Finacial Planning, Home Buying, Home Mortgage, Money Management
April 22, 2021
Listen to Podcast Episode:
On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Megan, Candi, Michelle, Caroline, Kate, Kathleen and Christine selected and read by KT.
April 22nd, 2021. Yeah, baby. So today is KT's theme Thursday. This is everybody ask Suze and KT, Anything, you know what I've been doing, KT? So, there's a thing called spaces now on twitter. Oh, you had fun the other night with Ben. Where you on with Ben? Wait do you all know about spaces on twitter? You get registered with twitter and then you push this little thing and then it goes out live to all of you and then you all just come on and then I can answer your questions where I can hear you asking me the question, I answer you. It was so much fun. I like, like we should take Ask Suze and KT anything on to, I’ll go on. You will? Do they see, you know me? go on. What would that have to do with them? They see you have to have to be dressed and a little makeup, fix my hair. She's laughing because my haircut is something that's not fixable. Okay, let's start this. This is I'm excited about today. Wait you have an incredible haircut. Well, thank you. Had better post a picture of this here on the app. I love your hair. Okay, ready, Suze. I'm excited about today and I don't want to mess up our timing because I have lots and lots of questions. She's so all she's been doing all, I've been collecting these, these are my real estate questions, but here's the thing, I promised all of you a new, I want to change things up on Thursday. So, this is a themed Thursday. Ask Suze Anything and KT, and it's real estate. And if you don't like this show, no problem. Just tell me, just say KT, we were bored. We didn't like it. We wanted you to mix it up. Just let me know what you like and we'll serve that next week. But for this week ready April 22. Here we go. Hi Suze. I'm 30 years old. I have reached my goal of a 12-month emergency fund, which is about $25,000. What is this person’s name, oh, this is from Megan. All right, I'm now going to start saving for a house and vacations for when I can finally travel again. I've got money in the bank in a personal savings account, but it gives me very little interest. I'm curious if there's a better place to keep my savings to gain more interest, but to keep it in a position that I can use it immediately if I need it. You know the answer to that right Suze. So, wait I ideally want $50,000 in there for my emergency fund down payment on the house and vacations. So, listen Megan that's a big ticket for only $50,000. So anyway, Suze, what are you going to advise her? Well, if the real question is how do you get more money on money that you want to be able to access at any time? Which means you don't want to risk it at all regardless of the amount and what you want to use it for. This is money that cannot be in the stock market. This is money that cannot be in Bitcoin. This is money that cannot be in real estate or in gold or anywhere other than a liquid savings account and all of you know, and you should know this Megan that our absolute favorite place to put money is in the Alliant Credit Union. Where you will get one of the highest interest rates out there of 10.55% right now. And if you take advantage of the ultimate opportunity savings account where you put $100 a month in for 12 consecutive months at the end of the 12 months, you get 100 bucks. That is a big, big detail or where to go. All right. So, you go to myalliant.com. That's what I say. All right. All right. Next one is from Candy. Dear, Suzy and KT. I'm 41 years old and have recently divorced. In the process of the divorce, my ex-husband and I sold our primary residence where we had a good amount of equity. We each walked away with about 160,000 at the time being recently divorced and then covid underway, I wanted to wait and by my next home so that I didn't rush into any big decisions. Now. The housing market in my community has gone bonkers. So, I'm just going to cut to the chase here. Candy lives in the Reno area. She's on a single woman's income. She wants to put a solid down payment on the house. Yet she's really hesitant to buy anything because of the market. But this is the question Suze. She's angry at her ex for many reasons and only one of which is, my victim mentality, thinking he put me in this situation. So now Suze, this is Candy’s question. How do I turn my anger into power and my victim mentality around? I would love any advice you can give on this and thank you Suze so much for helping women like me. You know, Candy, I went through long periods of time where I was seriously angry at my ex-girlfriends, as KT can tell you. When I say angry, I mean really angry. And then as time went on and then I was with KT and then everything just has become the greatest 20 years of my life. The anger actually just dissipated. And what's interesting about it now is that, almost every year on the date that KT and I met, we toast those that are exes or that I was really angry at and we now wish them well. So, there's no magic