Podcast Episode - Debt Is Bondage

Listen to Podcast Episode:

Dealing with personal debt is the most critical aspect of achieving a successful financial future.

Podcast Transcript:

Today's podcast is about debt. I know everybody thinks that when you do a podcast called Women & Money, we're gonna talk about money. What to do about money, how you invested, how you make it grow. But here's the problem, ladies, do you really have any money to invest? If I were to ask you right here and right now, if you have credit card debt that you can't pay in full at the end of the month to stand up. If you have a car loan debt, mortgage debt, student loan debt 401K debt, personal debt, stand up. I got news for you. 100% of you would be standing right now. So how can I talk to you about money, when most of you don't even have any? And why is it that you don't have any. You don't have any for two reasons. Number one. We want immediate gratification. We see that somebody else has something and we want it. We don't have the money to get it, but yet we have credit cards, so we're able to get it. We don't wanna have to wait to be able to have enough money to pay for something in full because we want it right now, so we don't have money. So we get ourselves into credit card debt. And when we get ourselves into credit card debt, number two kicks in. Debt renders you powerless, because when you have a debt, you are in bondage. It feels like you are in a financial jail cell, and when you are in bondage, you are rendered powerless. And when you are powerless, the number one law of money comes into effect, which is power attracts money and powerlessness repels it. It's just the law. You can check back on one of my previous podcasts, and I explain that law in great detail to you. But that is the number one law of money, and nothing renders you more powerless than having debt. So let's deal with how do we get out of debt, and how do we stay out of debt? And what were the reasons that you got into debt to begin with? When you are in debt, you are paying for your present day desires, but your costs are going to be your future day needs. It is so fascinating when it comes to money. Money is the only thing that you can spend when you don't have any. Like if you're hungry and you have cookies in a cookie jar. Okay, you can go to the cookie jar and take out a cookie. But if you're hungry and you want a cookie and there are no cookies in the cookie jar, you cannot get a cookie. You just have to go hungry, and want that cookie, but you're not going to get it. But because of credit cards, because of payday loans, because of people's co-signing for you, whatever it may be, you're able to spend money when you don't have any. Therefore, on today's podcast, we're going to focus on what are the best techniques that you can use to get yourself out of debt, the quickest and safest way possible. But right now, we're going to go to Sarah, and we're going to see what kind of questions all of you have when it comes to your debt. What is it that you need to know? And by the way, if you would like to participate on the Suze Orman Women & Money podcast, all you have to do is either go to ask suzepodcast@gmail.com, or go to my Facebook page, facebook.com/Suze Orman, and you just send in your question or whatever it is that you need to know, and if Sarah chooses it, you possibly could be on the air with me, or at least your question will be answered that way. Sarah. All right, I got through that opening. Oh, my goodness. Suze, do you always have to be so heavy? Debt is bondage. I mean. But it is, Sarah. It is bondage. When you have debt, you are in a financial jail cell. I don't care what anybody says, but you think I'm heavy. I mean listen. We're talking to people, and likely they're sitting there saying I've got this debt I’ve got to get rid of. It's like the sky's falling when you talk. But guess what? In my world, when somebody has credit card debt that they cannot pay at the end of the month in full, they are already down the path to financial ruin. They just are. And so you got to remember I've been doing this almost 40 years. You're not even 40 years old, my love. Six months, baby. But do you understand what I mean? And I have watched what happens to people when they get into debt, their entire lives are ruined. And part of me thinks when people get married, it shouldn't be till death to you part. It should be till debt do you part. So I'm sorry I'm so heavy, but it's just that I care so much. This is a very serious topic, and debt is the foundation. The beginning of everything. You got to clear the debt off, and then you can start all of the other building financially. We got an email from a woman who is a doctor in San Francisco, actually, and she just wrote, I just need to tell you I'm 37 years old, and on July 3rd I will have paid off $141,000 in debt, and she's literally writing, Woo. I'm 100% debt free. These are the emails we get because this is the topic. Debt is the topic. So want me to tell you one story and then we'll go on to the rapid fire. I know it's like, but I'm always so excited to talk to you. So here's the thing. So I'm on QVC. QVC is live and everybody I've been on QVC now on HSN for over 20 some odd years, and you could think about it what you want. But it's a legitimate way to get all of you to purchase all those items that you need, okay. But that's besides the point. And this woman calls in, and she's, you know, telling me about her life and how she's just paid off her