Podcast Episode - Ask Suze Anything: July 18, 2019

Bill Paying, Financial Security, Podcast, Spending, Women And Money

July 18, 2019

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In this episode of Ask Suze Anything, Suze answers questions from Women & Money listeners Katie, Toni, Rose, Donna, Terry, and Edie.

Podcast Transcript:

July 18, 2019. Ask Suze anything! Alright. This is where you write in. And if your email is chosen, it will be read and answered on this podcast. All you have to do is send in your question to ask Suze (S-U-Z-E) asksuzepodcast@gmail.com, and you just never know what will happen. I'm getting right to it. Alright from Katie. She says, Suze, can you help me? I'm scared to death. For years I blamed others for my mistakes. Now at nearly 47, I'm owning my S. H., you know where she says this. But all of the mistakes I've made have left me with absolutely nothing for retirement. I have a beautiful wife of nearly three years now and two beautiful gingers ages 15 and almost 18. Never heard that quote before. A ginger. Alright. I knew nothing about money. So it's not only me I'm worried about, but my kids, they know nothing as well. And I don't want them finding themselves in the same boat I'm in right now. In order to help them, I have to help me first. True, true. That's true, Katie. They deserve it. My wife deserves it. And most importantly, I love this. I deserve it. Am I too late to build a retirement? Here's what I really need to impress upon you. I really beg you to remember that it wasn't until I was 45 years of age, until I wrote my first book, the massive wealth that you see me having right now really started at the age of 45. It really came into effect when, in 1997, when I was 47. Is that your age, KT, is that your age? When really everything started to just skyrocket for me. If you think it's too late, then it will be too late. It is not too late. It is not. So you have to stop coming from a place of fear, and you have to come from a place of courage. From a place of energy. Where you are not going to turn your back on the financial battlefield, you are going to conquer it. You're going to conquer it with your family, you're gonna conquer it with your spouse, you are going to conquer it. But you can't be strong when you feel weak, you can't be secure when you feel insecure, and you can't be smart when you don't put any energy towards being smart. The smartest thing that you're doing right now honestly is listening to the women and money podcast, but you have to do more than that. You have to take actions. You really have to open up your statements. You have to look at what you have, you have to look at what you don't have. You need to get as much pleasure out of saving as you do spending. You need to do it all. And are you capable of doing it all? Of course you are, because you're a woman. Okay, Tony says I'm a 61 year old teacher, and can draw my pension in three years. I would like to start a travel business with women and teach them basics about finances. How much money do I put aside to start my venture? My only debt is student loans. All right, Tony. Can we talk, how do you teach others about the basics about finances when you yourself are wanting to start a travel business, a travel business that takes money to travel, when you already at the age of 61 still have student loans? It doesn't make sense to me. Don't try to be a teacher until you are the best student and you have learned what you need to learn. You can't encourage others to spend money that they don't have. So are you going to have people come to your business and say, you know, I know you want to go on this vacation, but I'm looking at your finances and you have student loan debt. You still have this debt. You still don't have anything in savings. But this trip, this trip, which is how I'm going to make money. If you take this trip is just so fabulous to you. You need to have both your feet in the same boat. You cannot have one ft in one boat, one ft in another boat. That you're going to teach them about finances, yet you're going to be in a business where you're going to have them spend money. You have to do one or you have to do the other. But the first thing you need to do is pay off your student loans. I know it sounds like I'm in the mood today, doesn't it? But I'm really not. I'm not. It's just how I am. Can you imagine how intense it is to live with me? Do you think that I could just say one sentence that was just like, hi, how are you? So sweet outside today. Does that even sound like me? I don't think so. I don't think so. I was born to be this way. Do you just love lady gaga? Oh my God, I love when she sings that song. This is from Rose. Hello Suze. You are wonderful. Yeah, but I'm feisty. You are wonderful. I listen to all your podcasts and always feel energized after listening to you. Quick question. Is it not advisable to store my original will and Must Have Documents in a safe deposit box? What is your expert opinion? I love this question. Here's what's really important. You obviously when it comes to your will and when Rose is referring to the must have documents, the four must have documents by the way are a will, a living revocable trust, an advanced directive and a durable power of attorney for healthcare. Every single one of you must have all four of those. And if you don't know why, please look back at one of the podcasts, I don't even know which one, and it explains them all in great detail. I think I'm gonna have to start to learn which podcast that was to make it easy on you. But then again, if don't make it that easy on you, maybe you'll listen to all of the podcasts and then you'll really learn what I think you need to know. Anyway. This is what is important to understand for the trust and the will and those documents to be valid. They have to be the original documents. That can't be a copy of one, they can't be stored on your computer and you printed out. If something happens, they have to have your original signature, and the original notarization stamp. So they have got to be the original, which is why it is important that you keep them somewhere in a waterproof, fireproof, whatever it is place, so that if anything were to happen, they would be great. So a lot of people decide, oh I'll just keep them at a safety deposit box in the bank, in the credit union, in whatever. Whoever has safety deposit