Podcast Episode - Do You Have Faith In Who You Are?

On this Sunday Ask Suze & KT Anything episode, KT asks Suze your questions about the best way to start saving money (at any age), handling your financial advisor, leaving real-estate to your children, and so much more.

Listen to Podcast Episode:

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Podcast Transcript:

KT: Hey, surprise everybody, it's KT in the house on Sunday. You thought Sunday School was gonna be Suze, but no, she took my space on Thursday, so I'm here on Sunday and I'm gonna do the whole show. We don't even know if we want to ask her any questions.

Suze: Well, how about if I ask you a question like what's the date?

KT: October 5th.

Suze: And where are we? What is this? The Women and what, KT?

KT: They all know. They know this is the Women and Money podcast and everyone's smart enough to listen.

Suze: And this is now not Suze School because I took her...

KT: It's Ask KT and Suze Anything...

Suze: And if you have a question, all you have to do is send in an email to asksuzepodcast@gmail.com.

And if KT picks it, oh, we will answer it on this podcast. Are you ready, Miss Travis?

KT: I'm ready. Go get a cup of coffee, everyone, here we go on Sunday.

Suze: All right, ask me your first question.

KT: Sundaaay!! OK, first question is from Susan. It's a long one, everybody, so get cozy. Hi, Suze and KT.

Suze: Is it a question or a statement...

KT: It's both, but it's good. I want to read how you changed her life. You guys have become part of my weekly life for the past 4 years.

Suze: Poor baby. I get how you feel.

KT: As I think of it, I became a regular Women and Money podcast junkie shortly after 30 years of marriage ended.

Suze: Oh, don't tell me I caused another divorce.

KT: She does all the time, but you know what, these are happy endings after all. We lived a middle class life, but at age 57 we were still having to borrow money from my future inheritance, and each month not making ends meet. Through you, divorcing a financial sabotaging husband, finding a great business coach and getting a $900,000 inheritance, I am now on my feet again, day by day and step by step.

Suze: I love that.

KT: Wait, I got to finish. This is long. I doubled my net income from my geriatric care management business, and I have been able to keep my home. It is a home that brings me joy and allows my out-of-state adult children to have beds and a reason to come home. No one in my family thought I would be able to do it. I felt I had no support except for my weekly episodes of Suze and KT.

Suze: What is this person's name?

KT: It's Susan.

Suze: Oh, of course, Susan.

KT: She said, I'm not exaggerating to say that because of you I grew financial self-esteem. Don't you love that? Then she goes on and keeps giving us all this praise, but I'm going to cut to her question. But here is where I...

Suze: Oh no, I like the praise. Keep going.

Suze: So Susan, you have to not be afraid. You made it this far. You made decisions on your own, whatever it is. You don't need to be scared. You don't need to be stuck. You can just do what you think is right. If you know it's right, then spend the money. If you know it's wrong, then don't spend the money. We all know when we should be buying something and when we should not at any level.

And the thing again about you being afraid because you had one parent do this and one parent do that, Susan, that is not your future. You have created your future. You've done one of the hardest things anybody can do—that after 30 years, girlfriend, you left somebody because it wasn't right for you. So stop it. Just stop it already.

Stop coming up with all these things about help me spend, help me do this. You know what's right. You know what's wrong. And you have to have faith in who you are and value your own self-worth over anything else and always stand in your truth and nobody else's. All right, KT, next.

KT: Next one is from Sam. Hi, Suze and KT. I took your advice from Thursday's Ask Suze and KT podcast and reviewed my 401(k) rollover returns, adviser managed, and compared it to the S&P returns over the same period of time.

Suze: That was my advice.

KT: I know it was. You told everyone to do that. My returns were about half of that of the S&P, and I'm paying my Fidelity advisor 1.22%. Is this my wake-up call to get rid of my advisor and put it all in the S&P? It's about half a million dollars and I'm 57 years old.

Suze: Listen to me, everybody. When I said that the other week on the podcast, did you not hear me say that if 100% of your portfolio is in equities, then you can compare that return to the Standard and Poor's 500 index, and you'll know how your advisor is doing for you.

Sam, I don't know how your adviser has invested your money. Was half in stocks, half in bonds, was three quarters in treasuries, and a quarter in stocks? So all of you, when you're going to compare how your adviser is doing, take the portion of your money that happens to be invested in just stocks and compare that to the S&P 500 index.

Because the truth of the matter is you can keep your money safe and sound by yourself in money market accounts or treasuries or bonds. But what you really are paying a financial adviser for, in my opinion, is how much are they making your money grow and what are they charging you for it?