debt and everything like that. And I say to her, I don't know why I'm telling this story. I think I'm crazy that I'm telling it. And I go, and she's in her eighties, right? And I go. Just can I ask you something? This is live TV, and she says sure. I said when you paid off your last credit card bill, because she called in to say how great she felt. Was that better than the first orgasm you ever had? And you know what she says to me, she says I don't know. I can't remember back that far. But anyway, all right, ask me the questions. Okay? First question that we have. What is the difference between a FICO score and a credit score? Yeah, it's an important one to know. Listen, everybody, FICO stands for Fair Isaac Corporation, the company that created the score over 50 years ago. 80 to 90% of all the financial institutions out there that extend credit to you, they Only based that interest rate on a legitimate FICO scoe. When you get a credit score, such as you do with creditkarma.com, it is not a FICO score, so it could be tabulated differently. The number could be different and sometimes five or ten difference, you know five or ten different score can be really a whole lot different than the interest rate that you get. So, a legitimate FICO score is what the banks use and 80 to 90% of the financial institutions use. However, most FICO scores, unless you get a credit card now that gives you them for free, and they are out there. If you happen to get one, and you need one, you have to buy it. And I think they're 12, 15. Whatever they are. Creditkarma.com gives them to you for free, but it's a credit score. But if you're ever really going to apply for a loan, it makes sense for you to check out a FICO score. You know it's so funny is nobody talks about the difference. Everybody thinks you just need a credit score. And it's actually very important that you know the difference between a credit scoring a FICO score. Yeah, here's the truth. When Credit Karma came out, all these places came out, Experian and everything with their vantage scores. I went into a FICO frenzy. I was like, Are you people crazy? Do not get those scores. Do not pay for those scores. And the only good part about creditkarma.com is that it was for free. So then, as I got a little bit older and I mellowed, although you think I'm still not too mellow here, but I have mellowed a lot, I realize, oh, who cares. If people just want to check their credit scores and it doesn't cost them anything like with creditkarma.com, why not? As long as they know the difference, at least they're getting involved with seeing how they're doing, which is the first step to at least coming into financial consciousness, so to speak, so that you're even aware of the credit scores, and the FICO scores. But again, if you're really ever going to apply for a home loan, a car loan or whatever, just take the time to check your FICO score. So you really know if you're in trouble or not. Okay, the next question comes from Amelia, she says. If I have not been paying my bills, I'm afraid they're going to close down my credit cards. I also have student loans I haven't paid. I just got a raise, so I need some money advice. So funny she's scared they're going to close down her credit cards, but she says nothing about her student loans whatsoever. What are you, nuts? Are you just nuts? Let me tell you why. When it comes to credit cards, all right. You haven't paid them. They close them down, or they go into default. What are they gonna do to you? In order to collect on them, they have to sue you and get a judgment. Maybe they will. Maybe they won't. But if they're a credit card, it's an unsecured loan. You didn't secure your house. You didn't secure your car. You didn't secure your bicycle or anything against a credit card debt. So they have to sue you. And yeah, like I said, if they win, they could garnish your wages. But how much do you owe? Does it really matter? Chances are they're not going to do anything. Student loans. They don't want you to pay them, in my opinion. They are a wishin’ and a prayin’ and a hoping that you just let them go, and go, and go. Why? Because 10,000 turns into 20,000 turns into 40,000 turns into 80,000 turns into 160,000 turns into 320,000. And then what happens? They have the legal authority to garnish your wages. They can even garnish your social security check, because, Sarah, do you know that 99.9% of the student loans out there cannot be discharged in bankruptcy? So you are stuck with these student loans forever. And because the lenders know that you can never get out of them, they don't come after you. They let you just get into default, and not pay it and everything like that. And so they’re wishing that you don't pay it. There should be something against the law. You need to really come after somebody sooner than before they're in trouble with hundreds of thousands of dollars of loans. So my advice is that, please, are you kidding me? You should be paying your student loan before even touch a credit card payment. Well, let's just, this is another topic for another day, but college is too expensive, and it's ridiculous what we're paying to go to university. Oh, now look who's being heavy. But you know what? Like you know, I spent a big part of my career in in that space. It's too expensive, and it's not relevant to the work force, what's happening in universities across the country. But that's my personal opinion, so let's go on to the real questions. But wait, why did you say it like