Family, IRA, Podcast, Retirement, Roth IRA
March 21, 2019
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In this Ask Suze Anything episode, Suze responds to great questions from Star, Melissa, Julie, Danna, Meg, and Ashley.
Ask Suze Anything today, it is Thursday. And if you want to send in an email, by the way you can do so to firstname.lastname@example.org, you never know when I'll pick it and talk about it on the air. Or email you back directly, or you can call in and actually leave a question at 1-877-545-7893. 7893 spells Suze, S-U-Z-E. Hi Suze, my name is Star, I'm 25 years old and my best friend actually introduced me to your podcast, basically I'm in this amazing relationship and your podcast inspired me to just ask about my boyfriend's financial situation. Um, I'm almost done paying off student loans and all my debt, and like I shared everything with him, and told him everything every time I paid something off and how amazing it felt, and all he would say was oh yeah, keep saving, keep saving, finally, when I got the courage after listening to you and feeling empowered to ask him how he is financially, it turns out that he is actually in debt and he is 34 years old but he has very bad spending habits. So this year and a half that I was with him, made it seem like he was comfortable, he was getting ready to settle down, to get married, to buy a house, he was talking about investing in certain things, and you know, I thought this guy had his stuff to get all together, but that wasn't the case. So I kind of feel a little betrayed, um and I feel kind of blind that I didn't see, as well as uh he gets angry very quickly. I guess my question is, do I stay with this guy and uh see the effort that he's putting to change it, like he says he's going to, um or is this kind of like a red flag, like beware that this is going to be a reoccurring thing in the future? So please help me, I'm very stuck. Alright, thank you, bye bye. Star, oh Star is this a red flag? It's like a million red flags waving at you, and I know you don't want to see them, but I know you can feel them. You started your question by saying I'm in this most amazing relationship. What is so amazing about it? I know, you feel close, you have a good time, you know, it's probably great in bed, whatever it may be, but it's not an amazing relationship. And it's not an amazing relationship because he was in fantasy land. I'm gonna buy this, let's buy a house, let's do all these things, and here you are, you're doing everything the way it's supposed to be, and he doesn't have any money. Now just the fact that he doesn't have any money doesn't make him a bad person. But the fact that he isn't dealing with the fact that he has credit card debt, that he doesn't have money, that he spends money, that he gets angry about it. Are you kidding me? Do I think that he's going to change? Not because of you know. People never change because of other people. You can only change yourself. And so do I really think that this is a relationship that you should probably say goodbye to? I have to tell you I do. Because otherwise what he would be saying to you would be, wow, look how great you've done. Can you help me? Let's set up a little account for me and I'll bring home the paychecks and and we'll see what happens and then you'll tell me, where should I put it, and how do I get out of debt, and you would see him stop spending, and you would see him wanting to change because he would want to be as good as you financially speaking. But that's not happening. So out of all the years I've been doing this, I have to tell you, after a year and a half, that's not that much invested, I would go on to greener pastures. And I would absolutely become my own star, shiny brightly in my own life, and so that, you know, you can really guide yourself to where you want to go. It breaks my heart that I had to tell you that. Hi, this is Melissa from San Diego, California. I have a question regarding helping out your parents, who didn't plan properly for financial retirement, and um I'm in my late 30s, and um I have an ill father, um my mom is not that financially stable, and my husband and I are really trying to put money aside for investing for our future so that we don't end up like that. And on the other hand, we really want to help our parents who are struggling and having health issues. Um so I was just wondering like where is that balance um with helping others, and helping yourself at the same time. And my second part to that question is, um my husband and I are self-employed , nd we also want to know what is the best way to invest our money, so that we have an abundant retirement. Thank you Suze, appreciate what you do. Melissa, you have a tough situation here. I have to tell you, that that in life the only two people in my opinion that you really need to take care of are your parents. If you were telling me this was your brother, your sister, your aunts, your uncles, whatever it may be, I'd probably have a different answer for you. But I really have a thing for parents. Especially if you love them. And even though they weren't that good with money, all right. So what it's now, they need your help. And so therefore the four of you should sit down, and really figure out how much can you afford to help them, without totally destroying your own financial future. Because you can't go Melissa and give them everything and just, you know, and have nothing for yourself. So I always say, don't be an all or nothing investor. Like don't do it all, or don't do nothing. But sit down with them, and your husband and really have a you know, family financial meeting. Where you look at what they have, you look at what they need, and you figure out what can you do, and what can you not do? How can they change their living situation or