KT: Next question is for Marisol. Hi, Suze and KT. Suze, I hope you can clarify something for me. My house is paid off and me and my brother own it. I'm 61 years old. My brother is 51. I would like to purchase the must-have documents, and if I do the trust, how do I change the deed if it's in both of our names? I want to leave my half to my son when I pass. Your help is much appreciated.

Suze: So Marisol, this is what you really need to understand. Most likely what's going on in your life right now is you and your brother probably own that home in what's called joint tenancy with right of survivorship, because that's just how people do it. Which means if one of you dies, it goes to the other one immediately without probate.

The only problem with that is if that happens—and let's say you die first—it goes to your brother. He then dies. That whole house is governed by his trust or his will. And it goes to maybe his children. And now you have disinherited your own son. So if that were to happen, then your son might not get anything.

Therefore, first of all, you should own it in tenants in common, which means you both own it, but when one of you dies, it's governed by your will or your trust. It doesn't pass to your brother. It's just that simple. And then your son would own it with your brother.

If you have the must-have docs—and for everybody who doesn't know, the must-have docs are a will, a trust, an advanced directive, a durable power of attorney for health care. Go to musthavedocs.com. They are legal documents good in all 50 states. You can get them right there, and they're $99. $2,500 worth of state-of-the-art documents, $99.

You can own it in trust when it's tenants in common because it's just your half. So therefore your half would be owned as Marisol trustee for the Marisol Living Revocable Trust dated whatever it is. But it would be held tenants in common within the trust. Just that simple.

KT: Next question is from Sheila. This is another one about a house in probate. Can I just add my house to the trust and leave my Roth IRA and 401(k) and bank accounts under beneficiaries? Is it true that the house will only go to probate and the other accounts do not? I feel very overwhelmed. This is from Sheila.

Suze: Oh my goodness, Sheila. You don't have to feel overwhelmed. This is really so easy for you to understand, my love. Whenever an asset has a designated beneficiary—an IRA, you can leave a beneficiary, and if you name the person as a beneficiary, of course it avoids probate because you've named somebody.

Obviously, if you have an insurance policy, it has a beneficiary, goes right to them, avoids probate. A bank account, you could do a pay-on-death account, you name a beneficiary, goes right to them. Now that beneficiary could also be the trust, just so you know. But what you say is true. A house, on the other hand, usually will go through probate because it's held in your individual name.

So you want a house that's held in the living revocable trust. Sheila, trustee for the Sheila Revocable Trust dated whenever you happen to do it, and then you leave it to whoever you want and therefore it bypasses probate. Just that simple. All right.

KT: Next question's from Tina. She said yesterday I was on a chat with a Fidelity representative, discussing opening a contributory Roth IRA. At one point I asked them to confirm that the 5-year waiting period would start as of the beginning of this financial year. I was told that the clock would start ticking the date the account was opened. Has the rule changed or was I misinformed by the representative?

Suze: What, what, what... You took my quizzy that I was going to give you that was in a pile of paper and you happen to take it.

KT: I can answer. Want to wait till the end for me to answer that?

Suze: No. But this was going to be my quizzy for all of you, which is: when does the 5-year clock start when you first open a Roth IRA? Quizzy! Do you all know the answer to it? Tina was told that the clock would start ticking the date the account was opened. But she thought it was at the beginning of the financial year. So she wants to know: has the rule changed or was I misinformed by the representative? KT?

KT: When the account is opened.

Suze: Without a shadow of a doubt?

KT: Pretty much.

Suze: Yep. So she opens it in June 5th, my birthday. The clock starts June 5th?

KT: I believe so.

Suze: (Suze makes the wrong answer noise)

KT: It does start in the beginning?

Suze: Listen, everybody. You can open up a Roth IRA for the first time December 31, 2025. The clock will have been deemed to have started January 1, 2025. So the truth of the matter is you only have four more years really, in actual time, to qualify.

KT: So everyone should open it up at the end of the year.

Suze: Not necessarily, but it's just because you also want to take advantage of tax-free growth. However, something very important about this email. A representative at a major brokerage firm gave this woman 100% incorrect information. And if she hadn't been listening to the Women and Money podcast, if she hadn't already had direct knowledge and had been told otherwise, she would be operating on the wrong assumption.

So be very careful. Just because somebody has the designation of financial adviser, just because somebody works for a major brokerage firm, does not mean they know what they are talking about—because chances are, they may not.

KT: I didn't know.

Suze: You don't work for me.

