Podcast Episode – Three Rules That Beat Budgeting

On this episode of Ask KT & Suze Anything, Suze answers your questions about giving to charity, pensions and back door Roths.  Plus three rules to make better financial decisions and so much more.

Listen to Podcast Episode:

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Podcast Transcript:

KT: Hello, Suze, and good morning everyone and welcome to the Women in Money podcast and everyone’s smart enough to listen. This is KT in the house.

And today is a very special day.

Suze: KT. Wait, everybody gotta listen to me. So we’re about to start the podcast, and I said, You wanna start? You wanna do it? And she goes, Yeah, I can do it.

KT: What’s wrong with that?

Suze: What day is today?

KT: I didn’t get there yet.

Suze: That’s how you start.

KT: No, I’m doing it KT way. Today’s Thursday, January 22nd, and why did I wait to give you that date? Because it’s Don Race’s birthday.

And Don is our brother-in-law, the daddy of Sophia and Travis that you’ve heard about for years, and he’s on his way to Oregon to carve wood. Unbelievable.

Suze: You, you, you’re cracking me up here already, Travis.

You know that you forgot to start with January 22, 2026.

KT: Here we go.

Suze: No, no,

KT: Today is January 22nd, 2026, the birthday of Don.

Suze: No, stop, stop, stop. Anyway, Don, we wish you a very, very happy birthday. We love you so much. How old is he?

We don’t know.

KT: I don’t know. It doesn’t matter.

Suze: That’s how much we love him, everybody. We don’t even know how old he is.

KT: He never looks old. He’s a handsome man.

Suze: Handsome man. Now this is the Ask KT and Suze Anything edition. You want to ask a question, just write in to ask Suze S U Z E podcast at gmail.com. If KT chooses it, oh, we will answer it on the podcast. I just have to say something, KT.

So as you know, everybody, I read many of the emails. Sometimes I answer you directly, as you all know. So I’m reading this one email, and it says, so I asked you a question a few weeks ago. I didn’t get an answer, right? How do I know what the answer to my question is and how do I know when it’s gonna be on the podcast? Will you let me know?

And I was like, I just wrote back one simple line. You have to listen to the podcast. Just that simple. All right, KT, go on.

KT: Also, she gets thousands, thousands. Also, you’re lucky if she answers you. It’s not something that she ever has to do. She loves doing that.

Suze: However, I do want to say something to a few of you. You wrote, I answered. You wrote again, and I answered.

You wrote again and then I got tied up and I get distracted sometimes and whatever. If I’ve been communicating with you and all of a sudden you don’t hear from me, don’t just give up. Write again. Just reply to the emails that have been coming back and forth, so it will be brought to my attention again. I go, oh yeah, yeah, yeah, yeah, so don’t give up. All right, go on.

KT: I’m starting with a question from Ben and I really like this and I like you, Ben, for this question.

Hi KT and Suze, I consider myself very fortunate. I’m debt free. I own my own home. I am consistently dollar cost averaging into my stock portfolio. I contribute to my retirement and I have accessible funds.

I feel like I could share some of this with someone or a cause less fortunate than me, but I’m unsure how to determine the right amount. Suze, is there a framework or guideline for deciding what is considered an appropriate or responsible gift or donation?

Great question.

Suze: How would you answer that?

KT: Do what we do, Ben.

Suze: What do we do?

KT: We, we have charities that we really believe in and that we like. One of them is St. Jude’s.

Suze: No, but that wasn’t his question.

KT: No. Well, hold on…

Suze: How do you decide on a responsible amount?

KT: 10% is probably a good rule of thumb, like all the tithings that are out there.

Suze: That’s how you would answer this question?

KT: Maybe, yea.

Suze: (Suze makes the wrong answer noise)

Give me this. Give me this. Just give me this before we even start. I just got to, before we even got into this podcast, I got to do my favorite thing. (Suze makes the wrong answer noise again)

You hate that, don’t you?