formula that I can tell you Candy, just do this, just do that. But there is something I just want you to think about. There's a law of money and a law of life and it essentially goes like this. That every wish that you wish another be a wish that you wish for yourself for in fact it is. So, if you're wishing harm to your ex, if you're wishing all these things should go wrong with him or if you yourself are feeling like you are a victim, I may understand that and maybe you understand it right now. But I just want to, just tell you something out of all the years that I've been doing this, and all the tens of thousands of women that have either written or I've spoken with who were so angry when it first happened. Two years later, four years later, five years later, every single one of them, every one of them has come to realize that it was the best thing that ever happened to them in their entire life. So, Candy, your life is not made up of a beautiful house. Your life isn't made up of all these things that you had around you. Your life is made up of loving every moment of every day in this precious life of your own. You do not have time to be angry. You do not have time to be a victim. All you have time to do is to absolutely appreciate yourself, appreciate your life and be so grateful that you're free. You are free girlfriend. You know, and I know that you weren't happy in that relationship either. You may have liked all the accoutrements of it, but there was no way that you were happy. So now be appreciative of your freedom, of your ability to stand in the truth, of nobody controlling you anymore and everything you're going to create from this point on is going to be yours. So, you have so much to be happy for so much to be grateful for. that. There's really no time to be angry or feel like you're a victim. But really the only thing that will take care of that is time. That was a great answer. That was full of passion. Suze, wow. See that would happen, Candy. You reminded her. Oh God, I was so angry for so long. All right, the next, yeah, but look at you now. You're a happy camper. She's a happy camper. I don't even remember they really existed. But anyway, that's besides the point. Okay, go on. Okay. So that's why I changed up these real estate question. You did good, Huh? Okay. So, the next one is from Michelle and this one I enjoy this one because I can't wait to hear what Suze says, but I think I absolutely can predict which is she will say, it says hi KT and Suze. I noticed, I noticed who she says hi to first. Alright you ready? She said, KT cracks me up. Please don't stop doing quizzies. It's comforting to know that you are still learning as well. That's comforting to You. Okay. Michelle's question is this, I'm well into my 50s, last July 2020 is when I first started to learn about the importance of money investing and saving. I'm a slow learner. Now it seems so overwhelming. Everyone seems to be doing better than I. And I recently started my Roth IRA barely $7,000 in there. So, Suze, Michelle said she makes crap right now due to the pandemic. I mean minimum wage, no house, no husband, no boyfriend. And now sadly Suze, no parents. She lost them both in 2020. So, besides the lottery, a rich husband and my only talent which is writing, hope seems lost. Now What Suze? Well, my dear Michelle Michel my belle anyway, um look at her little like he's going don't do that, don't sing Suze. Michelle, I could go through this email and I'm going to do that right now for one second and I just want to see something. You're a slow learner, you're overwhelmed. Everyone seems to be doing better than you write that. You make crap right now. Um you have no house, no husband, no boyfriend. No parents and everything. So, you have right, you say that you're even too embarrassed to use your real first name. That's interesting. I have 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, almost 11 sentences and words from you that are totally negative and degrading of yourself. Your poverty here isn't in the form of not having a boyfriend, not having a house, not having a husband, only making minimum wage. Your poverty is how you feel about who you are. And as long as you feel like you are less than, as long as you feel that you're really just embarrassed because you can't even use your first name. There is no way that you're going to be able to turn things around and stand in your truth and stand in your power. How many times have you heard me say that, shame is the main internal obstacle to wealth. Fear is the main internal obstacle to wealth. Anger is the main internal obstacle to wealth. So, you can't be angry, you can't have shame. You can't you know, do these things like that and expect to feel good. Michelle, here's what I really want you to do today, April 22nd, today at six o'clock, East Coast time. I am giving a webinar which is actually part three of how to heal your financial life. The way you sign up for it is simply go to Suze Orman suzeorman.com/webinar. And I really want you to listen to what I have to say because, in this webinar tonight, I'm going to