June 19, 2025 • 33 mins
On this edition of Ask Suze & KT Anything, KT asks Suze questions from you about 401(k) contributions, paying down a mortgage, and sharing the Must Have Docs. Plus, charging a child rent, overseas money transfers and so much more!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Suze (00:30):
June 19, 2025. Welcome everybody to the Women and Money
podcast and everybody smart enough to listen.
This is Ask KT and Suze...
KT (00:43):
Anything!
Suze (00:43):
Oh, there she is.
KT (00:43):
Here I am. Today's a really great day, one of
one of my favorite of all time. Why? It's called Juneteenth.
Suze (00:52):
Oh we love Juneteenth.
KT (00:53):
I love Juneteenth
Suze (00:53):
Every year. She loves this holiday.
KT (00:55):
Juneteenth is a federal holiday for those of you that
may not know, and it's really, really, it's, it's very important,
but it's also known as
America's Second Independence Day. Why? This is acknowledging the freedom
of all enslaved people in the United States.
Suze (01:15):
When did that happen? KT?
KT (01:17):
Oh my goodness, like 1865 something like that. But you know,
it was interesting. I was reading a little bit about
the history. It was one of the um generals went
into Texas and announced that on this day,
there were 250,000 enslaved black people in the state of Texas,
(01:41):
and he went in and he said, you are all free.
So Texas, I mean, they could probably the biggest barbecue
on earth that day. Anyway...
Suze (01:49):
Where is that general today?
KT (01:51):
The end of slavery. We're very happy, so everyone's celebrating.
Enjoy this wonderful, important day.
Suze (01:59):
All right.
KT (02:00):
So Suze, my first question is from Paul.
Suze (02:02):
Go on.
KT (02:03):
All right, you ready?
Suze (02:04):
You have this little smirk on your face again.
KT (02:07):
Why?
Suze (02:08):
I don't know why. Why do you?
KT (02:10):
No, this is just a really simple question. Hi Suze
and KT. I've been a listener of your podcast for
the past few years. I was gifted young, fabulous, and
broke years ago.
Suze (02:23):
I think I wrote that book...
KT (02:25):
I love that book
Suze (02:26):
...in 2005.
KT (02:27):
Great book.
Suze (02:28):
20 years ago.
KT (02:29):
It really helped shape how I thought about money in
my 20s and 30s.
Suze (02:34):
Is he now old, fabulous, and broke?
KT (02:36):
Well, wait,
here's what he wrote. Thankfully, though I'm not so young,
I'm also not so broke anymore.
Suze (02:42):
Oh good, Paul.
KT (02:42):
He's in Paul's in his early 40s. He said, I've
reached a milestone in my retirement savings where the annual
returns from my 401k are roughly equal to or even
greater than my annual contribution.
So I've been maxing out my 401(k)
Suze (03:00):
Wait wait wait, that is called compounding everybody where your money,
is making more money for you than what you are
depositing into that account. That is because Paul started 20
years ago, and he had that many years for it
to compound and bingo, he now has hit a fabulous
(03:24):
point in his retirement.
KT (03:26):
And that's what this question is about. He said, I'd
love your perspective.
Would it be wiser to now redirect some or all
of my contributions elsewhere for greater impact, whether that's investing
in a different account, purchasing an income generating property or
(03:46):
something else entirely, I'm wide open.
And then he's thinking, this is so sweet. He said,
thank you for all the guidance and energy you bring, Suze,
and for your loving truth so openly. Two years ago,
I proudly married my husband, and that's another celebration in June.
(04:07):
Pride Month and while he rolls his eyes when I
get on to the Suze soapbox, I'd love him to
hear you answer my question.
Suze (04:17):
That's why you picked it, didn't you?
KT (04:18):
Yes of course.
There's always a reason she picks them.
Listen up, husband.
Suze (04:23):
Hubby hubby hubby. First of all, you say it's a 401k, Paul.
You did not say it is a Roth 401k.
Now maybe where you work they don't offer a Roth 401k,
but I need you to start getting money into a
(04:44):
Roth and given that you're in your forties, I need
you to start converting that money to a Roth 401k.
Or a Roth IRA if they allow you to do
a partial distribution if you're still working for them, because
that's how you really will get the most for your
(05:04):
money now. What else should you be doing? I have
to tell you there isn't a better investment out there
than a Roth retirement account. I would not be doing
real estate right now.
Real estate right now really is not my favorite thing.
And why is that? Because of weather situations happening out there,
(05:26):
because of the increase in insurance costs, because of maintenance,
all kinds of things. I really believe that you can
make more money with less hassle in the stock market.
So given that you're doing so well, you understand it.
What I would be doing if I were you is
I would somehow be getting all of that money little
(05:48):
by little into a Roth, and remember you can have
a Roth IRA and a Roth 401k if you make
too much money for a Roth, then do a back
door Roth, but you need to do that. All right, next.
Surprise little hubby. Surprise. You don't get on him when
(06:11):
he gets on his soapbox. Do you hear me, Paul's hubby? Anyway,
go on.
KT (06:15):
OK, this next question is really typical that I think
many listeners will relate to, and this is from Keila.
