July 09, 2020
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In this edition of Ask Suze Anything, Suze answers questions from Women & Money listeners Elizabeth, Anonymous, Allison, Susan, Joan, Everett, and Tasha.
July 9, 2020. Suze O. here, welcome to the Women and Money podcast as well as the men smart enough to listen. This is Ask Suze Anything and this is where you can ask a question, you can send one into the Women and Money app that you can find on Apple Apps or Google Play, and if your question is chosen, I'm going to answer it on the podcast although I have to tell you what I was thinking about today. So, I'm actually doing this podcast from my home in Florida, and I have not been back to Florida from where I really live in the Bahamas since March 6, and I just even can't believe that I'm here. But anyway, I am, and I was thinking about as I was getting my hair cut because I got it cut, I got it colored, I can't even believe it, I think I look like myself again. But as I was getting cut I was thinking, wouldn't it be really great, Suze O., if you could answer all the questions that come in simply by taping the answer and having all of those answers on the app. So, I'm going to have to ask Sarah about that, because then it wouldn't take me very long because it does take me a while if I'm going to answer, you one on one to write your answer to then and it's just a lot so I'm thinking, wow, should I do that? What do you think, everybody? I think that would be so fabulous. And I could just sit there and I could do, like, 30 or 40 a day and get through the thousands, although probably never catch up. That might not be a bad idea. But, if I'm going to do that, even if I'm not going to do that, I just want to read you a question from Liz and why I sometimes have to go back and forth with all of you. So, I want to kind of teach you via this question as to how to ask the question in a way that I can answer it if I decide to do this crazy thing, which I'm thinking about, which is verbally answering questions on the app as well as the podcasts because not everybody has the app. So anyway, let me show you how this back and forth went between me and Liz. Liz says she's age 38, she's single with no kids, no debt, and she's renting. She has $120k in a Roth IRA, she tells me she has $90k in her Thrift Savings Plan, she has $18k in an index fund at a brokerage firm, and she has $9k somewhere else. She has $3k in savings, right, and on and on about what she has. Then she tells me, so you would think she's told me everything, wouldn't you? And then she says to me she's retiring from the current job in two years with a $30k pension per year, and she's trying to figure out if she's on track financially and what she can do to prepare for the job uncertainty in the future with potential lower income. And I write her back and I say, no way that I can answer this question because I don't know what your expenses are and I'm asking her that, and why are you retiring in two years, which would put you at 40? So, do you see how I had to go back to her? And then she had to write back to me, and she says, thank you for getting back to me, my monthly expenses are $2500, not including what I contribute for savings and retirement. But I needed to know what she was going to continue to contribute to retirement and savings because she's still young, so that's part of it. So, do you see how I need certain information from you? She then goes on to say, I'm retiring from 20 years of military service in about two years. OK, but that really doesn't help me, but this line does. This doesn't mean though I don't continue to find other employment, but I will start receiving the pension at year 39 a half. Thank you. So, Elizabeth, I'm going to answer this question. I'm sorry, I didn't mean to use you as an example, but then maybe I did since I did use you as an example, but do you see how I want you to ask a question? Just tell me kind of how much money you have, your age, your situation, are you healthy, your expenses, you don't have to break them down to me, just tell me if you're asking a question like that so if chosen, I don't have to go back and forth. Because if I don't have all the information I really need from you, I kind of tend to skip it really at this point and go on to somebody who's answered it in a way that I can really help you. Listen to me, Liz. At 38, obviously, you don't really have any expenses that are major. So, you're saying that there is $2500 a month, which is going to be covered somewhat by your pension because you have to remember, even though you're getting a $30k a year pension, so which is $2500 a month, that is totally taxable to you. So after taxes that you're not going to have $2500 a month in order to keep yourself going. So then, you're going have to go into your savings and things like that. So you know, you're trying to figure out if you're on track, financially. You're absolutely on track financially, but you are not on track financially, even with a pension, for you to not have another job. So what do you do to prepare for another job, and you say for the job uncertainty in the future? What you have to really get is that you have to be certain that you're going to get a job, it doesn't matter that you think that there's job uncertainty