Podcast Episode - Ask KT & Suze Anything: Can I Afford To Buy A Camping Tent?

On this edition of Ask KT and Suze Anything, Suze answers questions about using a legal separation to protect one’s assets, paper I Bonds, plus a “Can I Afford It?” quizzy and so much more!

Listen to Podcast Episode:

---

Podcast Transcript:

Suze: April 4th, 2024.

KT: Do you believe it's April?

Suze: I do. Twelve days before our anniversary.

KT: Yeah. Everybody, I met Suze April 16th in San Francisco at my home, and I just couldn't believe it. I didn't even know who she was.

Suze: But anyway, we'll get to that. Welcome everybody to the Women and Money podcast.

KT: And everyone smart enough to listen.

Suze: That's right, KT. And this is the Ask KT and Suze Anything edition. You know what I think is so funny? Ever since we've started doing the Ask KT and Suze Anything—which has been years now, believe it or not—you've been doing this a long time.

KT: I like it.

Suze: I'm glad—because with the people. But I've noticed that other celebrities, other people out there, are all doing "Ask so-and-so anything," "Ask so-and-so anything." It's very funny to see how people kind of copy... copycat. Anyway,

KT: That's flattering.

Suze: But only right here on the Women and Money podcast can you get the infamous KT—original, original, the one and only.

This is where, if you have a question, you can write in to asksuzepodcast@gmail.com. And if KT chooses it, we will answer it here on the podcast. Also, that is where you would write in your question for "Can I Afford It?" which is replacing the quizzy, so that all of you can decide.

But again, I need to know certain things, and I'm just going to take a second to tell you what I need.

I need to know what it is you want to buy. I need to know how much it’s going to cost you. I need to know your take-home income, how much are your monthly expenses, how much you have in emergency savings, what kind of debt you have, and are you fully funding your retirement accounts? That's pretty much what I need to know. You have to send in all that information with your question, and obviously, how you're going to pay for what you want to buy. All right, KT, what do you have for us today?

KT: Okay, my first question is from Colleen.

KT (as Colleen): Suze, I'm trying to protect assets. My spouse earns more money than me. We have always had separate finances. I purchased my home prior to meeting my husband and have made all mortgage payments. I also am paying school tuition for our children.

For so long, he said that he would give me money to contribute, and all this time, I believed that he must have had some money aside but just didn't want to give it to me. I figured in time he would. But now I've depleted my savings. I’m afraid the truth is that he doesn’t have any backup funds.

This is the big question, Suze: could a legal separation help offer some sort of protection and accountability?

Suze: So I can get into what a legal separation will do for you, just so if any of you out there want to know—because a legal separation is another alternative besides getting a divorce to see if you can work things out. However, Colleen…

Did you read over and over again your email that you sent in? Because what’s so sad is where you say, “For so long, he said that he would give me money to contribute. And all this time, I believed that he must have had some money set aside but just didn’t want to give it to me. I figured in time he would.”

But now, you’ve depleted your savings. Whose fault is that? Who takes responsibility when somebody says something to you, and you just assume that eventually he’ll do it—and you make all these excuses for him? Especially when you say that he earns more than you, but now you have depleted your savings.

Women, we have got to stop being powerless in the relationships that we happen to be in. We have to stop just figuring there’s a good reason somebody isn’t doing something that they said they would do. When you make an excuse for somebody and they aren’t living up to what they said they were going to do, the fact is: they’re not living up to what they said they were going to do. And to think that one day they’re going to do that is just ridiculous. I’m so sorry to say that, Colleen.

What I also find interesting is that now you find out he doesn’t have any backup funds. So the question becomes: if he is earning more money than you, what has he been doing with that money?

When you get married, what you have to understand is “M” doesn’t just stand for marriage—it also stands for money. And the only money you’ve been aware of in this marriage has been yours.

So now what do you want to do? Now you want to do a legal separation? My question to you is: why aren’t you divorcing him? Or does this not really matter to you? Because it’s also possible that maybe he doesn’t have money. Who knows what he’s done with it? But you’re still in love with him, you still like him, you still want to stay with him.

But the way that you have phrased everything says to me that this is a relationship—now, if you were to stand in your truth—you actually would rather divorce him than legally separate from him.

