Podcast Episode - Ask Suze (and KT) Anything

Bankruptcy, Credit Cards, Financial Independence, Home Buying, Must Have Documents, Retirement, Roth IRA

April 01, 2021

Listen to Podcast Episode:

On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Michael, Laura, Anita, Taxi Cat, Carmen, Nicole and Tycee, selected and read by KT.

Podcast Transcript:

April 1st, 2021. April Fool's Day. This is Ask Suze and KT Anything. I want to know what KT asked me before we went on to start this podcast this morning. I do, you like my new haircut? I do like your new haircut. Is that what you were going to say? Yes, April fools. I really don't. That's not true. You told me you liked. I do. I like it a lot. I really like when her hair is short. Because then she looks kind of punky and cool. I have very white, shiny hair and wait, wait. We just have to tell this one story. Do you know why KT doesn't color her here anymore? And why she just let it grow in to be white and silver and beautiful like it is? Tell them why, KT, do you remember? Yeah, you yet? Suze yelled at me. Why? Because she said I wasn’t, if my hair with the roots of my hair were starting to come in grey, if I didn't do anything about it. Then either save the money and just let it grow out or spend the money and get it done. So, what do you think I opted to do? She opted out of that. That's when I knew I got to marry this woman. She opted not to get her hair colored anymore. And how much did that save us per year? It's just saved us a ton of money. I loved it because it saved us seriously a few $1,000 a year. It did, KT because if it's crazy, which is what was crazy, which I so loved. Okay, little rainbow-colored head. Happy April fools, Suze. Okay, My first question. Are we ready? Because I have a great question. I have a great opening question. Great question is from Michael. I picked Michael because I'm going to tell you all why he said, Hi, KT and Suze. Oh, now here's what's happening. Everybody, you're all putting KT's name first, and that's now why she's choosing them. Why? Michael listens, and we love all podcast listeners who really listen. Hi, KT and Suze, I'll keep this short, so hopefully it'll make it easy for you to click print and answer my question on the podcast. See, Suze, Michael said right up front, I'll keep this short, so that's already longer than normal. He said, I can already hear KT reading this, and then he put a little happy face, he said. And so here's the question. I'm one of the men smart enough to listen. I'm 39 years old, with $120,000 mortgage as my only debt. I'm maxing out putting money into my 403 b Roth from work, as well as a personal Roth IRA. I have, over eight months of money saved in a savings account in a local credit union for my emergency fund. And on top of this, Michael said, I just opened an Alliant savings account, too. So, he's really a smart man, and Alliant credit union, everybody. So then, he said, I have about 25,000 extra in my savings that I don't know what to do with. I want to make it grow. What do you suggest I do with this money so I can get more than the interest from just keeping it in a savings account? Hope you have a healthy and safe summer. So, Michael. Yeah, I know. I know. Everybody's going to say different things to you if you were to ask them. Invest in more real estate, invest in the stock market, do all of these things. What does Suze Orman want you to do? Suze Orman wants you. Now that you're essentially 40 years of age, I want you to really be on the path to financial security. And the path of financial security is really become solidified when you own your own home outright. So, if I had $25,000 extra because you already have your eight-month emergency fund, you already have money and, you know, to credit unions now and you, you're maxing out your 403b Roth, your IRA Roth. I would put that $25,000 towards my mortgage. That then would give you less than $100,000 owning on that home. And if you think about it, your interest rate is probably even after tax is higher than the interest rate that you are getting on any place that you're saving. So, if it were me, I would be putting it towards my mortgage and don't get fancy with it. Uh, what was that noise? You just made me do that again. I never heard you. Where did that noise come from? I was gonna chuckle. And then I I said I'd better not laugh. I was sensing Wow, I did not. Michael, I didn't expect her to give you that advice. What do you think I was going to say? Give him a bunch of different investment opportunities, but you gave him probably the best advice. You know why? I don't want him to go in the markets right now. They're crazy roller coasters right now, they’re roller coasters. I've told you all were now in April that I do think in another week or so we could start a slow downward two-year trend. I don't like a lot of the things that are happening that I do not understand on any level. I get emails from serious, serious investment people saying can you just tell me what's going on? Can you explain this and I can not. So, these markets just concern me a little bit so bewildering they are. Bewildering, so I'd rather you be safe, then. Sorry. That's my girl. All