KT: I do. We need a different noise.

Suze: What should it be?

KT: I don’t know, but we don’t need a negative noise at this hour in the morning. Answer Ben’s question.

Suze: So Ben, listen to me.

I’ll never forget one of the Oprah shows I was doing, and there was a woman, and this is really for everybody, there was a woman who was in debt. Her car was just repossessed. She had credit card debt, but yet she was still giving 10% of her money away.

I’ll never forget this, and I looked at her and I said, why would you want to make yourself a burden on God? Why would you want to do that? Because isn’t it true that you’re constantly praying to God and saying, God, I just wish I had some more money. And she said, Yes, I pray for that all the time.

And I said, You know what, maybe God is saying to you: listen, I’m OK right now. Maybe you could just give me 1% or $10 or whatever, but you have got to be responsible for yourself and take care of yourself first.

And then I went on and I said on that Oprah show, sometimes it’s harder for some people to give $1 because they don’t have any than it is for some people to give $5,000 because they have so much or whatever it may be.

So, Ben, you have to decide on an amount that feels responsible to what you have and really what you feel. I would tell you in terms of where you should give it, your heart will tell you.

What happens with me is all of a sudden, sometimes even I’ll be in the car or I’ll see somebody and I’ll just be compelled to give them some money. Other times it will be an organization, sometimes it will be a person who just needs help.

I don’t get a tax write off for it. It doesn’t matter. I just want to help them because helping them makes my heart feel better. It’s not about helping them gets me a tax write off.

My advice to you would be there’s no percentage amount that should be dictated. You know when you should give and when you don’t want to give. You know who to give to if you simply follow your heart. It will lead you to the right place to donate money to. Just that simple. Next question, KT.

KT: OK. Next question is from…

Suze: I have a question for you.

KT: Yeah.

Suze: How come when I give an answer, if you disagree with it, you don’t go: (and Suze makes the wrong answer noise again)?

KT: I am not gonna go there.

Suze: Why is that?

KT: This is called the Women and Money podcast. You’re Suze Orman, the money guru of the world, and I’m KT, and I’m gonna disagree with your financial advice? No, no, no, I might disagree with your emotional advice, but no, I’m never gonna disagree with your financial advice. It’s made me millions of dollars.

Suze: All right, here you go, KT, if you did disagree, you would…

You would have, you feel like you’re powerful enough that you would do so, right?

KT: Yea. Oh, I would, well, we disagree all the time off air, so why wouldn’t I disagree on air?

Suze: I have absolutely no idea.

KT: Everybody, if I disagree with her, she knows. But I’m not gonna disagree about money…

Suze: Guess what, everybody, there is a saying in our household. What is it, KT?

KT: KT is always right.

Suze: Yeah, it just, oh, it irks me. Anyway, go on.

KT: All right, this is from Elle.

Hi Suze and KT, I plan on retiring in two years at 67 from the federal government. I have a car that will be paid off within two years and a mortgage balance of $120,000.

I have a modest TSP under 500,000 and is allocated 50% G and 50% C. I don’t know what that means, Suze, so you’ll have to tell us. Should I maintain or change that allocation? I may withdraw $20,000 when I retire. Thank you for all.

Suze: Elle, first of all, you did not say if your TSP was a Roth TSP, which makes me believe it’s a traditional TSP, which means it’s pre-tax.

So for the next two years, do you hear me, for the next two years till you are 67, every single penny that you put into the TSP needs to be what? It needs to be a Roth TSP. That’s number one.

Number two, you say that you may withdraw $20,000 at retirement. Why? If you withdraw that the way you currently have it now, and even if you open up a Roth TSP, it’s got to be open for at least five years to take it out tax-free unless you have a Roth IRA, which I don’t think you do because you didn’t say you did.

Then you could have converted it to a Roth IRA at 67, and if you had had that open for five years, then you could have taken out the $20,000 possibly tax-free, but that’s besides the point.

