Emergency Fund, Family, Long Term Care Insurance, Retirement, Saving, Social Security
April 02, 2020
Listen to Podcast Episode:
In this podcast of Ask Suze Anything, we hear questions and stories from Women & Money listeners Judy, Steve, Stephanie, Joan, Trish, Jim, Sophia, Suzy, and Patricia.
April 2, 2020, and welcome to another edition of Ask Suze Anything. This is where you write in and if your email, if your question is chosen, I answer it here on the podcast. And everywhere I go, people are saying, Suze, how do I write in? How do I ask a question? Just write your question to AskSuzePodcast@gmail.com, and it's really just as easy as that. So here's my question to all of you. Did you take advantage of the download of my free audiobook offer that I made to all of you? Last Sunday I told you, if you just went to www.SuzeOrmanAudio.com, you would be able to, for absolutely free, download 12 hours and 30 minutes of the audio version of my book, The Ultimate Retirement Guide for 50+: Winning Strategies to Make Your Money Last a Lifetime. You would be able to download the audio version of that book absolutely free, and guess what? That offer is still valid. So, if you haven't taken advantage of it, why not? Also, I just want to say, at 3 p.m. East Coast time on April 4, this coming Saturday, I will be on HSN. All right, today, I want to do a little bit of a rapid-fire because so many of you have written in and you have questions about the stimulus, about unemployment, about all of these things. And so, I think it's really important that we answer these questions because, for many of you, you really are just waiting for this check to come because you don't have any money. You know, what is so sad is that do you know that 60% of the people in the United States of America have $400 or less in their savings account? They don't have any money. So the first thing that I want to say to you is please don't feel that you are alone. Most of the people are in your exact same situation. So it's hard, it's hard to know what should you do, what shouldn't you do, and you're just waiting. You're just waiting. The main thing I want to say to you, again, is that you have more power than you have any idea and that if I were to give you one piece of advice, just one, I would tell you just two words. And those two words would be you have to BE STRONG. You know, I was looking the other day at my Women and Money book that I wrote and the subtitle of it when I re-released it, I think it was two years ago now. The subtitle and you hear me talk about this subtitle on this podcast all the time, is to be strong, be smart and be secure. Those are my goals for all of you that listen to this podcast. But the very first one if you look at that is STRONG. Be strong. This is the time that you have to be stronger than you have ever been before in your life. Because many of you are spending time all alone, and really, you've probably never done that before. You're always going out, you're always busy, you're always doing this, you're always doing that. And now you have to just stay home and be with yourself, many of you. Because many of you are isolated, you don't have people that you live with, and this is a time that you have to be strong and really get to know who you are. I was doing the Dr. Oz Show and somebody wrote into his show, and here was the question to me. It was all right, I'm at home, I'm all alone, I've lost my job. I just want to say my life is crap. Now, tell me what I should do. And my answer back to Dr. Oz was, well, at least he has a life. You know, maybe his life is crap, but he needs to really change how he's thinking about it, because there are going to be hundreds of thousands of people that are not going to have a life anymore. And true crap is when you don't have life. Your money and I've said this to you before, is going to come and it's going to go, but it will come back. And one day we're going to have to do a podcast on the lessons we have learned. What did we learn from this? How did you play a role in the misery that you're going through right now? You know so many times, how many times have I begged you to have at least an eight-month emergency fund? And yet you tell me now I don't have any money. I've been listening to you for years, Suze, but I don't have an emergency fund. And I write you back and I say, how many vacations have you taken over the past five years? How many times did you go out to eat? Did you happen to buy a new car, even if your car that you sold and got rid of was only three years old? Do you buy clothes all the time, do you give money to your kids? All these things and you all write me back and go, yes, yes, I've done all those things. So one of the lessons learned when we come out of this, and we are going to come out of this, one of the lessons learned has got to be, do I care more about having an emergency fund so I never have to go through this again? Or, do I want to go on that vacation? All right, $3k for the vacation, $3k towards my emergency fund. Don't forget what you're all going through now. Choices are hard, but the benefits of saving money it's so much easier than what many of you are going through right now because you do not, you do not want to live a life where you are dependent on the government giving you a stimulus check, letting you apply for unemployment. And don't think that this will possibly be the last time this happens. We're a global world now. Pandemics are going to be more and more. We went through a few SARS, Ebola, but they never got out of hand before. And who knows why this one really did or didn't and doesn't even matter. But it has taken many, many lives throughout this world so you have now got to learn the lesson that there is no more important thing or movement that you can make than creating at least an eight-month emergency fund. Can you all just promise me right now and promise yourself that when this is over that is going to be your number one priority? Write it on your refrigerator, write it in a book. In fact, why don't you all start keeping a book right now? You're all at home, you don't have anything to do, and write a book that's called Lessons Learned, Lessons Learned. And what are you learning about yourself? What are you learning about the role that money plays in your life? What are you learning about the people in your life? But what really, again, are you learning about you? Are you learning that you're strong? Are you learning that you're weak? What are you learning? What are you learning about what you wished you had done with money? What are you learning about what you regret that you did do with money? Take time and go and look in your closets right now, look at