that? You just said, well, that's my personal opinion. As if your personal opinion doesn't count. I don't know. The fact that Suze Orman has chosen you to be the co-host of this show means I think your opinion really does count. Because I think you bring a new perspective, a younger perspective, an intelligent perspective. I don't know anybody smarter than you, miss Sarah. Nobody more innovative, more on it, more caring, more whatever. And I'm not sucking up to you. I don't have to suck up to you. And yet you just said, well, just my personal opinion. That pisses me off. Listen, you know, I just you know, sometimes you feel like, is my soapbox worthy? I don't know. You know, I just. But then, if you don't think your soapbox is worthy, how can other women that are listening to this program think that their soapboxes worthy? And it's not a soapbox! It's a valid opinion that you have to feel matters, because when you feel you you matter, you have self worth. And when you have self worth, you have net worth. Every single woman's opinion matters, and every single woman's opinion needs to be heard, and voiced, knowing that it is a valid opinion because it is hers. All right, I'll let you off now. Next question. You know what? That was a mini Suze slap down everybody. I just want you to know, but it's actually a really good point that you just made with me right here. You know, for me, I feel secure. I have money in the bank. I all of these things, right? I'm doing the Suze checklist. I'm working the plan, but it doesn't mean that the work stops, you know. Listen, Sarah, I am 30 years older than you. And in those 30 years, these are the things that you learn. You learn that your thoughts matter. You learn what your own thoughts are because we spend our beginning years asking everybody, what do you think? What do you think? What do you think? I don't care what anybody thinks anymore, but I didn't start out that way. I started out thinking, what I thought didn't matter. But all of these things play into women and money. Play into debt. Play into the cycle of financial freedom or financial fatalities. The other day we were talking to somebody and you said, I want you to go and start telling people how much credit card debt you have. That's the first step. And, you know, a little bit. It's disarming. Like, okay, so I'm gonna walk into this coffee shop and meet my girlfriend, and I'm gonna tell her I have $18,000 in credit card debt. But you know what? As soon as you say it to somebody else, everything can start changing. You know what I used to do for my courage to be rich tour? I was in a very large bookstore that could handle all the people that did come to see me, and I was talking about debt, and I had people come and stand on the table. This was in Boston because they were just so buckled up in Boston. I was going crazy, and I had people come and step up on a table and scream to the room how much credit card debt they had. Oh, that was a scene. It was such a scene, but it was so freeing, so freeing. But I got so many stories I could tell you. I can tell you. When I was on the Oprah All Stars, and we had a woman that was going to admit that she had $1 million of debt and her husband did not know it, and the moderator of it, I will not mention names, right when the woman was about to say how much debt she had and free herself, the moderator said, don't do it. You don't have to do it. And oh, my God, did we get in a fight. Now obviously that was cut out. Nobody ever saw that. But oh, it was like you just kept this woman from making the biggest breakthrough of her life, because you have a problem with admitting anything about money. I almost died on the spot, and Dr. Phil was just looking at me going, Oh, my God. And I was like, step in Dr Phil. Of course he didn't, but that's besides the point. Alright ask me another question. Our next question comes from Tanya. I've been contacted by a debt consolidator that says that if I give them $800, they can reduce my credit card debt in half. Should I do that? You know, so many people when I had the Suze Orman show used to call in with this question. No, you should not do that. And here is the reason why. You can do this on your own, without having to pay somebody $800 to tell you what to do. And then they also get 50% in many cases of the amount of money that your debt was reduced by. They have you pay them every single month, an amount of money that they keep in an account for you. And they tell you to stop paying any amounts of money on any of your credit cards. As your credit cards go into default, your FICO score goes down, down, down, down. As your FICO score goes down, there now keeping money for you, and when they have a nice sum of money, they call up the credit card companies and they negotiate 50 cents to 25 cents on the dollar to reduce your debt by. So if you owe $10,000, and now you have a horrific FICO score and everything's gone to pot, you haven't made any payments. Maybe they'll settle for $2,000 or $3,000 or whatever it may be. They have that money to pay it, because they've been collecting your payments along the way, and they use that money to pay. But again, you had to pay them, and sometimes they get a percentage of how much they saved you. I got news for you. If you want to go that route, you could do it yourself. Just stop paying your credit cards, and just start saving money so that you can make them an offer so that eventually in six months from now or a year from now, you call them up and