Podcast Episode - Ask Suze & KT Anything: I Want to Be Financially Independent


401k, About Suze, FICO, Must Have Documents, Retirement


April 21, 2022

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On this podcast of Ask Suze & KT Anything, Suze answers questions from listeners about reinvesting divestments, investing after a stock split, special needs trusts, shady employers and much more!


Podcast Transcript:

April 21, 2022. Hi Suze. Miss Travis. She's calling me Miss Travis. Am I in trouble? No, that was just kind of excited. Today's a special day for our friend, Woody. Woody Simmons. Suze. Tell everyone who Woody is in your life years and years ago, like as far back as 1973 is when? Well, first of all, KT, but before that we have to welcome everybody to this is Ask Suze & KT Anything. But KT asked Suze to tell all of you about Woody Simmons. First of all, Woody's birthday is today. Happy birthday! It is her 70th. My dear, dear friend and I have been friends with Woody since 1973 and we worked together at this little restaurant that we both started at called Loaves and Dishes for like a dollar something KT an hour. And then we both moved on to where, The Buttercup Bakery, the famous Buttercup Bakery where woody washed dishes and I was the cook and brought out the food and waitressed all that. But Woody was this extent. Still is this extraordinary musician and at one point she was one of the top 12 Banjo players in the United States. Now woody and her wife Paula live in Hawaii as well as California, but we love both of you so much. But Woody, Happy, Happy birthday. Alright, so what should we do now? Well, I have a couple questions here for you. Do you want to tell everybody how your family visit was? Oh, easter weekend, Passover and easter holiday weekend was wonderful. First of all, we had great weather. Second of all we had a lot of fun with the little ones, little Will and Tommy and Suze, they embraced their Auntie Suze beyond my wildest expectations. They would run wake up and run, run, run all the way from one end of the house to the other to jump into bed with their Aunt Suze. And it was a lot of fun and we had the most unusual conversations but serious conversations, but it was great. So, but now they're gone and here we are again, ready to do our podcast. All right, KT, what do you got for us? Okay. First question is from Katherine. Hi KT and Suze. Any thoughts on reinvesting dividends or not? I am 28 with a good income and savings amount but not sure whether to choose yes or no when the brokerage firm asks this question, what do you think should she or should she not reinvest dividends? So, here's the thing, KT drip with the drip, drip, drip DRIP, A dividend. A Drip is what happens when my nose never minds. But it's like dividend reinvestment program. Is that a real term? Yes. That like in your secret money language term or does everyone know everybody knows a drip? Should I do it? A brokerage says should you drip or not? Yeah. Anyway, so and the answer to that would be my dear Katherine. Especially given that you're so young. Absolutely reinvest dividends because then your dividends also grow. Otherwise what happens is you get a dividend, it goes into the money market account, maybe you're making .01% on it or something like that and it just sits there, and you do nothing with it. If in fact you are investing in stocks or exchange traded funds or whatever it is that you believe in And hopefully you're going to own and be invested in for the next 10 20, 30, 40 years, even at the age of 28, that would make you only 68. Yeah, you want to reinvest dividends. However, KT, if she were six, drip drip, if she were 68 or 78 living off of those dividends, the answer would be no, do not reinvest your dividends if you need them to live off of what you always like regardless of age buying dividend paying stocks always have always have. I know that part. Okay, next is from LuAnn and this is hi Suze and KT. I understand that Amazon is doing a split next month. I've heard you explain splits before, but can you explain if we should be investing now or after the split? Is that your quizzie? You can make it my quizzie. You want to do an early quizzie. No, I have a quizzie for you. But let's make this a quizzie. So don't answer it now, no, no answer it now me to answer it. I think she absolutely wants to buy now before it splits because when it splits, she'll have double or more. But it could split KT and still buy it at a cheaper price. So, should she buy it now or wait till this split? I would buy it now. Oh, come on. No, you wait. And you buy more. Here's the thing. All right now don't go out there with me. We're not going to get in an argument over this LuAnn it. Is that being that my quizzie? No, that wasn't your quizzie. So, you didn't get it wrong? You feel better now, even though you didn't have to say the first time I heard the expression split was when