May 30, 2019
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In this Ask Suze Anything episode, we get questions from Sharon, Jennifer, Regina, Sherry, and Diane.
May 30, 2019. It's Ask Suze Anything day and today you've asked me, as I've said before almost everything. So I'm going to do an Ask Suze across the board of all different kinds of topics. So again, if you want to be part of the Women & Money podcast, all you have to do is send an email with a question to ask Suze, that's S-U-Z-E, firstname.lastname@example.org. And if it's chosen, I will answer it on the air. And again, you never know when I will answer you directly. At this point, please know I am the one reading every single one of your questions and I'm going to ask you, please stop going on for five pages worth and telling me every single thing that you have, because it's just too much. Just ask me your question. And if I need to know more information from you, I'll probably write you back and ask you. Great. Let's start with Sharon. She says, I signed for my son to get a 2014 used four-wheel drive hemi engine truck from a friend of his. He promised he would make the payments and that has been over a year now and you guessed it. I am the one making a $514 a month payment for a 60-month loan. Before I go on with this email, how many times do I have to tell you? I don't care who the person is, who asks you to cosign a loan for him or her. You are to have one answer and one answer only and that answer is no. No, no. If a bank will not give them a loan, if a credit union will not give them a loan, neither should you. And I don't care how much they promise you that they are going to make that payment. If they need you to cosign a loan, that means they don't have the money to make the payments. Therefore, you are going to get stuck. And once you've cosigned a loan and they stopped making payments, you are the one who is legally on the hook. There is nothing you can do about it. So either you're going to have to pay that payment and for the entirety of the loan, or if you can't afford it, it is going to go on your credit report, and therefore it's going to ruin your credit score. It is not worth it people. It is not worth it. Do not feel guilty. Do not feel soft, just don't do it. I continue on with the email. My older son fusses at me all the time about it and tells me to let it go back and not to pay for it. However, it is in my name as the cosigner so it will ruin my credit if I did that. That's right Sharon. You got that right. I am going to try to pay for it until it's paid for along with my own automobile payment, plus all the other bills I have. A mortgage. I had a gut feeling I should not sign, but I went ahead against my own judgment. I have a lot of stress on me as a single mother, and I don't need the added stress of my oldest son complaining and fussing at me for doing that. I am 66 years old, and still working because I can't afford to pay for everything on what I will draw for social security. And though I have tried to save money in my 401k, something always comes up that I have to draw it out to pay the bills or for emergencies. Now I get that was a long email that I just read to you. But I wanted you to hear all of it. Even though Sharon you are 66 years of age, you can't afford to save money because something always comes up and you have to draw money out of your 401k to pay for your bills and you have to continue working because you don't have the money to pay for these things, and yet you cosigned a loan for $500 a month for five years for your kid, and you're aggravated because your other son keeps fussing at you? You need to listen to your other son. You need to stop babying the son that you cosigned for. You need to honor your other son and let it go. I don't care if it ruins your credit score. Did Suze Orman just say that? Oh you betcha I did. I don't care about your credit score. I care about it. Do you have enough money to save for your own bills, to save for your own future. For you to not keep having to go into your 401k plan. Chances are a credit score isn't going to affect you that much more in the future. You're not gonna probably apply for more credit cards or a new car loan or things like that. But I want you to give yourself credit. I want you to give yourself enough credit to be able to stand up to that little son of yours that did this to you, and isn't standing up and making it good to you. He's hurting you. And yet, you're mad at your older son because he fusses at you all the time. The best thing that could happen to your younger son is that one day he wakes up, he goes out to get into this big fancy four wheel drive hemi engine, whatever the hell that is truck, and it's not there. Because it's been repossessed. I would love to see that happen to him. Or, you could also call him and say I have had it. We are going to put this truck on the market, and we are going to sell it. And we're then going to pay off as much of the loan as possible. And then you are going to go out and get 10 jobs if you have to and you're going to pay me the money every single month so that I can make payments on that truck. So I don't have to ruin my credit. But the solution isn't, it was a hard lesson to learn but believe me, I have learned my