Podcast Episode - Ask Suze (and KT) Anything

Credit Cards, ETFs, Home Equity Line Of Credit, Interest Rates, IRA, Retirement, Roth IRA, Stock Market

January 14, 2021

Listen to Podcast Episode:

On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Linda, Debbie, Nicholas, Vicheal, Donna, Tova, Stacy and Kim selected and read by KT.

Podcast Transcript:

January 14th, 2021. Congratulations, Suze and Alliant Credit Union for launching the best and coolest program on Earth last Sunday. Matter of fact, I got so many questions about it. I want to tell all of you, I'm not gonna read any of them today, but Suze's answering them on her Women and money app go there. You'll find the answer to all those questions. Go to my wall everybody on the women and money app and you'll find the app if you don't have it by downloading it by going to Google play or apple APS and search for Suze, Suze Orman and then you'll be able to get the up and you'll see it. It's on my wall, just so you know. All right, little KT. What you got for me? Okay, this is this is fun because I don't understand it either. Linda, this is a question from Linda. Hi, Suze. I enjoy your podcast. And especially the recent one with your 2021 outlook as well as the ones with KT, Iike you, Linda, a number of twentysomethings I know have been investing in Bitcoin. My daughter has seen her small investment more than double and she's been trying to get me to jump in. I don't completely understand Bitcoin. I don't either, Linda, But I know it is a volatile investment. Is it really legitimate? Can you provide a brief explanation on your podcast and your opinion off putting a small amount into Bitcoin? KT, do you remember on the app we have that go live function. And you, me and colo were in the loggia at the house and somebody asked about Bitcoin and I, It was at 11,000 then and I said, Yeah, buy it, buy it. Do you remember? I'm sure all of you, if you had the app, it would be there. You could find that. But here we are in Bitcoin reached almost $42,000 a Bitcoin. Right now it's hanging out in the 30,000 area. So more than explaining what Bitcoin is because it's impossible to understand truthfully, here's what I want to say to you. I really believe from the bottom of my heart. Okay, You know what I'm giving her look like? Don't go there. I've got the reason is because I don't get it. I don't even get a Roth. No, that's true. But I say to Suze, over and over again, I say Suze, who owns Bitcoin? Where's the money kept? How does it work? She said, KT, it's the future of our money in the world. Just understand that because I myself own Bitcoin. Okay let me tell everybody this, which is prior to recently when PayPal decided to offer Bitcoin where you could buy and sell it. It was almost impossible. I don't like dealing with coin base. I don't like the other ways that people were buying Bitcoin. So it really wasn't until PayPal said, All right, I'm going to get into this And they did. So I do think that Bitcoin is the future of the currency markets that eventually dollars and all that as we know it will absolutely, in my opinion, go away. And once paypal got involved and legitimized it, it kind of is a legitimate investment right now. So if you're interested in purchasing Bitcoin, open up a PayPal account, that's where you should do it, but only put small amounts of money in it so it could go from 30,000 down to 5000 back up to 20,000. It will go all over the place. So if you want to put like $100 a month or so in it, I'd say go for it. So, Suze, the next question I have is very special. We're gonna love this'll. This'll is from somebody really special. This is from Debbie Coffee. Oh, Debbie sending in an emailed a question on the asked Suze podcast. I know. I told her to be a good friend everybody. she has been a friend for like… Ok what is her question? She wrote, first of all, KT, I'm still laughing over the laughter podcast. Brilliant. Second of all, hope you don't mind if I ask Suzy a quick question. Here it goes. Jack, 20 years old and TJ, 16, these are her sons by the way, both very handsome Debbie, A beautiful boys. So Jack and TJ just received $25,000 inheritance from there Graham, which was Debbie's absolutely favorite best friend from listening and learning from Suze. I believe they must have a paycheck before they could do a Roth IRA. Jack made $2000 working last year. But T. J does not yet have a job. If we can't do the Roths, what is the best thing we could do with this money so that it can grow and grow? I told them they can use some of it when they graduate college as a down payment for an apartment. But all else, hopefully, 22k ish should be locked in a vault for retirement. What do you think, Suze? So, Debbie, here's the scoop, my friend. Yeah, you have to have a paycheck in order to have a Roth IRA, or a traditional IRA, for that matter. And the rule is the maximum that you can put into a Roth if you're under 50 which the kids are is $6000 or 100% of what you earned that year, which ever one is less so for Jack. He can put in 2000 in a Roth IRA for TJ, since he didn't make any money, he cannot. So given what I think's gonna happen with the market and everything, I personally would put the money, guess, where I would put it in an alliant credit union account. And I'm not just saying that because they're sponsoring this show, but because they do have the ultimate opportunity savings account that we talked about last week and so fabulous, but they consistently pay the highest interest rates out there for no fees. So I would open up an account for each one of them and start doing that and just wait until they're earning money and then get it in to a Roth IRA. All right. KT, what's up? Okay, next one is from Nicholas. Dear Suze and KT, My husband, Sean, age 45 and I, and Nicholas is 50, Have