right. Next. This next one is from Laura. Hi, Suze and KT. Thank you. For all your great advice and for answering so many, I just Let's take note, everybody. If the women who write in, say, Suze and KT and if the men that right in, say, KT and Suze let's just see if that's true listening that I like short. I'm just so curious. I mean, I'm fine either way. I just am curious. They should all say Suze. No, they should not. Suze and KT, will you answer? All I do is read them to you. Why would you put yourself down? Like I don't have the answers? Of course, you don't. But the reason why you're now going to be on every Thursday and Sunday is how soothing your voices, how enjoyable people have naked, that when we banter with one another. Not true. Have you read the emails? No, I don't read the compliments or the commentary on our podcast. You do that, but I read the questions. Here's one from Laura. Hi, Suze and KT. Thank you. Great advice and for answering so many of our emails. It's unbelievable that it is. Suze, you have mentioned on your podcast several times that one of the reasons that the market has remained high all of these years is that many people can't find returns elsewhere. With interest rates being so low, they have no choice but to invest in the market. Also, more younger people can participate in the market now that the brokerage firms are making it easier to invest than it says. That makes sense. But why would more people investing increased the share price of stocks and funds? I thought the financial health and success of the company is what determines its shared price. Or is it that if they have more investors, they naturally see more success? Can you please explain this? Now, I wish I did a Suze school on this about PE ratios and what really values a company and all of these techniques, price to earnings ratio. What is the price of the stock compared to the earnings of the company? And it used to be that you wanted to invest in a stock in a company whose earnings were growing about 20 or 25% a year and their price, though, was maybe a 20 PE, an 18 PE. Their price of the stock was 18 times their earnings anyway. No, now you have stocks that are so out of whack to their earnings. It's not even funny. So, to answer Laura, your question. It's a thing of demand. That's all, supply and demand. It's the same thing with real estate right now. All these people want to go in and buy a house. Maybe the House is listed for, Let's just say, 300,000, but because all these people want to buy it and they're all bidding for it and they're bidding above the asking price. The selling price the House sells for $450,000. So, it's a thing of supply and demand, and that's what's happening right now. And people aren't really that interested anymore in the earnings and all the stuff that we all used to be interested in, which is why I'm just a little concerned about the stock market. Okay, next question is from Anita, so this is a little bit complicated. I'm going to summarize it for everyone. Anita's 47 her only outstanding debt, is $120,000 federal student loan. All of her other debt will be paid off by the end of the year. But she said, the reason she's a little behind on all of this is because of a recent divorce, custody and legal fees. So, that's what happened over the past 10 years. She's had some really bad circumstances. Her dream is to be able to build her own home, retire in it and leave it to her son, her son's young. He's only 11, so she has a starter 401K, with about 22,000 in it and a $9,000 loan that she's paying back from that. You know what that means? She took money out of her 401K, and she's paying it back. But she's paying it back the right way. Just making sure. Yeah, and then she has 2,500 emergency fund. She's working on it to save more. She makes quite a nice salary 83,000 year. That's a nice income. And she hopes to be to increase that a little bit before she's retiring at 65. Now she's 47 Suze. So, she has two questions. One, am I too late to be able to own a home and realize this dream because of my student loan debt and low retirement savings? And two, is it okay to try to build again? I don't want a huge house just for me or one that needs many repairs. There is not many small homes that are good in the area that I live in, so those are the two positions that she's in. Will she ever realize this dream? And can she afford to do it? Yeah, you know, you always have to dream, and you have to always believe that you can attain that dream and it's really important. And I know that a lot of people sometimes love to have these thoughts. They're never going to get anywhere. They weren't born into it. They don't have privilege. They don't have education, whatever it may be. But dreams absolutely can come true because you really don't know my dear Anita, what the future has in store for you. You don't know who you're going to meet. If you're going to fall in love again, what's going to happen with your own career. You don't know those things, but what's really important is you don't put a dream in front of reality, and the reality right now that you are in is a reality. Of that. You do have 120,000 of student loan debt. You only have $2500 