In this Suze School, Suze teaches about the key to attaining financial independence.  Two important questions for you to ask yourself about how you feel about money is the first step. Plus, Suze gives an update to an I Bond answer from the last podcast.

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Podcast Transcript:

November 12, 2023. Welcome everybody. You know what I’m gonna say, don’t you welcome everybody to the Women and Money podcast as well as everybody smart enough to listen. This is Suze O and today is Suze School.

Today is also the day that KT and I are doing what? We are going back to the island. Seems like we haven’t been there forever. And as soon as we get there, Colo is waiting for us and we’re going to go fishing. I’m so excited because we got a new fishing pole and a new reel and I can’t wait to try it, although I won’t be trying it, but they’ll be trying it. I’m just so excited to see what it can produce.

It was many, many years ago and I decided to do an experiment and I had somebody gather a whole bunch of red roses, single red roses and this was in New York and they went onto the streets and they were to offer strangers as they were walking by a red rose, just one red rose.

And as I was watching this person was offering red roses and one person would take it, another person would come along, that person would take it. And before you knew it, all of the roses, I think she had two dozen, all of them were gone.

The next part of the experiment was that she had approximately 24 $1 bills. Ok. Same amount of bills that she had as roses and she stood in essentially the exact same spot.

And as people walked by, she offered them a dollar bill.

How many do you think took it?

One person passed, did not take it. Another person passed. Did not take it after approximately 30 minutes of her standing there. Not one person. And in New York, a lot of people pass you in a 30 minute period of time. Not one person took the dollar bill. I want you to think about this for a second in a relatively shorter amount of time. 24 people took a rose and smiled in a little bit longer period of time. 30 minutes. Not one person took a dollar. And I was just flipped out about that. I have to tell you, I talked about it everywhere I went. When I gave a talk, I just didn’t understand it.

But then I started to realize people don’t like to talk about money. People don’t like to touch money. People think that something’s wrong with somebody who’s giving a dollar away, but they’ll take something that, that dollar would buy such as a rose and that they’re willing to take.

And so many of us in our lives are like that with money. Whether we know it or not, we don’t mind touching what money can buy. We don’t mind touching those things, whether it’s our clothes or our furniture or our flowers or our gifts or whatever it may be. We don’t mind showing that to everybody and say, look what somebody got me. Look at what I just bought that. We don’t mind at all.

But yet we don’t like to talk about our money. We don’t like to touch our money. We don’t like to say to somebody, oh, look at how much money I just made. Look at what I have even though the couch that you may be sitting on may have cost you a whole bunch of money.

That’s not how you see it all. You see it as things. So when something becomes a thing, when money turns into a thing that has been purchased, then you will talk about it and touch it. But when money is just money, you tend to stray away from it.

What is that about? Everybody?

Think about in your own lives and by the way, take out your Suze notebooks. You are so going to need it today.

Think about that everybody. What is it about money? Your money that you work for that? You spend hours, maybe 40 50 60 70 80 hours a week working for? Why is it that you don’t want to touch it? Pay attention to it or anything like that?

If you have your susy note book out, that is the question at hand.

So what is it about money that repels you answer that question and if the answer to that question is nothing, then I want you to answer the question. What is it about money that attracts you? Now? Maybe you need to understand. Well, how do I even know if money repels me?

Do you look at your statements? Do you open your credit card bills right away?

Do you make sure that the dollars if you have any of them in your wallets or the $5 bills or the tens that they’re all facing the same way? Do you wait to the last minute to pay your taxes? Do you look at your statements to see what you have in your 401ks or your Roth Iras?

Do you pay attention to things like that when you’re watching the news? And it’s a money segment? Do you turn it off?

So many people used to say to me, Suze, I like you, but I just can’t watch your show. This is when I was on CNBC. And I would say, and why is that? They say I just can’t deal with money. I see you and I freak out obviously I’m known as the money maven, the money lady, whatever it is that you wanna call me. So when you see me, you think about money and for those of you who can’t stand watching me, it has nothing to do with me, whether you know it or not, it has to do with your repulsion of money, your inability to deal with it.

If that happens to be, you can you write down what is it about money that repels you? On the other hand, if you’re attracted to it and what do I mean by that?

I mean that you see a financial segment and you like to watch it. You hear about the markets and you like to listen to it. You would like to make sure that your money, your dollars and your $5 bills and $10 bills are all lined up in the right order. You like to look at your statements. You would like to look at what your individual stocks are doing or your i bonds are earning or whatever it may be.

You spend time making sure that you know that you do not have so much money sitting in a bank account today, maybe making 0.5% interest or whatever it is they’re paying you, you take the time to take that money out of a bank account and put it somewhere that’s making a whole lot more interest.

You’re actually attracted to dealing with money, to dealing with the facts about it, to knowing what are the limits for a Roth Ira or this or that anything like that.

