401k, Debt, Divorce, Investing, Podcast, Saving, Saving Money
June 20, 2019
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In this Ask Suze Anything episode, we get questions from Women & Money listeners Lisa, Kristie, "Sad & Mad," and Carrie.
June 20, 2019. It's Ask Suze Anything again on Thursday. You know, as I'm saying this, I want to break out in a song. Do you remember that song? I think it was from Cat Stevens, which goes something like, it's just another Saturday night and I don't got no money. I know I should stick to podcasting not singing, right? But it makes me feel like it's just another Thursday and I'm talking to you about your money! Anyway, want to be part of the ask anything to me? All you have to do is go to AskSuzePodcast, that's S-U-Z-E at gmail.com. Send in a question, and if it's chosen, I will answer it right here on the podcast. And again, you just never know when I will answer it directly. Are you ready to begin? All right, this is from Lisa. She says, I am 37, married, I have no debt, own our home outright, more than an eight-month emergency fund, Roth IRA, employer sponsored retirement, outside investments, etc. Yeah, baby doll. Don't you love that? Before I go on with this email, isn't it nice and refreshing to hear an email from somebody who has everything at the age of 37? She already owns her home outright? Fabulous. But then she goes on to say, I am afraid. Please underline that word, afraid. I am afraid to spend money in spite of this. My husband says we are fine. We are not extravagant people. My mind just goes to the worst-case scenario and I want to have enough money, “in case something happens” in quotes. Do you have any advice for me? Alright. You just heard that email. Now if you were going to answer Lisa, because one of the goals of the Women & Money podcast is so that you can become teachers, you can become a community, you can help each other when it comes to money. So when somebody doesn't come to Suze, when somebody comes to you, when they're saying to you, I'm so afraid, I don't know what to do. You can answer them! You can answer them, because you've become wise, you've understood everything that I'm trying to say to you and you're passing that along. That is another goal of this podcast. So what would you say to Lisa? Just think about it, for a second. She has everything. Owns her home outright, eight-month emergency fund, funds all her retirement accounts. Yet she's still scared to death. Why? Why do you think that is? What did she say in this email that triggers the answer to this question? Alright. Have you thought about it? Here is the answer. She says, my husband says we are fine. Her husband says it. That means that even though she is making money, and they have no debt, and they own everything outright, and blah blah blah, it is her husband that is controlling the money. It is her husband that is making the financial decisions about it. And therefore, that's why Lisa is still afraid. How many times have I said, you know when you go and you ask your spouse, it doesn't have to be your husband, it can be your wife, it could be anybody. And they say, oh, don't worry your little pretty head about it. It's fine. When anybody says to me, when I asked them a question, it's okay, I'm fine. I do not believe them. I don't like the word fine. The goal of life is not for you to be fine. The goal of life is for you to be great. For you to be secure. For you to be strong. For you to be knowledgeable. And when somebody else is telling you that you are fine, that means you don't know that you are great. And the truth is, the husband doesn't even know that you are great because he's saying, right, we are fine. He's not saying we are great. So he's not even sure as to how they are doing. So how do we rectify this? We rectify it by Lisa, you have got to get involved with your money. You have got to know that you are great, and that you are secure. And not let somebody else tell you, even though that person may be your husband, that you are fine. That's why you're afraid to spend money. You say it right in your email to me, I am afraid to spend money in spite of this. My husband says we are fine. So it's almost as if regardless of what your husband is telling you, it doesn't matter, because it's what you tell yourself. And you can only tell yourself that which you know for sure. And because you don't know for sure, you are afraid. And because you are afraid, that's what's going on. So that's the advice that I have for you. So how did you do in answering that question? Did you pick up the clues in the email? That's what you need to look for in your own life. And how you state something to yourself. When you're writing me an email to ask me a question, you can pick up clues like that. Look for words such as, fear, I'm afraid, I don't know, he said, she said, things like that. Next is from Kristie. She says, Hi Suze. My parents are 75 and 74. They have about $240,000 in