of savings. But I say only that way, but guess what? That's about six times more than the average person in the United States has in savings. So, it's not only that is a lot of money, so it all depends how you're going to choose to see your situation. You can see your situation as being totally poverty stricken and going through hard times and all these things, or you can choose to look at what you have, not at what you had, not at what you could have, but really what you have. And you do have money in a retirement account, but you also have a $9000 loan. So, all of this is there to say to you just work on the things that you're working now. Day by day, save more money. I hope you took advantage of the Alliant credit union offer, especially because they have now done what they have extended it till December 31st, so you can open it any time between now and December 31st. But don't wait. Don't wait, take advantage. The interest earned the interest number one, which is currently 0.55% but more importantly, start that $100 savings right now so that in 12 months from now you could get that additional $100. And that is a lot. It's a lot that's a 16.7% return on your money, but you have to value every single penny. Now, isn't the time for you to be buying the house. Not until you've paid back that $9000. Not until you have an 8 to 12-month emergency fund. Not until you have 20% to put down on a home. And when you have that, then so just keep working very hard towards that goal. But don't forget that that dream one day will come a reality. Here we go, Suze, Here's another one. I think I have this little pattern going on of people that are feeling a little anxious and discontent, and there's I think reasons, and I'm anxious, actually to hear your advice. So, this is from Taxi Cat. Do you have any advice, suggestions on anxiety that is having not such a good effect on my finances. I feel myself falling back into patterns of financial distress. What do you think about that, Suze? Oh, taxi cat. It's, you have to listen to me here for a second. So many times on the women and money podcast, I've given you many, many different ways to take care of your anxiety. But I have to tell you the one real way I find to take care of anxiety, because anxiety is just another form of fear and fear is the main internal obstacle to wealth. You're afraid to do something. You're afraid to say something. You're afraid to think something. You're afraid you're not going to be able to pay your bills. You're afraid you're going to become homeless. You're afraid of all of these things. That's all anxiety. And those are the financial thoughts one has when they have anxiety. And I used to have anxiety that way. I used to think I'm not good enough to be a stockbroker. I don't belong with all these people. I belong being a waitress, you know, cooking, doing these things. I don't belong in the world of high finance. And that's when I decided to create a new truth. I wrote down my greatest fear. And then I wrote a new truth directly opposite that fear. And I would say that truth 25 times a day, right at 25 times a day and scream it out loud. So, my advice to you is to write down when you get anxiety. What is your greatest fear? What are you afraid of? And then write a new truth that is directly opposite that fear and just repeat it for six months. And every time you think you can't, you have to tell yourself you can. Every time you get afraid in your mind, says whatever. Repeat your new truth. You know everybody. I have a new course that is coming out very shortly here, called the Nine Steps to Financial Independence that I recorded now, maybe almost two years ago, believe it or not, in a with a live studio audience. And then I had some things obviously happen to me and Covid and everything else, but it's going to come out shortly here. We're having a short version of it called the three-step reset. And that reset is all about taxi cat what you're dealing with. So, I ask all of you to watch for that and possibly join on a webinar that we most likely will have on it. But you'll all hear about it when the time comes. Fabulous course. Next question, Suze is from Carmen. I hope you don't mind emailing you for question. And I hope you reply. I have a will, but they said my beneficiary will still have to probate the will when I die. Of course, because why, KT, all wills have to go through probate, which is a court procedure that always costs money. Okay, go on. Okay. I'm in the process of buying a house. I'm putting 25,000 down, which is not much. I don't want to put my son on the deed because I don't know if I should read the financial flame. My goodness, she said my son is a bad financial disaster, and his creditors might put a lien on the house. So anyway, we might not want to talk about your son, but I see your point. My question to Suze is what can I do if I have something that happens to me? I want to make sure my son doesn't have to go to probate because he may not be able tomorrow to afford it. Please answer Suze. Thank you so much. Very few people Carmen can afford probate, and it's such a ridiculous thing to go through, especially when you own a piece of real estate. Because you can