I was fairly young and my dad had invested in Microsoft and he used to come running in so excited with a newspaper. My stock split, my stock split and we none of us understood what the heck that meant or why? He was so excited. He loved when that happened. But You know in days of old, it's very different than days right now. So, for instance, KT Amazon is right around $3,000 a share. That's a lot to pay for one share. But even if they split, let's say they split two for one. I don't know what they're going to split for, Right, that means it would go to $1,500 a share. That's still a lot. But that's not the point. But no, that's not the point. The point is Amazon, a stock that you want to own period, is Amazon where you want to be investing money. If it's true, then it really doesn't matter if you do it now or if you do it after it splits. So, what you really want to look at is what is happening right now in the stock market, what is happening with interest rates? Because remember when interest rates go up stocks like Amazon tend to go down. So, is now the right time for you to do it? Is it not? You're just going to have to figure that out. But I don't care if it's going to split. Your question has to be is Amazon a stock that I want to own now right here before the split or do I want to wait and see what happens? That choice is up to you. Next one, KT. So, Suze. Next question is from Raylan. She calls herself Ray and she said my FICO score is 731. Pretty good sweetheart. Pretty good. She said I have one last, do you mean. Not bad. That's a good FICO score. I have one last debt to clean up on my credit report after my divorce. She has $9,500 on a credit card. It was charged off with no new company contacting me for collection. I've been advised by a mortgage broker to let it go. But it's so old and inactive on my report. Should I save the money and then contact the credit union to pay it off or leave it alone for another three years for it to fall off and use that $9,500 towards a down I guess towards a down payment on a home. Got it. So, here's what's the answer That could have been your quizzie too right. Which is Ray absolutely do not and I repeat do not pay it off. The reason is when you are 120 days past due on a debt, it affects your FICO score. And even though you might pay it off 200 days from that point, it's not going to help your FICO score on any level. The fact that this was charged off years and years ago, there's a good probability that you are past the statute of limitation in the state that you live in. Which states that this debt is absolutely a debt that nobody can sue you to come after you nothing if you are past the statute of limitations. Therefore, I want you to go and look up because you don't say what state you're writing us from to go up and look up what is the statute of limitation on credit card debt? If you are past that, ignore it, you don't have to pay it. It is legally over. So yeah, use that 9,500 towards your new home purchase. It would be far better. It's not going to help your FICO score at all. You already have a relatively good FICO score of 731. So, I would not be worrying about it. However, If you are not past the statute of limitations and you are getting close to when that period is up on your phone is going to start ringing and somebody is going to try to get you to be afraid to pay off that $9,500. And if you simply say yes, I'll send in a check. You send in a check. The statute of limitation starts all over again. So, if somebody happens to call you and says they are from a collection agency because they will try anything right before the limitation period is up to get you to pay something to start it all over again. If somebody calls you and does that say I am absolutely not paying, I'm not going to pay and that's just how it is. And then hang up on him. I just want to just hang up on them. I would hang up on them. Say thank you, goodbye. You don’t just have to hang up on them. Why not? Because that's not nice. They're trying to trick her. She just says I'm good thank you. I'm all taken care of goodbye. Do you understand the dynamic in our household? You just have to hang up. Like that would be rude. Just say everything's fine. thank you. Goodbye. Okay Next one is from Tanya hang up hang up now. Wait wait no. Suze hi Suze and KT. I feel like I'm asking my own personal quizzie question after sharing the code for you must have documents with my immediate family. My parents age 79 and 77. They're still young and older sister aged 55. They've asked me to help them complete their forms. So, I am now the teacher. My dad has a consulting business that is in an LLC. My question is canning the LLC be put into a trust if something happens to them both? I'm not sure how we would access his business legally. So short and sweet. What do we do with the LLC? Tanya. Yes, yes yes because this is what KT and I have had to do for those of