followed your advice, Read the books, Reading the current ultimate retirement guide. We've saved and worked hard for years. We're looking for a life change, and we have considered moving to either California or Florida. Our LGBT in us says California, but our money and Suze in our head says Florida, what would you advise? And then the question is, was this at all a factor in your decision when you both moved from California to Florida? Okay. There you go. Yeah, well, the big factor for us was our moms. That's what brought us out of California to Florida, especially Suze's mom refused to leave Chicago unless we moved to Florida with her. So So we did. We did. So here's what I would say to you. The cost of living in Florida is so much cheaper than California. I cannot even begin to tell you I'll never forget the first time we came here and KT and I went out to remember this for a sushi dinner. Oh, my God, we got the bill and we both stared at each other, he said. I think they made a mistake. It was $32 and we ate tons of suits and the exact same thing that we would order all the time. And when we would order that someplace else in California and New York, it was like 80 $90. It was up there. So number one your cost of living here is absolutely so much less than California I can't tell you. California State income taxes will absolutely, in my opinion, eat you alive. They are among the highest in the country. Also, you have earthquakes in California fires. You have fires in California. We only have hurricanes. We have hurricanes. That's right, Because we only have hurricanes, right? But as far as was it a consideration in terms of our lifestyle that did we where we wanted to move? No, I don't think like that. I go where I want to go because I want to be there. And I make sure that no matter where I am, I'm always accepted. Hey, Nicholas and Sean. The best part about living in Florida is indeed the water. And if your water boys, you've got to come here. All right, let's go on to financial stuff now, KT. Next question. I've been a fan of Suze since I was 17. I'm now 40. All right, This one. I hope I don't start laughing. Here's the question. It's about Roth IRAs. Suze, please, can you explain why they're so great? I understand the tax benefits, but for my situation, my husband and I own our home outright, and we're planning a very modest retirement. I would expect I would be in a much, much lower tax bracket when I'm retired than I am now. So isn't a traditional IRA better? This is from Vishal. Vishal you say you're been listening since you were 17 and you're now 40. And here's what's important to understand. You still have another 25 or 30 years before you probably will be retired. So you can't look at money as to what is it going to be worth 30 years from now? How do I get access to it 30 years from now, 30 years from now, I'll be in a lower tax bracket. So isn't it smarter to do a traditional IRA. What if you got sick? What if you needed the money right now? What if you were part of the pandemic and you needed to withdraw money? Through a Roth IRA you could have taken out any money you originally put in without taxes or penalties. So the accessibility to the Roth IRA to begin with makes it the best possible retirement account out there. Also, if you really think that tax brackets in the future aren't going to go up, I have a bridge to sell you because the truth of the matter is how we gonna pay for the deficits of what we created just last year. Just doing a favor, invest in the Roth, do the Roth and just forget the traditional. Got that girlfriend? Hello, Suze. My name is Donna Curry. I am 46 years old, with an amazing family of four. I'm currently in the worst financial situation, and I honestly don't see a way out. I lost my career after 15 years, I had to file bankruptcy due to debt. And with no job or way to provide for my family, I've had to take an early withdrawal from my 401 K. Due to my credit reputation, I can no longer gain employment in the field I was in. My family is struggling so much right now. I just don't know what to do. I've done everything that goes against the rules of financial responsibility and I'm hoping Suze, you can offer some guidance. This situation is killing me inside. Oh, Donna, you know, I get that, 46 years of age. You know, you do know my story, right? Which was back when I was in the early forties, truthfully, and I had just opened up at about 37, 38 at that time, opened up the Suze Orman Financial Group in one of my employees ripped me off, and it was quite the scene for a number of years, and so much so that literally I was $250,000 in debt. I didn't know if I was going to be able to work, the whole thing. I could go through it and look at me today. So I don't know why certain things happen to certain people. But I do know this that God never gives you more than you can handle and really Donna, if you feel like you have too much on your plate, get yourself a bigger plate. The best thing that you have going for you is that you're a woman, and the reason that I say that is you know, there's a saying in China and the saying is this that women hold up half the sky. I believe from the bottom of my heart that women here in the United States, we hold up the entire sky. You say to me that you have an amazing family of four. Maybe that means that you have two kids, four kids. I'm not exactly sure what that means, but if you have what it takes to be a mother, if you have what it takes to take care of those kids and make it so they're amazing. You could do the same thing with your life Girlfriend, I promise. You just keep taking day by day. Do not turn your back on this battlefield. Stay strong, do whatever it takes. But you need to create a new truth to get you through this. A new truth that is directly opposite your