go, listen, I don't have any money, but I've saved enough to give you 20% of what I owe. You want to settle it? And chances are they will say yes. Now, in many cases, when they relieve debt from you, you owe ten. You settle for two. That $8,000 could be taxable to you, the difference between what you owed and what you paid them, cause they forgave that debt. And when you forgive debt, that's a taxable event. But nine out of ten times, you never have to pay it because if what they forgave is more than the assets that you have, then usually you don't have to pay taxes on it. But it's just something that you should check out to make sure that you don't. Let’s go to the next question from Phoebe, because this - why did that one just bore you? You don't have one comment on it? No, you know what? I get nervous, Suze. I feel like I don't want anyone to hear that, you know, just go run up your credit cards and then they'll forgive your debt. It's not - I didn't say run up your credit cards. No, I know you didn't say that, but I want to make sure that the women have the emotional foundation, that that's not what they heard. Oh, you don't want them to run up their credit cards knowing that they're then going to screw the credit card companies and get out of it for pennies on the dollar. Women aren't that stupid. Women don't want to do that. Women get themselves in credit card debt, and they don't know how to get themselves out - neither do men, by the way, and they get themselves in a bind. This is usually for people who have done that. But here's the problem. When you do that, you decrease your FICO score. And when you decrease your FICO score, you increase everything - your interest rates on your mortgage, your interest rates on your credit card. You even increase your direct TV bill and your car insurance premiums. So in the long run, they've screwed themselves. You never want to hurt your FICO score, or your credit score. So this is the last ditch effort for some people. And I'm just saying, If you're gonna use one of these debt collection agencies, you know, I'm here to tell you rather than pay them to do it, you can do it yourself. But the truth of the matter is, just avoid getting yourself in that situation to begin with. That's what I wanted everybody to know. Well, why did Here we go again? Why didn't you tell them that? Well, you know, sometimes I have to play a little game with you. You said, Let's go on to the next question. Are I'm getting you good today? I know you're on fire. Is this, is this like a pre-trip Suze on fire moment? Yes, I leave everybody in three hours for Spain, where I'm walking the Camino if you haven't ever done it, it's something that you should try, and it's really an extraordinary experience. It's the second time I've done it with KT. This time we're doing it with her sisters. So let's see how that goes, and keep going. Our next question comes from Phoebe, and she says this. I've been 120 days late with my credit cards. My credit score took a big hit. I just got an inheritance. That's enough to pay off the debt, but then I'm broke again. Should I pay them off so my credit score increases? I really would like to buy a home, Suze. Is Phoebe kidding me? She's 120 days late with her credit card payments, and she's thinking about buying a home, and if she's late with their credit card payments, it means she doesn't have an emergency fund, and she can't afford to buy a home. So before you run, you need to walk. And in this case, you not only need to walk, you need to crawl. You know, you owe this money. So of course you should pay it off, but not to increase your FICO score. Because here's the problem everybody, you are 90 to 120 days late on your credit cards and your FICO score has already taken a hit. Even if you pay off those credit cards, it does not repair your FICO score. It will not help it. What so ever. The only thing that it will do, is it will clean up your debt that you ethically owe, so yeah, you should pay it off because you charged on your credit cards and that is the ethical thing to do. However, this is just, this isn't what Phoebe asked, but for those of you listening, if you have credit cards that you are 30 days late on 90 days late on 60 days late on 120 days late on, take your money, if you ever get any, and pay down or pay off the credit cards that are only 30 to 60 days late, because that will help your FICO score. Once they go to 90 to 120 days. No matter what you do, it's not gonna affect your credit score. Well, that's an interesting distinction. I didn't know that. I got you on something. See, I'll tell you a few things that make you so great. It's all right. You don't have to explain it to me. But that's something Sarah, seriously, that very few people know about. I have to tell you, that's what makes me so great. Sorry, everybody. But not only was I a legitimate financial advisor with all the exams, all the licenses, everything you could imagine, I have seen it all one on one, as well as all the years in the media and my own TV show. So I really know that I bring something to this equation that very few other people bring. You know, most people, maybe financial correspondents or financial writers, or they have their opinion. It's a really big difference when you've sat across the desk from somebody, and you've given them advice and they've lost their money or whatever it may be. So whether it's an options trader, which I've been, or a commodity trading advisor, which I've been, a certified financial