Podcast Episode - Ask KT & Suze Anything: Do Not Live In a Home of Anger

On this Halloween edition of Ask KT & Suze Anything, Suze answers questions that spooked you about mortgages, focusing on retirement savings, ROTHs and more.  Plus, listen to find out what Suze’s favorite Halloween candy is!

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Podcast Transcript:

Suze: October 31st 2024. Welcome everybody to the Women and Money podcast as well as everybody smart enough to listen. This is the, come on, come on KT . Like I'm,

KT: It's Halloween.

Suze: Did you get overtaken by a spirit there?

KT: It's the Halloween ask Suze (sings in a spooky voice) Annnything...or KT

Suze: and everyone out there, that's what we're going to do today. But it's

KT: Halloween.

Suze: So tell everybody about our New York trip.

KT: Oh my God. We had such a great time. Oh Suze. Well, first of all, Susie was a superstar at the Forbes 50/50 event with Mika Brzezinski, who we love and it was, and we brought Sophia with us, our niece and it was very exciting. It was just a very exciting event and it was a big day for Suze. Following that, we went and did a photo shoot downtown.

After that, we went to a delicious one of my favorite bistros called Pastis for a little bit of French food. And then after that, I had a date night, Friday night with Suze where she took me to see Cabaret. If you haven't seen Adam Lambert in Cabaret, he was unbelievable.

Suze: If you can afford it and you're there and you're going to go to a show, you should absolutely go to that one but make sure he is performing everybody. However, all those things that KT just told you about, you could actually go on the Women and Money app and I posted the pictures of the photo shoot of all...

KT: My friends...Did you post my friends?

Suze: I didn't post your friends.

KT: Ok. So before all of that happened, I was able to have a wonderful reunion with our friends from the Philippines and I loved every minute of it and then ran into a very good friend from Hong Kong. And

Suze: we, I am so surprised

KT: About what?

Suze: You should see her little face that out of all the things that you said you did not say the one thing for sure. I thought you were going to say, which is how many blocks did I walk?

KT: Oh, Suze walked 25 blocks the day we landed. She walked with me all the way up Fifth Avenue to my friend's apartment. It was unbelievable. And before that, she walked with me across town to pick up a few things on the way 25 blocks in her new Converse flat sneakers.

Suze: It looked so cool. Everybody. It's not even funny.

KT: And she was almost gonna walk back but it was dark.

Suze: But tell them why that surprises you

Suze: Because I don't...

KT: She doesn't move and it was a big big, big, big, big walk.

Suze: And, and that is because everybody, KT asked for one thing when we were in New York and what was it?

KT: To walk with me.

Suze: To walk, and so I did,

KT: When we lived in New York, um across from Central Park, we would take strolls and it was so peaceful, believe it or not in a city that's completely noisy and crazy and traffic and horns. But it was peaceful to walk with Suze through the park or up Madison Avenue or downtown and discover new places.

Suze: But the good news is I'm walking long distance.

KT: No, the good news is she's back, everybody. She was unbelievably outstanding

Suze: I'm back. All right.

KT: And now we're gonna wait till the end of this podcast for the big reveal. The reveal of what Suze's favorite Halloween candy. So you're gonna have to wait, you're gonna have to listen through and then I'll reveal her favorite Halloween candy, which is a poll that's on right now.

Suze: Can you just imagine my, I just have to say it's, you can take it by the way in the women Money app which you can go to Apple Apps or Google Play and download for free. But can you just imagine if this is the first time anybody has ever tuned in to the Women and Money podcast to learn about whatever they want? They think they're gonna

KT: be a big poll about

Suze: Then talking about walking 25 blocks

KT: Here we go. So my first question could be a trick on Halloween. It's from Mary Anne. She said, Suze, I need your input, please. I have a mortgage and just found out that out of my $500 monthly payment. The company is crediting the principal $85 monthly. I am speechless and feeling so uninformed about the situation, Suze. Is this legal? I trust your knowledge. Please advise. So let's tell her this isn't a trick.

