Podcast Episode - Ask Suze (and KT) Anything


ETFs, Home Mortgage, Investing, Life Insurance, Roth IRA, Stock Market


March 04, 2021

Listen to Podcast Episode:

On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Jaime, Monika, Mora, Simone, Ellen, Jessica, and Sharon selected and read by KT.


Podcast Transcript:

March 4th, 2021. Do you know what today is? KT? March 4th. Do you know what today is? March 4th Stop it. Today is my friend Roxanne's birthday. Rocky, I love Roxanne. Happy birthday, Roxanne. I hope you feel better. She just had a big surgery. Yeah, serious one on her major back surgery. No. Happy birthday. Rocky. Hi, Roxanne. KT met Roxanne when she went. We went to high school together. I'm still friends. Suze is the only person I know that is best friends with her kindergarten and grammar school girlfriends and high school. I mean, they all when we're in Chicago, they all want to get together. Sometimes. If it's a nice evening and we don't have work the next day we take a ride to the old neighborhood, which is not very safe these days. What wasn't safe then? Well, but, um and they love to be together and all they do. They actually talk about the same thing every time they reunite, and they have the best time talking about the same memories and stories and restaurants and things they used to do. All right, KT, this is asked Suze and KT anything. It's KT asks Suze anything. You keep saying that, but, you know, sometimes you do answer questions. Go for it, girlfriend. All right, this is from Jamie. Hello, Suze. I've been having some fun with stocks, but I have a question now that I'm pretty diversified, Should I reinvest my stock dividends or transfer them to my settlement fund? I reinvested my Roth IRA, but I did not know if I should be doing the same with my individual stocks. Also, I got married in 2020. I was 42 at the time, and I've been working diligently to save money in my Roth IRA and contribute the max, I made just under 42,000 last year. And my husband made approximately 113,000. We each own our own homes. So, I'm so confused about tax filing with another person as this is new for me. When you mentioned that you can't do married filing separately and make more than a 10,000 to contribute to the Roth IRA. That was news to me. Did I understand you correctly, I want to keep investing with my Roth. Does this mean we'll have to file jointly? Jamie, you little snookums there, you've got two questions into one email. So, the first question is yes, you know, you should absolutely, always reinvest dividends. Why not? What else are you going to do with it? Unless you live off of the income from a dividend paying stock, you always reinvest dividends. And yes, you heard that correctly, that if you make more than $10,000 a year and you are married filing separately, you have very few rights in terms of any type of retirement account outside of your employer. It just doesn't make any sense. So, you should absolutely file jointly because you are married. Also, the truth of the matter is, don't worry about qualifying for a Roth IRA, because the new limit for 2021 is 198,000 of adjusted gross income for you to contribute your full contribution. And if what you say is true, then you only really between you and your husband make 185,000 of gross income, so you have nothing to worry about. Next one, KT. So, Suze, this next question is actually a question that I think you can help this, fan by giving them some really sound advice that you and I both know. So let me read it to you. Stop. News headlines, headlines, news. KT thinks that I can help somebody with something besides money. This is from Monika, she said. I'm 26 from Michigan, finding a way to cope through this pandemic. All right, she lost her job. She was laid off twice. She was a wedding planner, but she's still young. She's only 26. She's still unemployed. And due to stress and anxiety and everything that's taken a toll on her, she has really weak teeth and went to the dentist with the hopes that she could find, you know, some help to fix her teeth. She went to the dentist and was told that it would cost $15,000 to really help prepare her teeth, fix her teeth, and you want me to give her advice on how to pay that? She has no clue on what to do. She absolutely wants to get back to work, but is so self-conscious about her teeth and no smile. So, she's asking for advice. What can Monika do? Yeah, here's the thing. Our teeth are more important that we have any idea our teeth really the root of many diseases. In fact, do you know that the plaque that sometimes people have in their hearts and that they die of, starts in your teeth so that when you go to a dentist and they clean your teeth and they go, you have a lot of plaque? It's that plaque that we swallow that goes down and goes into our heart and can make us ill. So, it is really, really important not just because of how teeth look, but because of the illness that can come from teeth. I am a tremendous advocate of something called a dental savings plan, and a dental savings plan is where you can get a discount of anywhere from 10% to 60% off of a dental treatment. And if you just go to my Women and Money app, you know you go to Google Play or Apple's App. Search Suze Orman download the Women and Money community app and