avoid that and all the thousands of dollars, the six months to two years that it possibly very well could take you to go through probate or your son to go through. Probate is just, get yourself a living revocable trust. Please listen to pass podcast where I talk about why you need a living revocable trust. Really just that simple. Every single one of you should have the four must have documents, a will, a living revocable trust in advance directive and durable power of attorney for healthcare, as well as a durable power of attorney for finances. If you don't have all four of those, you are making the biggest mistake out there if you ask me. That's what we did last weekend on HSN. Yeah, that was so great. That was great. Did all of you watch? You know, we did this thing. I told all of you, you know, tune in to HSN. Not only are we going to give you the deal of your lifetime on the Must Have documents and, you know, a book and all this other stuff. But if you just had simply sent in an email on Facebook, your name would have been chosen. One of your names would have been chosen for $500 gift certificate. So, you know, I was doing everything to save you money. But are you listening to me? They're listening. All right. This next one is from Nicole. I love your podcast. Thank you for taking the time out of your busy schedule to help people like me learn good financial habits. My lovely wife and I are big savers were in our late thirties and have over a million dollars in assets. Woah woah, woah. How's pensions? 401K IRAs. We work for the government and make over $200,000. My question is. Should we purchase disability insurance? The cost would be around $2400 a year for each of us, and the amount goes down after five years, up to the age of 70 I would receive 5000 on disability, and Chris would receive 6500. I support my family and send them at least $500 a month. So, I'm concerned that if something happens to one of us, we can no longer support them. I would love your feedback on this, Suze. Why are you looking like that? Are you wondering anything? She has this look, whatever I ask her that, it's because an image KT and she like, does this thing with her lips. And she's like, looking like, why they want disability insurance. Do you even know what that is? Yeah. If someone gets injured, for instance, on the job, not necessarily on the job, you become disabled. Yeah, I'm just wondering. I mean, they work for the government and they're both wanting disability, and she. What do you think, KT? Should this be a quizzie, should they or shouldn't they? I'm just curious as to and there I mean, why do they want disability? I'll tell you why. Because one out of four people in the United States something happens to them and they're not able to work anymore. Here's what you really need to know about disability insurance. First of all, you have to know it's a good company and they really will pay you if you become disabled. Number one. Number two however, you need to know the definition of when they will pay you. And what I mean by that is that if you are disabled and you cannot do, Nicole, your job that you currently have right now, so you own this policy. So, it's called owners occupation. If you can't do your particular job, but you could sell pencils, they'll still pay you most disability policies. Or many of them anyway have what's called any occupation, which means they will only pay you if you cannot do any occupation. So maybe you can't do whatever it is that. Owners-Occ, you would only do a disability policy, KT for owners-occ because Suze Orman goes on TV, right? I know something happens to me and I can't do that. I can't go on TV anymore. The disability company, if its owners are, will pay me if it's any Och, they're going to say to me, But, Suze, you can do the podcast, Suze, you could go and write a book, and then they won't pay me. So, you have to know the difference between owners-occ and any occ. And you only want to get a policy. That's owners occ. Occ stands for Owners Occupation. Okay, Suze, this is from, have I warned you out today. A little know why haven't you told me? Like giving me the rap sign like I'm going. I don't do that anymore. Why is that? Because, you yelled at me the other day for doing that. Oh, like that has ever made a difference in our relationship. No, she says, KT, you have to let me say what I want to say. You have to just go with the flow KT, stop giving me the rap sign. The rap sign is what we do on TV. Everybody All right. So, this is from Tycee. I like your name, Tycee. Hello, Suze and KT. I first want to thank you for being a blessing for so many people because of you. My Children make great financial decisions. Good for you. Hearing that. Yeah, I'm 44 years old and I'm lost. I'm married to my veteran husband for over 20 years, and we purchased our first home three years ago. We used our savings for a down payment, and shortly after that I was injured at work and it was downhill after that. My credit cards are maxed, and at the end of the money, that's where that's just disability insurance, like, would make sense disability and she had it. But really, she should have had something like that. It we're covering her