But you want to withdraw $20,000 at retirement. And the question is: Why? Why would you do that? It’s going to affect so many things.

So, I want you to number one, immediately get into a Roth TSP. Also, if you’re not in a very high income tax bracket or you can afford it, you might want to, because you’re now allowed to, as of January 28 actually, you’re allowed to do in-plan conversions.

So you could take some of the money that’s in your traditional TSP and now transfer it to a Roth TSP. That wasn’t allowed before January 28 of this year for the TSPs.

In terms of your allocation, KT said, so what’s a G and what’s a C? KT, within the TSP, the Thrift Savings Plan, there are many different mutual funds or sections. The G is like the government one. It’s like a money market fund. They pay you an interest rate. It doesn’t fluctuate. It is good. It is solid. It’s there.

The C is like the Standard and Poor’s 500 index, like a common stock fund. So right now, she is divided 50/50.

The rule of thumb is when you retire you wanna make sure that you have at least three years of living expenses in your retirement account within a money market account or the G fund in your situation.

That’s because if the market starts to go down, you do not want to have to take money from a C fund or a stock fund when the market is down.

Elle, you’re gonna have to decide that you may want more if you really need money in the G fund than the C fund, just so you know.

KT: Right now it’s a 50/50 split. What would you recommend, 75/25?

Suze: No, I wouldn’t. What she needs to do is figure out what would three years of her living expenses really be. That’s beyond what her pension is gonna be or her Social Security.

What is that gap between her guaranteed income and what she needs for three to five years actually of living expenses? Whatever that gap is, that should be in the G fund. Or if she does an IRA rollover, a Roth IRA rollover, then that would stay in a money market fund for her wherever it is. All right, next, KT.

KT: This is from Cathy. What are some instances when a spouse would lose a deceased spouse’s pension?

Suze: Cathy, the main reason that you would lose your spouse’s pension when they died is because, number one, they chose a pension that was a life only pension, which means it’s good for his or her life, period. And after that there’s no more money.

Normally one chooses that because they feel like, I want more money now. We need more money. You won’t need as much when I die. So the largest pension choice is life only.

Then it starts to decrease when you want to leave a joint and survivor benefit. The biggest decrease is when you get a 100% joint and survivor benefit, which means spouse dies, you get 100% of what they were getting.

Many people opt for a 50% joint and survivor benefit. I always say that is a serious mistake. If you have the option, I don’t care how much money you have or how much money you need, always do a 100% joint and survivor option unless you know that the spouse that you’ll be leaving it to is seriously ill, isn’t going to survive you by any means, and you know that without a shadow of a doubt, and or they have what’s called a pop up option, but that’s a whole other podcast.

Next, there are many pensions where you know your spouse is going to get a pension, but they haven’t signed up for the pension yet, and they die before they sign up for it.

There are corporations and places that one can work that if you don’t sign up for it and you die before that, you’re out of luck.

KT: Really?

Suze: Uh-huh. You gotta know these things.

KT: Oh my, wait a minute, Suze, stop right there. If you’re working for a company and let’s say you’ve been there 15 years and you never signed up or your HR people haven’t really nudged you.

Suze: Usually they ask you to sign up at 55 or 60, right in there somewhere. It just depends.

KT: But if you haven’t done that, your spouse, if you die all of a sudden, you have a heart attack and you die on the job, let’s say your spouse doesn’t get a pension if you didn’t sign up?

Suze: That’s right. If you didn’t sign up, that’s why you’ve got to…

KT: Can you dispute it?

Suze: No, not if those are the rules. That’s why you have to know how does it work. And if you can’t sign up for a pension yet, that’s when you have term life insurance to cover yourself in case that were to happen.

Also, believe it or not, there are times when if it’s less than a 50% joint and survivor option, the spouse has to sign off, and a lot of times the spouse doesn’t listen and they just say, whatever.

