Podcast Episode - Ask Suze Anything

Credit Cards, Debt, Home Buying, Must Have Documents, Retirement, Social Security, Will

March 05, 2020

Listen to Podcast Episode:

In this podcast of Ask Suze Anything, we hear questions from Women & Money listeners Doris, Denise, Norma, Brent, Lisa, Cynthia, Mary, Ashley and Tyler, Kristie, and Anonymous.

Podcast Transcript:

March 5, 2020. It's getting to be more and more important that you know the date that this podcast was dropped because I'm starting to give financial advice and financial advice today might not be applicable a week from now, two weeks from now or whatever it may be, or five years from now. So, you really need to know when I am giving the financial advice for, that's number one. Number two, this is Ask Suze Anything, and I do not want this podcast to totally turn into the stock market and what's happening. And I know it went down and then it went up and then it went down. I get all that, so I will address it one more time after the entire week is over. So this Sunday's podcast, March 8, is International Women's Day, by the way. I will recap what I think about this market, again. I will also recap what I think about the bond market because so many of you are writing in and you're saying, Suze, I heard you on TV a week or two ago saying, now is not the time to buy bonds but in September, you told us to buy bonds. Yeah, and that was the best advice I ever could have given you, by the way. You're asking so many questions about that, so I like that, women, you are learning and that you want to know. So this Sunday, March 8, I will let you know what I think again. OK? Before I begin a regular Ask Suze Anything, now about questions that don't really have to do with the stock market. So I just want to say this. I was told this week that my new book, The Ultimate Retirement Guide for 50+: Winning Strategies to Make Your Money Last a Lifetime, hit The New York Times bestseller list. That will make it my 10th consecutive New York Times bestseller. And that is a big deal and something that I am so proud of, I can't even tell you. So, I just wanted to share that good news with you, for all of you who participated in making that a reality. And I also just want to say that very shortly, we're going to be telling you who won the money makeover with me one on one, and we will let you know that soon. All right, let's start with Doris. She says. If you trust any ID protectors, let me know. I've heard that some of the most advertised ones are tricky and don't follow through. Listen, Doris, I'm not a total fan of ID protectors, and the reason is this.They are reactive versus proactive. You want to make sure that you prevent somebody from stealing your identification, you don't want somebody to report to you after they've stolen your identification that your identification has been stolen, and now let's try to get it back. And that's what I think most of the ID protectors do. They are reactive, not proactive. So, what I would do if I were you? If you really want to protect your identity, just put a credit freeze on all three of your credit reporting bureaus: Equifax, Experian, and TransUnion. That way, nobody at all, if they apply for credit or they try to find out anything about you, they're not going to be able to because your credit is frozen. That is the safest way to do it. If you don't want to do it that way, you can check it on your own for free. Just keep going to www.creditkarma.com, watching your FICO score, your credit scores, looking at your credit reports at www.annualcreditreport.com and see, is anybody opening up cards for you? Is your score going down? Just keep checking on your own. Me? I would do a credit freeze.The next one is from Denise. If you can retire early because we followed your good financial advice for many years, why would you ever want to delay taking your social security benefits? If you delay, you start depleting your retirement savings accounts and could deplete your net worth by as much as $300k if you wait until you are 70. You would not catch up for many years, if ever. We are active and enjoying ourselves while we are young. By the time we are 80, if we're still here, I don't expect to be spending a lot on an active lifestyle, and I've already prepared for assuring we don't run out of income if we live too long. Denise, listen to me. You say that you followed my good advice. Don't stop following it now, girlfriend. If you're going to retire early, how early is early? Are you talking about your 50s? Are you talking about that from 50 on, or 40 on, that you're going to live off of what? Your retirement and you're going to start taking social security at 62? Are you kidding me? Do you know, if you wait until you are 70 you will get 76% more than if you started at the age of 62. You say, but by the time we are 80 if we're still here... Girlfriend, you're going to be here. Most people are living now until late in their 80s, early 90s. My mother lived until 97. You might not expect to be here, but if you run out of money, you're not going to want to be here. And you shouldn't be depleting your net worth by as much as $300k if you