Suze: Well, it's not a trick, my love but, KT, I also, and just remember everybody. I will answer many emails directly if you want to ask a question, write to ask Suze podcast at gmail.com.

And if KT picks it, she will ask it on the podcast, I will answer it. But every once in a while I write back and Mary Anne knows I wrote her back directly. KT and did all the numbers for her. So for all of you just to understand when you take out a mortgage, especially a 30 year mortgage.

Suze: Normally what happens is very, very little of that mortgage payment goes towards your principal. It's all interest. And why is that? That is because most people only keep a home for about seven years. So the mortgage company wants to get all of their interest up front.

So it's typical what I did show Mary Anne is that an approximate $80,000 mortgage? The payment is over 30 years, about $500 a month and the truth of the matter is about $80 of that goes to principal and the rest goes to interest. So that is how mortgages work everybody and you just need to know it.

KT: Next question is from Dorothy. Do you know why I like this? Do you know why I like this? Her email is shampoo girl. I won't read the whole thing because it's private. But her email I like that. It says shampoo girl and I'm wondering if she's a shampoo girl. Dorothy. All right. Hello, Suze. I'm at a crossroads on what direction I should head.

I'm 60 years old and I don't plan to retire till I'm at least 70. I'm not sure financially if I can retire at all. I've been divorced since 2012 and alone. My children are adults grown up and successful. My question is about my home. I've been paying extra on it since I took the loan out in 2011 for 200,000. I owe 62,000 at a 3.25%.

If everything stays similar to what is happening now in my life, I should have it paid off in 6 to 7 years. However, if I only pay the minimum, I would have paid it off in about 12 years. Now, here's, this is what made me chuckle a little. She said, Suze, I feel behind in retirement savings and wondering if I should focus on that since my debt is manageable. Help out a sister, please, I'm exhausted running the scenario. Help her. So, what should she do?

Suze: So, here's the thing, you're 60 years of age, you plan to work until you are 70.

Suze: And if you keep doing exactly what you're doing right now, you only have six or seven years left and then you will own the house outright. Now, if you did do this mortgage, $200,000 in 2011 at a 3.25% interest rate.

And I'm just gonna guess at this. All right, probably your payment is around $875 a month or about $10,500 a year. If you stop putting extra towards that right now, and you're gonna have to pay for an additional six years, then you're gonna have to come up with an additional approximately $62,000 over those last six years. If you don't pay it off early.

And what if you can't do that? So, because you can't take it for advantage that you're always gonna have the money. You're always gonna be able to work till you're 70. I want you to do what I want you to continue doing exactly what you're doing. I want you to stop looking at this just as a financial equation. I want you to look at it as you are going to own your house outright when you are 66 years of age and therefore you will have your home and then for those next years you're going to take that $875 that you would have to pay towards your mortgage.

If you hadn't paid it off, you're going to put that away, you're gonna just do that and you'll be fine over all those years. So, no, I want you to do exactly what you are doing. All right.

KT: There you go. Dorothy. I like that.

Suze: What do you like about that?

KT: Well, she's just was going back and forth, back and forth, back and forth and you just told her what to do and that she is doing the right thing.

Suze: You know, KT the mistake that I think personally many people make, they do the numbers financially. You're gonna come out ahead if you do this financially, this is what it looks best to do,

KT: Do what feels good.

Suze: No KT. Yes. But no, where I was going with that is, but that's only if you stay healthy. It's only if you don't get in an accident. It's only if you continue to have that job.

I don't want you to look at, well, if everything goes right, then we would have more. I want you to look at, oh my God. What if something happened? And I would still have to pay the mortgage on my home and if I wasn't able to pay the mortgage on my home, I wouldn't have a home and you need a home. And so I want you to start looking at things, everybody just a little bit differently.

KT: Well, listen to this one, this is from Eileen said, Suze, I contribute $23,000 after tax to my 401k. My plan only allows for one conversion to Roth per year. Should I contribute a lump sum so that I can convert it right away before any gains are realized? Or is it better to dollar cost average throughout the year and pay the taxes on gains when I convert at the end of the year?