be talking about a little course that I've created called the three-step reset. And you need to reset how you think, feel and act with money. You need to reset the anger that you have in your life. You need to reset the shame that you have in your life and that is what this course is all about. So, I am asking you to join me tonight. In fact, I'm asking all of you to join me tonight in a fabulous, fabulous webinar. Tens of thousands have already signed up. Be one of them. Be one of them. There you go. Are you going to be there to with me tonight, KT? Of course I am, I love those webinars. Yeah. 35,000 people in all come, sometimes 50,000. I think you're going to get a bigger crowd in that, wow. Okay. Next question is from Caroline. Okay, ready, Suze. I'm always ready. My dear, Suze KT. Hi my wife and I need your real estate. She said Suze 1st. She did. They should always say Suze 1st. No, they should not. Unless you want to be on top of my list. Hi, my wife and I need your real estate advice, can I tell a little story? No, wait, wait, can I finish? This is a good question. All Right. She is 35 and I am 40. We live in LA where our house has been on the market for 20 days now from when I received this email, it's probably been on the market maybe a little bit longer. They even sold it at this point. They might have sold it because now like a week has lapsed since I got this question. So, we just lowered the price significantly from 2.99 million 2.65 hoping to get more action. It's in a desirable neighborhood. But it's a unique house. What is the question? Okay. The question is this ken, or should we pull from our investments to help us raise, that's nonretirement investments, to help us raise the down payment of 760k on the house they want to buy, they haven't sold their house yet and they want to buy a house that's 3.5 to 3.8. So, in essence, the question is they want to buy a home before they sell the home. Exactly. And the reason is because of the boom right now in LA and they feel like they're missing out on everything they want. What would you tell them KT? Absolutely do not do that be patient, sell your house. You know, I'm old fashioned. I don't think anyone, it's going to create stress. They could have a real problem with that house that they currently live in and not sell. Right? So, here's what concerns me. Right? Partly. Okay, just would kill me to take this. This is Caroline and Daniel. So, listen to me, you too. Which is this first of all the fact in a booming real estate market where bids are coming in way over the asking price, 10o, 200, 300 or 400,000 over the asking price. And you lowered your asking price by $300,000. That seriously concerns me. Yellow flag. It concerns me because either you didn't price it correctly to begin with. So, do we have the proper real estate agent there? But if I were right now looking for a piece of property and I saw that you lowered your asking price, I have to tell you that would scare me away. It would make me feel like I don't think I want that house. Something has to be wrong with that house. They should be raising their price rather than lowering it. You know, I'm just going to do a little sidetrack here. KT and I had an apartment in New York City and we put it on the market for sale and we weren't getting any offers on it. So, I called the real estate agent, I said, fine raise it by half a million dollars. And KT was like, you want to raise it. I said, yeah, raise it by half a million dollars. Guess what? We raised it. One week later we got three bids on the house and this was a while ago now, this was maybe 2016 to be exact. And so, it's not like real estate was booming then, but we got three bids in one week, even a half a million dollars above are raising price. So, I went the exact opposite way just so you know, and when I did that, people got curious like, oh this house may continue to go up, this apartment. So, it concerns me number one that you lowered your asking price. Now maybe I'm wrong, but I think that could hurt you in sales. Therefore, if you go into your investments now, which you're going to have to probably pay taxes on and everything to buy another property, an expensive property and you don't sell the one that you have. Now, you are stuck with too expensive properties, everything is expensive, everything is going on. What if all of a sudden you move and you find out that there's repairs that you have to do? Can you just keep your life simple? Don't be afraid that everything good is going to pass you by, slow down, sell your house, when your house has sold. Then look and see what's available and just take it that way. Do not go ahead and buy something because you are afraid, fear the main internal obstacle. Are you going to be able to take my seminar tonight? My webinar tonight. Right. Look at the three-step reset course I'm telling you anyway. Don't do something out of fear. It never ever works. Okay. Okay, so to Suze's point on that question, here's a new one from Kate and this proves what you just said is very true. I recently decided to sell my house after going through a