wait until you are 70. How much are you spending between 62 and 70? Are you kidding me? $300k in eight years? You're taking out $30k a year from your retirement account and depleting it? You shouldn't be depleting money like that, not in eight years. Listen, you can do what you want but all I can tell you is, in the almost 40 years I've been doing this, I would wait if I were you until 70. Figure out another way to have other money come in without you depleting $300k.This one is from Norma. She says, we live in Southern California and are looking to purchase our first home in the near future. We have about 10% saved for a down payment, and we are working towards getting to 20%. My question is regarding names on the loan and title. My husband has suggested that we put the mortgage loan under my name only since it will be based primarily on my income and my credit score of 780. Would you agree? Again, his income has been inconsistent and his credit score is in the low 600s. If we do this, should the title of the house be under my name only as well, or under both our names? Does this even matter if we are married? You need to listen to me, and Norma, it would not be a bad idea for you to listen to last week's podcast. That would be February 27, the podcast, Ask Suze Anything that I did so that you can learn about how to take title. Because in California, it is a community property state. So, if your husband gets in trouble, financially speaking if somebody wants to, they possibly, because in a community property state, everything's considered his even if it's in your individual name. You have to be very careful, if he gets in trouble, somebody possibly could put a lien on your home. But that is beside the point.Here is the thing you have to do. If this is only on your income, if this is only on your FICO score, it should be only in your name. It should not be under both names at all, and you should be as protective as you can possibly be. Obviously, my radar goes up when somebody tells me that their husband's income has been inconsistent and his credit score is in the low 600s. So, you better have a plan worked out. But in answer to this question, it all should be in your name only, and you best have a prenuptial agreement. You make sure you listen to February 27, 2020, the podcast that I did. I think you will find it enlightening.All right, the next one is from Brent, and he says, Suze, my husband and myself are wondering if we should take out a HELOC, which is a home equity line of credit, to consolidate consumer debt we have accumulated or if we should stick with the payment method we are currently paying to be debt-free. So, he goes on to say how they currently owe for a variety of different loans, totaling $56k. And that they pay approximately $1500 a month in consumer debt payments and they expect to have everything paid off in 2022.But this is what they're thinking, and this is what I want all of you to understand why I do not want you to do this. They are thinking that if they just do a home equity line of credit and consolidate all their debt, then they would only have to pay $795 a month in payments. But, in the long run, they would be paying far more in interest because it would take them almost 15 years under this plan to pay it all off. Now, Brent, you are not to do that. You are going to stay paying it the exact same way you are paying it, and why is that? Brent, let's just say something happened. You and your husband got in a car accident, you can't work anymore, you can't make any payments on this debt. The debt that you are paying off is what is known as unsecured debt. They cannot come back and take away your house if you can't pay it. Sure, maybe they could sue you, put a lien on your house, but they're not going to do that. These are all different types of little debts and blah, blah, blah, all over the place. So, I think it's really far more important that you get rid of the debt now, even though your payments are higher now, and in the long run, you pay less interest than doing a home equity line of credit. Because a home equity line of credit does what? It secures this debt with the equity in your home. If something goes wrong, you and your husband can no longer work, generate income, they can take your home away from you. Can you just continue to do exactly what you're doing? And in three years, you will be totally debt-free and you won't have any more payments, whatsoever, except for the mortgage on your home.This one is from Lisa, she says, was hoping for some guidance on which documents I may need. I am a single 52-year-old with no children and have never been married. I am wanting to know what documents I should file for? A power of attorney, a trust, a will? I wasn't sure what I need since I don't have an immediate family, and if I need to fill out the same documents as a married or divorced couple would.So here's the thing. As a single woman with no family, nobody out there, you need what I call the Must Have documents: a will, a living revocable trust, an advance directive and durable power of attorney for health care, and a power of attorney for finances, more than anybody