in the future. The only thing that becomes uncertain and makes it that something doesn't succeed is when you start to have doubt in who you are and what you can do. There are all these things out there that by the time you retire, you're going to be able to do but think about what is it that you want to do, not just do anything so that you can make money? What is it that you want to do for the rest of your 54 years that you're probably going to be alive, girlfriend? So don't think about money at this point in time, you have money, you need to make more money. But what is it that you want to do? And that's something that you have to be certain about. So the next question is kind of interesting, it's from Anonymous. I'm like, why are you so afraid to tell me your name? It's not like I can come through this microphone and eat you up alive. Well, I'm sure there's sometimes you feel like I have, but you don't have to ever be afraid to tell me your name. You should never be afraid to say your name, it's who you are. Dear Suze, I am curious why you seem so pessimistic about the development of the work-from-home economy. I've been in the work-from-home industry for the better part of a decade now, and have witnessed firsthand what a lateral lifetime these opportunities are for thousands of women, including myself. I've spent so much of my career trying to build support within companies and industries for work-from-home options because I have seen what a blessing remote work is for both individuals, especially women with caregiving responsibilities and those with disabilities, military spouses, and those in rural areas and companies. After spending so many years trying to fight the stigma associated with home-based careers, it is a bit disappointing to hear you speak so negatively about remote work finally gaining some broad acceptance and failed to mention how critical work-from-home options are for thousands of women and families. I would like to understand why you feel this is a negative. Now, I read her entire email to you because I couldn't agree with Anonymous more if I tried about the positive stuff about working from home. So, anonymous, I don't know where you've gotten that I feel negative about working from home. I don't feel negative on any level about those working from home. I work from home, I love working from home. I think everybody should work from home if they can, I think it's absolutely fabulous. I think people are more productive, they don't have to waste time driving and spending money for lunch and all these things. So, girlfriend, I'm right there with you. So, I have a feeling that you may be mistaking my opinion on what corporations are going to do versus individuals who get to work at home. So just in case my hunch is right, I just want you to understand that my comments really are that I truly believe that many of the major companies out there that had big buildings, big office suites, thousands of people working there, have realized that they could save a considerable sum of money now that they understand that it is totally viable to have a workforce that works from home. Twitter obviously understands it because they're not going to open up again where you can go into the office, and I've been in their offices, they were great. They were great in San Francisco, but it's more cost-effective for everybody, for them to have employees working from home. Now that's not a negative. But what concerns me is, are the same companies going to use the excuse because now that you're working at home versus having to come into the office, are they going to say we're going to use this time now to lower you from $80k to $60k? It's just me wondering, it's not a comment on if it's positive or negative to work from home because I think it's totally positive for most people. But will it become a negative? Because many of these corporate entities will say, and we're going to lower your salary. Also, my fear is that a lot of these corporations are going to realize that most of the people get more work done at home, so will they need as many employees as they currently have? That's all that I'm questioning here. So I want everybody to be prepared for that because that is a possibility. So that's the only thing that I can think you've heard me say. But girlfriend, I'm behind you 100%, Anonymous. This next one is from Allison. And she says, I've been following your advice for dollar-cost averaging buying stocks for my Roth IRA (Good on ya, good on ya!), spending no more than $100 per month. But what about one stock start to go up and are worth more than that? For example, Zoom is now worth much more than that, but I can only buy a full share of stock at a time. In that case, should I buy one share every other month, up my monthly limit, look for a different stock altogether? No, girlfriend, listen to me. That's what the's fractional share buying or what Charles Schwab calls "slices" is all about. Where you can open up an account at a major discount brokerage firm, and all right, let's say you want to buy Zoom. Let's say it's at $260 or whatever it is a dollar per share, and you have a $100. So you put in $100 and you're buying a fraction of a share. So you now can dollar cost average into stocks like that. Now, currently, as I'm recording this, and