all your clothes, look at everything you bought. Look at all the jewelry, all the electronic gadgets, everything that is around your house and really ask yourself, would you rather have those things right now or would you rather have the money that you spent on those things? Just ask yourself that question. Judy wants to know, I have money in a retirement account and a 529 plan and I need money. So, Suze, please don't tell me not to take it out, just tell me which one I should take it from. All right, Judy, I won't tell you that since you don't want me to, but if it's a choice between a retirement account and a 529 plan, please take it from the retirement account. On a 529 plan, the government has not made any concessions on that, so if you take it from there, you're going to get a 10% penalty, you'll have to pay taxes and everything on the earnings. From a retirement account, the government is allowing you to take up to $100k without penalties. And regardless of your age, because you didn't tell me how old you are here, and you have three years to pay that money back because you will owe taxes on it. But you have three years to do so, so you have three years to pay the taxes or three years to pay the money back. So, take it from your retirement account. Steve asks, I'm on Social Security and my daughter is on SSI, which is Social Security Income. It's when there's a disability or something and she's getting money for that. And neither of us file a tax return. Will we still get the $1200 stimulus? You should, Steve, however, there is so much controversy about this right now I can't even tell you. The government issued all of these rules and everything so quickly that they didn't quite stop to think about, well, what about people who are on Social Security or SSI and they don't file tax returns because they don't make enough money or whatever it may be? If I were you just to play safe, I would file a 2019 simple tax form. Just do it for you and your daughter, I just think you should do that. You probably will get it. I'm telling you, they're arguing about this right now in Congress. And also, I know you didn't ask this, but you should tell your daughter not to worry that if she does file a tax return and she does get the $1200, number one, SSI is not going to be taxable to her. But more important than that is that she's not going to be disqualified from SSI. Stephanie asked, I heard you say you have to be a citizen to get this stimulus, but I have a green card. Will I not get it? Stephanie, you will get it. I'm sorry, I should have added that, in my whole haste, I didn't. It's you have to be a U.S. Citizen, you have to have a social security number, but if you have a green card, you absolutely will get it. Those that will not get it are non-resident aliens. So you will get it, I am so sorry that I left that out. Joan says I heard you say this morning on TV that you can go to www.healthcare.gov and apply for health coverage because I lost my job. But I was watching a news show and they said that President Trump rejected the opening up of enrollment for Obamacare. So, now what should I do? Well, what you should do is you should still listen to me. So before I answer this question, let me just say what I said, which is you know, when you've lost your job and you were working and you were covered by health insurance, you have, if you apply within 60 days, and I think I've told you this before, you can under Cobra, that's the name of it, the law, that you can get the health insurance that your company was giving you, and you can get it for 18 months. However, it is really, really expensive. So, a lot of you cannot afford that because now you're paying for your part as well as your employer's part. And so another thing I told all of you, and I did say this morning on television that you absolutely, if you don't have health insurance, you should go to www.healthcare.gov, which is the website for Obamacare. And that even though we are not in open enrollment right now where anybody could apply for Obamacare, if you have lost your job, especially because of what's happening right now, you can apply for it. What you heard about Trump is that he rejected opening up enrollment for everybody, and so there are many people who never had insurance, they didn't lose their job because of this virus, and they now want to make sure that they have health insurance because they're all afraid of catching the virus. And President Trump is saying, no, we're not going to open up Obamacare for open enrollment for those people. But for you, Joan, you can go there and you can get it. And the great thing about Obamacare right now is because you're not making money and you apply, you might qualify for a subsidy so that you can get insurance and it won't cost you that much money. So, that's what that mix up was all about. Trish asks Suze, I am totally at a loss, I cannot even afford to feed myself now. I was a manicurist and my shop shut down. I did not save any money, I cannot wait for the $1200 or unemployment, I don't have any credit cards, I don't have any money. How can I feed myself and my two kids who are three and four years of age? I beg you to help me, Suze. Do you have any idea how many emails I'm getting like that? It shouldn't be like that, it shouldn't be like that. But, Trish, did you hear me just a little bit ago say you have to be strong. You have to be strong now, not only for yourself but obviously for your kids. Because when kids are little and you hold them, and you hold them to your chest they can feel something is wrong. And they don't know that you're upset because you don't have money or things like that, they think they did something wrong. So, I beg you to be strong. Now, what I would do if I were you is I would apply to the SNAP Program, and SNAP is the supplemental nutrition program that's the new fancy name for what food stamps was. So, just apply for that and see what happens and listen to me. If your kids are under five, which they are, check out the Supplemental Nutrition Assistance Program for Women, Infants, and Children. And also for those of you with kids who used to eat at school, you know, you may want to try to apply to free and reduced school loan programs. Because eventually what's going to happen here, Trish, is the kids are going to get older, they're going to go to school and things like that. So when they're under five, you can apply for that supplemental nutrition assistance program, but then when they get older, you might want to look into the free and reduced school loan program for lunches. Jim says, Suze, I'm a single dad with two kids and our insurance was just canceled, and I cannot afford to go on Cobra. All