So, if that’s, you write down what attracts you to money because the answer to that question, whether it’s repelling or attracting isn’t about money.

It’s about you.

You know, I have always told you that money is just a physical manifestation of who you are.

You’re the one who works for it. You’re the one who earns it. You’re the one who saves it, invests it. Money can’t do anything without you. So if you are repelled by your money, there is something about yourself that repels you that you don’t like that you’re not dealing with.

I just want you to think about that. And if you are attracted to money, there’s something about yourself that you’re attracted to.

Chances are, if you’re repelled from money, you may also have what I call a lack of self worth.

And I will forever believe that self worth equals net worth. And as you get older and you’re dealing with money, you know, it’s very easy when you’re younger. And I think I told you this before, I gave a talk to some, whatever I did to some kids and in college. And anyway, that’s besides the point and they took such offense to when I said self worth equals net worth. They said Susie, I have self worth but I don’t have any net worth just because I don’t have money. Doesn’t mean that I don’t have self worth. Oh, grow up? You’re in high school? You’re in college. Your parents are paying for you.

You don’t have to deal with money. You don’t have to go out and get a job and pay for everything and take care of a family and deal with money. So, don’t talk to me about that. You think, you know what you’re talking about when it comes to self worth and net worth, when you’re a teenager or somebody else is supporting you. I’m talking about you.

Most of you who listen to the women and money podcast who work for money, who have to support a family.

We have to deal with credit card debt and inflation and feeding yourself and that because why it is all on you.

So if the answer to that question is that money repels you then in my book, what that is, is it’s a somehow a lack of self worth meaning that you don’t feel that you’re worthy enough to know about it or you have the ability to know about it or to understand it or to do any of that.

You know, you can listen to KT on these podcasts and she could not know the answers to questions and things like that. But I am telling you that woman looks at every single statement that comes in and our statements are very thick. She not only looks at her own, she looks at mine and because KT doesn’t like computers, she doesn’t do it electronically as I do, but she does do it. I’ve come out and I see her with a stack of papers and she’ll say to me, Suze Orman, do you know that we lost X amount of money last month or Suze, why are they charging me $6 a trade? I thought I didn’t have to spend any money for these trades. She watches every penny,

Miss Travis may not be able to answer certain financial questions nor may you. But who cares about that? Eventually? She will. And even if she doesn’t, she does have the ability to look up the correct answers, she is not repelled from money. She is attracted to money. That is because she values who she is. She has self worth. She knows that money is very important and she knows that because she knows that her survival is important and she values her worth, she values who she is. So she values all of it.

And so she would be one that would be answering this question by saying that, yeah, I’m attracted to money dealing with money, learning about money.

So this is a really, really important Suze school and I’m sorry if I sound a little harsh this morning because it means so much to me.

This is the crux of financial freedom. Everybody. This is it. Once you understand the concept that I am talking to you about right here and right now, then you’ll never have as much money truthfully as you should have and possibly you’ll never have any money at all. How sad is that? How sad is it?

That may be you, you’re the one who’s standing in the way of being an obstacle to your own wealth, your own financial independence. It doesn’t have to be that way.

So that’s the first part of Suze School.

The second part of Suze School is I just want to straighten up something that Katie and I talked about on Thursday that has confused so many of you and I address this on the women and Money Community app. And if you are not part of the women and Money community app, you are missing out on so much. I cannot tell you on Friday of this last week. I made a comment about what I thought was going to be happening with Treasury Notes. I made a comment for those of you who may own ARC the ETF by Kathy Woods. I make comments of explaining something when I know you are confused because just maybe I won’t address it here on the podcast.

So if you’re not part of the women and money community app, you should go and download it. It is absolutely free. But one of the things that confused so many of you last Thursday is that somebody had written in and asked a question when it comes to Series I Bonds and Series I Bonds. As you know, I was I bond crazy when the interest rates were at 7.12% annualized, 9.62% annualized.

And that is because at that time, interest rates in any place were at like 0%. You couldn’t get a 1% interest rate almost anywhere at that point in time. And yet savings I bonds, I stands for inflation.

They were giving you the inflation rate and inflation was off the charts. Then. Since then, inflation has started to come down and down. It’s not down as far as it should be, but we’ll see if it gets there and this may be the lowest they’re ever able to get it again for a while. But I don’t have a frenzy anymore about I bonds. I’m not one that’s like you haven’t heard me say go on and buy them, you have to buy them. This is how they work. This is what I want you to know. You already purchased the ones that I personally wanted you to purchase. Now, I am more interested in treasury bill bonds and notes or certificates of deposits that are paying high yields. I still love the one currently at Alliant Credit Union paying 5.3% or 5.35% if it’s $75,000 or more. I think that is a fabulous rate, especially for those who live in a tax free state. I think that’s a far better thing to do than treasuries, believe it or not because I’m not even sure about treasuries only because in just another eight days or so, maybe it’s six days now we’re gonna be facing another possible government shutdown.