whatever it may be, so that we can reduce their expenses. But somehow, you have to help them. And it's not that you have to help them. You should want to help them. Because I am here to tell you that if you don't, and if they suffer, and then they die, and now you get older, and you have money, you will have such regret I can't even tell you. All the money in the world will never be able to stop you from thinking, oh my God, I have money, but I don't have them. Oh my God, I have money, but they suffered. You'll start to hate the money that you have. So for me personally, the greatest thing, and it wasn't quite the same because it wasn't an either or situation. But for me personally, the greatest thing I ever did was I took care of my mom. I took care of her financially speaking in every possible way for 7.5 years. And it cost me a bundle. And when I look back on it, that was the greatest investment I ever made. I don't have any regrets about that. And what's fascinating about it, is that my brothers did not help at all financially speaking. And they could have, but they just didn't want to. And I often wonder, how do they feel about that? Was just because they thought their little sister had a lot of money, so why not? But there's just something about it. So girlfriend, it's, it's again, strike a figure that you feel comfortable with, and then mom and dad have to figure out how to make that work, but they're gonna have to figure it out with your help. As far as you and your husband that are self-employed, where is the best thing for you to do for your retirement? Well, I would do a Roth IRA if you qualify for income wise, and if you don't because you make too much money, and making too much money would mean that you both make over um together of 193,000 year of adjusted gross income to be able to contribute the full $6,000 each if you're under 50, or $70,00 if you're 50 or older, and you could do that. But if you make more than that then why not do a SEP IRA, and then you can convert the SEP IRA and do a Roth. I hope that helps, tell your mama and papa I said hi. The next question is from Julie. Julie says Susie, I am desperate for advice. Since my divorce nine years ago, I have turned my financial life around. I own my own home car and have all the right accounts in place. I retired in December last year on a small but comfortable pension. My ex-husband has risen from the ashes, and has now defaulted on paying a joint mortgage we had when married. When we divorced, he was supposed to remove my name from the mortgage, now the bank is going to foreclose on the property. I am so scared because my name is at stake. And I know what this is going to do to my credit rating. What should have been a happy time, has turned into a nightmare. Julie, it's a nightmare if you allow it to be a nightmare within your head. If it ruins your credit rating, so what. You are far more than your credit rating. You can repair your credit rating. I would just keep going on, living my life, putting as much money away as I can, and get him out of your mind. The problem here, and you should learn this now, is that whenever you get a divorce, if you trust the person that you are divorcing or who is divorcing you to do something, without checking up on it, making sure that it's done, following through, and then something like this happens, Julie on some level you have nobody to blame but yourself. And you're worried about your credit score? Listen, this was only nine years ago. You can straighten this out somehow. It goes into foreclosure, they will sell it. That's life. Hopefully they don't come back after you for anything or whatever it may be, it is how it is. So you are going to be a warrior, and you are not going to turn your back on the battlefield. And you are not going to let your ex-husband’s ghost of his financial irresponsibility eat at you. You don't have to do that. It can still be a happy time. Just be happy. Next email is from Dana. Hi Suze, Hi Dana. After reading Women & Money, I opened my Roth IRA as you advised, and funded 2018 all at once. At that time, my credit union advised me to put it all in a CD. Now that money is tied up for the next three years at 3%. Alright, not such a bad move, okay. This year I decided to go about it a different way. I opened up a Roth IRA with TD Ameritrade. I decided to commit to putting $500 each month in my Roth IRA. My question is, now that I'm ready to invest in ETFs, will I be charged a fee every month to buy shares? Should I just wait until the end of the year to put in the full amount, and invest it all then? Thank you. Donna. Here's the thing. I would call TD Ameritrade, and many of the ETFs, you can buy with absolutely no commission whatsoever. If they will not allow you to purchase ETFs with no commissions, no fees, then you can always do a no-load mutual fund, which hopefully you would be able to invest in with again no commission. If they will not do that for you, you might want to check out Fidelity. It's not too late for you to transfer your account to Fidelity where they have lower fees, they are actually better. You know, somebody wrote in a little bit ago and said Suze, why do you always you know suggest TD Ameritrade when Fidelity he has lower fees? And so I looked at it and I went, you know, he's right. The man who wrote in was absolutely right. So now I've switched to telling everybody check out Fidelity, check out Charles Schwab, ask the questions before you open up an account, because the firms are constantly changing because they're in competition with one another. So no, I don't want you to wait to the end of the year to invest it fully. I want you to invest on a dollar cost averaging basis, which is what you're doing when you invest each month, a particular sum of money. So find out if you can do it with