May 23, 2019
Listen to Podcast Episode:
In this Ask Suze Anything episode, we get questions from Jackie, Lana B., Miranda, Carol, Janine, Robin, Betty, and Krista.
May 23, 2019. Ask Suze Anything that's me. I'm Suze. But then, you know that. And I'm the one who goes through all of the emails to decide which ones do I want to read on the air. And if you want me to possibly answer your question, all you have to do is send in an email with your question to ask suze, S-U- Z-E, firstname.lastname@example.org. I want to start today's podcast with more of a comment email than really a question to begin with. And it goes like this. It is from Jackie. Hi there, Suze. I've been following you for years on and off since about 1999. I appreciate your podcast, and recently have heard you use the term empty vessel. And that you're being one as a positive. I like hearing this term empty vessel being used in the positive sense, as a financial abuser survivor. I was never called an empty vessel in a positive sense. My ex always called me empty vessel, meaning I have nothing to offer inside. And it left a pretty big mark on me. A mark that I try to remove every day. And sometimes I've had to correct my son, who has referred to me as an empty vessel, copying his dad and my financial abuser. And I have to train him, that we don't call mom such names. So thanks for being the refreshing uplifted of attitudes towards money, and giving a good, positive and fresh meaning to the term empty vessel. Signed, destined to be rich, Jackie. I wanted to start this podcast with this email because the main part in there, believe it or not, was about her son. That her son, having listened to her ex-husband, his father, her financial abuser, started to repeat things that he heard. So it is so important when it comes to money, and this is an extreme case. I understand this. But it's important when it comes to money, your kids listen to what you say. They listen. They hear the words that you use. So how do you talk about money when you're around them? Do you always just do it in a negative sense? Do you always just come down on them? Do you always keep information away from them? What are you doing with your children? How are you damaging them and you don't even know it? How are you encouraging them? What are you doing? So this is just an example of how words can hurt. Words can hurt big time. Okay, let's go now to a question. The first question is from, how do you say this? It's Yana something. But anyway, she calls herself also Lana B. so that's what I'll call you. Okay Lana B. Hi Suze, hi Lana B. My husband and I are building up our eight month emergency fund. We have about 15,000 saved up. Our goal is 110,000. We currently have this in a savings account. My husband, I know where this is going. My husband has done so well investing. He believes we should invest either all or some of our emergency fund rather than let it all sit in a savings account. What would you advise? Are you kidding me? Are you just kidding me? You think because this market has gone up and up and up and as I'm recording this it is still going up and up and up. It's been going up since 2009. For 10 years. And your husband thinks he has been doing so well in investing? Was it him, or was it the market? You could have just simply put money in an index fund, and you would have made a lot of money. So when you start to think that it's you, that you're the one that's been a great investor, and that you're going to take emergency fund money, money that has to be there for an emergency, and you're gonna risk it? Imagine this is back in 2005, 2006 and everything's going great, and your husband says this to you. Then all of a sudden everything turns, and before you know it you've lost 50%, almost all of your emergency money. Because you know when the market starts to go down, you never believe that it's going to continue to go down and down and down. You just think it goes down for a day and then maybe another day. But then it'll go up like it did. You know it goes down, it goes up and you just think that's how it's gonna be. But there will come a time, there always does, when these markets go down, and then they go down and they go down and they go down even further. And it will take years for it to come back. So no Lana B. don't you dare let your husband touch a penny of your emergency money. That is money that needs to be kept safe and sound. Just the rule of investing money that's for emergency use, never is invested in the stock market. Got that? Okay, I'll compose myself here now. Can go on to the next one from Miranda. Uh subject on this. Whole life insurance. I was just composing myself and you know when I talk about whole life insurance, you do know what happens to me, right? I start to kind of get irate, I kind of like blow my top a little you know? I just discovered this little emoji where it like blows the top. I use it all the time. I kinda do that, don't I? Anyway she says, hi Suze, I have three. I have three whole life insurance policies. One on myself, I'm 37, one on my husband, he's 41, and this is the one that really aggravates me. And one on my daughter. She is nine. Why do you have an insurance policy on your daughter? The goal of insurance is that if that person were to die, that there would be other people that are financially dependent on that person, so the insurance is meant to be there to help those people out with an unexpected loss. What financial