I could be wrong on this, so you should all check this. I don't think Schwab is allowing you to buy fractional shares on the NASDAQ and Zoom, symbol ZM, is traded on the NASDAQ. So you couldn't do it with that stock, but I think by the end of the year Schwab is going to be allowing fractional shares on the NASDAQ. However, Robin Hood, a brokerage firm, absolutely allows it now. Also, I believe Fidelity right here and right now is allowing fractional shares on the NASDAQ so that you could possibly by Amazon, you could buy Zoom, you could buy Netflix, you could buy whatever it is that you want to buy. So that's what I would be doing. So no, don't skip a month, don't go for the full share, right? Just make sure that your retirement account is in a place that will allow you to buy fractional shares on any single stock that you want. Come on Charles Schwab, TD Ameritrade, and all the other companies, you if you're not doing it now, you should be allowing fractional share buying on all stocks, regardless of the exchange they are traded on if you ask me. The next one is from Susan, and she says, I am 73, single, and retired with a good pension, plus social security. I also have a 401k account and a non-retirement brokerage account with diversified investments. I am grateful that I am in good shape, financially. My concern is that I keep the bulk of my non-retirement cash, about $80k, in a Fidelity California tax-free municipal bond money market fund. Given the current dire straits of municipalities in this pandemic, are these bonds safe? Should I transfer my cash to a taxable savings account until the economy recovers? Thanks for all you do to help us make wise decisions. So here's the thing that I don't understand, Susan, is that you again... So here are questions that I would have liked to be answered a different way. I don't exactly know what a good pension means. I don't exactly know when you say, plus social security, is your social security taxable? Are you withdrawing money from your 401k and if so, how much? Because obviously, it's a traditional 401k, so that's taxable. So my real question to you is, what tax bracket are you in? So, I doubt highly that regardless of what tax bracket you're in, that it makes any sense on any level for you to keep your money in this account. Now, I understand very well that it has a .05% expense ratio, but .05% expense ratio is still more than you can afford because if you look at the seven-day yield on the Fidelity California tax-free municipal bond money market fund, you will see that really it only is giving you like a .01% interest rate. Really, you're not making any money on this money. That is a taxable equivalent yield, even if you were in the 50% tax bracket of .02%. So why are you in there, what is the goal of that? So it just doesn't seem like it makes any sense to me on any level. So, I have to tell you, I wouldn't be in there if I were you. This is money that even if you had it in a taxable, high yielding savings account at a credit union or an online bank, whatever it is, you probably would be making 1.5% on that. And even after taxes, it would be giving you more than the Fidelity California tax-free municipal bond money market fund. Now I get because it's California that you don't pay any taxes on it in California either but who cares? At a 0.1% return, it makes no sense. So, Susan, this isn't about is it safe? This is about you asked me should I transfer my cash to a taxable savings account? Yes, you should. You then say until the economy recovers. No, until interest rates go way up again, assuming that you're in a high tax bracket, and then it makes sense for you to then maybe go back into this. But I have to tell you, I have a gut feeling you should just keep it in a high yielding savings account, period. Listen, I'm not short on any opinions, am I? And I seriously have an opinion on this one. All right, the next question is from Joan, kind of interesting. She says, hey, Suze, what is your thought process? Are you really asking me what my thought processes on anything? Can you imagine living in my head? Trust me, you don't want to. Anyway, she says to me, what is your thought process when you decide to sell an individual stock that is decreasing in price? At what point do you pull the trigger? And I'm sure she means to pull the trigger to sell. Well, that has a lot to do with what the general market and everything else is doing at that point in time. If I have a stock market that's going up and up and up, and I have an individual stock that's decreasing when the overall financial environment is increasing, that starts to concern me. So, now I'm concerned, and then I'm finding out why is that stock decreasing? Is there a management chain? Is there something wrong with their inventory line? What's going on? And then I look more at what are their earnings per share? How much are they earning, what is their revenue? And I look at the projections out for over the next three, five years, whatever it may be, what is being projected by the analysts for this particular company? Because sometimes a company goes down, and if I really believe in the company and I'm not exactly sure why it's going down, and then I do my research on it when it's going down, I'll absolutely, buy more. I happen to like