else. And that is because if something happens to you, Lisa, who's going to pay your bills for you? Who's going to manage your money for you? Who's going to look after you? And if you have all those documents in place, you will be totally taken care of in case of incapacity and illness, whatever it may be. Go to www.SuzeOrman.com/offer, and you might find right there exactly what you are looking for.Let's see, the next one is kind of the same, but I'm just going to read it to you anyway. This one's from Cynthia, she says, my mother died November 1, 2019. She had two wills that she did in 2008 where she listed my deceased brother and deceased sister, as well as me, as beneficiaries. She listed me in charge of it and I'm now her only surviving child. My nephew moved in, without authorization, into her home a week after she died. Three lawyers have said in the state of Texas, her will is not valid. I was supposed to have full benefits to the house, but because they said that her will is not valid, I now have to split the profit from the sale with the nephew. She says, can you help me enforce my mother's last wishes? Cynthia, I wish I could help you, but I can't because if her will is not valid, that means she died in intestate succession. Intestate succession is where the state that you live in decides how her property is going to pass and to who it is going to pass to. So obviously, in the state of Texas, it says you're to get some and then obviously other relatives are to get some as well. That is why, once again, it is really important that you know what you're doing, you know that everything is valid. It's really sad because she did this in 2008, she didn't die until 11 years later. You already had experienced that your brother and your sister had died. It would've been so great if you could just have checked on your mom to make sure that everything was in order, so I can't help you now. But for those of you listening, you have to know that you have the correct documents in place, otherwise, you could be asking for trouble without even knowing it. So, you just want to make sure that you have everything in place with the absolute correct documents.The next is from Mary, she says, how can I rebuild my credit after bankruptcy? It's been two years, and my score is standing still. Please help. I had a 780 before my divorce and bankruptcy. I got divorced after 24 years, and it's been something else.Listen to me, Mary. It's only been two years, and it takes a lot longer to get your score to go up after bankruptcy. The bankruptcy will stay on your credit report for at least seven years. Sometimes people find that it stays for 10 years, even though it's not supposed to. So, you have got to just be patient, and in time it will go up.This one is from Ashley and Tyler. I may have missed this, but have you done an episode about wedding planning? I'm 29 years old and planning a wedding. It was surprising to me to find that the average wedding cost is $30k. This seems to me to be a lot for one day when the marriage will hopefully last a lifetime and we have other financial goals to plan for like retirement, a house, and a mortgage. Any advice you have for fiscally responsible wedding planning would be appreciated. You know, I hate to tell you this, everybody, but I am not a big fan of weddings and spending a lot of money on them. Even my own wedding to KT, which was in South Africa, I think the whole thing cost us, I want to say, maybe $200. That's it, really. So, I would not be spending $30k on a wedding, especially if you're saying you have other financial goals to plan for. You know, the greatest wedding I have ever attended, really, was one up in the North Carolina hills where a nephew of KT's got married. Everybody brought little cakes, they put them all together to make a big wedding cake. They did baked beans and all kinds of vegetables and it was outside. Everybody brought flowers so that those were the flowers on all the tables. It cost him really under $2k to have one of the most beautiful weddings I've ever seen. And everybody brought instruments, they all played, they all danced, and the couple is still together today, having a great time. So, you asked me for advice on responsible wedding planning? Don't spend money you don't want to spend and do not have a wedding just to please your parents. Spend the amount of money you feel good about, and if you have to use up your emergency fund or put it on credit card debt, you are spending too much on this wedding. Just love each other up, that's what I say. This one is from Kristie. Is it bad to use 0% APR credit cards for home renovations? Because it has taken me longer to pay off, I've had to move the balance to other 0% credit cards but pay a 3% transfer fee and carry a balance of $11k. I also have $55k in student loan debt and not sure what to wipe out first. Thanks for reading.All right, Kristie, listen to me. It's OK when you get a credit card that has a 0% interest rate on it. It is not OK when you transfer from a 0% interest credit card that you didn't pay off in time to another 0% credit card that charges you a 3% transfer fee. That's $330 that