I don't like I bonds as much as the Alliant CDs. I just wanted to hold off on buying I bonds right now with new money
00:19:39
Suze: until I really had a grip on what was going to happen with inflation. And I have to tell you given the reports lately that are coming in and I'll know next week cause that's when the new inflation report comes in. I may say to all of you. All right, you know, before April is up, go ahead and invest money in I bonds again.
00:20:04
Suze: So it's just something to think about and to know. So we'll see what happens there. The thing that I don't love about I bonds is you have that three month penalty if you want to come out and you cannot touch it for the first year.
00:20:22
Suze: And you have that penalty all the way through years, two through five. I just want to know what we're getting into and what the rates are going to be and then we'll see, but it seems like I'm trending more to...
00:20:35
Suze: yep. I think we're going to be doing I bonds again. Okay. Next, KT.
00:20:41
KT: So Suze, next question from Tina, who do I name as the executor trustee of my will and trust when I have no family or friends capable of doing?
00:20:53
Suze: So, Tina, this is a sad question but you are not alone. There are many people in a situation like that.
00:21:01
Suze: And so a lot of times people go to a bank and they have the bank be the trustee or they go to a lawyer and have the lawyer be the successor trustee, actually after you. But I really like the fact that you have a grandson that's 23 years of age. KT just handed me your email and it says that in it
00:21:22
Suze: And as soon as he is ready to manage it, that is who I would switch to because nobody's going to care about you more than somebody who loves you. But there are professional trustees that you have to pay to do so. So that may be your only alternative. Alright, KT.
00:21:43
KT: Okay, Suze. Next question's from Tammy. She said a big thanks to you for all you do.
00:21:50
KT: And here's her question. Is there such a thing as a CD that you can roll a Roth account in? My guess is no, but I'm a nurse. Not a financial whiz like you.
00:22:05
Suze: So, Tammy, absolutely your guesses wrong. So if this was your quizzie. I would be going wrong. You absolutely can set up a Roth IRA and buy certificates of deposits within a Roth. All right.
00:22:20
KT: Okay. Next question. And I love these short questions. By the way, everyone this is from Dinah.
00:22:26
KT: Does a married couple need to purchase two living trust programs?
00:22:31
Suze: No, married couple does not need to purchase two living trust programs. If it's a good program, the two of you should be able to do it all at once. All right.
00:22:45
KT: Hello, Suze and KT. I'm a longtime follower of the podcast and learned a ton from you. Thanks for educating us about money. My question is about a car lease.
00:22:56
KT: Your favorite Suze. I'm currently leasing a vehicle and my lease is about to expire. What would be your recommendation as to what to do next? One, return the vehicle and lease another. Two by the vehicle and sell it myself. Three something else.
00:23:14
Suze: Pop quizzie. Pop quizzie. KT pop quizzie because you once leased a car.
00:23:24
KT: Well, wait a minute... I can't answer this question. Not enough information.
00:23:28
Suze: What information do you need?
00:23:29
KT: Well, leases a couple of years like five years or something. So it's a couple of years. I don't know what condition the vehicles in, how many miles are on it. I can't answer this. Is that correct? I can't answer because I don't have enough information. (Suze makes the wrong answer sound). Alright, what would you do?
00:23:50
Suze: So everybody, how would you have answered that question? Think about it before I answer it, you've leased a car, the lease is up usually in three years, the car is probably in good condition because it's only three years old, blah, blah, blah, blah. What would you do? Would you return the vehicle? At least another one? Yes or no, KT. Would you return it?
00:24:17
KT: No, I wouldn't lease another one.
00:24:23
Suze: And the reason is everybody, is leasing a car in most cases, is such a waste of money, it's not even funny. You lease it. Once you lease it again, you lease it again. It just doesn't make any sense. You buy a car. If you can't afford a
00:24:42
Suze: new car, that's fine by a car that's used but new for you. How do you know how much of a car you can afford? Hopefully, if you have to finance it, you never finance for more than three years. If you have to push out your financing to five years, seven years or 10 years, you are buying too expensive of a car. So no, you will not return the vehicle and lease another one.
00:25:08
Suze: Buy the vehicle and sell it myself. The truth is what you should be doing there is talking to your lease company and if in fact you like the car,
00:25:24
Suze: there is an amount of money that you could buy it for. But if you buy it, you will then keep it, you will not turn around and sell it.
00:25:35
Suze: If you are going to turn around and sell it, I doubt highly you would make any money on that. However many people, actually at the end of their lease, buy the car
00:25:48
Suze: at whatever price it is. If it's a good price, if you like the car, if it's been good to you and then they just keep it and they can finance it when they buy it. If you're not going to do that, then the something else would be return the car and find a new car for you that's probably used that you like
00:26:12
Suze: And you finance that and then after you have paid it off, you keep it for a long, long time. So treat that car with respect, but I would not be leasing another one.
00:26:28
Suze: That was your quizzie, KT. So I'm looking at our little clock here and we're kind of winding down. Alright, everybody let me just say
00:26:38
Suze: that the three month and the six month certificates of deposit at Alliant Credit Union have been a tremendous success with almost $300 million going into them. So I'm just saying that if you have money
00:26:58
Suze: somewhere else and it's not making a high interest rate at all and you're interested in certificates of deposits, you might want to look into the Alliant Credit Union offer and you do so by going to My Alliant A L L I A N T dot com
00:27:19
Suze: slash Ultimate. Also, I'm just gonna say for those of you who want to get into the savings habit, you need to take advantage of the Ultimate Opportunity Savings Account where you put in $100 a month, every month for 12 consecutive months.
00:27:36
Suze: And at the end of that time, Alliant will give you $100 plus you're earning currently 3.10%. And I am sure that interest rate over time will go up for that. You would go to My Alliant.com.
00:27:54
Suze: All right. That brings us to the end of Ask KT and Suze Anything I just want to say on Sunday, the Suze School is going to be on the accurate way for you to figure out your net worth and you're going to be surprised what I have to tell you. So you make sure that you tune in for that. But until then,
00:28:23
Suze: there's only one thing that both KT and I want you to say every single day and we want you to say it with us right now,
00:28:33
Suze: every day, wherever I go, I will create a more joyful, peaceful and loving world. Now you do that and I promise you you will be what KT?
00:28:49
KT: Unstoppable!
00:28:51
Suze: Unstoppable. See you Sunday. Bye bye.
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