boxes. But here is the problem. Let's say you die, and you have not designated who can enter and get into that safety deposit box to access your trust and your will and your Must Have Documents if you're not alive anymore or if you're injured or whatever and you can't do it. So you have got to make sure that if you keep them there, that somebody else is signatory and able to access that safety deposit box. They have the key, they have everything, their name is on the paperwork. Otherwise it's going to be a serious, serious mess because nobody is going to be able to get in there and then you have to go through all this rigmarole just for that to happen. I personally don't keep my Must Have Documents in the safety deposit box. I keep my must have documents in the Protection Portfolio that I myself have created that is water resistant, that is safe and sound, that will float. That you know really does resist fire up to a certain point. But I never say that because it hasn't been proven. But I feel safe with it there. So that's what I do. But if you're going to keep it in a safe deposit box, make sure somebody else that you trust can access it. Next one is from Donna. Hi Suze. We have a nine-month savings fund and growing, we just started putting $1,000 in per month. But we also have a HELOC, that's a home equity line of credit for those of you who don't know a balance of $35,000. And we are only known as she says only only paying off the interest at 7%. So they are paying 7% on a $35,000 home equity line of credit. Got that everybody? And they pay off interest only. They are not paying off the principal each month, as advised by our accountant. Great accountant you got there and Donna. Anyway, after hearing you talk about not putting credit card debt onto a HELOC, I started wondering if we should be paying this off first instead of saving more right now. Mm hmm, mm hmm. Of course you should. What kind of accountant do you have? Let's just think about this. You say in this email that you have a nine-month savings fund and growing because you're putting $1,000 per month away in it. You know that I think it's adequate for you just to have an eight month emergency fund. So you're already exceeding that. But let's think about the interest that maybe, just maybe, you are earning on that money. You are earning, if you are lucky, 2.2% taxable. However, you are paying 7%, 7% on your home equity line of credit and let's just assume that's tax deductible. Let's just assume you're in the 50% tax bracket between state and federal. So the money that you are making in the savings account after taxes, if you're making 2.2%, is 1.1%. Alright. The 7% that you're paying on the home equity line of credit. Let's just say you get 50% of that as a tax write off. Now you're really only paying 3.5%. You are still losing over 2% on this money. What for? And if something goes wrong, right now you're able to do this, what happens if you get sick, what happens? Whatever. Now you have a $35,000 home equity line of credit, and now you can't make the payments and now all of a sudden you go into foreclosure because you can't make those payments. Debt is bondage. You're never going to have financial freedom if you have bondage. It's not about money, it's about how do you feel. Do you like having the fact that you owe $35,000 and what's securing it is your home? So if anything goes wrong with you or your spouse or whatever, you could possibly lose your home? Wouldn't you forget what I say? Forget what your accountant says. What do you say Donna? On a scale of 1 to 10, how good would it make you feel, with 10 being the best the most, how good would it make you feel if you didn't owe that $35,000 of a home equity line of credit, which would make you feel more secure not having that debt or having money in a savings account? Do you have money or do you not have money? Do you owe money? Are you saving money? You get rid of your debt especially especially because you already have an eight month emergency fund. You might want to get rid of the accountant while you're at it. Terry says, Dear Suze. Is it shallow that I don't want to be in a relationship with a guy because he won't get a job? His reasoning is because he has a product that he is shopping around, that he believes is going to take off and he'll be a millionaire for us. I personally worked my butt off to pay a massive amount of credit cards, a student loan debt. I have no consumer debt and I'm on target to have my house paid off next year. I - notice this is all everything that she has. I have a great job, shouldn't he at least have a job in case his bright idea doesn't make him rich? This guy depends on his parents and sponsors for money, which drives me bonkers. I want a financially sound man, not a 36 year old guy with potential. We do have a lot in common, but obviously not in the finance department. I don't know whether or not I should give him a solid chance, and if I don't, does that make me shallow? Signed, Terry. You know Terry, I'll never forget when I was a waitress at the Buttercup Bakery and two guys used to come in both by the name of Steve and I used to give them free coffee every once in a while and they would tell me about this crazy idea that they were working on in the garage of one of their parents, and their parents just hated that they were doing this. And it was this little device called a computer. And that computer turned out to be Apple computer, and that was Steve Jobs and Steve Wozniak. However, they weren't being supported and living with parents and doing all this stuff, they were still doing things on their own, they were still bringing in money. Are you kidding me? He can have all the brilliant ideas in the world, but what is preventing him from doing both, but just look at your own life, look how great you are doing? You are going to own your home outright. You are paying off everything, you're fine on your own. The only thing that's bringing you down, it seems, when it comes to your life, is this boyfriend. No, it is not shallow. He should be doing it all. Now. Maybe the invention will go, maybe he'll end up making a fortune, but I've always said that when you write in with questions like this, you already know the answer to that question. So no, it doesn't make you shallow. Because if he is not fulfilling you on the money level, he's not filling you on the life level. And so therefore, I