their bank earning no interest. They receive ongoing monthly pension and retirement funds that they use for their living expenses and still have funds left over. They don't really feel comfortable having their funds tied up at this age. Alright. You're listening to this email, before I go on, because remember we're educating in this Ask Suze Anything session. What have you noticed about this email that Kristie has already just said to us? They don't really feel comfortable having their funds tied up at this age. Again, what is the goal of money? The goal of money is for you to feel secure. If you don't feel comfortable about something, that means that you don't feel secure, and therefore, that is your warning sign that you should not do it. Got it? The email continues, the bank keeps pressuring them to invest. I suggested to them that they minimally move the majority of those funds to a bank with a higher interest rate. Should they do this, or something else? How would you answer that question? Here's how I would answer it. Your parents at this point in time really understand that they have less time left on this planet than they had on this planet. Everyone wants to know as they get older, what can they do so that they feel secure? So they don't have to be afraid, if something happens, they need to hire a nurse, they don't want it tied up. They don't want it where the markets are going up, the markets are going down. So your suggestion to them Kristie was absolutely perfect. They absolutely should be changing this money from that bank that's not paying them any interest at all, to a bank, a savings account that will pay them 2-2.5% interest or so, which is the going rate as I am recording this right now in June 2019. So that's what they should do and that's all they should do. Why is the bank constantly pressuring them to invest? Because that's how they make money. You know that person that sits behind the desk that you come in or all of a sudden wants to call you or see you or whatever? It's because they make commissions. When they invest your money, they are making more on your money. But the truth is, they're already making more on your money because they're paying you 0% to have that money in their bank. Their lending it out for 4, 5, or 6%. They're really making more money on you than you have any idea. But they wanna make more. And that's because most banks are just greedy. If you ask me, you know, banks are not my favorite things around. They just aren't, I personally would never ever have an investment account with a bank. I wouldn't do it. Would I do it with a discount brokerage firm? Yes. Would I do it with a credit union? Yes. Would I do it with a mutual fund company itself? Yes, but not with a bank. Next one comes from, uh oh, somebody who has signed it, Sad & Mad. What do you think this one's about? Ready? Hi Suze. Here's my question. After divorce, is there any way to legally get your ex-spouse off your mortgage other than refinancing? My ex got our very valuable business, and I got the house with some cash to help me refinance. However, even after putting down $100,000 towards the mortgage, I still don't qualify to refinance on my own. Sad & Mad again is how she signs it. Sad & Mad. Maybe you're going to be happy and glad with what I have to say. Here's the truth. The only way to get your ex off of the mortgage is by refinancing. That is it, hands down. If you don't qualify with your own income to be able to refinance, then the courts really can't force you to do much, can they? Because you're legally trying to do so, but the banks are not allowing you to do so. So guess what? Your ex all of a sudden stays on the mortgage. Now, how does that help you? It helps you in that if he gets testy with you, if he starts to get mad at you again, if he says we're going back to court, I want any money I gave you towards that mortgage back. Whatever it may be. If you stopped paying that mortgage, it ruins his credit score. It ruins him. And he doesn't want to be ruined. He wants to be able to buy homes, he wants to do everything. So you have a little leverage over him as well. Because if you can't do it, you just can't do it. And he doesn't want to be on there, because again, if you just weren't able to pay that mortgage, they would come after him to pay that mortgage because it's on his credit report. So what I would do if I were you, is I would literally get in touch with him and say I have tried everything to refinance this home. I cannot do it. Therefore, what else would you like me to do? Talk to him, communicate with him. Don't let him just come to you one day and say did you do this? Why haven't you done this yet? Face it. Otherwise, you're living with Oh my God! What if he finds out? Oh my God, he'll get mad at me again. No. Just go and tell him. There's nothing that I can do about this. And you're lucky that you only had to give me $100,000 towards the mortgage. I should have stood my ground with