you who don't know an LLC are a limited liability company and you can absolutely own a business or a home or anything that you want to protect from what from somebody suing you? So, think about the name a limited liability company which means your liability is limited. And most of the times like Tonya in your situation the member of the LLC is your father. What you would simply do is that or what he would simply do truthfully is he would change the member to the trust. So again, if you're the member was your dad, then it changes to your dad as trustee of the trust. Now everybody I want you to listen to me. You have questions like this with the Must Have Documents that many of you are using and the Must Have Documents has a section and it called frequently asked questions and there are questions under the funding sections. So, if you are confused on how to fund a trust or even let's say you had this question about an LLC and I didn't choose your email or KT and choose your email to answer. All you would have had to do is go to the frequently asked questions and you would have found the answer right there. So it's just that simple again for all of you if you want the Must Have Documents which happens to be $2,500 worth a state of the art documents that you can share with anybody in your family for $99 just go to SuzeOrman.com/offer and they're so easy to have and to do. Everyone needs one a willing to trust. So, this next question I chose because I think it's important. It's about disabilities but there's a term in here I never heard of. So, I want you to educate me as well. And this is from Avis. Hi Suze and KT. My niece has a child born with disabilities. My understanding is that an able account is pronounced ABLE can be opened and contributed to for her daughter's care that will not affect her SSI benefits up to $16,000 a year and a maximum of 100,000. So, they live in New York. What are your thoughts on this? Does a special need trust a better option? So, Suze, what is ABLE account? I never heard that? Yes. See KT here's what happens is that when you go on SSI Social Security income or disability or whatever if you're left an amount of money all of a sudden, you'll get disqualified from SSI. The state will literally take it away. And so therefore what happens is people set up a special needs trust where they leave money to the trust to help take care of the special need’s child. Which then doesn't disqualify them from SSI. However, another way to do it. And I think this was set up Boy. I'm guessing on this in 2014. And able ABLE stands for Achieving a Better Life Experience. That's what it means. A better life experiences. Right? So, in essence it's a savings account where you can pay for qualified disability expenses tax free. And the great thing is it will not disqualify you or your child from SSI. So, let me ask you a question if this niece let's say she's still you know young and she's left a significant amount of money or an inheritance. But how much when do they disqualify you? For the SSI. Yeah. Well believe it or not it's like you can't have more than I think it's $2,000 or $3,000 for a couple in a savings account. That's why or and I don't think you can have income more than 1,600 a month. So, imagine here you are, the most you can make is I think 1,600 a month. These figures change all the time. So, I could be off a little bit but 1,600 a month. You can't have more than two or $3,000 a month in savings. So how fabulous that the ABLE account has come along. You could put 16,000 a year. And if you happen to be by the way the disabled person who's funding it themselves, the most you can put in is 12,000 I think it's 900 a year. But still you can put money in there and have it up to a max like I said of about $100,000. So, he can give his niece money in that account. But you have to remember to qualify for it. The disability had to happen prior to the age of 26. So, it's not like so many rules and regulations. It's really sad anyway. Okay. All right. I love this next question because you know this is something, I always want to do with Suze everybody. So, listen to this question. It's from Cyrus. Any thoughts on a bank that might refinance a single wide mobile home with land in Arkansas. I cannot find one. So, I don't want to I don't want to live in a single wide with Suze. But I always wanted to do some kind of a little mobile home trip. Yeah, it was in 2003 when my book The Laws of Money and The Lessons of Life came out and KT and I Got a 45 ft bus. It was the best trained and we traveled 12,300 miles on that bus, slept six weeks on that bus. We were going constantly on tour in that bus and it was Suze learned how to drive. But we had a bus driver and we had an assistant driver. We needed to drivers and one Because it went 24 hours a day. But we had a great time. Right? So, there actually is a bank that really fits the needs for people like you and people