planner, one of the first ones out there. I still have that license. That's something that comes with age. So that's why you and me make a good team. And I think what I bring to the table is, the questions of Help me, i'm selfish in this. You know, it's every episode, actually. When we finish recording, I have a conversation with KT about something that I learned. Yeah, I always know when you're a little nervous because I can hear you pounding the table. All right, so go on. Let's go on to Christine, she says. My credit score is great. My husband's is horrible. Just so you know, he's a stay-at-home Dad. We're buying a home, but his score is making the interest rate we're gonna pay way high. Is there anything we can do. So this is an interesting one, Christine, because he is not contributing, obviously to the household income. So you are qualifying for a mortgage all on your own. When you go to apply for a mortgage with somebody, and both names are going to be on the mortgage, they will take a look at both of your FICO scores. Sometimes they average them, or they take the lowest one to assign the interest rate that you're going to get. Remember everybody, the lower your FICO score, the higher your interest rate, the higher your FICO score, the lower your interest rate. So, in your situation, if I were you, I would take out the mortgage in just my name so that you get a lower interest rate. However, I would also only put the house in just my name because the last thing you want if something doesn't work out between you and your husband, and anything is possible, that he is not responsible for a mortgage payment, but he still owns the house with you. So given that somehow he screwed up on his money, and the reason that I'm asking you to do that, is usually a FICO score means somebody has been irresponsible with money. A high FICO score means somebody has been responsible with money, and usually when a low and a high get married, eventually there are a lot of financial lows. So I would protect what I have, the income, the fact that only my name is on the actual mortgage, and therefore, no matter what happens, you're okay. Make sure that you have a living revocable trust, where you leave it to him, so he doesn't have to go through probate, but also you want to make sure that you have a term life insurance policy for at least whatever the mortgage balance is, because he doesn't have an income. So you need to also figure out, besides the mortgage balance that would be owed if you died, how much income does he need per year to be able to stay at home, and still take care of your child or Children? And you just need to figure that out. Usually if he needs, let's say, $50,000, you would times $50,000 times 25, and you would have or even 20 now, cause interest rates are going up. That that would mean that you need at least a one million and a 1.5 million or $2 million term life insurance policy. You should have it for at least 20 years until your youngest one is at least 23, because then you'll know everything's okay, and you would add on to that amount of money, whatever your mortgage balance is, and then you know you have protected him in case you die prematurely. So that's what I would be doing if I was her. Okay, the next one comes from Alison, and she says, What does my FICO score have to do with my car insurance premiums? I've just had my insurance premiums increased, and they said it was my credit score. What the f is what she actually says in her email. Oh, she's not happy about this, you know, this is what I mentioned earlier. Now we mentioned that a low FICO score, which is why you would never want to ruin your FICO score, has to do with everything it has to do with. Will a cell phone company give you a cell phone? Well, even possibly, will an employer hire you? Because your FICO score is made of the information on your credit reports, and many employers look at credit report. So if you have a low FICO score, that means you have bad stuff on your credit reports. Is that legal? You can maybe not get hired? Yeah, it's, they’ll look at your credit reports, and you have to give them permission, obviously, to do so, which is why all of you should go to annualcreditreport.com, and you can get your credit reports for free. Because it is legal. Because listen, if you're not good with your own money, there are many employers that are not going to hire you, because they don't think that you're going to be good with their money, so to speak. And so yes, of course they can. But here's the scoop. In the same way everybody has a credit score and a FICO score, everybody also has what's called an insurance risk score that is tabulated the exact same way that your FICO score is tabulated. So if you have a low FICO score, you have a low insurance risk score. And when the insurance companies look at that, they then know that you are a risk to them, so they increase your insurance premiums on your car. The only one state that I'm aware of that isn't supposed to do that because of Prop. 13 is California, but I don't know. Do they do it? Do they not do it? Any of you know that? But that is why this woman had her insurance premiums increase because her credit score obviously went down, because maybe she went and had a debt consolidator and decided to ruin her credit score, or just wasn't paying her bills on time. But that is how it works Sara. It's incredible. I think that everybody, I think that everybody I think I think a lot of people don't realize the trickle effect on your