She said, My 22 year old daughter is working full
time and making about $30,000 a year.
She attends a community college part time and will transfer
to a university in about one year for her bachelor's degree.
(06:40):
She lives with her boyfriend in an apartment.
Her boyfriend works construction, which is seasonal. He's not in school.
He maybe makes about $20,000 a year. They're having financial difficulties,
and they want to move into my home with me
for a period of time to save up to buy
(07:01):
a house eventually.
OK, ready. How do I know what to charge them?
And then she goes right into giving us a little
bit of her background, but this gets better. I'm divorced.
I work full time. I earn about $92,000 a year.
My 20 year old son lives with me who is
(07:24):
working part time, and he's in school part time at
a community college.
And I'm helping to support him so that he can
become an electrician. Yes, I still owe about $60,000 towards
my mortgage. That's right. My insurance taxes and mortgage in
one payment is about $670 a month.
Suze (07:48):
How's that
possible? But anyway, I believe that if she said it, OK.
KT (07:51):
She said, I also have a HELOC on which I
owe $25,000 because I have been making much needed repairs
to my house.
Suze (08:02):
Ding ding ding ding...
KT (08:03):
Yea, she has no emergency fund...
Suze (08:05):
Ding ding ding.
KT (08:06):
OK, she said my ex-husband and I still help my
daughter with her car insurance payment.
The car she drives is under my name and it's
paid off. She also pays her father monthly for her
cell phone bill.
I don't know. She makes $30,000 a year.
Suze (08:26):
I'm not liking this just so you know.
KT (08:29):
All right, you ready? I want to help them out
so that that way they could open up an account
and put money in it every month towards the future. However,
I don't want to enable them and have them think
that they don't need to be accountable for money so
that they end up spending it all and going out
all the time.
(08:49):
How do I set those boundaries and establish the appropriate
rent payment to help me out as well? Thanks for
your help, Suze.
Suze (08:57):
What does my face
look like?
KT (08:59):
I'm not going to describe it on the podcast. It's
what we call a radio face.
Suze (09:05):
Is that a radio face? So first of all, Keila...
Where do I even start with you? Listen to me.
You make $92,000 a year. You say,
that all you owe is $670 a month for your
(09:26):
mortgage insurance, taxes, da da da da. However, you don't
have any money. How do I know you don't have
any money? Because you had to take out a HELOC
on the equity in your home. Why? To pay for repairs,
(09:46):
and if you had cash, you never would take out
a HELOC.
So even though it looks like you are doing well.
I don't think you are because you have to think
about yourself before you continue to think about your kids.
When I say people first, I mean you, Mamma. I
(10:08):
mean you 'cause if something happens to you.
And you can't work anymore and you can't make that
$92,000 a year.
Where is all the money going to come from where
all these kids are living, to pay for your true
monthly expenses? Why do I have a feeling that you
(10:29):
gave your paid up car to your daughter and you
bought another one that you had to finance, cause no
way did you have the money to do what? Buy
it outright when you didn't have the money to do repairs, so.
That's number one. Number two.
Your daughter is 22 years of age and she is
(10:52):
living with a boyfriend that works part-time seasonal, only makes
$20,000 a year, and he's not going to school. Is
that a boyfriend that has ambition?
Don't you want somebody for your daughter that all right,
they make $20,000 a year doing construction, but it's seasonal,
(11:14):
and then goes out and does all this other stuff.
Your daughter,
makes $10,000 more a year than this boyfriend of hers.
If she wants to move into your home.
Is this the boyfriend that she's really gonna marry? Really?
(11:34):
I would say if your daughter said, Mom, I need
to move back home because I want to save money.
Not this unrealistic expectation that we want to move in
so we can save for a down payment on a home.
They can no more afford a home than the man
in the moon.
She's living in this fantasy world, and you're partly responsible
(11:57):
for it. You gave her a car. You and your
ex pay for her insurance, cell phone. What are her expenses?
I just think it's a mistake for her and her
boyfriend to be moving into your home, and I just
have to ask you, how does your son feel about it,
'cause it's his home as well.
(12:18):
And now all of a sudden his sister and her
boyfriend are moving back in. Number one, you need to
have a discussion with your son and see if he
feels OK about it. Number 2, here's how I would
do it. I would be charging them $700 a month
and any increase in your utility bill or food bill
(12:43):
they have got to pay.
I'm just saying that's what I would be doing to
teach them responsibility. Now that may be more than what
they're paying now, but I would not make it easy
on them. $700 a month is not that big of
a deal for two people to pay rent. All right,
(13:04):
that's number 1. Number 2,
I would make it mandatory that they have to open
a savings account, and you have to agree on the
minimum amount that they're going to deposit into that savings
account because you're doing this so they can save money
(13:25):
and once a month you listen to me now, once
a month they have to show you that savings account
and you have to make sure that it is growing
and growing and growing.
Next, you need to have what I call a family agreement,
a written agreement, where you say how long this is
(13:47):
going to go on for. They can go on for
6 months and then you will review it to see,
is it working, is it not working, and if it's
not working for whatever reason, they need to go and
the agreement needs to say the due date for rent.