loss will you sustain if your daughter happens to die? Okay. It'll be an incredible emotional loss, but not really a financial one. Alright. After listening to your podcast, oh, at least she recognizes this. After listening to your podcast, I have made a mistake with doing whole life policies. Clearly I need to close them and do term insurance. No, no, no. You first need to do term insurance, and if you don't know what that is, go back and listen to one of the previous podcasts. And after you are accepted with your term life policies, then you close out your other insurance policies. Your whole life. Because you don't know, maybe you go to get an exam and they tell you no, I'm not going to give you insurance because you have a spot on your lung or something like that. If you need insurance, you never cancel a policy until you have the type of policy that you want in place, and then you cancel. She goes on to say, I have had the whole life policies on myself and my husband since 2005, and on my daughter since 2006. Yikes. I know. How do I get out of these policies? And do I get the dividends they have earned? So first of all, you just call up your insurance agent and you say you want to close the policies, and of course you get the interest and the growth on the money. Now what you're gonna find is you are not going to get as much back as you put in. If you put in $5,000, maybe you'll get back $3,000, or $2,000. So therefore, because you are getting back less than what you put in, you do not have to pay income taxes on it. Got that? Back to the email. Also, the policy on my daughter in 2010, I was told to do that in case she were to ever become not insurable. Anyway, and then she goes on to say do you recommend having life insurance on my daughter? I think I got bad advice back in 2010. You think? You think you got bad advice Miranda? Maybe it got worse than bad advice. You got terrific advice. You got insurance on your daughter in case she was going to become uninsurable. Okay, I get that. But why whole life? At the age of nine, you could've gotten a million, $2 million policy on your daughter for maybe five bucks a month, if that. It just none of it makes sense. So again, you get insurance when somebody is financially dependent upon you. The type of insurance that I love to see you get is term insurance. And the type of insurance that in most cases I hate is whole life, universal, and variable life insurance policies. Now, Suze, tell us how you really think about it. Okay now, this one is from Carol. Subject area: which trust to trust. What do you think she means by that? Hello, Suze, I’m 50 and single. I own a condo with a mortgage, a car, have savings and checking accounts, a Roth IRA, a 457 at work, and an investment account. My accountant currently lists my mother as the primary beneficiary. I have no other relatives that I would leave anything to, and I have no partner on the current horizon. I know I should open a trust, but in my various research I still do not understand which would be best for me. A revocable or irrevocable. And upon choosing one, should I put everything listed above into it? All right Carol, first of all, you are writing me from San Jose, which means you're writing me from San Jose California, I am sure. And California is a state where probate fees are set by statue. Also, California has really, really, really expensive real estate in it. So therefore, if your mother is the primary beneficiary of everything, and you own a condo, and you want to leave it to your mother, she's gonna have to go through probate because I'm sure you don't have her name on the condo. I'm sure that's just who you wanted to go to. And even if the condo had a market value of $200,000 and you say here that you have a mortgage on it. And let's just say you have $180,000 mortgage. Do you know that probate fees, by statute, in the state of California, on a $200,000 piece of real estate, regardless of the equity that you have in it, it's gonna cost her about $20,000 to get? And, it's going to take her one year to two years to get it. So yes, you absolutely need a trust. But your question to me is, should it be revocable or irrevocable? The difference between those two is very simple. Revocable, you can change your mind anytime you want. So in 99% of the cases, when you hear me talking about a living trust, you're hearing me talk about a living revocable trust. You can change your mind, you can change the trustee, you can change beneficiaries. You can do anything you want. You can revoke your wishes. An irrevocable trust is usually chosen as a tax planning tool to get money out of your estate. And once your money is out of the estate, you cannot make any changes with it. It is irrevocable. Everything that you have written is cast in stone. So in most cases, you do not want an irrevocable trust. You want a revocable trust. You then say to me should you put everything listed above into the trust. You cannot put a Roth IRA, or a 457 into a trust. A Roth IRA, I. R. A. stands for individual retirement account. It has to be owned by an individual. Can you make the trust the beneficiary? Absolutely. But you cannot put a retirement plan in the name of a trust. Your 457 at work has to be in your own name, your personal name. So there you go. Now you know. Next one is from Janine. Hi Suze, hi Janine. Oh here's what she says. Are you ready for this one? I need a lot of clarification and help so I can make