You should always check what happens in case of a divorce, because sometimes that can change. So there’s so many things that can happen, but the main reason is normally they’ve chosen a life only option which, if they are married, is the absolute biggest mistake that they can ever make in their lives unless their spouse is seriously ill. All right, KT, next.

KT: So Suze, wait, I have a question. If the spouse that’s working signed off, he or she wants 100%, they don’t leave anything after death to their spouse…

Suze: And the spouse signed off on it, yes…

KT: Can they change their mind like a year later?

Suze: They can’t even change their mind a week later once they start the pension.

KT: OK. Next question is from Peg.

I am 83. I have been a poor money manager all my life. I’ve been able to make some positive changes in the past few years.

I need help getting the basics in budgeting and learning not to spend. Can you help me?

Suze: Girlfriend, you listen to me. If you are now able to make good financial decisions, you don’t really need help getting the basics in budgeting and learning not to spend.

But she says, can I help? Here are three rules. You follow these three rules, and I promise you, you will know exactly how to budget.

I don’t like the word budget. Budgets, KT, are like diets.

KT: Wait, here’s the three rules. Go for it.

Suze: All right. Is this: you are to live below your means but within your needs. What is a need? A need is food that you get at a grocery store. It’s gasoline that you put in your car because you really have to go somewhere. You don’t go out joyriding.

The second rule is how do you do that? From this day forward, when you go to spend any money at all, Peg, ask yourself the question: Is this a need or is this a want? If it is a need, buy it. If it’s a want, walk away.

And last but not least, just get as much pleasure out of saving as you do spending. It’s just that simple.

KT: Now wait, this isn’t just for Peg. These three rules apply to everyone, no matter what age you are.

Suze: But don’t you wanna ask me why I don’t like budgets?

KT: No.

Suze: Why not?

KT: Because you think they’re like a diet. They don’t work. People start it. It’s a silly thing. A budget isn’t something people follow.

Suze: All right, go on.

KT: This is from Carla. She said, I was blessed to be gifted your books in my early 20s and took your advice to invest in index funds with a low expense ratio in my first 401k. Now in my forties I have 1 million plus in investments. Thank you.

My parents have named me executor of their will. They are in their early eighties. They have a reverse mortgage, a car loan on a 2025 sedan, and credit card debt. I am told that when they pass to turn the house and car over to the bank, there’s nothing left for my sister and I. Is it really this simple?

My parents have declared bankruptcy in the past, maxed out credit cards, and buy a new car every two to three years. They are disclosing little information, which is why I read The Ultimate Retirement Guide for 50+ to learn more. I don’t want to purchase their home from the bank. I’m glad they’re able to supplement their income through the reverse mortgage. I don’t want to be on the hook for their debts.

Suze: Carla sweetheart, listen to me. Number one, as long as you don’t put your name on anything, as long as you don’t say you’ll take responsibility for it, you are not responsible for any credit cards that they have in their names.

When they both die, then those debts will absolutely go away. However, when one of them dies, the other is still going to be responsible, and that’s what you have to think about.

They’re both in their 80s. Maybe one of them has a pension like your father. He dies before your mother. Now we’ve lost one Social Security check, maybe we’ve lost a pension check, and now your mom or the surviving parent has less money available than they did with even more and more credit card debt.

Now they’ve maxed out on their credit cards. They can’t get any more credit, and now we have problems. So you better start to find out right now what’s really going on with them because it’s not just what happens when they are dead.

It’s what happens when one of them dies. You might want them to listen to this if you don’t have the nerve to ask them for this on your own.

Number two, they have a reverse mortgage on their home. What that means is that the bank owns the house and the bank is paying them monthly every month to live in that house.

I don’t know how long that’s been going on. It is possible that the bank has already paid out more than the house is worth, or maybe they haven’t.

But on your parents’ death, what will happen is depending on how much has been taken out, if they’ve taken out already more than the house is currently worth, the bank is just gonna take the house and you don’t have to worry about it.