It needs to say the guidelines for cleaning the house,
(14:10):
the quiet hours, all of those things, cause they can't
just move in there and expect, Mamma, you're going to
be their maid. So they have to agree on cleaning, participating,
and being a part of that household. Those are the
things that I want you to think about.
But I just don't have a great feeling about this.
(14:34):
I know you say that it's going to help you,
and I'm sure that it will help you, but why
do I think it's going to cost you more than
what they're bringing in? A 22 or 23 year old
boy eats a whole lot of food, Mamma. So again
they need to be responsible for their food.
(14:55):
They need to be responsible for an increase in utilities,
and you need to do a written agreement. Now, I
will post on the Women and Money community app,
an outline for the agreement. Use it as a template.
Just copy it, print it out, put the names and
everything in it, and that's what I want you to use.
(15:19):
If they don't want to do it, they say, Mom, really,
we're trying to buy a house. It's like, give them
a reality slap, so to speak, because if you don't,
you are not doing them any favor whatsoever.
When I was her age, I just have to say I,
(15:39):
I worked 3 jobs, 3 jobs to make it, and
I worked every morning, afternoon, and in the evening till
2 o'clock in the morning at the Red Lion Deli, KT,
that's where REO Speedwagon used to play. But yeah, but
I did everything I could to save money.
(16:03):
And then when I was 23.
My brother KT gave me $1500 to buy an old
Ford Econoline van which my girlfriend and I at the time,
Laurie Seligman, with $300 to our pocket, went out and
we lived in that van on the streets of Berkeley,
(16:24):
California for quite a few months right until I landed
my dream job, as she did too, waitresses at the
Buttercup Bakery.
Right, that is what we did. So, Mamma, I am
who I am today because I had to make it
on my own. Please don't try to make it too
(16:46):
easy on them. I know I went long, KT, but
I don't have a good feeling.
KT (16:52):
There's one more thing.
He works construction and it's seasonal. It's part time. Why
can't he do a whole lot of maintenance and repair
work on the house if that's one of his skills.
Suze (17:01):
And save mamma money. So, we should put that, you
should make that part of the agreement.
KT (17:05):
Special skills,
Suze (17:07):
He's got to help that way around the house and
then maybe it's worth it, but I don't know. I
wish it was just your daughter moving in and not
with her boyfriend.
KT (17:17):
It' OK.
But I love the idea that you're going to post
that contract or agreement on the site on the wall,
so you just need to download your Women and Money
app wherever you get your apps and look and go
to the wall, and you will see where Suze will
post this agreement. Fabulous. All right, next question. Next question
(17:40):
is from Allie.
Suze (17:42):
Aren't
you wondering why I even have that agreement?
KT (17:45):
No, I think it's important because a lot of people
ask about that. How do they, you know,
Suze (17:49):
I
created it years ago when I was seeing clients and
they always came to me with this question
and so I created a template to say here.
Here you go. Deal with it this way.
KT (18:04):
Good for you and you have it, of course. So
this is from Allie, Suze and crew, she wrote. Suze
and crew, my husband and I are late starters to everything,
especially finances. We didn't purchase our first home until our
late 40s. We have no debt. We have a large
emergency fund.
(18:25):
And we have about 245,000 remaining on our mortgage and
136,000 in an IRA. He is 65. I am 61.
Between our pensions and Social Security, we will be able
to replace most of our current monthly income with the
(18:45):
exception of one paycheck.
We are considering taking 130,000 out of the IRA. Wait
a minute to put towards the mortgage. We will then
be able to pay off the mortgage in 3 years
and move into retirement completely debt free.
(19:05):
This will free up $1400 a month and almost match
all of our current income. Our thought is IRA will
last approximately 8 to 10 years with a monthly withdrawal
of $1400. Not having a mortgage payment gives us $1400
a month for the rest of our lives, principal and interest.
(19:29):
Not taxes and insurance. Is this a wise course of
action for
us?
Suze (19:36):
All right, my dear Allie, I have to tell you
that's the worst idea I've ever heard in my entire life,
and the reason is this.
You want to take out $130,000 from an IRA. You
did not say you want to take out $130,000 from
a Roth IRA, because if you had, you could take
(19:57):
out $130,000 totally tax free and put it towards your mortgage.
But because it's a traditional IRA, you are not calculating
the taxes, and if you take out $130,000 you're going
to owe approximately, let's say just you and your husband
make $60,000 a year. Maybe you make more than that,
(20:19):
but just let's say that's true. You would owe approximately
$26,000 in taxes if you file married filling and jointly. OK,
that's number one.
At the bottom of your email you say Allie, in
Virginia Beach, OK.
Virginia Beach, as you know, has a bracket when it
(20:42):
comes to income taxes, with the highest one being, I
think it's 5.5% for state taxes, but.
On average, you would probably owe Virginia $8500 of income
tax on that withdrawal. Now, the question is, where are
you going to get that from?
(21:04):
Do you have $34,000 sitting on the sideline to pay
in taxes because you cannot take it from the IRA
because you want that $130,000 to go towards your mortgage,
so $34,000 has to be somewhere else. But if you
(21:24):
don't have that, then you have to.