credit score or your FICO score and how it really does impact every single area of your life. Yeah, you know, I always used to say, everybody you need to think of your FICO score like your financial SATs. You are not going to get into college, or a good school, if you don't have good scores on your SATs or your ACTs or whatever they are. So this is like the same with your financial scores. Your financial SATs, your FICO scores. Because everybody, no matter what you do in life, they are going to be looking at those scores, from giving you the interest rate on a car loan, a home loan, a job, your insurance premiums, your telephone. Every single thing will have to do with that. You know, a landlord is not going to rent to you, unless you have good FICO scores. They are not going to do it, because why would they? That's the way that they can immediately check, with your permission obviously, they can really check to see, are you financially responsible or are you not? Because if you're not and you have a low FICO score, why would they rent to you? Because you're not gonna pay them their money. That's exactly right. That's exactly right. Well, let's, let's keep moving. Let's think I have a question for Maria, she says. When I was younger about six years ago, I let all my credit cards going to default. Now I'm getting calls threatening me that I have to pay them or I'm going to be sued. They want me to send in, what she's calling is a good faith check immediately. Is that a thing? And she wants to know if she should do it. Don't do it. Don't do it. Don't do it. And let me tell you why. The reason that you are getting calls in within six years is that every state has their own statute of limitations, where after those years have past four years, six years, whatever it may be, after that amount of time has passed, you are no longer are legally responsible for that credit card. They're gone. Your debt is wiped clean. Nobody can sue, you, nbody can do anything. It's just gone. It's already taken a hit on your FICO score, and now they've just gone into default. What happens is, credit collection bureaus buy the records from the creditors that are about to go into default for pennies on the dollar. And then they call you up, trying to scare the bejesus out of you, so that you send in any amount of money. Because if you send in even $10, you have started this statute of limitation clock all over again. And now, they can legally go after you for that entire amount of money. So don't do it, don't do it, don't do it. Next time they call you just say, you know, I was listening to Suze Orman, and I am not going to send you a penny because I know you're calling me, cause the statue of limitations is almost up. So I just have to tell you, I am not sending you a penny. So take that to the bank, credit collection bureaus. That's amazing. Like, and you know what’s so funny, is we get a lot of emails about this. This is, so Maria, one of the reasons why I picked it is, we get a ton of emails on this very topic, on what they should do in these threatening phone calls people get. They all need to know that they're protected by laws. They should just know that they can't be harassed at work. They can't be threatened to be sued. There's all these laws that protect them. Not that it doesn't have good cause everybody breaks laws. Obviously. Look at the state of where we are right now in the world, but that's besides the point. I will not go political on us, but boy would I like to. Alright go on. I know. Well, maybe we'll do an out take session with a special drop for if we give everybody a secret code for it. This question comes from Sandy. Yeah, we should, and we should call it like that earlier person who just wrote in who said W-T-F, I think you said WTF, because it's really when you look at the state of this world right now, every single day I'm going, WTF are you kidding me? Okay, the next one from Sandy and she says, Suze, I co-sign on a loan for my son for a car. I just found out my credit score has been ruined because he didn't pay the bills, and now they've repossessed his car, and I now owe $6,000. How is it possible they took the car back? Why do I ow? What is going on? So, first of all, this is a woman who obviously never watched the Suze Orman show, because I couldn't have ranted and raved more about, do not co-sign a loan. I don't care who it is. Why it is. If a bank isn't willing to give this person money, neither should you. And if, by chance you don't listen to that, you should be paying the creditor and whoever you co-signed for, they should be paying you, so that you know that your FICO score isn't getting screwed up, but obviously that's not the question here. But that's how it should have gone. Here's what happens with car loans, and it is such a racket I can't even tell you. Let's just say it's a $20,000 car. That car will depreciate 30% in value the second you drive it home. So now, that car is only really worth $14,000. You possibly owe 20,000 on it, or you only owe, let’s just let's say $14,000, let's say even put $6,000 down. And now the car goes into default and they repossess it. Here's the racket that the car loan companies, and the automobile companies do. They all have a used car lot, where they repossess the car, they put the car in the used car lot, and they sell it, possibly for, oh, let's just say, $8,000. You owed 14,000 and they sell it to somebody who works for the car company. Now you owe them $6,000. The difference between 8,000 and the 