the best decision for myself. I am married, and I have a step daughter. When I first got married, I didn't mind caring for the child as my own. However, my husband has made it very clear that he doesn't want that. And he and her mom, meaning his ex-wife, have it all under control. However, the child lives with us full time. And my husband wants me to contribute 100%, as in split everything evenly. And I don't think that's fair. Am I wrong? No, you are not wrong Janine. Why is it, that if he doesn't want you really to have anything to do with the child, and everything and not really care for her, why should you spend your money then on this child? Why is it that his ex-wife, her mother, isn't splitting all of the expenses for the child? For everything 50, 50. So no, I don't think it's fair, and I think you should say something. But there's more going on here than that. Because she has another question and this now email makes me start to really be concerned about if this relationship is going to work out or not. Now, Janine goes on to ask a second question and she says this. We just bought a house and are living in a community property state, California. Do I need to get a living trust or will? Now Janine, I just answered that question in the very last question. I think it was the last one I have a very short-term memory about. Yes, you absolutely need a living trust. Especially in the state of California where their statutory probate fees. But she goes on to say that there are a lot of other things that frankly he doesn't seem to think - she doesn't even refer to him by name - just says that he. He doesn't seem to think that we need to talk about. Such as knowing about each other's financial stuff, 401(k), life insurance, anything extra. Am I wrong? I don't know what would happen to either of us, and I don't want to be stuck or screwed. I don't blame you girlfriend. I hate asking. But I'm a little lost and as you can imagine, a lot of tension and fights come from this. Any help would be appreciated. Okay, listen, the writing is on the wall, and you better start reading it. First we have a situation where with his ex, the kid that you're living with, you can't even act like it's your own or anything and that he doesn't want anything like that, right? In terms of that. And now, so you have one child that's kind of being taken away from you, even though it's not your own child, you are caring for her. As you said when you first got married. And now your other children, your financial children, I call them Bill, Buck and Penny. Get that everybody? That's kind of a joke. You all know, I have a kids book out, the adventures of Billy and Penny, do you know that it is fabulous for about five- or six-year-olds? That is besides the point. Anyway, and he doesn't want to talk about that with you and you tell me that you hate asking. You should not hate asking about anything when it comes to a relationship that you're in. This is your money. This is what you're doing together. Like, how is he making you feel? This sounds like a mild case of financial abuse, honest to God, it does. That here you are, you're doing everything. He wants your money, but he doesn't want to give you rights to certain things. He doesn't want to talk to you about it. He you don't know as his wife, do you have life insurance? What's in 401(k)? You don't know! Is he hiding money from you? Is he not? I don't like it. And you should not be afraid of the tension and the fights that come from this because the more fights that come from this now, the more honest you're going to see he is in that he might not be caring for you. And if he's not caring for you, you better get honest with yourself and take action because you don't want to stay in a situation where you are not being respected, where you are not being honored, where you are not able to live a life where there is absolutely no tension, and you could talk to somebody, the person you're sharing your financial life with, about anything that you want. So Janine, Janine. Have the conversations with him, but open up your eyes because I don't like what I'm seeing. Do you really like what you are seeing? I don't think so. Do you see how subtle financial abuse can be? Financial abuse, is when you're living in a house under the same roof with your spouse, or your partner, or a boyfriend or a girlfriend. You are sharing expenses, you are sharing money, you are sharing your life. But are you really sharing money? Or are you just taking your money to pay for things for their life to be easier? But they're not sharing financial information with you on some level. They are keeping you down and out. That's what financial abuse feels like. This next one is from Robin. She says Hi Suze, I have $50,000 in equity in my home, and $12,000 in credit card debt. Essentially, she's asking me, should I refinance to pay off my debt. No, you should not. And the reason why is this. Especially with your credit card debt that you have. Credit card debt is unsecured debt. If you cannot pay off that debt, chances are the credit card companies are not going to come after you and sue you. They will write it off as bad debt, your FICO score will go down, blah blah blah blah. But they're not able to take anything away from you because that debt isn't secured by something. The equity in your home, the $50,000, is secured by your home. If you get into trouble, if you get into trouble, and you can't pay that loan, they can