fear. If your fear is this situation is killing me inside. If your fear is I'm never going to get out of this debt. Then your new truth should be; I have more money than I will ever need. Write down your biggest fear right now. And everybody out there that's listening to me, if you're afraid, if you don't know what to do, I want you to do this. I want you to write down what is your greatest fear in life. And after you have done that, I want you to write down a new truth that is directly opposite that fear. And I want you to write that new truth 25 times a day. I want you to say it silently before you go to bed 25 times a day and I want you to scream it in your car out loud 25 times a day. Make the truth as if it has already happened. Repeat it over and over again. Commit to doing that for six months and I have a feeling you'll feel a whole lot better after you've done that. Suze, The next question from Tova is so straightforward. I'm happy to answer it for you. All right ready? My question is I have a friend who's looking to rent an apartment but has no credit because she had to declare bankruptcy a few years back. I had offered to be a guarantor for her, but now I'm rethinking that offer. Is there any danger for me if I act as her guarantor? Is it possible for it to somehow hurt my FICO score? I trust my friend, but my gut is telling me that is a bad idea. I don't know how to retract my offer. What do you think? Is it a bad idea? Do you want me to answer this? Oh, you betcha. Tova, so trust your gut here. Oh, my goodness. In every question you asked, I can guarantee you, you know the answer yourself. Off course It's a bad idea. It's a terrible idea. But tell her why. No, you tell her you're why. You tell her why. All right, so here's the thing Tova is that if you guarantee her rent, your friends rent and now your friend can't pay the rent. You're going to be the one who has to pay the rent. And if your friend doesn't tell you she's not paying the rent and she just doesn't pay the rent. It then hurts your FICO score. She's because she's already ruined hers, so I think you need to muster up courage. Courage is one of the eight qualities of a wealthy woman. It's the fourth quality, to be exact, and what you have to do is muster up your courage and you need to go to your friend. And you need to say, I know that I said that I would do this. But honest to God, I can't. I can't take that risk. I've worked too hard to restore my own credit and to do whatever is maybe true in your life. And if you need an excuse, say I can't do it because I wrote him to the Suze Orman Women and Money podcast and asked her this question and she answered it and she said, No, I can't do this. And in fact, you might wanna let her listen to this answer herself. And she was a true friend of yours, a true friend of yours. She would also say, I understand. I understand. Good Suze, there you go, Tova. Okay. Next question is from Stacey. In the current state. You know what Tova means in Hebrew? No. Means good. Good Tova Good Tova. Good, good, good. Tova Good. Sorry. Alright. So next question is from Stacey and the current state of the economy. How do you recommend prioritizing money? I currently have a little over 70,000 in the bank. No debt, I rent, I live by myself with a dog and I work three stable part time jobs. Is it better for me to buy a home? Go back to school as I only have my bachelors? By the way, Stacy's 29 Susie. Or should I start planning for retirement? I want to open a Roth IRA, but when is the best time to do so? I was told to invest in high growth stocks because I'm young like Amazon, Tesla, Healthcare, etcetera. But does it make sense to invest in these when they're already so high? I've also been told to invest in Silver or CBD. Any thoughts or guidance would be thanked immensely. Stacey Stacey, Stacey Let's see. Is it better for you to buy home, to go back to school, to start a Roth IRA, to invest in the stock market? Do you understand how you're all over the place? Girlfriend? You are all over the place. At your age of 29 you have to do a little bit of it all. Got that? So what's fabulous is that you have 70,000 in the bank with no debt. You rent, you live by yourself with a dog. Would I be buying a home right here and right now? I wouldn’t. And the reason that I wouldn’t is that I do still believe that in the coming year or so I think real estate prices, they're going to go down. So I would be renting just a little bit more if I were you. You asked, Should you go back to school? Is you only have your bachelor's. Bachelor's great bachelors is great, but if you feel like you want to go back to school because you need a masters to do whatever, then fine. No problem. But then you say, Should you start planning for retirement? Here's what I can tell you for sure. At 29 your number one priority is to fully fund a Roth IRA. Your number one priority is if in any of the jobs or in your job that you work. If they offer a retirement account where they match your contribution, Hopefully it is a Roth retirement account, you should absolutely be investing up to the point of the match. Those are your two priorities. No matter what else is on your plate, that is something you absolutely want to do. Now listen to me, when it comes with small amounts of money, such a $6000 and so forth. While it might be nice that you could buy slices off Amazon, Tesla and all that, I think you're far better off investing your money in an exchange, traded fun and let them diversify for you. If you want to buy those kinds of stocks, then you would buy ARKK the ETF, which has just been a fabulous ETF, but it again is high. But here's the good news. If you dollar cost average every single month and the markets start to go down, where you want them to go by the way, than every month when you invest