Take out even more. It's just nuts. You are far
better off letting that money sit there. Let it compound,
invest it wisely. Let it grow and grow and grow.
It could be worth $200,000 in 7, 8, 9 years
(21:45):
if you left it there and invested it properly.
So I wouldn't be doing it on any level you're
thinking in theory is correct, but in reality it isn't
how it works. Next question, KT.
KT (22:01):
OK, next...
Suze (22:02):
Stop giving me ones that upset me. All right.
KT (22:05):
So Suze, I have two questions that both pertain to
must have documents.
Suze (22:10):
Did you all take
advantage of it, everybody. The birthday gift for $74 for
those documents. It's over now, but I hope you did. Anyway, go on.
KT (22:20):
OK, so let's explain to everyone how this works. This
is from Susan. She said, I've had the must have
documents for several years. I would like clarification on your
statement that you can share them with your family.
Does this mean that they can use mine to set
up their own must-have documents, or does this mean they
(22:43):
can see my trust?
Suze (22:45):
Now, the great thing about the must have documents is
that all I ever wanted was for one of you
to take this step forward and buy them to protect
your family, but we also made it possible for you
to share with your family.
Are those that you really love the activation code that
(23:10):
comes with the must have documents. If you give that
activation code to somebody when they sign on, they have
to create their own account, their own password. Everything is
absolutely private. It just gives them access to the
program, it does not give them access at all to
(23:31):
your information what you put in on any level, but
it was that way that if you bought one, you
then could help your mother or your father or your
sister children or whoever you are, you know, so maybe
your entire nursing home, who knows, but you could have.
Seriously, I had one person do that, KT, right, but
(23:53):
the goal is every one of you needs the must
have documents. That's why I call them must have. Every
one of you needs a will, a living revocable trust,
an advanced directive and durable power of attorney for health care,
and a financial power.
All of those if you go to must have docs.com
(24:18):
now that they're off sale, really they're still though a bargain.
I'm telling you they're $99 and those documents if you
went to a lawyer to do it would cost you
$2500 so you can share.
Share it with people. You can come back and change
it as often as you want. If we have an upgrade,
(24:40):
you are upgraded all free because this wasn't about making
a lot of money. This was about making sure that
you are protected. All right, KT next.
KT (24:52):
And in keeping with the same theme.
This is from Elba, she said. Suze, people first, especially daughters.
What can parents do to protect their most precious asset?
What are the must-have documents for 18 year olds? A
health care proxy. Can you talk about this on your podcast?
Suze (25:12):
You bet I can. And here's what all of you
need to know that I don't think you know.
Which is once somebody turns 18 years of age, you
no longer can legally make decisions for them if your
daughter ends up in the hospital.
(25:33):
And let's just say on life support and you want
to take her off life support, you cannot, you cannot
make legal decisions for them at all. So to that end,
obviously one of the most important documents to have for
yourself is an advanced directive and durable power of attorney
(25:54):
for health care, but you also need to have it
for your 18 year olds or older.
Until they're married and everything and somebody else takes that
decision away of what to do. So a while ago
we created what's known as the ultimate protection pack for 18+,
(26:18):
and it's simply an advance directive and durable power of
attorney for health care, and this is where your daughter
has to give you.
That power to make decisions for her or your son.
So if you're interested in that, everybody, it's on the
(26:38):
Women and Money community app, I think it's under Suze Shop.
You can see it there or if you go to Suzeorman.com/offer.
You'll see the things that we offer right there, especially
if you don't have the app. And by the way,
while I'm talking about this, some of you wrote me
(27:01):
and said that you want to buy the Ultimate Retirement
Guide for 50+ the updated version in soft back, but
when we brought it out in hardback, you offered it
for $10 free shipping, and now when they go to Amazon,
it's like $16 plus shipping.
So if you go to Suzeorman.com/offer, you will see the
(27:26):
soft back there for $10 free shipping as well as
on the Women and Money community app where it says shop.
So do that. So my dear Elba.
You should go and get that immediately and have your
daughter sign it over for you to make decisions. All right,
(27:49):
by the way, everybody, I think it's only $38. It's
not going to break the bank. All right, it's something like that.
KT (27:55):
It's great if you have kids in school.
Suze (27:57):
And you know by the way, that's Suze
Shareware as well. If you have 3 kids, you have
10 kids, you can use it for all of them. Oh,
your sister has kids. You can then take it, give
her the activation code, and she could do all her kids.
So again, everything I do is Suze Shareware. All right,
KT (28:18):
All right. This question is from Sean. And Sean said, Hello, Suze,
short and to the point.
How does retirement affect your FICO? I retired five years ago,
and I've maintained my FICO to be between 821 and 850. However,
I also have not applied for new credit. Now that
(28:41):
I have no income, if I need a new car,
is it best to put it solely in my husband's
name since I have zero income?
I just wanted to assure I don't lose that score.
I'm proud of it. Long time follower.
Suze (28:58):
So what's sweet is that, I love that you have
a great FICO score, Sean, but nobody's going to lend
you money simply because you have a great FICO score.