right in there, you will find the dental savings plans, or you can just go to dentalplans.com and just pick a dentist that uses one of those plans. Or ask your dentist if they take those plans. Those plans seriously are like 100 maybe 120 a year. They are so fabulous. I can't even tell you. So then that help tell her you, you've used it yourself. I always used it. We have saved thousands of dollars on dental work. Thousands. So great. So, the thing I would do if I were you is I would number one find a dentist that took a dental savings plan number one, number two I would get that plan again, might cost you $100-$120. And then I would work out a payment plan with that dentist so that over time you could pay them, so you might have to do it just little by little. Maybe you don't do the entire thing at once, but it is something that I do think you should do because I truly understand that if you don't feel like you look good and you're not presentable plus the illness that can cause, that's something you have to fix. All right, KT. Next ones from Mora. Suze, I'm 54 years old with breast cancer and brain tumor stroke. I have been stable. Well, hold on. Wait a minute. This is not so bad. I've been stable for the last two years. I have a zero balance on my credit card. I own a 2016 Jeep with no car payments, and I have 80,000 left on my home mortgage. I've been following all of your guidelines. I have close to a million dollars in my 401K, 403B and Roth IRA. Because I am disabled and not able to work. Am I able to withdraw funds without paying penalties? She is. But the thing is, remember, you have to make sure that you can never work again. The doctors are going to have to state that. But, Mora, you just also have to remember, just because you aren't going to have to pay the penalty in terms of that 10% because you're only 54 years of age, you will have to pay income taxes on any traditional 401K or 403 b. Your Roth IRA, obviously, you can take out any time you want your original contributions without taxes or penalties. But remember, you're going to have to pay taxes on any amount of the 401K or 403 B that you take out. But here I just have to say one other thing. You have a million dollars in retirement accounts, and I would imagine that most of that million dollars is absolutely invested right now. You also know that, in my opinion, very shortly here. I think these markets are absolutely going to turn. When you have money in a retirement account, if you happen to come out of those investments to keep the money safe and sound, then you have nothing to lose because you're not going to pay any taxes on it if you sell what's in there and just keep the money that's in the retirement accounts. Remember, you're only going to pay taxes on it when in fact you withdraw. So, if these markets start to turn or they're a little bit much for you, then I don't know. I just think a million dollars is a whole lot of money just to keep safe and sound if these markets start to turn. So, this one's fun. I was introduced to you, Suze, by my auntie recently, and I've been listening to your podcast M Live at the Apollo. And ever since I've learned so much. When I was doing your personal finance course, I realized I did the wrong thing with my 401K. I rolled over about $6000 and got the check sent straight to me and into a traditional IRA at my bank. I did this back in June. Is it too late to do anything about it, or am I just stuck? So, here's the thing, and this is what I want all of you to understand when you have money in a 401K or 403 B or a TSP at your employers, and now you want to take that money and put it into a brokerage firm or a bank or a credit union, whatever it may be, and you want to do an IRA rollover with it, the correct way to do that is the first, open up an account at the place you want the money to roll over to. They then will contact your ex-employer, and they will do a custodian-to-custodian transfer where your ex-employer will send the check directly to the new place. You've opened up the IRA rollover. Why did Simone say that when she was taking my personal finance course that she learned she made a mistake? Because when you have the check sent directly to you, your ex-employer has got to withhold 20% for a tax. It is mandatory, the 20% mandatory tax withholding rule. So, let's just say Simone had $10,000 with her ex-employer that she wanted to roll over into an IRA rollover at her bank. When she had the check sent to her, they only sent her $8000 because they had to withhold 20%. She then had 60 days to take that $8000 and get it into her IRA rollover at the bank, which she did. The problem is the other $2000 that they withheld. Now she is going to owe taxes and possibly a penalty on that money because she had $10,000 in her employer's account, her 401K. Therefore, to do a true roll over, she would need $10,000 in her IRA rollover because they withheld 20% for taxes. She only got 8000. So, when the government looks at this, she's $2000 short. And unless she comes up with $2000 out of her own pocket to make the $10,000 equal to what she had in her 401K, that $2000 is going to be taxed to her as ordinary income, plus a penalty if she's not 55 years of age or older in the year that she left service. So, whenever you do an IRA roll over, it