401k, Car Loans, Family, Investing, Retirement, Roth IRA, Saving
February 25, 2021
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On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Kelly, Joyce, Nicole, Kim, Marcia, Tommy, Jessica, Robert, Zoya, Lori, and others selected by KT.
Hey, everybody today is February 25th and you are listening. What? What year? Everyone knows it's a new year. She doesn't want me to say Happy New Year anymore. Hello, everybody. Tell them February 25th, 2021. Why? You're starting this podcast. Suze cannot compose herself. So KT's very soothing voice is going to open the show today. February 25th 2021. You already said that. We are. We are listening to KT Ask Suze anything on the women and money podcasts. I've got to try. Ready? Try. Okay. No, that's our opening. All right, so here we go. Today's podcast everyone is not going to tell them why I'm laughing. And I can't because we're naked. We're not naked. I just said, that's me. I did say to KT, She's this morning, she said, why don't we do the podcast naked? I said why? I said, we can't do that. I have to get dressed like I'm going to work. And she said, I know I can ask you questions like myself and then I would answer. Does it make me look slimmer? Anyway, we're wasting away. The reason I wanted to do that is because when I did the TV show, I always wanted to one segment called the Bare Naked Truth about money. And I would just have whatever let her do it, with nothing under it. But they won't let me do it. So, I thought, Why not on the party? What are you doing? We'll fly. No one would ever let her do that, so here we are. All right, start this off. Today's podcast is not thematic at all. It's a rapid fire. I have lots and lots and lots of questions. I try to pick fairly short ones so that Suze could get to all of you and give you answers and whatever she doesn't get too. I'm happy to answer a little later after the show. So, here we go. Hi, Suze. I read an article of yours that stated, if you get a federal tax refund, you are wasting money. How can I make this happen? I've always gotten a tax refund. This is from Kelly. Here's the truth, Kelly. This was more important years ago when interest rates were really a whole lot higher and you, by getting a tax refund, we're essentially lending the government, your tax refund money, interest free. Now that interest rates are so low, truthfully, it doesn't matter. All right, but if you wanted to change that, all you would have to do is raise your exemptions. Alright, so this is from Joyce. Hey, Suze and KT, my son persuaded me to sign up with NerdWallet. I get updates of my credit score on a regular basis. Should I still pull my credit report annually? Yes. The truth is, I still want you to pull your credit report, and you can do so for free by simply going to annualcreditreport.com. And the reason that I want you to do that is just It's always good to see. Has anybody else opened up a credit card in your name? What else is going on that might not currently reflect in your credit score, so it's always good just to check that, and it doesn't ding them at all when you check your own. No. Okay, so next one is from Nicole. My three-year car lease is ending in a few months, and the buyout option is $23,000. It's a 2018 Ford Edge with extremely low mileage. Since I don't drive much, it only has 11,000 miles. I'm thinking of buying it out. Is this ideal? And if so, should I pay it off immediately or finance for 2 to 3 years? I would number one if you had the money to pay it off. And you still, in addition to paying it off, have at least an 8 to 12-month emergency fund. You have no other credit card debt or debt whatsoever. Obviously, besides a mortgage, I would pay it off. Is it a good idea? If you love the car, you know the car. You know what's good with it? What's bad with it? I have to tell you, I would do that if I were you, and it's done at a good price. One other thing very quickly. Even though I know there's a buyout on it, why not offer them less? That's great. Well, in my in my younger years, KT, when I did lease a car and there was a buyout on it. I offered them a whole lot less than the buyout, and they took it. So, it doesn't hurt you to try. Okay, this is from Kim. My company's 401K plan has been terminated because the company was purchased by another. I need to move the funds very soon. I'm 54 and a half. I'm not sure if I should roll it over to the new companies 401K or roll it into a mutual fund that would charge me 2.5 per cent upfront or roll it into an IRA that charges 1% per year. Can you tell me what you would do? None of them. Are you kidding me? Why would you do any of that? That is all ridiculous, today when you could absolutely roll it into an IRA at a discount brokerage firm and invest it in no load mutual funds or exchange traded funds where there isn't a commission to buy them. You could do whatever you wanted with it and not have to pay essentially anything almost, maybe a quarter of a percent. Maybe even less than that to have your money managed, that's within the ETF. No, I wouldn't do any of those. This is from Marcia. Hi, Suze. Here's my question. We own two homes. Neither are paid off. One is being used as a rental property. It's a town home in a desirable location. However, we have debt. We don't want to sell it