them commission free, and if not, let's go on and move to a place where you can. Next email is from Stephanie. Hi Suze, I have a question. What would be better to raise your credit score, pay your credit card balance in full, or pay more than the minimum payment each month to show you pay your bills on time? I have the money to pay it off, just don't know which would be better to raise a credit score. Very simple. Pay it off in full. The largest part of your credit score is made up of your debt, what you owe, to your credit limit ratio. How much credit limit you have. So if you just pay the minimum every single month, your debt to credit limit ratio stays high, which makes your FICO score, your credit score, go lower. If you pay it off in full every single month, great, fabulous. Then what usually happens is your score will go up. Pay it off in full. Next email is from Meg. I was wondering if you have any advice on getting life insurance for my 98-year-old mother who is living with me in my home. I found out she has none. And just wanted something along the lines of covering final arrangements expenses, debt, etc. Oh Meg. You know, I would not do that if I were you. It's, it's fine to cost effective way to take care of those expenses. I just don't think life insurance at this point is worth it, if you can even get it when she is 98 years of age and just love her up. But start looking now, what is the most cost effective way for you to deal with her final arrangements. Next question. Hi Suze. It's from Ashley. Hi Suze, I'm 34 years old and I'm about five years away from retirement from the military. I'm on track to have everything. Including my house paid off, I will be able to live comfortably off my retirement, pay an income from three rental properties without working. Do I still need to contribute to a retirement account? I feel like I can be saving that money for something else that can help make me money now. Not when I'm 70. P. S. I currently have $40,000 in a Roth IRA, and 62,000 in my traditional TSP that I would plan on leaving. You know Ashley, here's the problem. Which is that in theory the way that you're thinking is fabulous. And you're doing everything exactly like you should be doing. But you're 34 years of age and things can happen in the next 60-70 years, believe it or not, since everybody seems to be living 100 or even longer today. And as you get older, you can get sick, you can you know be in an accident, all kinds of things can happen, and then your living expenses go up. It's like right now, you can live comfortably because you're young and you don't need any help, and you're not paying for medicine, and all of these things are going right, but what if something goes wrong? Will you still be able to live comfortably? And the answer is probably not. Because really, all that you're having is you have $40,000 that's liquid, because it's in your Roth IRA, and $62,000. So you have about $100,000, everything else is paid off, you have rental properties. But what happens if all of a sudden the rental property is hit by a hurricane, or a flood, or a tornado or something happens that way, or the tenants that that you're renting to that you're depending on the income from that rent, lose their job and they decide you know what, I'm just not gonna pay Ashley, or you need a new roof or a new refrigerator, a new heater, new windows, new flooring, new plumbing, all these things happen. And just because things are going great right now, and everything is as it should be, doesn't mean that it's going to continue to do so. So it's one thing to put your money in assets like real estate, but real estate needs money to keep them going. Property taxes increase, insurance increases, maintenance happens. So yeah, you need other investments. It's called diversification. And it doesn't necessarily have to be in a retirement account. You don't have to leave it there until you're 70, right? And you make that sound like it's so old when it's only about two years away for me. But okay, I'll let you do that to me Ashley, no problem. But no, truthfully you can have investment accounts that can keep growing and making money for you that way, especially now. And so yeah, the answer to this question is right, do I still need to contribute to a retirement account? Doesn't have to be a retirement account, girlfriend. But it has to be that you need to take some of this money and diversify. And you need to do it year in, and year out. And don't stop now. And by the way, what does that mean that I could be saving that money for something else that can help me make money now? What makes you think that you can't make money in the stock market, you can't make money doing other things like that. Of course you can actually, at 34 years old, you are so smart according to this email. Well that was an interesting asked Suze question, a variety of questions this time. You know sometimes when I think about the questions, I think about which one really made me the happiest or the saddest, or whatever and I have to tell you in today's Ask Suze Anything, I think it was Star’s question. Star and about her boyfriend and about how wanting him to change, you know, I'm just gonna say it again, everybody, the only people in life that we are responsible for is ourselves, when it comes to what we wanna do, how we want to do it, how we think, how we feel. So don't spend a lot of time changing others or trying to, because in my opinion it just doesn't work, right? Keep writing in, keep asking me those questions, and I know most of you know this, I have answered so many of your questions online directly to you. I have even called some of you personally to talk to you about your questions. So you just never know when I will do that with you.
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