14,000 you owe, because they lost that money when they sold the car, but now they have that car, and they will sell it for $16,000, and now they recoup all of their money there, plus the $6,000 from you. And that's why people have to be very careful, by the way, when they buy a car, because what's interesting is you buy a car, no money down, $20,000, now you're in a car accident and the car is totaled. Your insurance company only pays you the value of what your car is worth, which would be $14,000. Now you still owe $6,000 to the car loan company, you don't have a car, and you still owe money on it. That's why you see some of those commercials on TV. How is it possible? I bought this car and I thought it was insured, but I guess not. And everything, I forget what insurance company that's for, but it's so accurate. You're gonna get screwed one way or the other, so be very careful people. What's the solution to that? Either you have a lot of money and you don't care, and okay, you're fine, no matter what, and you don't finance a car, you buy it outright for full cash, and if you really can't do that, then just buy a new car for yourself, but that's used. That's already depreciated the 30%. So then, once you buy it, if you're in an accident with it, you're still going to get the full insurance for it. And if you ever have to finance a car, you should never have to finance it for more than three years. Because if you have to go out further than three years to afford the payment, you are buying a car that you cannot afford. But again, that's a whole another podcast. Well, let me just say this really quickly, if you're going to buy a car, go to Kelleybluebook.com and see what the value of the car is, so you know you're making a good financial decision. And never, ever, ever lease a car that's the biggest rip off out there, bar none. And when you do buy a car, keep it for 10 or 12 years. I keep every car that I buy for at least 10 years. So does Jack Welch. So does a lot of people that are billionaires, multi multi multi billionaires. So why not do with that? The car is just a total waste of money. Anyway. Go on. What else you got for me? All right, let's go to our last question. Here it is. I took on a private student loan for my daughter. That costs me about $675 a month, which I can barely afford. The deal was, once my daughter got a job, she would pay me back. I can barely write these words, but my daughter got the flu that turned into a nightmare and died. I'm still in shock. However, I’ve now been told that I still owe her on her student loan. Please tell me that that's not true. Don't cry here, Sarah, because things like this happen. But the truth is, it’s true. If this had been a stand for loan or a parent plus loan with the government, when you are signing for your kid, and if your kid dies, the lone dies with it. It's over. But on many private student loans, when you sign, if your child dies, you are still legally responsible for those payments. That is why it is essential, if you co-sign for a private student loan, which you should never, ever, ever, ever, ever, ever do, nobody should take out a private student loan. But if you happen to, you also need to get a term life insurance policy, with your child being the insured and you are the beneficiary for the amount of the student loan, so that this doesn't happen. It happens so much, I cannot even tell you, Sarah. It's a sad one. It's so, so sad. And it's a lot of money. $675. It's a lot. That's not a small number. That's a big number. No. And that comes back to your original comment earlier in this rapid-fire session, although these aren't so rapid fire anymore, you know, they're all going 30, 35 minutes, but okay. The truth of the matter is, that you really have to think about how expensive of a school are you going to? There is nothing wrong with going to community college. There is nothing wrong with postponing even going to college until you have the money to do so. But to get yourself into debt if it is a private student loan, it will haunt you for the rest of your life, cause private student loans can increase their interest rate to any amount that they want. It could go as high as they want to take you. Private student loans are the biggest rip offs out there, and one of the stupidest things any of you can ever do in the name of wanting to help your child. It will not help them, it will not help you, and it will burden you forever, possibly with student loan debt, which we already talked about earlier, that will not be dischargeable in most cases, in bankruptcy. What a way to end our rapid-fire girlfriend. You know, listen, I think that college education and the cost of college education, there's so much hype when you're a teenager about where you're going to go to college. But nobody's talking about the cost, or understanding the value of a dollar when you're picking your school. And you know that I spent ten years in working in higher education, and if I knew then what I know now about the value of a dollar, and the impact of where I went to school, I would have been just fine if I went to a less expensive school. Yeah, you know, remember, I went to school on to be a social worker with a specialty in geriatrics. How’d that helped me? Now it helped me and only that I'm more compassionate, I understand what happens when you don't have money. But I became who I am after seven years as a waitress everybody, never forget that, till I was 30 years of age, making $400 a month. I became who I