are just starting new businesses that are a little bit unusual and it's Stearns Bank there in Minnesota. I don't happen to have their phone number or link to them, but I'm sure that you could look them up and absolutely go there and get your needs met. All right, next KT. Alright everybody. The next one is from anonymous. I am 51 years old in 2016. I was blindsided with divorce papers. Since then I started my own business. I have a small TSP IRA and Roth IRA. But my credit card debt is more than I have, and all of those accounts combined. I am ashamed of the credit card debt. However, I did what I had to do. I receive alimony and recently half of my husband's retirement pay. What can I do Suze? I want to be financially independent and not be a burden to my children when I get older and cannot work. What do you think I'm going to say KT. What word in that email did I really target you? You Suze Orman ashamed. Oh, I love you so much. So those things bother you. Especially when it comes to money people. Right? Stop being ashamed. The deficit here is not that you have more debt than you have in savings. The deficit here is how you feel about who you are. If you want to be financially independent, you have to feel good about who you are shame, fear, and anger. The three internal obstacles to wealth. They cannot cross your mind. Your lips you're feeling do not say them. No. You know I did a podcast so long ago called The Three Gatekeepers. And these are three things that you need to remember which are as follows whenever you think something, whenever you say something, whenever you do something, it has got to pass the three gatekeepers and they are, is it kind, is it necessary, Is it true? You are ashamed. That is not kind to yourself. It is not necessary. And it is not true because there is nothing for you to be ashamed of. So, All right. Maybe it is true that you feel ashamed in your situation, okay? But it's got to pass all three gatekeepers and it's not kind and it's not necessary. As soon as you fail to pass all three gatekeepers, you have to stop. Don't say it. Don't think it don't feel it and say what you want to feel what you want to think, what you want to say in a way that it passes those gatekeepers. Can you try that out? You are not way behind the curve when it comes to retirement, who cares right? You have now freed your life. Who knows what else will come? But it will come to you when you feel that you are worthy to get all the magic and the love, the caring and the devotion that's out there, just waiting to come your way. And did I say money as well as money. Alright, go on, KT, so beautiful. I love the gatekeepers. You know everybody, we still use the gatekeepers ourselves. Yes, Suze. And I always try to live by that rule, and you stop, it just make you think, is it kind? Is it necessary? Is it true? Yeah. So, Suze, this is from Julie. And the reason I picked this, the subject says shady employer and then I started reading her question. I thought, wow. A lot of people out there may be experiencing the same thing. I have to tell you. I answered her directly. Yes. Because I was so upset. I read this email and it's funny you picked it because other people should know the answer. But I didn't answer her directly. Everyone that listens what to do. It says hi. By the way before you say that KT, if you want to write in and ask a question, maybe I'll answer it directly. You never know like I did with this email. But all you have to do is write into either AskSuzePodcast@Gmail.com or download the Women & Money app at Google Play or Apple Apps and you never know I'm putting stuff on there and I'm about to download on the app. The do’s and don’ts of money that I told you I would do a few podcasts ago. So, you'll find things there that you're not going to find anywhere else. Alright, ok. Ready everybody listens to this. My husband has gotten wind that his employer is broke and hasn't been paying his subcontractors. It's only a matter of time until my husband doesn't get a paycheck anymore. The writing is on the wall. As soon as I realized this, I had him immediately stopped his 401K contribution and dug deeper into seeing when the last time his money had been deposited into his 401K. Then she said sadly it appears that my suspicion was true. I feel that we may now be out of all of the money. He's been contributing for all of January and February. Who do I call and find out what to do now? I'm sick to my stomach about it. This made me sad because obviously your husband works as a contractor and or, but it happens all the time. Not fair. So, what should people do Suze? Yeah what can they do? So, Julie this is what you need to do and everybody listening to this take heed, this happens more than you would think. So essentially this is what I wrote back to Julie. Is that the employer, her husband's employer is an absolute violation of what's called Arisa Laws and Arisa Laws