And therefore you gotta make sure everything is ok. I don’t want to get too off track here. Although I think I already have, I wanna go back to series I Bonds.

So they’re not something that I’m like just so gung ho about. Would I be putting new money today into a series, I bond?

I would not. All right. Are we clear on that? That’s my opinion. I know there are many people out there that you listen to that maybe would be taking old money and putting it in again. That’s fine. But I would not be committing new money at this point in time to a series I bond.

However, if I had money in a series, I bond, that had a 0% fixed income rate at the time, forget what the inflation rate is. Remember, I bonds are made up of two interest rates, an inflation rate and a fixed rate and it is a combination of those two that give you your composite rate. Many of you purchased in I bond when the fixed rate was 0%.

And now every single six months when your I bond interest rate adjusts it has been going down and down and down.

So the question for you becomes, is it important for you if you want money in I bond still to cash them out, take a three month interest penalty hit and take that money and reinvest it in an I bond that recently came out that’s giving you a 1.30% fixed rate.

Now, a lot of you really like that because the inflation rate of 3.94% plus the 1.30 fixed rate plus a little 0.3%. Also interest on the fixed rate that you can get. It’s a long story. Anyway, your composite rate is 5.27%.

If you are staying in bonds that you bought with a 0% fixed interest rate, you then only will get the inflation rate, which can be in the 3% area. If you sell, take the three month interest hit and switch over, you could increase your yield by quite a bit.

However, back to where I was asking the question, two things. First of all, you need to know, when does it make sense for you to liquidate and I bonds to do this. Listen to Thursday’s podcast, the answer will be there for you. However, where the confusion came in is when somebody wrote in, they essentially wanted to know the 1.3% fixed interest rate on their I bond that they just purchased.

Is that mean that I would never get less than 1.3% on this particular I bond .

And my answer to that was no.

And all of you who thought that it meant that that 1.3% fixed rate was always going to be the rate that you got no matter what happened to inflation.

So even if the inflation rate went to zero or to a deflationary rate, which it did, by the way, in 2009 and 2015, you thought that you would still get 1.3% and everybody out there that is not how it works. So let me read to you from the Treasurydirect.gov website itself. Please listen to their exact words.

The actual rate of interest for an I bond is a combination of the fixed rate and the inflation rate. The combined rate can and usually does change every six months that you know,

I bonds protect you from inflation. Because when inflation increases, the combined rate increases that you know, but here is what you did not know because inflation can go up or down, we can have deflation, which is the opposite of inflation deflation can bring the combined rate down below the fixed rate. As long as the fixed rate itself is not zero.

However, if the inflation rate is so negative that it would pull the combined rate below zero. We don’t let that happen. We stop at zero.

Did you hear that? Everybody? So just to be clear, if the deflation rate happens to go down and it goes down enough below what the fixed rate happens to be, then it will bring all the rates for the new term down, but it cannot take it below zero.

I have been buying I bonds since 2000 – 2001. And some of my fixed rates are in like 3.5% 3.6% right there fixed.

And the reason that I realized this is, I think it was in May of 2009. When I checked the interest rate on my I bonds that I purchased with a fixed rate of about 3.5%. I was getting a 0% interest rate on that bond. And I was like, how is that possible? I have approximately a 3.5% fixed rate. And then I started to truly learn about how I bonds work.

And I think it was in 2009, it lasted that way for the entire six months because once they issued that new rate, it lasts for six months. It happened again in May of 2015, everybody just because you see that it has a 1.3% fixed rate or maybe it goes higher. And I think that the highest fixed interest rate recently in the past few years was 1.6%.

But it doesn’t mean that you’re locking that in no matter what. And that is something you need to know because so many people out there have been telling you to buy an I bond lock in the fixed rate, the fixed rate is great and the fixed rate is great as long as we have inflation.

But if we go to a deflationary period of time again, and in my book, anything can happen again. If it happened once it could happen twice, which it already has. If it happened twice, it can happen three times. Who knows?

You just have to be clear on how fixed rates work for I bonds. Ok, everybody.

All right. That is your Suze School for this Sunday now, next Sunday. Just so, you know, because we’re getting close to the end of the year. I think it’s really important that all of, you know, what are the new contribution limits for a traditional Ira and a Roth Ira and a 403 B and A 401k and a TSP and a 457. What is the new contribution limit for a SEP Ira in the year? 2024?

What are the capital gains tax rates in 2024? Because a lot of you may be selling real estate or something like that. That is not your primary residency. And you should know those things. You should know what the modified adjusted gross income is to qualify for a Roth Ira.

And those are things that you’re going to have to know. Ok, so that’s what next Sunday’s Suze School is all about. So there’s only one thing that I want you to say every single day and it goes as follows today, wherever I go, I will create a more, loving, peaceful and joyful world.

And if you do that, you will be unstoppable. Bye bye now.

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