because we know one day it will generate income. Right now, it's paying for itself through rent. Would you sell it to pay off the debt or keep it for future income? Marcia, it depends what kind of debt you have. But you said to me, you don't want to sell it. You want to keep it for future income and, well, that future income, will that generate more income for you than if you did anything else with that money? And given now that interest rates are so low and again, I think shortly you're going to see the market start to decline. If I were you, I would just keep that house at this point in time. Okay, Suze, this is from a man. We love man question’s, he writes as a man, I also listen to your women and money podcast. I'm a retired New York City firefighter. KT loves firemen, by the way. I always have. I'm a retired New York City firefighter. My wife is retiring from nursing. I took a 50% pension option. Should my wife take 100% option. I don't think it's the best option in our case, her pension is a lot smaller than mine. And I think she should take single annuity option. Especially since she took an early retirement package. I don't need her pension, and she will get half of mine. Please. What are your thoughts on taking this? You have an answer to that, KT, do you even know what they're talking about? No, I think that first of all, he took a 50%. You either know it or you don't. Do you not know what they're talking about? No. All right, so then you know this. You answer that question. Wait, I ask the question. You answer the question. Sometimes. Sometimes you like Sometimes I know the answer. Most of the time, you don't. What was this person's name? Um, Tommy, I think it's Tommy. All right, Tommy, listen to me. And for everybody else listening. What is Tommy actually asking me? Normally, if you are retiring from a company that offers you a pension, which means after you quit, they send you a check every single month. There are different options. You can take 100% joint, and Survivor option means you get let's just say, $1000 a month. And upon your death, your spouse gets $1000 a month. Then they have 50% joint and Survivor option, which would be you would get more than 100%. You might get $1200 a month, but on your death your spouse gets $600. Or there's a life only or single annuity, which normally says, let's say you would get 1400 a month. But upon your death, your spouse gets nothing. So, the less your spouse gets on your death, the more you get while you're alive. And Tommy, since you said to me you don't need her pension, then, yeah, you should have her do the life only pension, but you better make sure that you don't need it, because if you end up that $300 a month or whatever. Half or 100% of it would have been. You end up needing it. You'll be sorry that you took a single annuity or life only option. Normally, everybody, I recommend that you both if you have pensions, that you both take the 100% joint and survivor option if you're going to rely on that income. I didn't know that because you don't read my books, remember? No, I do. But you forget half of that information. The very first book I wrote, “You've Earned It, Don't Lose It” In 1995 I do the most incredible detailed explanation of this. All right, So Hi, Suze. I contacted you once before with a question about personal finances, and I appreciated your answer. So, I picked this one. Usually, I don't do two of the same person, but Jessica has an interesting point that happened to her over time. So, she's working on paying off her debt. She's building up her emergency fund with the Alliant Credit Union, which I'm proud about. But Suze, here's the question. Recently, the husband, her husband, had a health scare and it got her thinking of what she should do about her trust. So, here's the question. She has a trust they did 10 years ago. It does not include the home, which is held in joint survivorship tenancy. So, she's asking you if either one becomes incapacitated, they need nursing home care. What do they do? She has to talk to about trust. Tell her what to do with the trust. So is her question to me. Should she redo her trust? Yeah. Should she? They haven't touched it for 10 years. And recently her husband had a big health scare. All right, Jessica, I have to just say Suze and I have a trust. We change it like every month, they know that. All right, I have to update it again. Okay, go ahead. Tell her it's normal to do that. Now, here's the thing. The main reason you want a living revocable trust living. You do it while you're alive. Revocable, you can change it anytime you want. Trust, the name of the document. The main reason you want it is because especially if you are in a relationship and you own a home in joint tendency with right of survivorship. If something happens to one of you, they don't die. They become incapacitated. She said that her husband had a health scare recently. Then the problem is, if you needed to sell that home and one of you is incapacitated, it takes both of you to sign the deed to sell the home, and the one that's incapacitated cannot sign it. Now you have to go to probate court, get a conservatorship for your spouse that will cost you $5000. And it's really a nightmare. You need to put your home in the living revocable trust so that the homes title is in the trust you can sign