are what governs your 401K’s, your 403B's any employer sponsored retirement accounts. So, if I were you, I would call the department of labor and I do know their number off hand because of how many times I've had to give it out which is 18664 USADOL. So, the department of labor and you should do it immediately Give them the number one more time. It's 18664, the number 4, USADOL. Okay great and just call that and do that as soon as you can. And the thing is you have an employer and you also have a plan administrator that plan administrator looks over the plan that your husband's employer is offering to you. They should have taken action, and I would let them know as well. You know they really have to get on this case. Why aren't they sticking up for you? Call whoever the plan administrator is and asked to speak to the manager also you should bring this to the attention of all the employees immediately, so everyone stops contributing now I would be all over this like a cheap suit if I were you. So, I'm so sorry this has happened to you and really your husband should get a new job right now. Oh, it's so so sad. Not fair at all. Yeah, it's just not right. You know what time it is time for us to sign off? We're not going to do a quizzie. I gave you quizzies throughout this entire podcast. I don't have a quizzie right now. Not today. I love you. I love you. I love you. I love you. Yeah baby. Now I do have one here. I have to tell you but I can tell you she's so happy Because she doesn't want to be wrong because I know you're not going to get it and then you'll be upset and then when we go have coffee, you're going to talk to me about it for 45 minutes. We had enough quizzie. Right? So that brings us to the end of another Ask Suze & KT Anything. See I knew that because I could hear her stomach growling, so I thought I'd better end this before we get a growl in the middle of the answer of her quizzie alright, so until Sunday when we have Suze's School and I don't know what that will be yet because I'm kind of spontaneous with it. What do you want to tell everybody? I think you're going to be on CNN with Pamela Brown on Saturday night. I think so. I don't know exactly what time though everybody but tune in. She starts at 7:00 P.M. Eastern tune in. Suze's going to be on. They're going to do something. She wants to talk to Suze now for weeks. So this is the first time on the calendar that I said okay, I'll give it a show and that I told everybody I was going to be on CNN I think it was on Wednesday and it turned out I was on CNN international but we'll post that clip because I thought it was a pretty good clip. But all of a sudden, I'm starting to be asked to go back on television. She's going to see with resistance, but she's going to do it, I've been being asked now for a year and a half, but I've been like, no, I don't really want to. I've been booking her, everybody. All right. Here we go. Alright, everybody. But until next Sunday, KT, there's really only one thing that we want people to remember when it comes to their money and their lives. And what is it? We want you to be safe, strong, and secure. See you Sunday, Bye bye, everybody.


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Suze's Financial Strength Test

Answer Yes or No to the follow statements.

I pay all my credit card bills in full each month.

I have an eight-month emergency savings fund separate from my checking or other bank accounts.

The car I am driving was paid for with cash, or a loan that was no more than three years, and I sure didn’t lease!

I am contributing at least 10% of my gross salary to a retirement plan at work, or I am saving at least that much in an IRA and/or regular taxable account.

I have a long-term asset allocation plan for my retirement investments, and once a year I check to see if I need to do any rebalancing to stay on target with my allocation goals.

I have term life insurance to provide protection to those who are dependent on my income.

I have a will, a trust, an advance directive (living will), and have appointed someone to be my health care proxy.

I have checked all the beneficiaries of every investment account and insurance policy within the past year.

So how did you do?

If you answered yes to every item, congratulations. If you are working on improving on a few items, I say congratulations as well.

As long as you are comitted to truly creating financial security, I applaud you. If that means you are paying down your credit card balances, or are building up your emergency fun with automated payments, that’s more than fine. You are on your way!

But if you found yourself saying No to any of those questions, and you’re not working on moving to Yes, then I want you to stand in your truth. No matter how good you feel, you have some work to do before you can honestly know what you are on solid financial ground.

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