lesson. No, you haven't. As a single mother, the lesson is you have got to teach your children responsibility. You have got to teach them to care as much about you as you care about them. You are getting older now. You're getting older. You're two years younger than me and I know what it feels like to be older. Even when you have money. So I want you to be the strong, smart and secure woman that this podcast wants you to be. That I want you to be. And I want you to deal with your son in the most strict, harsh way possible. And you should be angry at him not your older son, but angry at your younger son. And even if that means you have to ruin your credit, at least you have given yourself credit for doing what is right versus doing what is easy, which is simply paying those bills for the next five years. Are you kidding me? Next one is from Jennifer. Hi Suze. Thanks for your awesome podcast. You are most welcome, my dear Jennifer. I worked really hard in my late twenties to pay off my credit cards. At that time, not knowing better, I close them all. Now today, age 38, I am proud to have no credit cards and pay cash for my expenses. I would like to buy a house again in the future. I have car loans and student loans, federal and private. My FICO score is 680-700. Is it worth opening up a credit card with no annual fee to build my credit? I would not use this credit card. Well Jennifer, you have a pretty good FICO score 680-700. Obviously your FICO score is being built up on the fact that you are making regular payments on your car loans and your student loans. But maybe it would help you a little bit because one thing FICO looks at is the diversification of credit that you have. You have student loans, you have a car loan. Maybe you need to have a little bit of credit card debt. So you should get a credit card, look at one with no annual fee. Take a look at bankrate.com or go to nerdwallet .com or any of the websites that are out there where you can find a great credit card again with no annual fee. But if you do then you do, the you do need to use this credit card. Just having a credit card that idol is not going to help your credit score. So use your card. I actually love by the way the Discover card where you can use it for different things and get a tremendous cash back. So look into the discover card where you also get a free FICO score. You can see your FICO score for free. I love that card. And no I am not paid to say that. Use it so you can get cash back, so you can get miles, whatever it is that you use it for. Just make sure that you pay it off in full at the end of every month. For those of you out there who think by leaving a small balance on your credit card, and paying just the minimum payment due or paying it off little by little that improves your FICO score, it does not. Next one is from Regina. How to calculate to pay my mortgage faster? 30 years paying in 20 years. How much should be the extra principal every month in a simple way or is it better to refinance? Regina, the very best way for you to figure this out is for you to call up your lender. Tell them that you want to pay off your mortgage in 20 years, and ask them for a new amortization schedule. They will then tell you based on your particular interest rate, your mortgage balance, everything about your mortgage, how much you need to pay every single month to have this mortgage paid off faster. That is the best way to do so. You do ask me, is it better to refinance? I'm just gonna say to everybody that is listening, is this. If you are in a situation where you have a mortgage, and a really high interest rate, maybe had a bad FICO score and you want to pay off your mortgage or you want to refinance, I don't have a problem with that. You can do so, just make sure if you are ever refinancing a mortgage, and let's say you had a 30-year mortgage. And you've been paying on it now for five years, you have 25 years left. And you know you're gonna be keeping this home for a number of years. And you know, you can now qualify for a lesser interest rate. So you decide to refinance. If you do that, do not refinance for another 30 years. You have 25 years left, refinance for less than those 25 years. Refinance for 20 years. Refinance for 15 years. But never refinance for a full 30 years after you have been paying that mortgage for a number of years. Always refinance for a lesser amount of years than you currently have left on the mortgage you are refinancing. Next question is from Sherry. Suze. Should I encourage my daughters ages 22 through 25 to set up a trust now? One daughter is married, the other two daughters are single. From what I have read, the biggest reason people do not set up a trust is because of the work that is involved in funding it with assets they set up over time that are in their personal names. Before I go on with this question Terry, that is not why people don't set up trusts. They just don't set up trust because they don't understand the advantage to them, some lawyer has told them they don't need a trust, or they are just lazy, or they don't know where to go to get a trust, or it's too expensive. It’s $2,500 in most cases so they just don't do it. You always could get my must have documents everybody, it won't cost you more than $69. You can