take your home away. They can just simply foreclose on it. That's number one. But number two, if you free up the credit card debt, the $12,000 of credit card debt, then you have $12,000 of available credit on your credit cards. And I will bet you any amount of money that you, before you know it, will charge up the $12,000 on your credit cards again, and now you owe more money on your home because you refinanced it to pay that off. What you need to figure out is. Why are you in debt? That's what you need to figure out. Why are you spending more money than you have? Because if you don't figure that out, you're gonna continue to get into debt. And even if you pay off your credit cards, you're gonna charge up your credit cards again. So you are never, ever, ever, ever, ever. Oh, I must have really meant that. Because normally I just say you're never, ever, ever, but I just said you are never ever, ever, ever ever to take equity out of a home to pay off credit card debt. Are we clear, Robin? All right let's do two more. I think you may have had enough. Why do I worry about you so much? I think more than 30 minutes or whatever about money, you just go wonky. You go, you just can't take it. Anyway, this is from Betty. Hello. Hello, Betty. I'm married later in life. So did I. Anyway, I married later in life and have always been a saver and planner for the future. I married someone who does not share the same values on money. They are more into having the latest and greatest phone, clothes, etcetera. How can I get my spouse to share my views? This isn't something I want to compromise on. I don't want to sacrifice my future for material things today. I'm worried I will reach a breaking point, and want a divorce. Well, I can tell you one thing Betty, you got that one right. But here's what I just have to ask you. You say you married later in life. Didn't you see this in this person that they maybe even were a big tipper, or they like to buy these things or buy you things when you were dating, and didn't you have some inkling before you said I do that you didn't respect how they spent their money? I mean, there's no way that you just met somebody, and then three weeks later that you would do when you were in your twenties, you get married. Not that people in their twenties do that. I didn't mean to insult you, those of you in your twenties. But you know what I mean. I'm sure you went through some dating period that you would have noticed that. So why did you say yes. What was that about? So here is the true bottom line. There's no way you're going to change him at this point in time. Told you this a million times. You can never change others. What you can do, is you can say if you do not change, if we cannot come to see this the same way, let's just end this now and get a divorce before we are too much in the weeds. He doesn't change, make your life simple and just divorce him. Oh yeah. Just that simple. And the last one, Krista says, hi Suze. I know you said advisors charging a commission is a big no. And places like Fidelity have no fees. I think I quoted that correctly. Alright listen closely everybody now. The guy we met with says he uses Fidelity, and the front-end load will have a five and three quarters percent fee, and went on to talk about A shares, mutual funds that have a fee up front. He told us that he keeps 42% of that, and the rest was Fidelity's. He also could sell us B shares, that have no fee, no money, but I have to keep the money in there for at least eight years. Is this correct? An an expected amount to have to pay every time we put in a lump sum? Last, he said he could sit with us, and do a financial plan for everything. Look at our IRAs, saving my 401k from a $1,000 a year fee. Is this expected and sound reasonable? See I'm already around 30 minutes, and I'm like this is a really, really long, long answer. Here's what you need to know. You are to run not walk; you are to run from this financial advisor. You do not need a financial advisor to put you into a mutual fund, and be paid almost 6% to do so. Are you kidding me? When I was talking to you about going to Fidelity, I was talking to you about you yourself going to Fidelity or TD Ameritrade, or Charles Schwab, opening up your own account, and looking to put your money into the Fidelity, no fee index funds, not to have a financial advisor do it for you. How did you get involved with a financial advisor? It makes no sense. You know, I have a hate list. And one of the top things on my top ten hate list are loaded mutual funds. And whenever you see the letter A or B on the end of the name of the mutual fund, those are loaded mutual funds. Where a good portion of that money goes to the person selling you that fund. But what do they have to do with managing your money, making sure what stocks, and nothing! Every mutual fund has a portfolio manager, and that's the person who buys and sells everything. You do not need a financial advisor to put you in mutual funds, and you do not need to pay this person $1,000 a year to look at your IRAs, your savings, your 401ks. He should just do that. Or she should just do that because they can. So no, it shouldn't be that way. So can you just get rid of him? Whole life insurance, loaded mutual funds, financial abuse and people who are abusive to you. I should name this podcast, UGH. but I'm not. This was Ask Suze Anything, and I'm sure glad you did.
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