when markets go down because I like to keep stocks for the long run. And as I've said to all of you, especially with dollar-cost averaging, if you have at least five years or longer until you need this money, preferably longer, then why do you want the markets to go up? Now, I'm wishing and praying and hoping right now that Amazon comes back down, like, it's at $3k a share right now. I would like to see it go back down to its support level which is about $2500 to $2200 a share. I would love that so that I could buy more. So, it just depends on what the outlook is for a company. On the other hand, if I see a company that's going down and I can't figure out why it is going down, especially if everything else is going up, then it's not making sense that it's going down, I pulled that trigger so fast, I pull it faster than a New York minute. And so I don't know if that helped you at all but the other thing is, if you start to get worried about a stock, you're obviously going to sell it because fear causes people to buy as well as to sell. The fear is, I'm afraid I'm going to lose out so you buy, and I'm afraid I'm going to lose money so you sell. All right? But I think it's really important that you ask yourself these questions as to if you should sell a stock. If you had, let's say you had $10k in a particular stock. Ask all of you, and this is for everybody listening right now. Ask yourself the question, if I didn't have that stock right now, and I had that money in cash, at $10k in cash right now, would I buy that stock right here and right now? If the answer to that question is no I would not, then maybe you should sell. But you remember, you don't have to be an all or nothing, investor. You absolutely could only, you know, maybe keep half of it and sell half of it. So you don't have to do everything at once with all of your money. You don't have to sell it all, you don't have to buy it all, especially now with fractional share buying. You know, you can come back in little by little, but that's an interesting question. So, if the answer to that question was, yep, I would buy more right now, I absolutely would, then you keep it. Just keep it then, but you are the ones who have to have faith in the stocks that you own in the mutual funds that you own, in the exchange-traded funds that you own. And if you've lost faith in them then that makes you feel insecure, and when you are insecure, that is not the goal of money. Again, what is the goal of money? In unison, everybody, the goal of money is for you to feel secure. So if you own a stock that's making you feel insecure, sell it and just don't look back. All right, this next one is from Everett, and Everett says, hi, Suze, it is said... Who says it, Everett? Who says it? "It is said," what does that mean, anyway? It is said that Roth IRA earnings are tax-free once you reach the age of 59 a half. It is clear to me that the federal government will not tax but what about the state you live in? Is the state allowed to tax you on your gains? I ask because a while back when I cashed out individual shares of stock, not only did the federal government tax me, but the state of Colorado taxed as well. Thank you for reading, love you lots from a man smart enough to listen. Yes, you are, Everett. Sweetheart, obviously the state of Colorado taxed you because when you sold stock, it probably was in a straight investment account that wasn't in a tax-sheltered or tax retirement account or anything like that. So, whenever you do something that is taxable, you betcha, the federal and state government, if you live in a state that has taxes, will take their taxes from you. However, in a Roth IRA, it's not like that. Your state will see that the money is coming from a Roth IRA, and as long as you have met the qualifications of the earnings, which means you have had to have that account open for at least five years and have reached the age of 59 a half so that whenever you take out money in any way, all of it is tax-free. For those of you who don't know when you do have a Roth IRA, one that you contribute to every year, the money that you contribute every year, you can withdraw at any time regardless of your age or how long the account has been open and that money just comes back to you, obviously, tax-free because you had already paid taxes on it. Remember, it is the earnings of that money that have to stay in there until you are at least 59 a half years of age. And the account itself has to have been open for at least five years. So, Everett, my love, don't worry about it. All right, we have one last one. This one is from Tasha Web, and she says, Hi, Suze. I'm 48 years old and I'm in bad shape, financially. I have no savings or emergency fund, I owe $32k in student loan debt and $30k in credit card debt. I am depressed and see no hope in my future at this point. Can you share any advice on what I should do next, especially during this pandemic? I feel terrible for getting myself in this situation. You know, Tasha, when I was doing the Suze Orman Show on CNBC, I always would look at the name of the people that had written in a question or who were calling in or whatever it was and sometimes their name, believe it or not, would give me a hint as to who they are or really what's going on in their life, believe it or