Now yes, a legal separation that’s done by a judge can absolutely protect you. But you’ve already protected yourself because the house was in your name before you got married to him and everything else. The judge obviously will decide what is separate property and what is marital property. The judge will decide how to distribute the marital property that’s equitable—but not necessarily equal.

If you decide to eventually get a divorce, you’re going to have to go through it all again. And now you’ve wasted all of this money, in my opinion. You also need to know that you can have a legal separation while living under the same roof.

However, I have to tell you, Colleen—you already know. You already know because of the question that you asked me, how you said things in your email—what you want to do in this situation. It’s up to you if you’re going to stand in your truth finally or not.

KT: Do you think that Colleen even said to him, “I think we should be legally separated because you're not contributing”?

Absolutely not. Why doesn’t she do that?

Suze: We don’t know if she’s done that or not. I doubt very highly, given the words of this email, that Colleen has really expressed how seriously upset she is—how she feels about it. I doubt she’s done that. Because if you can’t talk about money and have a conversation and a true solution about financial disagreement together, no way are you talking about anything else. No way.

KT: I agree with you. Get rid of him.

Suze: Not that easy, obviously. But Colleen, you hear what I’m saying. And somehow, remember how I always say to all of you—you never write in a question like this that you don’t already know the answer to.

The main question that I always ask people to ask themselves in situations like this: If you could turn back the hands of time, would you marry this person again? And if the answer to that question is no—get a divorce.

KT: OK, next question is from Aska.

KT (as Aska): Hello KT and Suze. Thank you for all you do to support us to become financially independent and secure. I'm about to file my taxes and want to learn more about the pros and cons of buying an I Bond with my tax refund. I'm not super excited about the fact that it'll be a paper bond mailed to me. I'd most likely convert it to an electronic one upon receipt. Please let me know any pros and cons of this process so I can make an informed decision. Do they always have to mail it?

Suze: So here's the thing. Remember, everybody, an individual can only buy $10,000 of a Series I Bond per year. However, you can buy $5,000 more if you use your tax refund—assuming it's at least $5,000. You can then buy $5,000 more of an I Bond using your tax refund. But they will mail it to you, and it will be a paper I Bond. It's just that simple.

But the true question really isn't that. It's—should you be buying I Bonds right now? And as many of you know, I stopped buying I Bonds about a year or so ago because I still think—why lock up your money right now for at least five years, with the first year you cannot access it at all, when you could possibly get a higher interest rate in a certificate of deposit or certain Treasury bills or notes?

I'm not seeing it the same way as when I recommended them years ago. Now, I know there may be people who disagree with me, but that’s how I think about it. Also remember, everybody—you can buy more than $10,000 a year of an I Bond. You can buy it as an individual, $10,000. Maybe you have a living revocable trust—and the trust can buy $10,000. You can give them. There's all kinds of ways.

But really, Aska, I would not be doing it if I were you. If you're going to do $10,000, that is enough. The main reason I don't want you to do it is—when I read, "I'm not super psyched about it"—then don't do it.

I would never do anything with money that I am not so excited and psyched about doing. So, no. If you're going to do $10,000, just do $10,000. There you go.

KT: Now, this next question is rather long, but I've actually abbreviated it so that we can cut right to the heart of the matter.

Suze: Like what I'm doing with my answers, right? She always says I'm answering and goes—she does this little...

KT: I do a little thing, like a little wrap-up: "Suze, you've gone into this enough."

Suze: But I think that you really need to know about everything when I'm answering a question, so I don't care if I go on...

KT: And I think you won't remember what she said. So here we go...

Suze: Is that because you don't remember when I say things and I go on and on?

KT: I can't remember all of it.

Suze: But when you and I are talking about something?

KT: I remember everything.

Suze: And who goes on and on when you're talking?

KT: Well, I tell stories. I'm going to read the question. This is from a 26-year-old young man.

KT: He said, "I'm currently in second year law school. Thanks to a full ride from my undergraduate university and the savings from my 529, I should be able to graduate law school with no debt." That’s a big deal. "I have a fully funded 12-month emergency fund." This kid—

Now we get to the heart of the matter, Suze. "I am gay but have not come out to my family yet. I am fearful that if I do, my mother might revoke any money in my 529 or even ask for it back."