Suze: Absolutely not. Why are you looking at me like that?

KT: Absolutely not on which one?

Suze: I knew it. I did it for you. That was a trick.

KT: It is a trick. I'm gonna say, all right, absolutely not. Do you convert? I want me to tell you what I would do. Do you want this to be your quizz? No, because I listen, Eileen, I'm not good with anything that says the word Roth in it. But reading this, I think you might be better off to dollar cost average throughout the year and, and gain on the highs and lows that she might make then pay taxes. Am I right?

Suze: (Suze makes the wrong answer noise)

KT: Oh, see, I told you I wasn't good at those.

Suze: So why, do you even try?

KT: That's what I would probably end up doing...

Suze: So when I say to you: "So why do you even try?" What should you say back to me?

KT: Why not give it a shot.

Suze: I should always try Suze. Who cares if I'm wrong? I need to always go for it. So you need to, learn. Everybody. Then when I...

KT: KT doesn't have fear and I'm not ashamed, but I'm angry, I didn't get it. I'm angry, you get that. Your fear, anger, baby...

Suze: Right, the three obstacles, internal obstacles to wealth. So, Eileen, here's the scoop and for those of you who don't know a lot of corporations above and beyond what you're allowed to contribute into your 401k pre-tax or into a Roth. You also are allowed to do an after tax contribution and that after tax will always be tax free when you withdraw it. However, the earnings on it will be taxable unless it's in your Roth as well. But anyway, here's the scoop. So Eileen, if they allow you only one conversion to a Roth per year, if you can contribute $23,000 in one lump sum and convert it once all of it to a Roth and you did that at the beginning of the year.

Now you have the money in the Roth and you could dollar cost average into the markets while it's in the Roth because in the me, you don't have to always absolutely, you know, invest it all at once. So if I were you, I would so convert it right away and then you don't owe any taxes on it because it hasn't grown at all. So, you know, you wouldn't want to wait before there were gains so that you could have to pay taxes on that.

KT: All right, here we go. I'm, this is from Roseanne. I like that name. I always liked that name. Roseanne.

Suze: What do you like about it?

KT: I just thought it was always a pretty name. Roseanne. I like Rosanna.

Suze: Now, do you want to hear why you like it? Because first of all, you love roses. So you love a

Suze: rose...

KT: And my mommy's name was Anne and so was yours, Roseanne.

Suze: And your middle name.

KT: Anne. Not Roseanne.

KT: Anne. My middle name is...

Suze: Yes of course, your middle name...

KT: Suze's is...

Suze: Will you stop this?

KT: Suze's middle name is Lynn, like my twin. So this is from Roseanne. Suze, I'm 59 years old and about to be 60. I have a small amount of $13,000 in my 401k. That's not a small amount. Would it be wise to pay the tax and transfer into a Roth? Thanks in advance. Well, there you go.

Suze: So here's the thing Roseanne...

KT: Yes.

Suze: Are you answering it?

KT: Put it in a Roth.

Suze: Ding, ding, ding.

KT: You just told us all to do this.

Suze: However, how do you do it currently? We are October 31st. We are two months away until 2025. So what I want you to do? Very simple is take $6500 this year and put it in a Roth IRA $6500 January 1st and put it in a Roth IRA. And that way you won't have such a large tax bill. So it's wise to put it into a Roth. Absolutely. Just divide it by two and put half in this year and half in next. All right.

KT: No tricks here. This is from Joy. Hi, Suze and KT. Thanks so much for all you do for women. I got the must have documents and will be setting up my trust for my home. Will it just automatically be included in it or do I now need to somehow change the name on the deed on the house? How do I do that? The house is totally paid off. I'm confused by how this works. All right, I'm answering this joy. I'm gonna answer. This is from KT. There are no tricks on your must have documents. All you have to do is open it and read it. You haven't followed the guidelines on the right side as you scroll and it's really, really simple. It tells you.