for your spouse. Your spouse can sign for you or whoever your partner is that you own this with, and it makes life really easy. So, you bet you should redo the trust. And obviously many of you know that we have the must have documents, which is $2500 worth of state-of-the-art documents that you can get via this podcast for $69. Just go to Suzeorman.com/offer. They're the exact same documents that KT and I have created by our own trust lawyer now who will be your trust lawyer and you can do them and change them as often as you want. So, Jessica, that's exactly what I would do if I were you. Great. Yeah, all of you need a trust. Okay, So, Suze, this one's this is an interesting question, and it's a sensitive one. This is from Robert. He said my partner and his brother are inheriting a significant amount of land worth hundreds of thousands. I think the brother is bullying him into making a financially, just dangerous decision. My partner is not business minded and despite my worries that his brother will lose their entire inheritance, trying to start a development business on the land that they inherited with no experience, my partner starting to buy into the idea that his brother could turn this into millions. So, the question is, can you talk sense into him or Robert’s asking you, Suze, is he wrong for getting involved? So, is Robert wrong for getting involved in his partner's business and protecting his partners and the partners brother’s business decisions? Well, here's the thing. You started this. I just have to, hand me this piece of paper for a second KT. Oh, I know why you chose this question because the subject matter is financial abuse in progress. That's why you chose it, right? It is. But I didn't want to necessarily call it that title. There's nothing wrong with calling it that if that's what Robert named it, and he also signs it called a concerned partner. Yeah, he's worried. Here's the thing is that development is not always easy. Development takes a lot of knowledge. It takes money. It's not that. Did the partner, did your partner and his brother inherit land? Did they also inherit a lot of money to be able to develop the land to do what his brother wants to? Because otherwise they have to take out construction loans and all these things, and everything can go wrong if your partner does not want to do it. The solution is very simple. He should not do it. 50% of something is better than 100% of nothing, number one. Number two, if your partner's brother believes in this so much, your partner's brother should simply buy your partner out, and that's that. Actually, I would not be doing it because nobody should ever be talked in to doing anything ever when it comes to money. I think that's perfect advice. I would have said exactly the same thing. Let the brother buy out the other brother. Go on. All right, so I'm so happy she thinks I'm doing good advice. I have five more questions. We're going to get there. So, this is from a long-time fan. Short question. Ready for this one? I had to throw these in everybody. Do you think Bitwise 10 Crypto Index fund is a good investment? I wonder if this is our Zoya. If it were our Zoya, she wants to invest. So, here's the question I would very much like to invest in crypto, but without the worry of digital wallet and security. I knew there was more to that than just that, whatever. Tell them they'd be careful of this. Well, the reason that she's telling you that you all should be careful is because last week KT, when Bitcoin was about 58,000, what did I actually do? Sell it sold, and I was so proud of her. So, the first thing I did as I told you last week, is I did sell that one stock, that I had been playing Bitcoin through MicroStrategy's and essentially right after I sold it. It went down from 1000 to almost 600 something. So that so I was happy with that, I don't care if it goes back up or not. And then I started to watch Bitcoin and there was just something that I wasn't quite liking about how it was reacting, and I sold it all. I had made a 40 or 50% profit. I had only put in $10,000 by the way and in the actual Bitcoin and I decided, you know what, I'm out of here. Now that does not mean that I'm not going to go back in again because for the long term, do you remember me telling you everybody I like Bitcoin as an investment. I don't like it as a currency. I would be putting $100 or $200 a month in if you could afford that. And that was money that you never would need. Other than that, I would stay away from Bitcoin. So, to answer this question, Zoya, I would do it the way that I do, do it. If I were you, I would do it through PayPal. You don't need a wallet. You don't need anything. All you do is you sign up and get an account at PayPal and you know you can do it from your credit card. You can do it from anything that you want, as long as you pay it off in full and you just buy Bitcoin through PayPal. The commissions are not that big of a deal. I would do that, versus by an index fund. That's just how I would do it. Because that is how I do it. There you go. Another Bitcoin. And we'd be upset when I buy back into Bitcoin. No, just don't tell me. Okay? Ready? This is from Lori. So, I read. This is a good one. I picked this because I had the same question. Lori, you you're not alone here. This is about credit unions. And