He said, "I've been incredibly blessed to have a supportive family and a financial jumpstart. But I still wake up in the middle of the night with anxiety about coming out to them and my financial future being less stable."

So what do you think about this? How can we help him—you and I—with the courage to come out to his mom and family and to put family first before money in this situation?

Suze: Not family first. Wait, wait, wait—not family first. He needs to put himself first, then money, then things.

So here's my question back to you: what good does money do for you if every single night you wake up with an anxiety attack? Is money really worth that?

The other thing is this: if not now, when? Because the other thing is—if your mother were to take the money back, which I doubt, by the way, that she will—because then it would have financial ramifications on her, believe it or not, unless she has another beneficiary to assign it to, and blah, blah, blah.

And it’s not just money now. Let's say you get through school, you did it, you used the money, and then you tell your mother. And then she says, "Why did I give you that money? I'm so sad that I gave you that money. Maybe now I want you to pay me that money back." Who knows what she’s going to say?

But you have to give your mother the choice: is she going to put money over the love of her son? Is she?

You have to find that out. And if she doesn’t love you for who you are, you need to know that as well. I can tell you stories—about my mother and how my father felt about things. However, nothing—nothing—made me feel better about who I was than coming out to everybody. And I stood in my truth, and I did it during a time—back in the late '60s, early '70s—when it wasn't like it is now.

So my advice to you would be: you are who you are. You should be proud of who you are. You should love who you are. And therefore, you should have people around you who love who you are as well.

So, boyfriend, go for it—with love. Go for it with understanding that she may have a hard time at first. But don’t stop loving her, even if she stops loving who you are. That’s what I would tell you.

KT: And you know, I was thinking—I don’t want to say his name, but I don’t think your mom’s going to pick a 529 plan over her son.

Suze: You never know. It might be better to find out sooner than later.

KT: You'll both feel at ease—trust me—in the future.

KT: All right, next question. "Hi Suze and KT. You spoke about 401(k) loans recently, and I know it’s not something that’s typically recommended, but I can’t shake the idea of going forward with one because I love the idea of paying interest to myself versus paying interest to the bank."

"Is it a good idea to take out a 401(k) loan and start paying down that loan at $500-ish a month faster, since that’s about what we’re paying right now on our HELOC on interest alone? We'd have to take out some money from my 401(k) and some out of my husband’s to get the full $63,000. That’s the HELOC balance by the way."

"I realize there’s an opportunity cost of taking out that money, but paying $6,000 a year in interest alone just seems nuts."

Suze: So, KT, what Megan means about this really is that when you take a loan from your 401(k), a specific interest rate is assigned to that loan—could be 8%, 9%, 10%, whatever it is according to what interest rates are in the economy. And when you pay that loan back, you pay it back with that interest—but that interest goes into your account. So a lot of people think, "Oh, let me take out a 401(k) loan and I’ll pay interest back to myself."

Megan, here’s the problem, in my opinion, with what you’re thinking. You're saying that you’re going to have to pay back this loan. But when you take out a loan like this, it will depend—do you have to pay it back in five years because it’s not for a home purchase? Will your company let you pay it back in five years, or will they make you pay it back in 15 years, which is usually the amount of time you can pay it back when you’re buying a home? It’s up to your company how they’re going to do that.

But if you're taking out $63,000 of loans, not only is the payment going to be a little bit bigger because of the interest rate on it—but you say, besides that 401(k) repayment, you’re going to be paying an additional $500 a month, which is what you pay on the home equity line. So my question to you is: if you have that kind of money to pay back to your 401(k), why don’t you take that amount of money and just pay it towards your home equity line of credit?

Even though the HELOC is interest-only, that doesn’t mean that you can’t pay more principal down on it and get rid of it. That’s number one.

Number two—listen to me now. You have $63,000 that you’ve taken out as a loan from your 401(k), and something horrific happens in the United States. Now we go into a recession—possibly a depression—and both you and your husband are laid off, your companies have downsized. In most cases, $63,000 is due—or whatever the outstanding balance on the loan is at that time—to your 401(k), usually within one month of losing your job. Otherwise, you will owe ordinary income taxes on that money, as well as a possible 10% penalty, plus state penalty, depending on your age.