has to be custodian to custodian. Otherwise, you could be in big financial problems, because why? What if it wasn't 10,000? What if it was 100,000? What if it was 500,000 now? She would owe penalties and tax on $100,000 unless she had that money out of her own pocket to make up for it. So, Simone, it's six months. It was last June. There's nothing you can do about it. This is from Ellen. Hi, Suze. I'm buying a condo with 20% down, and I'm stuck on deciding between a 15 or 20-year term mortgage I can afford both. The 15-year rate offer is 2.25% and the 20-year rate is 2.87%. I like the lower payment of the 20 year because it gives me more room, in the event I lose my income. And she's saying that she's single. She also wants to pay less because it gives her a little bit of wiggle room to earn money for any improvements she needs down the road. Um, say for retirement and help her mom with her mortgage. So, she said, I figured I would make extra principal payments anyway. Am I thinking wrong, Suze, when I choose the 20-year term? Uh, Ellen, I wish I knew how old you were. You don't say so in your email. I wish I knew how much of an emergency fund you had. You don't say that either and you don't say if this is a home that you're going to keep for the rest of your life. Therefore, what is the goal of money? The goal of money is for you to be secure. 2.8% is still a fabulous rate, obviously, 2.2% for 15 year is a seriously fabulous rate. But if the little bit of difference, the $200 a month difference, or whatever it would be in this particular case is what gives you security, allows you to help your mom, allows you to feel better. Do the 20 year. If I had a magic wand, would I try to convince you to do a 15 year and other things? Yes, but it's not my life, Ellen. It's your life, and you have to do what feels good for you. And I can tell by looking at this email that KT just handed me that. It's not about are you thinking wrong? It's about are you feeling right? It seems to me that you're feeling right to do 20 years, so go for it, girlfriend. Yeah, I'm glad you gave for that advice because usually Suze would definitely want to do the 15. Well, you know, she's saying, though KT that she does the 20. She's going to put extra money towards it anyway. So, if she has extra money to put towards it, why not do the 15 and not put extra money towards it? But anyway, I'm not going there. Okay, go on. So next is from Jessica. Wait, I have to say something. There's financial advice. And then there's personal financial advice and financial advice is strictly advice that's by the numbers. Personal financial advice, which is my expertise, is when you give financial advice that's personalized for the person asking it, and you have to take in consideration their emotions, their fears, their insecurities. Not just what is the best thing for them to do financially. Financially she would be far better off doing the 15 year, but personally, she's better off doing the 20. Next is Jessica. Hi, Suze. I'm getting married this year in 2020 I made more money than I ever dreamed I could. At my age, according to my W2, I made $150,000. Are you sure you want to get married? Well, her future husband only made 90K, but that's all right. I'm looking at my mass mutual account through work, and I am thinking I should increase my contribution. Right now, I have 11% going into a traditional 401K and 5% in Roth Deferral. What do you recommend I change? Also, when we get married, would it make more sense to file jointly? Or so what is this thing with everybody asking about filing separately? Where did you get all of you? Where did you get this idea? That you should get married and then you should file separately. If you're going to get married, you file jointly. Don't do that. A lot of people file separately because they don't trust their spouse, and they don't want to get into trouble if their spouse files away that's an illegal tax return, so they don't want to be involved with that. But if you file separately, you are not eligible for so many financial benefits. It's not even funny. Now I get that you made 150,000 this year. So therefore, really, between you and your husband, you no longer qualify for a Roth IRA unless you do a backdoor Roth. What you might want to consider if you don't know what I'm talking about. Listen to one of my past podcasts, and you will find it. However, I would absolutely be at least splitting 50/50, the contributions to the 401k from the traditional 401k to the Roth 401k. I just think in the long run I would pay the piper now and have my money grow and grow and grow. So that when later on in life, I could take it out tax free. If I could again change anything, I would have 100% of your money at work going into a Roth 401K. But you should know that by now. I don't like what's happening with taxes. I don't like where I think taxes are going. I do not buy into this thing that when you retire, you're in a lower tax bracket. Depends how much money are going to have in your retirement account. Water tax bracket is going to be. Then I would go Roth all the way if I were you. I would contribute the most I possibly could to a Roth 401K. So, this next one is from Sharon. Hi. Suze and KT, my husband. And I love your podcast. We listen on a regular basis. You