for those of you that have never been a member of a credit union, that's how they work, membership. So, this is the question from Lori. Suze, I recently tried to sign up for the ultimate savings opportunity with Alliant Credit Union. I have a question about the application process, after I entered my contact information to begin the process, the next screen shows a box that's required to check to join support foster care to success in order to become a member of Alliant. What is this and why is it required? And then, she said, I'm anxiously awaiting the response because the deadline for this offer is at the end of March. So, let's remind everyone again to take advantage of this. It makes me so sad that this offer is going away because it really is so extraordinary. You hear it at the beginning of the podcast, where I tell you all about it, but essentially you deposit at least $100 a month for 12 consecutive months. At the end of that time, Alliant will give you which is the credit union, one of the largest online credit unions in the United States, best rated by almost everybody, $100. That's over a 16% return on your money, you will need $18,000 today in an account to earn $100 of interest. However, it is a credit union. And as KT just said, to be involved with the credit union, you need to be a member of that credit union, and there's all different ways that you can be a member. But if you don't qualify for any of those ways, when you do, go to myalliant.com the last way and I actually think the best way is that you actually become another member. You support foster care to success and foster care to success is, once a foster child reaches the age of 18, they're no longer in the foster care system. So now what do they do? So, if you become a member of this, then this money all goes to help support those kids, and it's $5. However, you don't pay that $5. Alliant pays that $5. And now, given the thousands and thousands and thousands of people that have done the ultimate opportunity savings account through Alliant, foster care to success has gotten a nice sum of money. So, you can other one by helping yourself. Yes, I want to tell everyone I did that because we all did that. It's a very simple thing. But the whole reason Alliant is choosing them is because that's their charity of choice. That's our charity of choice, our charity of choice as well. But that's it's not a big deal. It's very, very simple. So just click the box in your in. Yeah, and it's not going to cost you a penny. But that's what it helps. It helps another kid, so just click it in your and so help yourself by helping others. Okay, so, Suze next question is from Laura. I'm a 73 year-old retired nurse. I'm moving into an adult living facility next week. I had to give them my Social Security number so they could do a background check. I asked them to please discard the number, after they contacted the FBI. I just received another call asking me for the number again for my medical records. Even Medicare took Social Security numbers off the Medicare cards. How should I proceed, Suze? Now, I would never give anybody my social security number who called me. I would take their number, and I would call them back. Or I would call the facility that you are moving into since you already gave them your social security number and give it to them again and ask. In fact, was it them who called you for that information? I would not just give it to anybody who called me. No way. Next, KT. Okay, this is from Paul Francis. I just read your article where you suggested folks in their fifties should contribute to a Roth IRA. I'm 56. My husband's 57 will probably work towards 65. My husband is currently contributing the max to his 401K. And I was thinking putting my paycheck into a 401K to reduce our overall taxable income. Now, I'm torn between the 401K and the Roth IRA, which I already have an account. Please help us make the best decision. Yeah, first of all, here's the answer. Do you Paul have a Roth 401K where you work that matches your contribution. Because the way that you would do this in order is a Roth 401K at work that matches your contribution if they don't offer a Roth 401K at work that matches your contribution. Do they offer a traditional 401K at work that matches your contribution? If they do, then you contribute to that up to the point of the match. After the match, you would put all your money into a Roth IRA. If they offer a 401K even a Roth 401K that does not match your contribution. You are far better off funding a Roth IRA than anything at work. I would forget about reducing your taxable liability. Now, I've said this for years, and I would do a Roth hands down. I don't care about the taxes that you pay. Now I care about, what are you going to have in your retirement account years from now that you can access absolutely tax free? Alright, My last question. And then I get to ask me queasy. The last question is a strange one, but I kind of I felt his, I felt it's really sincere everybody. So, this is an odd question, but I want Suze to answer it. This is from Tony and this is and it's a man, and I feel a little sorry for him. I listened to your Valentine's Day podcast and was startled when you said money does not dwell in filth and to clean up your house for your money. You ready, so Tony is a 63-year-old