breakup. I lived with my partner in that house for the duration that I owned it. So, it was just making me sad and I felt like I needed a fresh start. The selling market has been gangbusters in Portland. So, when I sold it, I made a solid profit. I sold it for 440k and I bought it for 255 only five years ago, she came away with a $200,000 profit, Suze. So now to find a new place to live, the shoe is on the other foot. There's no inventory. I have made five offers so far up to 45k over asking price and haven't gotten a house yet. The market is starting to make me really nervous. We're being asked to sign all kinds of things. People are waving inspections, everything so that she just gets a house. So, the question is, should I give up and rent for the time being? I don't want to buy a house and be completely underwater. Yeah, I wouldn't give up and I would rent for the time being and maybe you can find a month-to-month rent, but I would not be rushing to buy a house. I would not ever buy a home with the removal of all contingencies and waving of it. Are you kidding me? Which is one of my favorite sayings, isn't it KT? It is. Kate, I have to agree with Suze. It's time to just sit and be patient. Sit and be patient. But keep looking because you never know when somebody will be selling and you'll be the first person there and you'll get it. Or somebody will be selling and they really like you and they don't really care about the extra money, believe it or not. And they want to sell it to you. I had a friend recently that was in that situation and there were two or three bids on a house and the people who were selling the house loved my friend so much that even though they didn't offer as much as the other people, they gave it to her. Very fabulous. So, you never know what can happen. Slow down. Good. Slow down. That's going to be a new theme too. All right, maybe I'll do that for Sunday's podcast for your school, Suze School. Yeah. Well not necessarily a Suze school. I've been thinking I really want to talk about um don't rush time. I like that. So that would be that will be Sunday's podcast. Don't rush time. All right. Next one is from Kathleen. Hello Suze. I'm currently in grad school from my MBA. At the end of the program. I have borrowed $156,000 at 5%. I'm also currently purchasing a home. I can opt to put 5% down or 20% down. The house is $438,000. The interest rate will be 2.5%. Should I put 90k towards the 20% down to avoid the PMI. Or put it towards my student loan. Currently I'm putting 4.5% to my 401K. Which my company matches. I'm 35. Should I up this to 10% or wait until my student loan is paid off? Mm I know this is an interesting, this could be a quizzie. Well, here's the thing, we have many choices here because $156,000 of a student loan that's not dischargeable in bankruptcy at 5% is a big deal and a very expensive loan because chances are as an MBA, you're going to be making too much money to even take any of that interest off in taxes. So, whatever at the same time you're purchasing a home and you could put $90,000 down, which would then avoid PMI. But even PMI, which is private mortgage insurance, even if it added a half a percent to your interest rate, which is what it will add. Now you're at 3% versus 5%, but you're at three percent tax-deductible. So, believe it or not, I am in your situation going against my absolute adamant rule of thumb, which is to put 20% down when you buy a home, what I would be doing in your particular situation? Well, I would be taking that money and put five percent down. I would be taking the remaining of the money and I would pay down my student loan. I would probably refinance my student loan at a lower interest rate. And then, when time goes on and maybe the student loan is down and everything like that, maybe you would refinance your home because I think you'll have more time to refinance your home at these low interest rates. I don't think they're going anywhere. And then what I would do Is that you might be able to have 20% equity, not because you put more money into it, but because the price of your house may have gone up that much. So, on this particular advice very different than advice I normally give put down five percent on your home and put down as much as you can to pay off your student loan. Kathleen, there you go. I would not have guessed that, but good. We should have made that your quizzie. Because I always believe she says put 20 down. Yeah, but in this case I just heard Kathleen. But just something very important just happened there everybody is that, personal financial advice needs to be tailored for the person. There isn't blanket advice that everybody should do this. Everybody should do that. And that's just how it is. Every single one of you is an individual. Every single one of you has different fears and different, you know, different things that make you operate emotionally speaking and so therefore everything should be personalized for you, which I just did. Okay. Go on. All right. Next one is from Christine. Hi Suze. I have a question about what to do with approximately 125,000 