you. But come with him with love, but with strength. No longer where you're sad and mad. Don't be mad anger is the main internal obstacle to wealth. Come to him with strength. Come to him with being smart, come to him with being the woman that you now are becoming. Alright and let's do one more from Carrie. Hi Suze. Oh yeah, I'm reaching out to you unfortunately because I'm finalizing a divorce after 20 years and hope to get your advice on what to do. I'm 42 years old. That means she got married everybody at 22. Now before I just continue reading this, I just want to say, do you understand, you're 22 years of age, you're 25 years of age, you're 30 years of age. You never think that if you get married, you're gonna end up in divorce. You always believe, that's going to happen to somebody else. You have to listen to these emails, you have to take them to heart. You have to understand that anything in life is possible. So again, I say, plan for the worst, and hope for the best. Prenups. Prenups, prenups. Maybe I'll do a podcast all on prenups. But it's just something to think about, because the time to plan for the what ifs of life is not when you're in a state of hate, or a state of hurt. When you're really loving one another and you love each other so much that you're willing to give each other anything that you want or need. I will continue on with this email from Kerry. I'm 42 years old. I have two college age daughters that have had to realize they have no college fund. I left my marriage out of necessity after feeling unsafe and being asked to leave etcetera etcetera. I made the divorce maybe too easy, and basically ending up with 76% of a $130,000 401K. Then she goes on with some more details but I'm just going to jump to, I've paid $5,000 in legal fees, and expect another $5,000. So this divorce now has cost her at least $10,000. Okay. I owe $4,000 to the IRS, and I have went from $20,000 of credit card debt to $35,000 with cash advances, and charging things for setting up a new apartment. Again before I continue, what that tells everybody is she left this divorce with absolutely no cash. Yeah, she's going to get some of her ex-husband's 401K and blah blah blah blah, but she has absolutely no cash. She left penniless. What that says is this woman left because she was afraid for everything, possibly even her life. She goes on to say I also owe on some medical of a little under $20,000 for a surgery that my daughter had, that I've been making monthly payments on. I have also about $3,000 of student loan debt, and a car loan of about $20,000. My salary is around $72,000 gross, and my rent is $1,350 a month. Now when I say, somebody by the way, has $72,000 gross, and I know you hear that and you think, oh my God, that's so much money. Really, is it? After all is taken out, after taxes, everything. How much? Really, she gonna have $60,000 a year, or $5,000 a month. When $1,350 it goes to rent alone. So don't get hung up when you hear that somebody's making $72,000 gross. What you really care about is how much do you get to bring home so you can live on it. She goes on to say, I know if I cash the 401K out that I'll be penalized and worth so much less. However, I think I need to get out of debt and have a fresh start. I am so grateful for all that I have. However, the monthly payments are not sustainable, and I know I've put myself in a bad situation. Your guidance would be so greatly appreciated. Carrie, first of all, you cannot take money out of the 401K to pay these bills. Listen to me. Money that is in a 401K is absolutely protected against bankruptcy. You are in a situation where maybe you really don't have that much, you don't have any money. It is possible that bankruptcy is the way for you to go. There would go all of your debt. The $35,000, the $20,000, all of it would go. Now. I understand as you are listening to me say this, you may go. But no, no Suze, I have to pay it. It's the honorable thing to do. I want you to listen to me. There comes a time in life when you have got to put your pride away. There comes a time in life where you have to not care about your FICO score more than you care about just making it. You said you want a fresh start. When you can legally do something. There is nothing wrong with doing it. But no, so many times you go, no, I created these bills. I have to pay these bills. I have to do that. There's nothing in here that says that you ran up debt to buy all this junk. To go on vacation, to go out to eat, to do all of these things. If that was the case, I'd probably say to you, oh just suffer and pay for it. You were spending money you didn't have. Now you need to suffer. But $20,000 for a surgery for your daughter. $35,000. It runs up to your credit cards for cash advances so that you can live because you had to leave a relationship that you didn't feel safe in. When things like that happen, I just ask you that if, because you don't own anything right now, you've got nothing to