asked you to think about this one seriously. If he really wanted you in his life, he would do it all. He really would. He would go out and he would contribute, he would get a job, he would do those things and sell his product at the same time. So no, it doesn't make you shallow. If anything it makes you one smart cookie to take note of what's really going on in your life, not only with your money but with your love feelings as well. This next one I actually find quite interesting. It's from Edie. Hello Suze. I listened to your podcast where you mentioned investing in pot stocks, Bitcoins and stocks in general, but you shot it down so fast. You say if you have student loan debt, credit card debt, that you can't invest in stocks. I did not say that or if I did I sure didn't mean to. That one in five people with student loan debt is in their fifties, that I did say. She then goes on to say well I have a problem with this advice. Good. I like that you're voicing it. This is what I want. I want you to be a strong, smart and secure woman. I want you to be somebody that could absolutely tell me what you're thinking and it's okay if you disagree with me. I like that because then we can work it out. All right. Edie asks, what if a person has their credit cards paid off every month? Then you do not have credit card debt. Edie, credit card debt just so you know, is when you have debt on your credit card and you cannot pay it in full at the end of the month, you're paying the minimum payment. All your credit cards are getting maxed out. You're putting more money on your credit cards than you have anywhere because that's how you're paying your bills. You do not have credit card debt just so you know. She goes on to say, and is making monthly student loan payments. I love that for you. Hopefully, however you are on the standard repayment method where you are making monthly student loan payments where your student loan, if you're not working for public student loan forgiveness, is going to be done in 10 years. She goes on to say, and does have an 8-month emergency fund. Some of these stocks are under $50. What if a person can set aside a few bucks every week to build up enough to buy some of these cheap stocks for potential future growth? If a person is in their fifties, and doesn't do some investing, besides a Roth IRA, then what happens to that person when they reach their mid sixties and have no other investments to retire on? I just feel like you shot this opportunity down so quickly without giving any chance for people to get in on the growth opportunity for their future. I've heard this is an ideal time to invest because it has so much growth potential. I feel you should talk about this to people trying to build a retirement. I think people are very interested in this opportunity but aren't sure if it's a good idea. What do you think? I think I love you Edie. Listen, obviously, Bitcoins, marijuana stocks, things like that can be very very speculative. And you first have to build, in my opinion, a foundation to make sure that you really are secure before you go up that pyramid of speculative types of investments. Gold, Bitcoins, all of those things. If you are Edie, totally out of credit card debt, even though you're just using your credit cards, if you really are paying off your student loan, you've purchased a home because you want a home and you know that that's going to be paid off by the time you retire, you are fully funding a Roth IRA or a traditional IRA along with your 401k, or 403 B at least up to the point of the match. You have your eight-month emergency fund, you have children that you want to put through college and you are fully funding their 529 college savings plans and you are doing all of that. Your job is secure. You've been working, everything is as it should be and if you have extra money besides that and you want to put some in Bitcoins, or in Facebook libras, or whatever it may be or in certain marijuana stocks because some are gonna stay and some are not. I personally own a whole portfolio of marijuana stocks. I am invested in Bitcoin. I also have full belief that Facebook is gonna pull off the libra thing. So I own facebook stock, but could it all absolutely backfire? Oh you betcha it could. You absolutey betcha it could. And so I can look at some of my marijuana stocks that I have purchased, some are up 2030 40% and some are down 50 60 70%. So do you have enough money if you're going to be investing like this that you can have a whole variety of stocks so that you can have a portfolio, some that will do well, some that obviously won't, or are you gonna bet the bank on just one or two stocks because you only have a little bit amount of money? There is a place in every single person's portfolio that they can choose to speculate a little, and you can even do it within your own Roth IRA, in a retirement account. But you first have to have, in my opinion, your foundation covered. You have to have good quality stocks, mutual funds, ETFs, or whatever. You have to be out of debt. You have to do those things. But I get you Edie, I get you. But then I just get a little concerned when I hear you say, you know somebody in their 50's. If somebody in their 50s doesn't have a retirement account or something like that happening, then I would much rather see them take their money and put it towards a mortgage, do something. I rather invest in the known, versus the unknown. But I like your spunk, girlfriend. I like where you're going. So there are certain circumstances where it makes sense, there are certain circumstances where it does not make sense. When you hear me give advice on a podcast, and this podcast is going all over the world, and you are all in different situations, different ages, different beliefs, different aspects of your own financial life, where you know what to do, where you don't know what to do, where you have children, where you don't have children, whatever it may be, you have got to be intelligent enough, where you can go, oh that applies to me, or no, that doesn't apply to me. And then, all the answers that I give on the ask Suze anything will absolutely help you in every possible way. But you have to know when it applies to you, and when it doesn't.

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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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