Suze: Now let me answer this.

KT: So there's no tricks to that.

Suze: Yeah, but stop being me. All right, which is when you go through the must have documents and for all of you who don't know the must have documents are legal documents that in my opinion you all must have and that is no trick. You know, you need this everybody. You need a living revocable trust. You need a will. You need an advanced directive and durable power of attorney. For health care and you need a financial power of attorney. You need all of those.

And if you went to must have docs.com, there are currently $99 and you should all do this everybody because they are going, that price is going to change sooner than later here and you will be getting $2500 worth of state of the art documents good in all 50 states.

And so therefore, when you go through and you answer all the questions, what's really important? Joy is that at the end, it shows you the funding documents. So when you print things out, they're there and all you have to do is fill them out, they get printed out and you have to take it to a title company and the title of your house has to be changed from your individual name to the title of the trust. So then the house is in trust and because the house is in trust, it avoids probate and all other kinds of things. So just go back and do the program again and you'll see it's in the program. All right, KT.

KT: It's easy. All right. Next question, Suze is from Jane. She writes, hi, Suze. Love you. I like this a lot.

Suze: Listen, does that make you jealous?

KT: No, listen to this.

Suze: Do you get jealous for all the people who love me.

KT: They can never love you enough and I can never love you for loving them. Enough.

Suze: That made absolutely no sense. Ok.

KT: This is love you. As I'm listening to your episode this week, a question came up for me. Is it ever a smart idea to sell everything I have within my IRA? But keep it in the IRA, put that money in a money market fund within the IRA and then start dollar cost averaging monthly anew? My thought is that if the markets are this high, perhaps they will come down and as they're coming down, I am re dollar cost averaging into the same funds I was in before, too complicated. Or is this a good idea?

Suze: It's the worst idea I've ever heard in my life,

KT: Jane don't do it.

Suze: And Jane, here's the reason why you don't know that they're going to come down, they could continue to go up and up and there you are sitting on the sideline waiting for them to come down. And in the meantime, you have missed maybe the biggest move out there. If you want to continue to be smart, leave them where they are, continue to add money and dollar cost average new money into it. Just that simple. One last question KT.

KT: This is from Debbie. She says, dear KT and Suze, I got divorced a few months ago at the age of 37. And your podcast really helped me get my life together. My ex husband purchased a house within a month of the divorce being finalized. It made me mad that he purchased one immediately after the divorce and after claiming he had no money and I owed him money during the divorce. And it took me some effort to just not go out and buy a condo. I'm taking your advice of no major expenses within the year of divorce.

However, here is my question. I love where I currently live, but I can't stop looking at homes around me on Zillow and wondering whether if I buy a home right now, it's only out of spite for my husband. So what should she do? So this is an emotional roller coaster. Just let it go.

Suze: Yeah, this is a good one for Halloween because the last thing you want to do is treat yourself and then it will turn into an incredible trick. All right now what I want all of you to know because I'm looking at this email that KT just put down in front of me and I want you to be aware that this was a long 1.5 page email.

So obviously KT edited it because a lot of the details whether they mattered or not. But so she did edit it, but with what you really needed to know. So when you write a long email and if KT does choose it, don't be surprised if it is edited to get directly to the question out of spite for your husband.

Look at the words that you used Debbie in this email. You're wondering if it's only out of spite for your husband that you really want to buy a home. I was struck by the one line that says I love where I currently live. But, and the thing, the, but right, you know, I always have said everything before a but is the truth, everything after the word but is not the truth.

And therefore you need to stand in your truth. You need to stand in the truth that you love where you live, you need to stand in the truth that you're still angry at your husband for obviously in your mind lying to you about not having money and going out and buying a home, which is something you always wanted to do. Let it go. As long as you live in the home of anger, you will never be able to build or buy a home of love. Therefore, just stay where you love and just give yourself time.

All right.