know, I love about this already. What do you think? I love love your podcast husband. And I do love that. That's what you I love when if you're in a relationship that both of you are listening to this podcast. I love that you're going to love the next part of this email. Opened an account Alliant and bought your Will and Trust kit. You know, that account is only good now for like, another 26 days. Three weeks, people. We have a countdown coming here. You better sign up for it, don’t miss out on that. So, you've been an amazing resource, Suze. You've been saying the market is going to become quite hectic. I have a day trading friend who quite agrees. Hectic. I never said it was going be hectic. Says she wrote Hectic. It's going to go up and down this month and the roller coaster and then starting. I said in the first week of April. So, first week, second week? I don't know. We'll see what happened. So, Sharon has a day trading friend who agrees with you. Suze. With that in mind, he suggested we put some of the cash we take out of the market into bonds. TLTs in particular TLTETF. Yep. TL curious your thoughts about bonds right now. And the TLT in particular. I wish you could see the look on my face, Sharon right now. You don't look happy. No, because number one, that is the worst advice I have ever heard in my life. I would not listen to this day trading friend on any level if I were you. Who in their right mind right now, would number one go into bonds, you would never go into, did you just hear Warren Buffett and everybody talk about they would never go into bonds here. Let me go to Suze school very quickly, when interest rates go down, the value of bonds go up. When interest rates go up, the value of bonds go down. Do you really think that we are in an interest rate environment where interest rates are going to go down, we are not. Is it possible that they may go up? Absolutely. The TLT is an ETF that only invests in long term bonds that are 20 years in maturity or longer. The next rule of thumb Suze School, the longer the term of maturity, the more volatile the bond is. So, if interest rates go up, those bonds long term bonds which is 20 years and longer, the more they go down. In fact, I think if you look at this, um, at the return of the TLT, I think they're already down 10% this year alone. Are you kidding me? So, if you're coming out of the stock market, you are not going into bonds. You just leave that money sit hey, if you want, let it sit in the Alliance account at 0.55% interest, let it sit in a money market account wherever you may be. If you want to buy preferred stock and get a 6% return or things like that, I don't have a problem with that. But no bonds, no bonds, no bonds and particularly no TLT for you because it will do what it will become a TNT, and it will blow up in your face. That's good. That's the worst advice I've ever heard. But that's funny that TLT will become a TNT. Also, I just have to say something. You know KT. Yesterday I recorded an interview on influencers for Yahoo Finance. I think they're actually airing it today, sometime this afternoon and we were talking about one of the questions I was asked was about, you know, all these trading and things that happened. There's a big difference between day traders and investors, and it's very easy to be a day trader and to make money when the markets have gone straight up, which they have since 2009 essentially. It's another thing when these markets start to go down, you want to be an investor. You do not, in my opinion, want to be a day trader. So, Suze, the next question is about a movie that we both recently saw on Netflix. It's called I Care A Lot, and it's a little disturbing this movie, but it's before you talk about that. Can we talk about what happened last Sunday, did you hear my podcast on Sunday where I ended it with talking about the United States versus Billie Holiday. Do you know what happened two days ago? I'm just so blown away that this happened. I can't even tell you. Lee Daniels, the director of the United States versus Billie Holiday, heard the podcast. He listened to it, not only listened, he loved it, and he played it on his Instagram live. And I actually posted that on the Women and Money app what he said, and all of a sudden my phone starts ringing. He is so cute. So cute. Oh, my God. But anyway, my phone starts ringing off the hook and people are saying Lee Daniels is talking about you right now on Instagram Live. You've got to hear this, Suze. All I should watch it because Lee Daniels face was lighting up as Suze was giving her little podcast review on Billie Holiday, which was brilliant. So, if any of you missed last Sunday's podcast, please listen to it, listen to it, and then go to the Women of Money, app or Instagram and take a look at what Lee Daniels had to say. All right, so now we have another movie. Okay? Okay. So, this is a Netflix movie. I care a lot. And here's the question. Hypothetically, is there any chance that any legal guardian would ever have a chance to take over despite my fully executed must have documents. So, the movie I care a lot was about a scam that takes place in nursing homes, and you've got to see the film. But it was a little bit disturbing. And I even asked Suze, can they do this? And Suze, tell everybody