share them with as many people as you want. You should look into that. Anyway. Would you advise a millennial to set up a trust early on, so every financial asset they set up following is included in the new existing trust, thus avoiding changing the names of accounts to fund a trust later in their years? Listen Sherry, I think everybody should have a trust. And if you have a daughter who is married, she absolutely should have a trust. The other two daughters that are single. Why not set up a trust? A trust is not just for leaving assets. A trust can also be for if you become incapacitated, you become ill, you have already assigned a successor trustee as to who can pay your bills for you, who can write your checks for you, who can take care of your money. What you have to know Sherry is that once your kids become 18 years of age, they are no longer minors. Therefore, you cannot have any legal authority over anything with them. Their health, their money, anything. If they simply had to trust that had an incapacity clause in it, which the ones that I’ve created for all of you, they happen to have that, then if they name you the successor trustee, or they name you know their their spouse or whatever, then everything becomes so easy. And yes, then when they set up a regular bank account, a regular investment account, maybe when they set up the beneficiaries of their 401ks, IRAs they would do so where they would leave the trust being the beneficiary. So yeah especially if they could set up a trust where it doesn't cost them each $2,500, $2,500, $2500. Oh you bet they should do it. Again, I encourage all of you to go back and listen to my Must Have Documents podcast, and there there is a link for all of you, in fact we’ll included in this podcast as well, where you can look at and download my Must Have Documents that you can share with all your family members. And let's do one more now. This one, I want to do it just a little bit differently. Because you know how I say to you that you write and sometimes I will write you back. I want this time you to hear the email that Diane sent and I'm going to read to you the reply that I sent to her and then I'm going to read to you the reply that she sent back to me from my reply. You get what I'm saying here. Anyway it starts like this. Hi Suze, I listened to your podcast all the time. Thank you for being such a force in helping us all be better. I'm a 53-year-old divorced female. I'm 100% debt free. I've been working all my life. I am college educated and have had a 33-year successful career in the healthcare field. I have always saved in my 401k. I willingly divorced three years ago. I was the breadwinner, while my husband made money under the table. Which I could never account for. I had to walk away from a fully paid for home, to avoid paying alimony and to avoid him getting half of my 401k. I've blown my rainy-day fund on lawyer fees and having to start all over again. Can you give me any advice about how to build myself back up financially? Thank you, Diane. So that was the email that I got from Diane, and this was the email that I sent back to her. Oh you will be fine, you will build yourself up one penny at a time. In life, true strength is not determined by the money we have built up. It's determined by the strength of our own convictions and how we feel about ourselves, and the ability to stand in our own self-worth. You now are living in the truth, and that is priceless. You are now in total control of your own life, and that is priceless. Homes will come and go, who cares about them. There is nothing wrong with renting. Just go slowly and wake up every morning and feel the freedom of your life now. Get used to that. You can do this. I promise. A little bit after that, I got a reply from Diane that said thank you, Suze, I'm going to treasure this and remind myself that it is about moving forward and not looking back. Blessings to you today and every day, Diane. So I wanted to read you that, because sometimes I give you answers in these emails, that are so much better than I could just do on the air. Sometimes the words just come, and they're the words that I really believe that you need to hear. So I'm gonna have to figure out a way where all of you can see all the emails, where all of you can see the responses that I give to all of you, so that we can create a true Women & Money community, where we can benefit from each other's emails, and we can benefit from the responses that I give, and the responses that you give, and we just go from there. One thing that I do want to say about this email and it's this. In divorce, sometimes what we do is we give in too easily as women. All right, I'll give you this. You can have that. I don't want to fight with you. Sometimes we do with thinking if I just give this person everything they want, they'll come back to me. Ladies the time to be strong, the time to be powerful, the time to get what you deserve is at the time that it's at the end of a relationship. And you are in the process of divorce. Do not back down. Do not get afraid. You have put in as much if not more than your partner. Always ask for what you deserve, because that is the key to being a strong, smart and secure woman.
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