man. He's recently divorced, living on his own for the first time. Because of the pandemic, he says. I've been working from home in the mountains. It's been a snowy winter. I rarely leave the house. Being a bachelor for the first time in my life, I've kind of let things go a bit. Cuz when I read this, I thinking, what a mess he must have made. So, I'm sure Tony made a big mess. I never made a connection between having a clean house and being abundant. I took your advice and began to clean my house. I found a box of old coins and I've been making a tidy profit selling them and other things I have accumulated. I can tell you one thing before you finish. I'll never forget doing an Oprah show, and we did this and there was a woman and she went through her closet and found so many gold coins from her father that I can't even tell you what they're worth. But it's amazing how much money you might have in those closets of yours anyway, go on. Yeah, so listen to This is the question. Already I have two urns with ashes of two spouses that have pre-deceased me as spouses to as and he's recently divorced. So, this is like, you know, Tony ready? So, then he also has the ashes of his beloved pet in a wooden chest at the foot of his bed. I would like to know your opinion as to what I should do with them. I do feel on some level having them is affecting my energy and thus my financial state. So, Suze, do you have an opinion on this? And then he said, I know this is an unusual question, but I'm not the only person facing this. You know what, I think? Tony's true. It's true. It's just others like you out there that make a mess, Tony. So, you know, Tony, it's KT, and I had to do this as well. With her mother and her father's ashes, as well as my mother's ashes. It's like, what do you do with them? And both of us have little tiny gold boxes, little one little brass hearts and brass hearts, their heart that that we have a little bit of their ash in. I mean, I'm telling you, like an inch by an inch tiny, that we just keep on little special places and the rest, what we did was that we went out into the ocean and we let the ashes go, and we watched them spiral down. It was really one of the more beautiful releases ever. So, find a really sacred place that would honor them and release them. And then I think you will absolutely feel better. Alright KT, you got through all those. How is that? That was great. That was Yeah, we got. That's a lot of questions. Okay. Alright. What's my quizzie? Be nice, Suze. All right, All right. Let me see. I can do a short one or a long one short. Alright, I'll do the long, right. This is from Lance, right? Many of these are from men today, but that's all right. Lance says I'm turning 35 this September and want to be the best version of myself that I can be. I haven't been at my new job long enough to begin contributing to their 401K plan, but will be able to do so in April of 2021. I have about $20,000 from my old employer sitting in their Fidelity plan. My new employer plan does not have a Roth option, which I know you prefer. My question is, what do I do with my current 401K when it's time to roll over, A) roll over my old employer's 401K into a Roth IRA or B) roll over the funds into my current employers 401K and then start my own Roth IRA. So, which one would I do? The first one? Yeah. Wait, why are you laughing? KT, did we not discuss earlier in this podcast how you cannot go from a traditional 401K into a Roth because it would be totally taxable. The answer to this question, everybody is all of you have really got to get this, and KT is not unusual. Because so many of you are writing in and saying you took your traditional IRA and put it into a Roth. You put your 401K into a Roth. Any time you convert or roll over money that is in a pretax retirement account into a Roth, you are going to owe ordinary income taxes on this. So, the answer to this is neither. I would not roll over my employers 401K into a Roth. That was a trick question. The answer isn't a or B or one or two. It's neither one. But you said A, because you said Which one? KT, which like KT, don't try to save this for yourself. I should have said, I don't know. That's right. But you should everybody don't guess. If you don't know, you don't know and tell them you don't know. Also, I would not be rolling over the funds into might. Now, this is why I chose this as a quizzie. All right, KT, when you roll over the funds into your current employers 401K, that would be fine. But then you're limited to the investments that are in your employer's 401K. So normally, I would tell you to absolutely do an IRA rollover with this and convert it little by little to a Roth IRA. You can still have a Roth IRA on your own lands. You can do both. But if you think in the long-run you're going to make too much money to qualify for a Roth IRA income wise, then roll it to your employers. 401K, it will make your life a whole lot easier. All right, KT, you brought us in, take us out girlfriend. So, remember next week, no more quizzes for KT. But remember, everybody there's only one thing that matters when it comes to your money. And it is this people first and money, then things and no quizzie. And you laugh as much as you possibly can. Stay safe. Everybody stay safe bye.
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