or the state, but all right, go on. So, then Tycee continues to tell us her credit cards are maxed. At the end of the month. She doesn't have enough for her minimum payments. She's currently working full time, but that income isn't enough to make ends meet because she's dealing with the injury. She's unable to pick up, part-time income, part time work. I'm afraid my only option is a debt program or bankruptcy, Suze. What should I do? Also, Suze, my credit score has dropped drastically, so Tycee is sending light and love. What should she do? You know Tycee, obviously bankruptcy is absolutely a possibility. But you really have to check to see what will happen to the house that you just bought if you claim bankruptcy. So, before you do that, check out the laws. What I would do, however, if I were you and you say that you're afraid that your only option is a debt program that isn't a bad thing. I would if I were you. I would go online to NFCC.org, and just talk to them about getting involved with a debt management program where you pay them, they pay your creditors and things like that and just see, because normally within a five-year period of time, they could pretty much get you right back on your feet without you having to field bad about claiming bankruptcy, which I obviously can read into this that you would. So, the very first thing you should do is contact NFCC.org. Suze, what is NFCC? It's a nonprofit corporation where it's set up with credit counselors to help people really in Tycee’s situation. Have to pay for that. Well, she may have to pay five or $10 a month, but what happens is they have a deal with the credit card companies because the credit card companies rather get something than nothing. And they usually lower the interest rates to 0%. And I just think they're fabulous. So, she should at least give it a shot, and then that doesn't work. Bankruptcy might be in her future. All right, KT, it is Quizzie time, I'm ready. You're never ready for a quizzie. I'm ready. You sure? Alright. So, this question is from D and she says I am 64 years old and I live on my military retirement and have no debt. Remember, everybody. Quizzes are not just for KT. There also for you. So, you can really think about what would your answer be? I'm waiting to begin drawing my social security benefits, and she's probably waiting till she's either full Social Security age or 70. Okay, I have a 403B that I opened following my time in the military, and wonder if I should move it to an IRA. I have a Roth IRA and a traditional IRA from my early days. Right. Everybody should D take the money that's in her 403B when she was in the military or should she move it into an IRA. And should that IRA or a traditional IRA or a Roth IRA, since she already has both. And she could move that money into either the Roth or the traditional. And right before you answer, everybody think about it. What did she do? KT? Let me hear your answer. Since you always love a Roth, I think she should probably roll it over into the Roth IRA. Ehhhhhh. We should see her face. Right? Wait. All right, Suze, here's an answer, because this is a trick question. Everyone I know, Suze. Maybe she should just leave it right where it is. Yes. All right. See, I figured, why did you ask us what should she do either? Or? And the third thing is, just leave it. You see how she is everybody? Here's the thing. If I were you at this point in time, I would just leave it in my 403b plan. Why? Because especially If you have a lot of money in there, it can be very, very intimidating. If you did roll it over, and by the way, if you rolled it over, you would roll it over to the traditional IRA because you would not want to have to pay any taxes on it. But it's intimidating. You roll it over to a traditional IRA, now you have all this money in there, and now you have to invest it and how would you invest it? So, sometimes it's just better when you really don't know what to do, really not to do anything because you've been used to investing it within your 403b and you feel comfortable there. If, however you want to, you can move some of it. You don't have to move all of it, and then you can maybe get used to investing in a traditional IRA. A little by little. Okay, let's say goodbye to everyone. I'll say I'll see you Sunday, Sunday. You think that's funny that you're going to be there on Sunday? Oh, she's laughing. She has to work seven days a week Sunday, with KT laughing because she is going to be here Sunday, and I'm going to do a little bit of a Suze school on something that I was talking to you about last Sunday. Which is Cobra payments as well as subsidies and certain things that many accountants are absolutely getting wrong right now. So, that's good one. Until then, what do you want everybody to know, KT, I'll see you all Sunday. But until then, there's only one thing I want you to remember when it comes to your money. And what is it, KT? People first, then money, then things. Alright, everybody. You stay safe and happy April fools. See you Sunday. Bye bye.

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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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