your money buys more shares, the more shares you have in the long run, the richer you will get. So I would stick with exchange traded funds rather than picking your own individual stocks until you have more expertise and until you have a lot more money to buy individual stocks, you should own at least 20 to 40 stocks if you're gonna own your own individual stocks. Otherwise you're better off with exchange traded fund our mutual. That's good advice. Yeah, All right. I have another stock question for you. All right. Hi, Suze. I have question I need advice on. I bought $20,000 worth of Exxon Mobil stock at $53 per share last year. Since then, it has declined a great deal and doesn't seem to be making a comeback. Can you please help me with this and advise me on what you think I should do at this point. What do you think I'm gonna tell Kim? I think you're talking to hold it. I'm always telling you to sell and you say no. No, no, KT, Not yet. Alright, Kim, here is the thing with oil. Maybe you remember this, but it was almost a year ago. It was like in March or so that when oil was so low, it wasn't even funny. And I came on the podcast and I told everybody to buy XLE, which is three exchange traded fund for oil stocks. And I have to tell you, everybody thought I had lost it. When I did that, it was at $35 a share and I told everybody to dollar cost average into it. A month later it was like down a 22. So it was like, Keep buying it. Today it's at 43. Got that, everybody. And what was great about that is the entire time everybody was making 10, 12, 13% in dividends while they were watching it go down and then go all the way back up again. I think Exxon is the same thing. You know while you're holding it, you need to understand that. I think Exxon right now, is it about $48 a share? So that means that it's paying you about 7.4% in dividend yield. That's a lot of money. So therefore, I really believe that oil is going to continue to go up this year, and I think you absolutely we'll see Exxon go higher, now that's just my opinion. I could be 100% wrong, but if I had Exxon stock, I would not be selling it here. But you're going to have to decide for yourself. See, she never sells. All right, KT, I think it's that time again. You know what time it is? Time for the quizey quizey. So I picked one for you. I hope I can get it right. You always hope you can get it right. So this one is from Jennifer. Okay, Right. Jennifer is questioning, which is the best option for us, meaning her and her husband. We need to paint our home exterior to keep up with neighborhood regulations. We have saved $5000 and the cost hiring a professional would be about the same. If we pay cash, that would empty our account and if anything comes up, we wouldn't be prepared for an emergency. Would it be better to take a loan? So here are your choices. KT, are you ready? Alright, everybody you need to listen to how would you answer this question? Would it be better to take a loan and pay the interest? Should we consider a cash out refinancing option or a third would be credit cards? We currently have zero credit card debt. Our only debt is our home, one vehicle, and my student loans of $10,000. So what should they do, KT? They need $5000 but they have $5000 in cash. Okay, So, cash. Jennifer, how about if I pick the color of the paint instead of answering what you should do? All right, I'm gonna take a wild guess here. This is what I would do if that if that was my situation, I'd put it on the card. There's nothing on the credit cards. Get the points are in the points or whatever you can on the card, Put it on the card and just don't be delinquent and paying it off. Oh, come on, Suze. What do you think she should do? Use the cash? No. Get a line of credit on the house why? Isn't it expensive? You should look at here. Wouldn’t that cost more than the credit card. No. Let me tell you why. Jennifer, Here's what I told you. I should have just picked the color your pin. Here's what concerns me. Everybody okay? Jennifer is saying that she has to pay $5000 to have a house painted, but if she pays cash, that totally empties her account. So that means she has no liquid cash whatsoever. If she did that and now she's in trouble and she starts using up her credit cards. It's not going to take her long, probably to Max on her credit cards. And now she's in serious trouble. Interest rates on credit cards are not tax deductible in this situation. I would take out a home equity line of credit on my home, and if you only want to do it for $5,000 fine, you could do it for $10,000 and only use 5,000 of it. You then pay for the painter, and then the interest rate on that loan, which will be far less than a credit card in most cases, is tax deductible. And if anything goes wrong, you still have $5000 in savings. You still have your limit on your credit cards to get by, and you have a painted house. That's another Ask Suze Anything. Listen tonight it's the 14th at 6 p.m. East Coast time, I'm doing a Web webinar, so tune in and it's a lot of fun. And if you want to register for it, it's absolutely free. Free, free, free, free. Just go to SuzeOrman.com/webinar and tune in. And the only the only thing missing is KT. I don't do webinars, no she doesn't work on Sundays. But here's the other thing, which is, if you haven't please go back and listen to Sunday's podcast on the ultimate Opportunity Savings account. I have to tell you, we've had such an overwhelming response to it, and it's so great that all of you are taking advantage of it. So, like I said, it won't be around forever. so please look into it. And it's really something that you all should absolutely do. So until tonight on the webinar or Sunday you stay, what KT? say Safe, Everybody. See you soon. Bye.

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