And you say to me, "But Suze, my job is secure. That’s not going to happen." All right, let’s say you're both out on a date and you're hit by another car and both of you can no longer work. You are not to think things like that can’t happen. I’ve read too many emails and dealt with too many circumstances where that is exactly what happened.

Therefore, if you know that you can sustain all of those things and you still think it’s a wise choice—even if these markets may skyrocket far beyond whatever interest rate the government is paying you—because remember, as interest rates go down, the amount of money that you’re going to be paying back to yourself is going to go down. And you might not have made the right choice at all.

So bottom line: no, I would not be doing it under any circumstances. No ifs, ands, or buts about it—because of the things that can happen. So take the money you would have been paying back to the 401(k) and pay down the home equity line of credit.

Also, KT, as time goes on, if the Feds lower their interest rates—and that’s a big if, you never know—their interest rate on their HELOC will also go down. So I just wouldn’t be doing it.

KT: So, Suze, I listened to this answer you just gave and I'm thinking, what if a recession could definitely take place?

Suze: A recession isn't right now in the cards. But you have to look at what's happening to the price of oil and why oil is going up right now. All of you should be very happy with your PXD, your Devons, your XLEs, your FANGs—you should be so happy with them. But anyway, we have a time in our life where nobody is getting along with anybody. And I'm not just talking about what's happening in the United States, but globally.

And all of a sudden there's a cyberattack, all of a sudden there's an attack of any kind. You never know what can happen in the world. So you have to hope for the best, but plan for the worst. And then no matter what happens, you will be okay. KT and I live our lives that way. We could obviously be investing our money more aggressively and make more money, but we have planned for the worst. But we always hope for the best.

KT: It's been pretty best so far.

KT: Okay, this is from Ellie. "Hi, Suze and KT. I am fuming right now." And just on the side, everyone that's listening—when I read this, wait to see how Suze starts fuming. This is one I put in there to watch her face turn red.

"We are required at work to talk to an insurance company about their various policies. I wonder how much that company makes. A 20-year-old coworker came away so excited after talking to them because she feels so great about her future. They sold her a whole life policy as well as a cancer policy. I tried to talk her out of the whole life, but the owner of our company said she doesn't like what you have to say and that it's a great idea."

Ready? This is the big million-dollar question: Do the owners of the company get a kickback depending upon what is sold?

"When I mentioned she needs to look at opening a Roth, that was shut down too. She's only 20, getting such bad advice. I wish I had all your great advice when I was her age. She doesn't understand that their job is to sell. The insurance company's job is to sell."

Suze: And it's the boss's job to protect her employees against everything that could go wrong.

KT: Right. But wait, I have to share this with all of you. When I was a young managing director in Asia, I was making a great deal of money—a lot of money for my age and for that time—and our head of the divisions brought in AIG insurance. They only introduced them to those executives that were making a lot of money.

And this is true, Suze. So I bought a whole life policy. And every year on my birthday, I put a ton of money into it. But ask me what made me make that decision? I actually went to the controller of my company and I said to him, "Did you buy one of these?" And he looked at me and he said, "Yes, it's a great way to save for your future." And because my controller, who I trusted—who didn’t know as well as Suze—said to me, "Yeah, I did it, KT," I said, "Okay, I'm going to do it too."

Suze: And the very first thing when KT and I got together, she told me that for 10 years, she had put in $15,000 a year—$150,000 total—and the cash value after 10 years was $50,000. And then I took out all the illustrations they had sent her, I made her cancel it, and then we took that $50,000 and we invested it. And now that $50,000 has made up the $100,000 loss that she had put in—plus a lot more.

Here’s what I would tell you, Ellie. Your boss may not be getting an individual kickback, but somehow her company obviously is. Number two, a responsible boss—a responsible company—will never bring in financial advisors that make money off of their employees. They would bring in people that would educate you and tell you everything that you can do, but not make money off of you.

They make a fortune off of you when they sell you a whole life policy. The mere fact that she doesn’t want to hear about—and it breaks my heart that your boss is a woman—that she doesn’t even want to hear about a Roth IRA for her employee, who’s 20, probably not making a whole lot of money and can’t even benefit from a traditional IRA? Shame on your boss.