lose. Everything really is going to go into a 401K that is protected against bankruptcy. If you're in a situation like that, and the reason that you have debt was for your survival, bankruptcy is a viable and honorable, self-honorable place for you to consider to get a fresh start. Here's the problem though. Most people who claim bankruptcy once, they claim it twice. And you claim bankruptcy twice when you use bankruptcy as an excuse to get out of all these irresponsible debts that you ran up. So if that's who you are out there and you are listening to this podcast, I'm not talking about you being able to get your money excused because of your irresponsible behavior. But Carrie, this debt came because you had to save your daughter, you had to save yourself. And now it is another way that you can save yourself. And when one comes from a place where you're coming from, chances are you never claim bankruptcy again. And then that weight is off your shoulders, and then you can stand up, and here's the part of your life you've left. Your free, you can breathe, oh my God, this is your life. And you will never hopefully make this mistake again. So it's just something that I ask you to consider. But even if you do not consider bankruptcy, you are not to touch your 401K under any circumstances, do you hear me? You will somehow figure out whether it's going to credit.org and get a debt management program, or whatever it is, you'll figure out how to do this. But you are not to touch your 401K. That is for money later on in life, when you no longer are able to make money. So if you can't pay your bills while you have a paycheck coming in, can you tell me how you are going to pay those exact same bills later on in life when you no longer have a paycheck coming in. So your retirement accounts are off limits. All retirement accounts are off limits. Right? Those are your questions that you sent into me. But I still want to just tell you a little something about me now. It was many years ago in 1981. It was actually June 21st to be exact. So it's almost to the date when you will be hearing this. And this was the day that my father died. Um it was Father's Day back in 1981 at that period of time, and my father had been sick for quite a long time. And he was in the house, and he wasn't really able to walk. He was in a wheelchair, and he hated being in that wheelchair. And I was in California living there, and I would call up and I would say, did he open up his presents? And my mother would say Suze, he doesn't want to open any presents, he just won't open any presents. And I would say okay. And then very unlike him, he asked my mother to take him downstairs for a walk, even though he couldn't walk. So she wheeled him downstairs, and he knew that my brothers were about to come over to be with him on Father's Day. And rather than just wheeling around, which is what he considered was a walk, he got up out of his wheelchair, and he started to walk, and walk, and walk with my mother wheeling the wheelchair behind him and she kept saying, Maury, Maury sit down. You know you're not supposed to walk. And as soon as he saw one of my brothers drive up is when he collapsed on the ground. My brother came over, my father asked him what time is it, my brother told him, and my father died. My father chose to die on Father's Day. So every Father's Day, I always think about that. I think about my father, and I wonder to myself, why daddy, why did you decide to essentially take your life on that day? And I found it so fascinating that he didn't want to open up his presents because he knew that my mother could return them and get the money back. I always say to you if you haven't heard this before, I'll say it again, that the one regret that I'll always have in my life is that my father never really saw who his little girl Suze became. That was the first year really that I had become a stockbroker. I wasn't making any money at that time, and I know that he died a man thinking, who's going to take care of my wife, who is going to take care of my daughter, what's going to happen to them. But daddy, if you're listening up there, your wife was taken care of so incredibly well, I can't even begin to tell you. I'm sure she's up there with you now, still telling you stories of all the crazy things we got to do. Well your daughter now is 68 years of age. She spends her time really trying to help others so that they can become strong, smart and secure. You were smart daddy, you were strong to get through everything that you got through, but you weren't secure. And you weren't secure because you didn't have the money to be so. So that was the one element that was missing in your life. And that is the one element that I can only pray for you that are listening right now will eventually achieve so that you love every single day that you get to spend on this earth.
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Credit & Debt, Saving, Investing, Retirement