you paid to do what? Transfer it to this card. And if you continue to keep doing that year after year, the 0%, it's not really 0% since you are paying transfer fees. And the fact that you have a $55k student loan, what, you don't want to do that? Just pay off the $11,000 at 0% while the 0% is still in effect. Because after that 0% percent goes away, you do not want to do a balance transfer fee again, the interest rate will absolutely go up and then you're really stuck. So can you just make it your number one priority to pay this off in the time limit of when that 0% interest rate is in effect?The next one is hi, Suze, I currently have $100k in my savings and want to invest it. I recently went to a Chase Bank Financial Advisor. Why would you do that? Why would you go to a bank to get financial advice? Really? All right, sorry, just my opinion. And she advised me to invest $50k for now, keep $20k in my savings, and used the rest of the $30k to invest in the future when the market goes down. The bank takes 1.3% in fees. My question is, I've heard people talking, and also from you, that the market will go down in a few months. Is this the best time for me to open an investment account or stay put? Is it better for me to just open a CD account instead of investing for now? Here's what I find so funny. Your investment person at Chase Bank is telling you, even though she knows that the market's going to go down in the future, so she wants you to save $30k for that. But she's willing to invest $50k for now. Why would she want you to invest in one lump sum $50k right now if she is so sure that the market's going to go down in the future? Also, $20k in your savings, is that enough for an eight-month emergency fund? Because before you invest any money, girlfriend, I want to make sure that you have at least an eight-month emergency fund. I want to make sure that you are totally out of debt because I would not have you be investing at all if you had credit card debt, car loan debt, student loan debt. Do you have any debt? Just because you have money in savings doesn't mean that you don't have debt. If I was going to tell you how to invest, I would first ask you, do you have a least 10 years or longer until you need this money? I'd ask you how much are you willing to invest, assuming you're out of debt and everything else? And you said, oh, I'm willing to invest about $75k. Then I would tell you to divide $75k by 36, which is three years, 36 is 36 months, and then you would take approximately $2100 a month, and you might want to divide that up every single month between the Standard and Poor's 500 Index ETF, or the Vanguard Total Stock Market ETF, or even the Motley Fool 100 Index, symbol is TMFC. And I would put $700 into each one of those. I would do something like that every single month. And that way, if the market tanks, you're still investing. If the market goes up, you're still investing. But you're participating on a dollar-cost averaging basis. I would not be putting $50,000 in a lump sum right here and right now, especially if you thought the market was going to go down. So there's no way to know. Is the market going go up? Is the market gonna go down? I don't know. But if I had fresh money to invest right now, I would be investing on a dollar-cost averaging basis spread over a three year period of time. I would continue just to invest every single month. Maybe you want to do it over a two year period of time. So then, you know, you might want it up that to $5k each month, whatever it is. But just do it on a monthly basis and diversify it within three indexed funds. That's what I would do.OK, that brings us to the end of Ask Suze Anything for today. But please remember, tune in on March 8, and I really will go over what I think is happening in the economy, what I think is happening in the stock market, the bond market, the Federal funds rate, interest rates, the election, and everything that I really think is going to affect you over the next three years. OK, tune in March 8, 2020.In providing answers neither Suze Orman Media nor Suze Orman is acting as a Certified Financial Planner, advisor, a Certified Financial Analyst, an economist, CPA, accountant, or lawyer. Neither Suze Orman Media nor Suze Orman makes any recommendations as to any specific securities or investments. All content is for informational and general purposes only and does not constitute financial, accounting or legal advice. You should consult your own tax, legal and financial advisors regarding your particular situation. Neither Suze Orman Media nor Suze Orman accepts any responsibility for any loss, which may arise from accessing or reliance on the information in this podcast and to the fullest extent permitted by law, we exclude all liability for loss or damages, direct or indirect, arising from use of the information. To find the right Credit Union for you, visit https://www.mycreditunion.gov/. Interested in Suze's Must Have Documents? Go to https://shop.suzeorman.com/checkout/cart/index/.

Suze Orman Blog and Podcast Episodes

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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