So first of all, when you do the must have documents, you create a living revocable trust. That's in the documents that I tell all of you about. Right? If you're interested, go to suzeorman.com/offer. $69. You can get $2500 worth of legal documents. Okay, besides the point, but what's interesting is when you do a living, revocable trust and in this particular living revocable trust that I'm offering to all of you in case you're incapacitated, then you have already appointed a successor trustee to take over. You're a state for you and make all the decisions. But you have appointed that person and that person is the one that has legal authority over you. The reason that this happened in the movie is that most of these people didn't have any children or they didn't have anybody. Or if they did have a child, the child wasn't actively involved in the situation. But chances of this happening really are very minimal. Especially if you have a living revocable trust where you have appointed certain people to take care of you. The same thing with your power of attorney for finances, where you have been the one who appoints the person to do so. If you haven't appointed anybody and now all you have is a will and you don't really designate anything. Oh, yeah. The court can designate any legal guardian for you that they want, number one. Number two, if you have children, you could have a judge appoint a probate guardian for your child. That is why these documents are so seriously important. In my opinion. There you go. Okay. Where's my quizzie Suze? So, this one is from Miss Kay? Are you ready? Miss Travis? Are you ready? Everybody out there because you're going to have a choice. You're going to have to decide. Miss Kay says, Number one Aloha, she says I'm 46 years old, single with three adult children in good health. She has a 401K. She has a Roth IRA. She has money, you know, in an emergency account. She just opened the ultimate savings account with Alliant. She does have a little debt, a car payment and things like that. But she does not have any life insurance at all. Remember, she's 46 she has no life insurance and she's been listening to me. And she hears me always say that she should get term life insurance, don't get whole life or universal life. So that's it, everybody. But here is her question. She wants to know, a. should she in her situation purchase term life insurance or b. there is an insurance plan with national life with a living benefits writer. Should she purchase this plan and access these benefits in the event something happens to me. So, everybody, should she do a purchase just a. simple term life insurance policy or b. purchase a life insurance policy with national life with living benefits riders. Which means if she gets ill or something later on, they'll take care of her. What should she do? A or B? Miss Travis, this, this isn't a trick question, but I think I know the answer. I wouldn't do either one and here. I don't know why. All right, so definitely. Are you sure she's 42 KT, 46 rather? Yeah, I wouldn't do either. One is so cheap at 40. So no, no, you tell us all you don't need term life. If your kids are over the age of 21 they're independent. They're adults. What do you need it for? Who are you going to? Who are you going to take care of? In terms? Look at the smile on my face. Yeah, because I got that right. You got it right. And she got it right. Did all of you get that right? And she doesn't need the next one. Why? Because that's whole life. It's a form of. No. What is it? Ding, ding ding. Wrong. What is it you can't want, right? You got one wrong. Let me tell you why that Miss Kay should not get the second one. Even I didn't say she should get it. I said she shouldn't get it. That's right. But you said she shouldn't get it for the wrong reason. Here's the right reason she shouldn't get it. Okay, it's all right for you to learn. Oh, she looks so disciplined. So, the truth is, everybody. I was right. She doesn't need either one or two. Does this give you an idea into a little window into our relationship? Are you right? Are you wrong? Who's right? Who's wrong? Who's Suze's? KT's usually always right about things to do with our family, but when it comes to money questions, I give Suze 100%. Thank you, KT. But here's the point, everybody, Miss Kay, the reason that you shouldn't do the national life is you tell me that you have a savings account that only has about $7000 in it, that you do have some debt. $15,000 in a car payment, plus your living expenses. So, at the age of 46 this is not when right now I would be spending any money on anything other than creating more of an emergency fund for yourself, getting yourself out of debt, paying off your car. That right now is your immediate need. The other you can do still 10 years from now or whatever if you want, but not now. So that's what Miss Kay needs to know. Did you learn anything there? You don't need insurance, Miss Kay. Uh huh. That's all right. Let's take this out, Girlfriend. So, there's only one thing that I want you all to remember when it comes to your money. And it is this. What is it, KT? People first, then money, then things. Let's do it together, Girlfriend. Now you say safe. See you Sunday. Bye. Bye.


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