KT: Oh no, I don't... I tell them I don't know... ask Suze.

Suze: But if they had asked you and you had said no, just like you did with such certainty, they might believe you.

KT: So that means you gotta double check for yourself, everybody.

This is from Sue. Hello, Suze and KT. I hope you're having a great day. Are we having a great day?

Suze: Actually, I have to tell you we are.

KT: It is pretty great. I am new to buying individual stocks, and I am not quite sure about the order type when buying. I have to choose—and she gave me two examples. She said market and limit. Suze, could you explain what these mean and which one would you recommend? Thank you so much for sharing all of your knowledge. I don't know what that means, market and limit.

Suze: When you go to buy a stock on your own, you're online, you've gone to the brokerage firm, and now you want to enter an order. The very first thing they're going to ask you to enter is the symbol of the stock that is in question here.

The next question is, are you going to buy it or are you going to sell it? You will put "buy" if you want to buy it. You will put "sell" if you already own it and you want to sell it. Then they will ask you the number of shares that you want to buy or sell, and you will enter that number.

Then they will tell you if you have enough money in your account to buy that number of shares. Now, stocks trade all the time when the markets are open and even sometimes when the markets are closed in after-market hours. Since the price goes up and down and up and down, if you enter a market order—either to buy or sell—that means that no matter what it's trading at, you are definitely going to buy or sell it at that price.

You have no control about the price. Whatever the market bears the second they get that order, that is the price you are going to get. So you know 100% for sure you're going to buy or sell that stock. You just have to wait a few seconds to see what was the price that you got.

However, maybe you only want to buy or sell it at a specific price. You do not want to just enter and say buy it at any price. You only want to buy at a specific price, and that's known as a limit order. You have limited the price that you are willing to buy or sell at. You enter that price. It goes to the trading desk and then maybe it's filled and maybe it's not. Because if it doesn't trade at that price then your limit is not filled. Just that simple.

They also might ask you, by the way, is this a day order? Is this only good for the day and then it cancels, or is it a good-till-cancel order, which means that order stays in effect until you physically cancel it. That's what some of the terms mean.

KT: Little confusing, but...

Suze: That was the clearest explanation you would find anywhere. What are you talking about?

KT: Buy sell buy sell. OK, next question is from Diana. Hey Suze, what's a K-1 conversion? Is this the best way to not pay taxes on my pre-tax 401(k)? How do they work? Do you—I've never heard of it. First of all, I don't think there's a best way not to pay taxes on anything.

Suze: That's my girl. So Diana, you're confused. There's a Roth conversion. There's no such thing as a K-1 conversion. And the best way to not pay taxes on your pre-tax 401(k)? Never have opened one to begin with because you would have opened a Roth 401(k) and then you never would have paid taxes on it, just so you know.

A K-1 form—when you make an investment that happens to be a limited partnership or a subchapter, whatever it may be, some partnership with you—a K-1 is simply a tax form that reports your income, your deductions, and credits from a partnership. That's it. That's all a K-1 happens to be. All right.

KT: This is from Michelle. Hi KT and Suze. It's almost open enrollment time for benefits with my employer. They are offering a new benefit this year called—ready for this—voluntary critical illness insurance. Never heard of that. It provides a lump sum payment of 10, 20 or 30,000 with increase in premium for each tier if me or my spouse are diagnosed with one of the covered illnesses.

Have you heard of this? And if so, what do you think of it? Now Michelle's 55, the husband's 61. All right, you like this?

Suze: Do you?

KT: I don't even know. I mean, what kind of illness would I get? Like what happens if I get COVID?

Suze: No. So here's—normally a critical illness insurance isn't necessarily COVID, KT. It's really more like a heart attack, a stroke, cancer, something that really is gonna do you in, it's critical. It's that, OK? And what you do is you get this lump sum of money. And in fact you can use it for anything that you want. It's not like health insurance where you have to use it for this or that.

You can use it to pay your bills. In many cases, you could take a trip with it. You could do whatever you want. And the premium for it is more expensive if you get 20,000 versus 10, 30,000 versus 20. And if they give it to you in one lump sum, it's tax free.

KT: I like that part.

Suze: So at their age it's not a bad idea because not only can she insure herself, usually the spouse is insured as well.

KT: So what's the catch on something like this? It almost sounds too good to be true.

Suze: Everything is. Now here's the thing, everybody. After the age of 61, KT, your premiums tend to go higher and higher because the more of a chance that you have to come down with something, the more they charge you. Also, not all cancers, not all heart conditions qualify, so you have to ask before you buy this, well, what kind of cancer? What are they?