If they haven’t taken out as much as the house is worth, then you will sell the house, pay the bank back, and you get to keep the rest. I have a feeling the bank is going to get the house.

As far as their car goes, just call the car company up and say, hey, repossess it. It’s theirs, whatever.

Any car company that is stupid enough to really lend people money who have claimed bankruptcy, who have probably horrible FICO scores, all the stuff going on with your parents, fine, let them repossess the car.

So the main thing that I’m worried about isn’t so much what happens when they’ve died. It’s what happens as they get older and older and now all of a sudden do they need nursing care? What are they gonna need? What if they can’t take care of themselves? Who’s gonna be responsible for that?

You need to sit down with them. You need to be an adult, and you need to say, I don’t care that you don’t want to talk to me about this. I need to know these things, and I want to know them now, or else, as you get older, if you need my help before you’ve died, I’m not going to be able to be there for you.

KT: Now on that same note, this is from Sue, who’s 80 years old. She said, Hi, Suze, I’m 80 years old and I live in New York State. My daughter lives in Pennsylvania, which I recently read has an inheritance tax of 4.5% for children of the deceased.

I have about 3 million in a 403B which names my son, a New York State resident, and my daughter as the beneficiaries.

If I am reading this correctly, is my daughter gonna have to give 4.5% of my hard earned money to the state of Pennsylvania? If so, how would that work if she withdraws the money over 10 years, since PA also says that inheritance tax payments are due on the death and are delinquent after nine months?

Suze: No problem, Sue. Listen to me. First of all, normally this 4.5%, which is true, applies to things like real estate, things like that. It never usually applies to a retirement account, especially because you happen to be in New York.

Even if you were a Pennsylvania resident, normally IRAs are not included in this 4.5% estate tax.

KT: The reason I wanted you to read that is here is an 80 year old that’s extremely responsible.

Suze: Most of the 80 year olds that are writing in have money. They’ve been listening to me for 40 years. They are, of course, responsible.

What this really shows you, everybody, is if you start early, you’ll be just fine. All right, go on.

KT: This last question is from Richard. Suze, what is a backdoor Roth and how do I do it?

Suze: Obviously, there are maximum modified adjusted gross income limits that you have to be under to do what’s called a contributory Roth.

A contributory Roth is where you are able to put in up to $7,500 if you are under 50 this year, $8,600 if you are 50 or older, and you can do that every year.

You can also do what’s called a conversion, which means if you have a traditional IRA right now, an IRA that you’ve never paid taxes on, you can convert that money regardless of your income into a Roth IRA. You just have to pay taxes on the amount that you converted.

But a backdoor Roth is very different. A backdoor Roth is where you do not have a traditional IRA already, or a traditional SEP IRA or a SIMPLE IRA, because if you do, you cannot do a backdoor Roth without being subjected to what’s known as the pro rata rule.

If you do not have a traditional retirement account outside of work of any kind, what you do is you open up a traditional IRA but you make it non-deductible and you fund it with either the $7,500 this year or the $8,600 if you are 50 or older.

You then immediately convert it to a Roth IRA. So now you have gotten money into the Roth IRA through the back door.

You cannot contribute more than $7,500 or $8,600 right now to a traditional IRA that you make non-deductible.

The key is you have to make sure that you do convert it. The reason is you want it in the Roth IRA because if it stays in the non-deductible IRA and it starts to grow, if it makes money and then you convert it, the amount of money that it’s grown will be taxed to you.

KT: That’s the part I missed.

Suze: All right, there we go, everybody. And in the same way, KT says she should know, so should you.

Until Sunday, there’s only one thing that we want you to remember. We want you to go to my YouTube channel, youtube.com/SuzeOrman. Please subscribe.

Until Sunday, there’s only one thing that we want you to remember. What is that, KT?

KT: People first, then money, then things.

Suze: And you stay safe. Bye-bye.