right, so, Jim, for you, you would go to www.healthcare.gov and apply for yourself and see what's there. But you also say, but I don't want my kids to not be able to go to the hospital because they have no insurance, I don't care about myself, I care about them. Well, Jim, you better care about yourself, because if something happens to you, can you just tell me as a single dadwho's going to take care of those two kids? Jim, you better be watching me on HSN April 4 at 3 p.m. EST and take advantage of that will and trust program and everything else that's going to be offered, because you cannot have kids today or be you today and not have that. You know, it breaks my heart because forever I've been telling you, you need these things. You need an eight-month emergency fund, you need a will, you need to trust, you need an advance directive and a durable power of attorney for health care. And you have always thought, no, not going to happen to me, I'm never going to be in a situation where I could get sick. Well, we now have an entire world, almost, but definitely, the United States of America, where we are in lockdown, we are in lockdown, and we're afraid to go outside because we might get sick. We are afraid to contact anybody that we love, hug them, our mothers, our brothers, anybody because we might get sick. So, that possibility that you never thought was possible has now become a probability. So, please do something while you can, please, Jim. But as far as your kids go, you know there is a program called CHIP which is the Children's Health Insurance Program. Please check it out and insure those kids. Sophia says, can you just give me an idea of expenses I can cut? I am so afraid I cannot see straight. I cannot believe that after 10 years of working, I just lost my job. I'm so sorry I never listened to you. I don't have an eight-month emergency fund and I'm waiting for the stimulus check. (You and everybody else, Sophia.) But just give me an idea, where can I start? All right, what can I tell you here? So I'm just going to ramble what comes to my head right away. If you do have a car, and I imagine you do and maybe you even have a home or renters insurance, I would increase the deductibles on my car and home insurance. I would call my insurance companies to ask could I have what's called a forbearance where they forgive you from making payments? Could I have forbearance on those for a least 90 days? And really work with them and maybe they'll say yes, but either way, I would increase the deductibles on your car insurance and your home insurance. I really would cut your cable and your cell phone plans. If you happen to subscribe to magazines which I don't know if people do anymore, I don't, but if you do, you should cut all your magazine subscriptions. If you have whole life insurance policies in place where you've been paying them monthly, this is the time that you might want to get a term insurance policy. And once your term insurance policy is in place, literally cancel your whole life insurance policy and that way, not only will you save money each and every month, but your whole life policy may have a cash value that will help you get by. You absolutely should be pausing your student loans by using an unemployment deferment. So, a lot of student loans, especially federal, they may allow you not to make payments, but private student loans and everything you might, you know want to call them and talk to them. But you should be pausing your student loans because student loans are absolutely big payments, many of them are. If you're on the standard repayment method for a student loan and after this is all over, you might want to go to income-based repayment. Those are just a few things that come to mind that you know I'm thinking about, because a lot of the other things that many of you waste money on you can't do anymore. You can't go out to eat, you can't go shopping, you can't go on getting a massage or your haircut, or doing this, or going to the movies, or doing anything like that. So now that you're stuck at home, this is really a fabulous time for you to take a good look at what is a need and what is a want and just get rid of the wants because you should want to have an eight-month emergency fund more than you want those luxuries in life that aren't doing you any good right. Now, let's see what else we have. Oh, we have a Suzy, I love this. I have the money to pay my federal student loans of $600 a month and my mortgage payment for $1500 a month. I am a nurse and still have a paycheck coming in, however, I have to tell you, Suze, I'm working harder than I ever have to earn it, and I'm scared to death every day that I myself am going to get sick. However, the real problem is I have no emergency funds at all. Should I take advantage of the deferral programs that I qualify for, for my mortgage as well as my student loan, even though I have the money to pay for them? Suzy, Suzy, Suzy, um, you absolutely should and here is the reason why. So, you probably haven't been able to save for an emergency fund because all your money is going to those bills. If you could just have, which you can right now, the ability to not pay $2100 a month for, let's just say, 60 or 90 days for two or three months, you very easily could save that money and have a great start to an emergency fund. You could have $4200, you could have $6300 if you even differ longer, if they allow us to, you could get an eight-month emergency fund. So, I would absolutely do that if I were you. Patricia or Paticia? Oh, I think it's Paticia says, my daughter is a college student and we claim her as a dependent as she lives at home. She was told she would not qualify for a stimulus check. Is this true? Oh, Paticia, I have to tell you it is true. Students, college students who are claimed as dependents do not qualify for the $1200 of stimulus. All right, Sunday, I'll give you a small recap of what I think, how long this market is going to be going up and down and up and down, 900 points up, 900 points down. How long is this going to happen? A new way to think about the money that you may have lost in your retirement accounts, especially if you've sold. Should you be selling now or not, and how long do I think this really will last until the market is calm again? So until then, what did I tell you that I want you all to be? I want you all to be strong, but I also want you to be smart, and I really want you to be secure, and I really, really want you to be healthy. See ya Sunday. 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. 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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.
Credit & Debt, Saving, Investing, Retirement