What they want to see is that do you have
the income to pay them back? So yes, you should
put it into your husband's name.
(29:18):
Um, because he has income, just that simple.
KT (29:22):
All right, my final question, Suze, is from Marie. She said,
Dear Suze, my house is on the market, and once
it is sold, I need to send the money overseas
to Belgium. I would like to leave America and return home.
She wrote 30 years, so I think she's ready to
go back, yeah.
(29:43):
I am with a credit union here in Florida. I
hear terrible stories of losing so much money to the
exchange rate, US dollars to euros. Question, what is the
most economical way to do this transaction?
I am 69 years old. This is all the money
I will have. I have a dual citizenship US and Belgium.
(30:07):
Thank you.
Suze (30:08):
It's sad because right now the euro to the dollar
is up 15%
from just a little bit ago, so you're going to
lose at least 15 or 16% now. So that's a
big deal. I wish you had done this just maybe
quite a few months ago. When were we in Spain, KT?
KT (30:32):
Um, about 6-7 months ago...
Suze (30:34):
Right there, so it went from 110 down to $102.
So if you had done it then, you would have
been at almost parity, which for every $1 you converted,
you got almost $1. But now for every dollar you convert,
you're going to get only about 85 cents on the dollar.
So I'll tell you what I do.
(30:55):
All right, I happen to use a company called Revolut,
R E V O L U T, and I have
to tell you they offer, in my opinion, a competitive
rate when it comes to exchanges and pretty much low fees,
so I do that.
(31:17):
Also, however, for large amounts of money, I want you
to look into a company called Wise W I S E, before,
I think they were called TransferWise, but Wise is widely
recommended just so you know for large international transfers because
it uses what's called the real mid-market exchange rate, which is.
(31:41):
Totally transparent and they have a low fee, so that
means you get more money for your euros to your
dollars than most banks, credit unions, or wire services. So
look into those two things and maybe you should wait
just a little bit to see if our dollar gets stronger,
(32:02):
which it should be right now, but it's not, which
is not a good thing. All right, everybody, KT, that's it.
That's a wrap.
KT (32:11):
That's a wrap.
Suze (32:12):
So everybody, there's one more thing I do want to
tell you that I want you to do, and that's
I want you to start going to my YouTube, the
official Suze Orman YouTube channel. I'm starting to post videos
again there.
So, and I want you to look at them. You
would go to youtube.com/@ Suze Orman. Just go there and
(32:39):
give it a try. All right, everybody, and by the way,
while you're there, make sure you subscribe and don't forget
to click on that little bell so every time I
post something,
you get notified. So until Sunday I have no idea
what I'm going to do for Suze School. Let's see
what happens to this world, right? So anyway, there's only
(33:02):
one thing we want them to know and what is it, KT?
KT (33:04):
People first.
Suze (33:06):
Then money.
KT (33:06):
Then things.
Suze (33:07):
Now you stay safe. Bye bye.
June 19, 2025. Welcome everybody to the Women and Money
podcast and everybody smart enough to listen.
This is Ask KT and Suze...
KT (00:43):
Anything!
Suze (00:43):
Oh, there she is.
KT (00:43):
Here I am. Today's a really great day, one of
one of my favorite of all time. Why? It's called Juneteenth.
Suze (00:52):
Oh we love Juneteenth.
KT (00:53):
I love Juneteenth
Suze (00:53):
Every year. She loves this holiday.
KT (00:55):
Juneteenth is a federal holiday for those of you that
may not know, and it's really, really, it's, it's very important,
but it's also known as
America's Second Independence Day. Why? This is acknowledging the freedom
of all enslaved people in the United States.
Suze (01:15):
When did that happen? KT?
KT (01:17):
Oh my goodness, like 1865 something like that. But you know,
it was interesting. I was reading a little bit about
the history. It was one of the um generals went
into Texas and announced that on this day,
there were 250,000 enslaved black people in the state of Texas,
(01:41):
and he went in and he said, you are all free.
So Texas, I mean, they could probably the biggest barbecue
on earth that day. Anyway...
Suze (01:49):
Where is that general today?
KT (01:51):
The end of slavery. We're very happy, so everyone's celebrating.
Enjoy this wonderful, important day.
Suze (01:59):
All right.
KT (02:00):
So Suze, my first question is from Paul.
Suze (02:02):
Go on.
KT (02:03):
All right, you ready?
Suze (02:04):
You have this little smirk on your face again.
KT (02:07):
Why?
Suze (02:08):
I don't know why. Why do you?
KT (02:10):
No, this is just a really simple question. Hi Suze
and KT. I've been a listener of your podcast for
the past few years. I was gifted young, fabulous, and
broke years ago.
Suze (02:23):
I think I wrote that book...
KT (02:25):
I love that book
Suze (02:26):
...in 2005.
KT (02:27):
Great book.
Suze (02:28):
20 years ago.
KT (02:29):
It really helped shape how I thought about money in
my 20s and 30s.
Suze (02:34):
Is he now old, fabulous, and broke?