not. And the reason that on this podcast I read your full name, which I normally don't do, is because your last name is Web and I feel like you are just tying this web of confusion and guilt and fear and sorrow and anger all around you. It's like you're caught in the spider web of shame, of fear, of anger, and it just has you like paralyzed. It's like you're stuck, you're just stuck to the stupid web. And just like with a spider's web that, you know, if you just will move your hand, it goes away because you're stronger than that web. And you are stronger, especially at the age of 48, you are stronger now than what you think you are. First of all, you have to stop saying things like, I feel terrible for getting myself in this situation. So, I want just to reiterate with you, and I did a whole podcast on this, but I want to talk to you about the three gatekeepers of life. And they are: Is it kind? Is it necessary? And is it true? Those are three questions, three gatekeepers that I am asking you, Tasha, from this day forward, every thought that you think, every feeling that you have, every word that you say, every action that you do, has to pass through these three gatekeepers. And they are: Is it kind? Is it necessary? Is it true? When you say things like, I am 48 years old and I'm in bad shape, financially, is that kind to you? No. Is it necessary? No. Is it true? Yep, it's true, but it has to pass through all three. So stop thinking it, stop saying it, stop resonating in it because what you have to understand is that your words are more powerful than you have any idea. They have the power to create or the power to destroy in your own life because your words and your thoughts and your actions are what determine your destiny. And there's an entire podcast on that as well. So, I want you to stop saying and thinking and feeling things like, I feel terrible for getting myself in this situation. Stop it. It's not kind, it's not necessary and actually, it should not be true. I don't know what happened to you to get you into $30k in credit card debt and $32k in student loan but I personally don't care. And I don't care that you don't have any savings or emergency fund. I care that you become a warrior and you don't turn your back on the battlefield of yourself. You got yourself in that situation, you can get yourself out of that situation. Obviously, the student loans can go on income-based repayment if you don't have a job or whatever it is. All right, if that's what you have to do, that's what you have to do. The $30k in credit card debt, listen, if you don't have the money to pay it and they won't negotiate with you, all right, there's not a lot they can do to you. So, you might want to contact www.NFCC.org, which stands for the National Foundation of Credit Counseling, where they will work with you, set you up with one of their sister/brother memberships that they have, and they'll work out a plan with you where you can pay off this debt in 24 to 60 months, depending, and probably lower your interest rate on those credit cards down to zero. So contact them. But just don't sit here and feel depressed, do not sit here and feel terrible. How do you conquer fear? Through action. So what actions are you taking besides feeling sorry for yourself, Tasha? Listen, don't feel sorry for yourself, feel excited that I even chose this email to answer, that I'm talking with you now, and I'm just trying to give you some encouragement. Can you please remember that I did not write my first book until I was 45 years of age? That was only three years younger than you are now. And the massive amounts of wealth that I've built up was built up starting at 45. I was doing OK before that, but not like I am now. So, it's not what you don't have now that you should be dwelling in, it's what do you want to have? Go back and listen to creating a new truth and all of these things. And very shortly here I am going to have a course coming out called the Nine Steps to Financial Independence. Watch for that, because that's definitely a course that you should take because it's going to be dealing with not just what to do with money, but the emotional blocks that keep you from being more and having more. And that's what's going on here. So it's not about me giving you advice on what you should do during this pandemic and everything. It's advice on what you should do with your life and how you should feel about who you are, what you can create, what dreams you want to make true, and you recognizing that you have the ability to do anything and everything that you want. Hi, I'm Sarah, and I'm Robert, and we're from Suze Orman's Women and Money podcast team here to tell you that Alloya's member credit unions are so proud to have brought you this episode. You know, Robert, credit unions live by people helping people philosophy. Absolutely, Sarah. And that means when you bank with a credit union, you can trust that they have your best interest at heart. The fact is, regardless of circumstance, a credit union will have your back and keep your money safe, that's the credit union promise. Go to www.MyCreditUnion.gov to find a credit union that fits your needs. That's MyCreditUnion.gov. 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. 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