became because that's what I was meant to be. Education did not get me there, I got me there. Now it's different if you want to be a doctor, or a lawyer. But the majority of the professions, I don't know. You got to think twice about this. You know, I'm going to make an executive decision here on this week's podcast, because this was kind of, in a very strange way, a heavy podcast. And I really think, that the rapid fire questions covered every possible thing that somebody should know want to know when it comes to debt. So how about If we skip the caller this week and we go straight to the do it moment, what do you say? I totally agree with you. Let's do that. And also, I just want to say to everybody, when you send your emails in to the Ask Suze podcast Gmail, we read them all. And, oftentimes Suze and I quickly get on the phone, talk about the question, and record an answer and send it back to people, because we just want people to get their answers. So please, please, please send in your questions. We are looking at it. We're reading it. We’re replying back. So if we don't do a caller on an individual episode, it doesn't mean we're not responding to people. We love the dialogue. When I end this recording for this podcast, there's a woman who wrote in, and she’s too embarrassed to have it read on air. Now she'd given us, by the way, her telephone number. I would have called her directly today and spoken to her one on one. I'd love to do that. But I'm going to record an answer to her personally, and we are going to send it to her email box, so she could hear the answer. Cause she deserves to hear the answer that I'm going to give her. All of you deserve to have the best financial advice in the world, and we care about each and every one of you. Here's the thing. Do you care as much about yourself and your money as we care about you? For those of you who are in credit card debt, where you cannot pay off the balance in full at the end of every month, and all you can afford to do is to make the minimum payment due on all those credit cards, here is what I want you to do. I want you to open up every credit card statement that you have right now, and I want you to list them, write them down from the highest interest rate down to the lowest interest rate, and the balance that you owe on each, as well as the minimum payment due on each one of them. First, I want you to look at the interest rates, and if you have an interest rate that is 8,9,10 that’s up there, 18% 20%. The first thing you need to do, is to see if you can get a lower interest rate. So if you have a good FICO score, or a credit score, go to creditkarma.com, check your credit score for free, and if it's relatively high, you should be OK. If you want to verify that it's accurate and it's the one that all the banks use, then you would get a FICO credit score because again, 80 to 90% of all financial institutions use a FICO score. Again, you have to know, the higher your FICO score, the lower your interest rates. The lower your FICO score, the higher your interest rates. So it is possible that you have a high interest rate cause you have a low FICO score. And if you have a low FICO score, the banks aren't going to do business with you. They're not going to give you a lower interest rate. But if you have a high FICO score, 720 or above, then the banks will most likely lower your interest rates. If they don't, you can always do a balance transfer or look for a credit card where maybe you can qualify for it at a 0% interest rate. But your job, is to get the lowest possible interest rates available to you. Then, you go from the highest interest rate to the lowest, and you are to add up every minimum payment that you happen to owe. Maybe you owe $20 a month on one, $100 a month on another, $80 a month on another. Add them all up. In that case, it would be $200 a month that you are paying at a minimum on all your credit cards. I want you to add 20% to that amount. So if your total amount that you're paying per month is $200, then you add $40 extra per month to the credit card with the highest interest rate. So that's $40 above the minimum payment that most likely is what you have been paying. Once that credit card is paid off, then you're to take that $40 plus whatever you have been paying on that credit card, and you are to take that entire amount and now apply it to the credit card that had the second highest interest rate. When that credit card is paid off, your to take that amount, plus the additional that you were paying, and do what with it, pay it on the third, and keep rolling down until all your credit cards are paid off. Once your credit cards are paid off, the ones that you pay an annual fee on, you are to close them down. If, however, you're not paying an annual fee on these credit cards, leave them open. Because remember, when you close down a credit card, you actually decrease your total available credit. When you do that, what you owe to your credit limit ratio, how much credit limit you have, actually increases. When that increases, your FICO score decreases, which increases everything else, such as interest rates. That is your do it moment. Now I happen to have a debt eliminator, that can help you do all this if you would like to. Just go to the hyperlink in the description of this podcast, or send us an email to ask suze at asksuzepodcast@gmail.com, and we will send you back the hyperlink directly. So now your job is to get out of credit card debt and stay out. It's just that simple.