KT (02:36):
Well, wait,
here's what he wrote. Thankfully, though I'm not so young,
I'm also not so broke anymore.
Suze (02:42):
Oh good, Paul.
KT (02:42):
He's in Paul's in his early 40s. He said, I've
reached a milestone in my retirement savings where the annual
returns from my 401k are roughly equal to or even
greater than my annual contribution.
So I've been maxing out my 401(k)
Suze (03:00):
Wait wait wait, that is called compounding everybody where your money,
is making more money for you than what you are
depositing into that account. That is because Paul started 20
years ago, and he had that many years for it
to compound and bingo, he now has hit a fabulous
(03:24):
point in his retirement.
KT (03:26):
And that's what this question is about. He said, I'd
love your perspective.
Would it be wiser to now redirect some or all
of my contributions elsewhere for greater impact, whether that's investing
in a different account, purchasing an income generating property or
(03:46):
something else entirely, I'm wide open.
And then he's thinking, this is so sweet. He said,
thank you for all the guidance and energy you bring, Suze,
and for your loving truth so openly. Two years ago,
I proudly married my husband, and that's another celebration in June.
(04:07):
Pride Month and while he rolls his eyes when I
get on to the Suze soapbox, I'd love him to
hear you answer my question.
Suze (04:17):
That's why you picked it, didn't you?
KT (04:18):
Yes of course.
There's always a reason she picks them.
Listen up, husband.
Suze (04:23):
Hubby hubby hubby. First of all, you say it's a 401k, Paul.
You did not say it is a Roth 401k.
Now maybe where you work they don't offer a Roth 401k,
but I need you to start getting money into a
(04:44):
Roth and given that you're in your forties, I need
you to start converting that money to a Roth 401k.
Or a Roth IRA if they allow you to do
a partial distribution if you're still working for them, because
that's how you really will get the most for your
(05:04):
money now. What else should you be doing? I have
to tell you there isn't a better investment out there
than a Roth retirement account. I would not be doing
real estate right now.
Real estate right now really is not my favorite thing.
And why is that? Because of weather situations happening out there,
(05:26):
because of the increase in insurance costs, because of maintenance,
all kinds of things. I really believe that you can
make more money with less hassle in the stock market.
So given that you're doing so well, you understand it.
What I would be doing if I were you is
I would somehow be getting all of that money little
(05:48):
by little into a Roth, and remember you can have
a Roth IRA and a Roth 401k if you make
too much money for a Roth, then do a back
door Roth, but you need to do that. All right, next.
Surprise little hubby. Surprise. You don't get on him when
(06:11):
he gets on his soapbox. Do you hear me, Paul's hubby? Anyway,
go on.
KT (06:15):
OK, this next question is really typical that I think
many listeners will relate to, and this is from Keila.
She said, My 22 year old daughter is working full
time and making about $30,000 a year.
She attends a community college part time and will transfer
to a university in about one year for her bachelor's degree.
(06:40):
She lives with her boyfriend in an apartment.
Her boyfriend works construction, which is seasonal. He's not in school.
He maybe makes about $20,000 a year. They're having financial difficulties,
and they want to move into my home with me
for a period of time to save up to buy
(07:01):
a house eventually.
OK, ready. How do I know what to charge them?
And then she goes right into giving us a little
bit of her background, but this gets better. I'm divorced.
I work full time. I earn about $92,000 a year.
My 20 year old son lives with me who is
(07:24):
working part time, and he's in school part time at
a community college.
And I'm helping to support him so that he can
become an electrician. Yes, I still owe about $60,000 towards
my mortgage. That's right. My insurance taxes and mortgage in
one payment is about $670 a month.
Suze (07:48):
How's that
possible? But anyway, I believe that if she said it, OK.
KT (07:51):
She said, I also have a HELOC on which I
owe $25,000 because I have been making much needed repairs
to my house.
Suze (08:02):
Ding ding ding ding...
KT (08:03):
Yea, she has no emergency fund...
Suze (08:05):
Ding ding ding.
KT (08:06):
OK, she said my ex-husband and I still help my
daughter with her car insurance payment.
The car she drives is under my name and it's
paid off. She also pays her father monthly for her
cell phone bill.
I don't know. She makes $30,000 a year.
Suze (08:26):
I'm not liking this just so you know.
KT (08:29):
All right, you ready? I want to help them out
so that that way they could open up an account
and put money in it every month towards the future. However,
I don't want to enable them and have them think
that they don't need to be accountable for money so
that they end up spending it all and going out
all the time.
(08:49):
How do I set those boundaries and establish the appropriate
rent payment to help me out as well? Thanks for
your help, Suze.
Suze (08:57):
What does my face
look like?
KT (08:59):
I'm not going to describe it on the podcast. It's
what we call a radio face.
Suze (09:05):
Is that a radio face? So first of all, Keila...
Where do I even start with you? Listen to me.
You make $92,000 a year. You say,
that all you owe is $670 a month for your
(09:26):
mortgage insurance, taxes, da da da da. However, you don't
have any money. How do I know you don't have
any money? Because you had to take out a HELOC
on the equity in your home. Why? To pay for repairs,
(09:46):
and if you had cash, you never would take out
a HELOC.