Also, is there a waiting period? Because sometimes they have a 30 to 90 day waiting period before coverage will kick in. And if you have a preexisting condition, some policies will exclude them. So you got to ask questions about this before you just go ahead and sign up. Get the details. The devil is in the details.

KT: Yeah, I think for me when I read it, a critical illness sounds like you're not going to recover.

Suze: I don't know. You have to just ask.

KT: That's the first question I want to know. OK. Next question I have here is from Adrian, and Adrian asks, Hi Suze, I've made the mistake of not saving throughout my lifetime. And even though I'm married, my husband was never my financial provider. I'm 51 years old.

Suze: Don't tell me I caused another divorce.

KT: No, no, no, I don't think so. With that being said, how do I start to save in a way that is beneficial to me at my age when in all honesty I am just realizing I have to start to take care of me.

Suze: Maybe a divorce is on the horizon.

KT: Maybe soon. Yes, I have a student loan. The mortgage is another topic, and I know my issues in debt, but I want to buckle down before I look up, and I cannot. I am reading your book Women and Money, so is that enough to get me started?

Suze: Listen, it's a start. I'll tell you the book Women and Money is an absolute start. Listening to the Women and Money podcast, however, twice a week is even a better start. But you have to start making smart decisions with your money.

I just heard KT say you have student loan debt at the age of 51. You have credit card debt at the age of 51. Whatever those reasons are, you first have to tackle your debt. Don't think about saving for your future until you have taken care of your mistakes of the past.

Now I'm not saying to you that a student loan is a mistake, but an unpaid student loan is a serious mistake because they aren't dischargeable currently in bankruptcy. So you take care of yourself one step at a time. Don't plan for the future until you have cleaned up your past. Contribute obviously to only Roth retirement accounts, especially if they match your contribution. And little by little you can do this. It's not that hard.

KT: So Suze, my last question is short but sweet. What's the difference between titling your financial asset in your trust and naming your trust as a beneficiary?

Suze: Well, that's actually a good question. Listen to me, everybody. Your only concern should not be, do my beneficiaries get this asset without probate, because so many of you think that the only reason for a trust is so that the asset will bypass probate. Wrong, wrong, wrong.

If your asset is in a trust, and a trust that has an incapacity clause like the trust of the must-have documents happens to have, you have a stroke, something happens, you get hit by a car, whatever it is. Then the house or your asset is already in trust. You have named a successor trustee, the person that you designated to make decisions if you yourself couldn't make them, and then that person can take care of everything.

If the house is not in trust or your assets are not in trust, but the trust is the beneficiary, something happens to you, they can't write checks for you. They can't help you. They can't do anything. They only benefit when you have died.

A trust can serve more than just the purpose of bypassing probate. It can serve for you to take care of yourself when you can't do it for yourself. All right, everybody.

And again, every single one of you—you know, I was talking to KT this morning about—we're redoing our website and so KT is featuring the Women and Money podcast and she's looking for a...

KT: A description, no, no, no, a description.

Suze: Like how do you...

KT: How would you describe in two sentences the Women and Money podcast without it being boring and typical? We want something that really sets this apart. So if you have a good descriptor...

Suze: Let us know. Go to the Women and Money community app or even send it in on asksuzepodcast@gmail.com. Say "idea, idea"—we'll see it.

But anyway, I was telling her when she was asking me this, I said, you know KT, can't we do something like... the biggest mistake you will ever make is the mistake you don't even know that you are making.

Because I really believe from my heart, everybody, that one of the things the Women and Money podcast does, it keeps you from making mistakes—mistakes that your financial advisor at a major brokerage firm told you, which would have been a mistake. A mistake of many things. I don't want you to make mistakes. So, write in what you think.

KT: It's called a description.

Suze: So what should the descriptor be for the Women and Money podcast? And if we happen to choose...

KT: I'll send you a prize.

Suze: We'll send you something, seriously.

KT: Something great.

Suze: Something really great. Because I just want to say one other thing. The book I wrote, the Young, Fabulous and Broke book, that title came from somebody who was listening to the TV show or my radio show or something.

KT: We made a contest, I think.

Suze: We chose it and we sent them a gift as well. So let us know and maybe we'll send you a little gift.

There's really only one thing we want you to remember when it comes to your money, and it is this:

KT: People first, then money, then things.

Suze: Stay safe, stay healthy. And make sure you make your money, make more money. All right, everybody. Till then, now we love you.

KT: Bye bye.