KT: I'm ready for my quizzy. Am I getting a trick or treat quizzy?

Suze: This is a very scary one.

KT: They are always scary.

Suze: It's scary because I already know what's gonna happen. This is this, this question is gonna haunt you rest of your life.

KT: Every quizzy I take is scary and haunting.

Suze: This is a haunting one.

KT: What is it?

Suze: Which is, hey Suze and KT pick me. So I did. All right. I already have an IRA from a previous job that I retired from, a tax deferred 401k that I rolled over to an IRA in 2023 last year. So, KT, they had a 401k, they rolled it over to an IRA last year.

The question is, can I still do a back door Roth?

KT: Go for the front door, baby.

Suze: No. Really? Can they do. They just rolled over?

KT: I think there's a, isn't there like a little bit of a, a time rules or something?

Suze: No time rules.

KT: Yeah, you can do it.

Suze: Do you remember all the podcasts that I've done on this? Do you ever remember me talking about something called the Pro Rata Rule? Do you ever remember me saying that if you have a traditional IRA do not do a backdoor Roth? Because if you do, you're going to have to pay taxes

KT: Go in front door baby. Don't do it. Take the front, don't do it, don't do it.

Suze: So did you get this one right?

KT: Don't do it.

Suze: Ding, ding, ding

KT: Treat, treat, treat. Don't do it.

Suze: But now we're gonna be serious with you, Mia and everybody listening to this, if you have a traditional IRA an IRA rollover, a SEP IRA, a Simple IRA. You have any IRAs at all and you wanna do a back door Roth, which simply means that you make more than the modified adjusted gross income. So you can't do a contributory Roth.

But there is a way for you to get money into a Roth and that is through the back door, which is where you put money into a non deductible traditional IRA. So you're not gonna take it off your taxes and then you immediately convert it to a Roth if you have an IRA of any kind. However, and you do a back door, there will be a big portion of that money that is going to be taxed again for you. It's called the Pro Rata Rule.

I have done many podcasts on it. But the biggest warning I can give you is do not and I repeat, do not do a backdoor Roth IRA, if you have a traditional IRA, what you could do Mia if you wanted to is you could take the money that you did the IRA rollover with, put it back into a 401k if you can and then you can do a backdoor Roth. That's how you could do it. Ok, KT time for the reveal.

KT: OK? The big reveal, the big Halloween reveal. Here we go, Suze.

Suze: Tell everybody.

KT: Ok. So we did a poll and it's on, it's actually been on the Women and Money App Wall. And you're to guess of all three, what is Suze's favorite Halloween?

Suze: And what were their choices, KT?

KT: The choices were malted milk balls, candy, corn and Tootsie rolls.

Suze: So the majority of you actually did get it right. But let me just say something. It was a few years ago, I think it was Halloween maybe 2021 where we kind of did this, KT. I don't know if you remember that or not.

And at that time my favorite was Tootsie Rolls. And KT can tell you that for years. Even on the island, I would wanna go into craving craving roll Pop, anything Tootsie roll. So, for years it was Tootsie Rolls or Tootsie roll pops. Favorite favorite candy of all time. But then as I've matured in the past year or two, I have changed. I have a new favorite candy and my new favorite of all is KT

KT: drum roll, drum roll, ding.

Suze: Tell them

KT: Malted milk balls!

Suze: And the majority of you got that right. So I know a lot of you probably thought it was Tootsie rolls because of what I've said in the past. But a woman, is absolutely allowed to change her mind.

KT: She's a Gemini. Not, not just a woman, a man, a Gemini. Geminis can change their mind any moment at any time. And let me tell you, I know what that feels.

Suze: I do. So now you know.

KT: Happy Halloween everybody!

Suze: Ok. KT there's really only one thing that we want everybody to remember when it comes to their money. And what is it, girlfriend?

KT: People first, then money, then malted milk balls.

Suze: And if you eat a lot of malted milk balls on Halloween and you stay safe and you stay empowered with your money. I promise you you will be unstoppable.