So even though it looks like you are doing well.
I don't think you are because you have to think
about yourself before you continue to think about your kids.
When I say people first, I mean you, Mamma. I
(10:08):
mean you 'cause if something happens to you.
And you can't work anymore and you can't make that
$92,000 a year.
Where is all the money going to come from where
all these kids are living, to pay for your true
monthly expenses? Why do I have a feeling that you
(10:29):
gave your paid up car to your daughter and you
bought another one that you had to finance, cause no
way did you have the money to do what? Buy
it outright when you didn't have the money to do repairs, so.
That's number one. Number two.
Your daughter is 22 years of age and she is
(10:52):
living with a boyfriend that works part-time seasonal, only makes
$20,000 a year, and he's not going to school. Is
that a boyfriend that has ambition?
Don't you want somebody for your daughter that all right,
they make $20,000 a year doing construction, but it's seasonal,
(11:14):
and then goes out and does all this other stuff.
Your daughter,
makes $10,000 more a year than this boyfriend of hers.
If she wants to move into your home.
Is this the boyfriend that she's really gonna marry? Really?
(11:34):
I would say if your daughter said, Mom, I need
to move back home because I want to save money.
Not this unrealistic expectation that we want to move in
so we can save for a down payment on a home.
They can no more afford a home than the man
in the moon.
She's living in this fantasy world, and you're partly responsible
(11:57):
for it. You gave her a car. You and your
ex pay for her insurance, cell phone. What are her expenses?
I just think it's a mistake for her and her
boyfriend to be moving into your home, and I just
have to ask you, how does your son feel about it,
'cause it's his home as well.
(12:18):
And now all of a sudden his sister and her
boyfriend are moving back in. Number one, you need to
have a discussion with your son and see if he
feels OK about it. Number 2, here's how I would
do it. I would be charging them $700 a month
and any increase in your utility bill or food bill
(12:43):
they have got to pay.
I'm just saying that's what I would be doing to
teach them responsibility. Now that may be more than what
they're paying now, but I would not make it easy
on them. $700 a month is not that big of
a deal for two people to pay rent. All right,
(13:04):
that's number 1. Number 2,
I would make it mandatory that they have to open
a savings account, and you have to agree on the
minimum amount that they're going to deposit into that savings
account because you're doing this so they can save money
(13:25):
and once a month you listen to me now, once
a month they have to show you that savings account
and you have to make sure that it is growing
and growing and growing.
Next, you need to have what I call a family agreement,
a written agreement, where you say how long this is
(13:47):
going to go on for. They can go on for
6 months and then you will review it to see,
is it working, is it not working, and if it's
not working for whatever reason, they need to go and
the agreement needs to say the due date for rent.
It needs to say the guidelines for cleaning the house,
(14:10):
the quiet hours, all of those things, cause they can't
just move in there and expect, Mamma, you're going to
be their maid. So they have to agree on cleaning, participating,
and being a part of that household. Those are the
things that I want you to think about.
But I just don't have a great feeling about this.
(14:34):
I know you say that it's going to help you,
and I'm sure that it will help you, but why
do I think it's going to cost you more than
what they're bringing in? A 22 or 23 year old
boy eats a whole lot of food, Mamma. So again
they need to be responsible for their food.
(14:55):
They need to be responsible for an increase in utilities,
and you need to do a written agreement. Now, I
will post on the Women and Money community app,
an outline for the agreement. Use it as a template.
Just copy it, print it out, put the names and
everything in it, and that's what I want you to use.
(15:19):
If they don't want to do it, they say, Mom, really,
we're trying to buy a house. It's like, give them
a reality slap, so to speak, because if you don't,
you are not doing them any favor whatsoever.
When I was her age, I just have to say I,
(15:39):
I worked 3 jobs, 3 jobs to make it, and
I worked every morning, afternoon, and in the evening till
2 o'clock in the morning at the Red Lion Deli, KT,
that's where REO Speedwagon used to play. But yeah, but
I did everything I could to save money.
(16:03):
And then when I was 23.
My brother KT gave me $1500 to buy an old
Ford Econoline van which my girlfriend and I at the time,
Laurie Seligman, with $300 to our pocket, went out and
we lived in that van on the streets of Berkeley,
(16:24):
California for quite a few months right until I landed
my dream job, as she did too, waitresses at the
Buttercup Bakery.
Right, that is what we did. So, Mamma, I am
who I am today because I had to make it
on my own. Please don't try to make it too
(16:46):
easy on them. I know I went long, KT, but
I don't have a good feeling.
KT (16:52):
There's one more thing.
He works construction and it's seasonal. It's part time. Why
can't he do a whole lot of maintenance and repair
work on the house if that's one of his skills.
Suze (17:01):
And save mamma money. So, we should put that, you
should make that part of the agreement.
KT (17:05):
Special skills,
Suze (17:07):
He's got to help that way around the house and
then maybe it's worth it, but I don't know. I
wish it was just your daughter moving in and not
with her boyfriend.
KT (17:17):
It' OK.