that my dad plans to give me when he sells the family home next month. I'm debt free and renting. I plan to use the money to buy a house but I won't be ready to do that for another year or so. What should I do with this money in the meantime to make it work for me, while still keeping it accessible? Yeah. You know the answer to this is the answer that every one of you when you write in and ask this question, the answer is always going to be the same everybody. It's going to be put it in the Alliant Credit Union all 125,000 of it and get 0.55% interest and then you'll be a customer of theirs. And then when you go to buy a home and if it's more than $125,000, you'll probably want to get your loan for your home from Alliant credit union because credit unions normally give better interest rates on home loans and things like that, then banks do. So that's exactly what I would be doing. That's it. Okay, so Suze one more part of this from Christine and she didn't give me enough information, but she's saying what are the tax implications for me? She isn't inheriting her dad is gifting her this money. And there are no tax implications for her. The tax implications are for her father, because the most that he can give her in one year is $15,000. If he gives her above $15,000, which he is in this case $110,000 above that, it comes off his unified tax credit. So, upon his death that will be subtracted from the amount of money that he can leave his beneficiary's estate tax-free. But I think he'll be fine no matter what. Why are you looking at me like that? I don't have a, we don't have a quizzie. I'm ending this show since this is my real estate theme with something special. I was going to say, what do you mean? You don't have a quizzie? I have a quizzie for you? No, no, wait. I want to end the show with something special. We never do this. So, alright, you can do it. You did a quizzie you know, I did a quiz on Sunday, everybody. All right, so there you go. You don't have to do it today. But this is from to Tameel. And I really loved this email. Hi, Suze and KT, earlier this week. I sent a panicked email to you about refinancing. Please disregard as you have said, anxiety is fear over money. I got a refi offer and realized something didn't feel right. I checked over my notes from when I refinanced in 2017 and I've been paying bi-weekly automatic mortgage. So, what the refi I was going to give me guess what, I'm going to get there in the same amount of time. So many people say refinancing is the way to go. But had I taken the time to trust my gut and do my own research, I wouldn't have wasted a week being upset. Sometimes the heart knows before the mind does. Suze I just think I saved myself closing costs to do exactly what I'm already doing right now. Why am I so tempted to believe others know more about my money situation than, I do. Thank you, Suze for all you do. All right, KT, I'm going to turn this into a quizzie now for you. You ready? Yeah. You sure? Yeah. Are you already out there for your quizzie that we didn't think we were going to have, but now we're having? When to Tameel says to you fear this email that she has a bi-weekly mortgage and by having a biweekly mortgage, she accomplishes the exact same thing as refinancing for a lesser period of time. What does that mean? I think it means that she had a set it and forget it mortgage, where every twice a month it's already paid or deducted into. She pays the mortgage twice a month on a set and forget it deal. So, she pays it twice a month versus once a month. So why would that change the timing of the mortgage? It pays it all faster. Why? Because you're paying two payments a month which gives you one full extra payment a year. So, everybody, what you all have to know is if you want to pay your mortgage off sooner, all you really need to do even more than refinancing it, especially if you have a good interest rate is, let's say that you had a mortgage payment of $1,200 a month. You could, if you wanted to divide your mortgage payment by 12 that would be in this case $100 So that you could send in an extra $100 a month with your payments. Or you could pay that $1,200 a month, every two weeks at $600. And if you do either of those that gives you an entire extra mortgage payment per year. Which can reduce the life of a loan by years, sometimes four years, six years. It just depends on your interest rate. So, what to Tameel was saying there, KT is rather than refinancing her mortgage, it's already at a good interest rate down to decrease the years since she's been paying it bi-weekly. It's going to be paid off before she thought anyway. And she never needed to refinance trust your gut. So, here's the thing you did. You pass the quizzie. Yeah, you did. All right. Everybody see us tonight. See us tonight. Remember I am doing part three of the you can heal your financial life. It's at six p.m. East Coast Time to register. Go to Suze, suzeorman.com/webinar. We'll see you there. Say bye bye to everybody, bye everyone. See you tonight. All right. Take care.< /hr>
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