And maybe she doesn’t like what I have to say, but you do not earn a label of a financial icon without having helped millions and millions of people throughout the entire world. So your boss may not agree with me, but all I have to say to her is—one day, she’s going to look back on this and be so sorry that she financially hurt herself, hurt her employees, and didn’t care about listening to somebody who really, really knows and has nothing to gain by what I am telling you. So sad.

And I have to tell you, you should be fuming, girlfriend. And maybe even think about getting another job somewhere where a boss really cares about her employees—because all the money that you're making with her is not worth it.

KT: I have to share something with the listeners. They may not know this.

So when Suze was on television and speaking publicly and very, very, you know, out there, she actually spent almost two years getting her license to sell insurance in all 50 states—except Hawaii. She didn't want to make the trip to Hawaii to do the test.

So wait, the reason she did this was that she then had a license that allowed her to share her opinion—whatever it was—about insurance policies publicly and on air. Now ask me, did she ever sell a policy? A whole life insurance policy?

Like never. Never, never, never. So she went to the trouble—I don't think there's anyone in the case history of insurance agencies that ever did that. So Suze walks the talk, everyone.

KT: All right, Suze. So I have more questions, or we can go to your quizzy.

Suze: I want to go to the quizzy because the quizzy is now "Can I Afford It?" So the other day I did a little post on the Women and Money Community App and said, "Do you want us to make quizzies ‘Can I Afford It?’ And if so, write them in." Well, the emails—we got a ton of emails. So much so that I'm kind of thinking of maybe going on YouTube and doing live "Can I Afford It?" or whatever.

KT: Do it! Let's do it.

KT: But here is the "Can I Afford It?" And for those of you who don't know, this is where you write in, you tell me what it is that you want to buy, and I tell you if you can afford it or not. This is for everybody. So write down the stats that I'm about to give you, and you decide if this person can afford it or not.

Now KT, don't answer right away—just so people have a few seconds to think about it. All right?

Suze: Melanie is 33 years of age. She wants to buy a rooftop tent to go camping with her wife and kids in the summer. The cost of the rooftop tent is $1,500. Melanie will pay for it in cash. Got that, everybody?

All right, here is her money situation:

• She brings home $3,000 a month.
• Her expenses are $2,000 a month.
• She has $7,500 in an emergency fund.
• She has $30,000 in an IRA.
• She still owes about $2,500 on her car loan, which is what she uses her extra $1,000 a month to pay down, and she puts a little bit more toward the mortgage.

The question is: can she afford it or not? Think about it for a second—$1,500. She has $3,000 of income, $2,000 of expenses, $7,500 in an emergency fund, and $30,000 in an IRA. She's 33 years of age.

Can she afford it or not? Do you approve her or deny her, KT?

KT: I deny her. I don't think she can afford $1,500 in cash to buy a tent to go camping.

Suze: So is that your final answer? If I were to ask you to explain, why would you just say it's a feeling?

KT: Well, for me probably, but I just don't think she's got enough money. She's 33. She should have far more in her retirement and everything else. I don't think she should buy it.

Suze: Melanie, you are denied. And the reason you are denied is very simple. You have $2,000 a month of expenses. What have I told you forever? That you need at least 8 to 12 months of an emergency account.

Which would be, in your situation, $16,000. You only have $7,500. So you are $8,500 short of the emergency fund. Then, if you were to pay for this in cash, which is what you say you're going to do, that leaves you only $6,000 in an emergency fund—which is $10,000 short.

If you had had an 8 to 12 month emergency fund of maybe even $17,500, and you told me you were going to take $1,500 to pay for this, I would have approved you. But until you have that 8-month emergency fund, girlfriend, you are not going camping in a rooftop tent for $1,500. Just that simple.

KT: Camp under the stars. It's much more authentic, right?

Suze: I'm sure she thought that I was going to approve her—but you are denied.

Suze: All right, KT. So until Sunday...

KT: What's coming up Sunday, Suze?

Suze: I don't know yet. I'm waiting to see. The stock markets are going up, down, down, down—they're all over the place. Oil is going up. I just have to see what happens at the close of business on Friday, and then I'll make it up as we go along. But until then...

Suze: There's only one thing that matters when it comes to your money. And what is that, KT?

KT: It's people first, then money, then things.

Suze: Don't you forget that, everybody. And when I say people first, we mean you. So until Sunday, you stay safe and what?

KT: Unstoppable.