But I love the idea that you're going to post
that contract or agreement on the site on the wall,
so you just need to download your Women and Money
app wherever you get your apps and look and go
to the wall, and you will see where Suze will
post this agreement. Fabulous. All right, next question. Next question
(17:40):
is from Allie.
Suze (17:42):
Aren't
you wondering why I even have that agreement?
KT (17:45):
No, I think it's important because a lot of people
ask about that. How do they, you know,
Suze (17:49):
I
created it years ago when I was seeing clients and
they always came to me with this question
and so I created a template to say here.
Here you go. Deal with it this way.
KT (18:04):
Good for you and you have it, of course. So
this is from Allie, Suze and crew, she wrote. Suze
and crew, my husband and I are late starters to everything,
especially finances. We didn't purchase our first home until our
late 40s. We have no debt. We have a large
emergency fund.
(18:25):
And we have about 245,000 remaining on our mortgage and
136,000 in an IRA. He is 65. I am 61.
Between our pensions and Social Security, we will be able
to replace most of our current monthly income with the
(18:45):
exception of one paycheck.
We are considering taking 130,000 out of the IRA. Wait
a minute to put towards the mortgage. We will then
be able to pay off the mortgage in 3 years
and move into retirement completely debt free.
(19:05):
This will free up $1400 a month and almost match
all of our current income. Our thought is IRA will
last approximately 8 to 10 years with a monthly withdrawal
of $1400. Not having a mortgage payment gives us $1400
a month for the rest of our lives, principal and interest.
(19:29):
Not taxes and insurance. Is this a wise course of
action for
us?
Suze (19:36):
All right, my dear Allie, I have to tell you
that's the worst idea I've ever heard in my entire life,
and the reason is this.
You want to take out $130,000 from an IRA. You
did not say you want to take out $130,000 from
a Roth IRA, because if you had, you could take
(19:57):
out $130,000 totally tax free and put it towards your mortgage.
But because it's a traditional IRA, you are not calculating
the taxes, and if you take out $130,000 you're going
to owe approximately, let's say just you and your husband
make $60,000 a year. Maybe you make more than that,
(20:19):
but just let's say that's true. You would owe approximately
$26,000 in taxes if you file married filling and jointly. OK,
that's number one.
At the bottom of your email you say Allie, in
Virginia Beach, OK.
Virginia Beach, as you know, has a bracket when it
(20:42):
comes to income taxes, with the highest one being, I
think it's 5.5% for state taxes, but.
On average, you would probably owe Virginia $8500 of income
tax on that withdrawal. Now, the question is, where are
you going to get that from?
(21:04):
Do you have $34,000 sitting on the sideline to pay
in taxes because you cannot take it from the IRA
because you want that $130,000 to go towards your mortgage,
so $34,000 has to be somewhere else. But if you
(21:24):
don't have that, then you have to.
Take out even more. It's just nuts. You are far
better off letting that money sit there. Let it compound,
invest it wisely. Let it grow and grow and grow.
It could be worth $200,000 in 7, 8, 9 years
(21:45):
if you left it there and invested it properly.
So I wouldn't be doing it on any level you're
thinking in theory is correct, but in reality it isn't
how it works. Next question, KT.
KT (22:01):
OK, next...
Suze (22:02):
Stop giving me ones that upset me. All right.
KT (22:05):
So Suze, I have two questions that both pertain to
must have documents.
Suze (22:10):
Did you all take
advantage of it, everybody. The birthday gift for $74 for
those documents. It's over now, but I hope you did. Anyway, go on.
KT (22:20):
OK, so let's explain to everyone how this works. This
is from Susan. She said, I've had the must have
documents for several years. I would like clarification on your
statement that you can share them with your family.
Does this mean that they can use mine to set
up their own must-have documents, or does this mean they
(22:43):
can see my trust?
Suze (22:45):
Now, the great thing about the must have documents is
that all I ever wanted was for one of you
to take this step forward and buy them to protect
your family, but we also made it possible for you
to share with your family.
Are those that you really love the activation code that
(23:10):
comes with the must have documents. If you give that
activation code to somebody when they sign on, they have
to create their own account, their own password. Everything is
absolutely private. It just gives them access to the
program, it does not give them access at all to
(23:31):
your information what you put in on any level, but
it was that way that if you bought one, you
then could help your mother or your father or your
sister children or whoever you are, you know, so maybe
your entire nursing home, who knows, but you could have.
Seriously, I had one person do that, KT, right, but
(23:53):
the goal is every one of you needs the must
have documents. That's why I call them must have. Every
one of you needs a will, a living revocable trust,
an advanced directive and durable power of attorney for health care,
and a financial power.
All of those if you go to must have docs.com
(24:18):
now that they're off sale, really they're still though a bargain.
I'm telling you they're $99 and those documents if you
went to a lawyer to do it would cost you
$2500 so you can share.
Share it with people. You can come back and change
it as often as you want. If we have an upgrade,
(24:40):
you are upgraded all free because this wasn't about making
a lot of money. This was about making sure that
you are protected. All right, KT next.
KT (24:52):
And in keeping with the same theme.
This is from Elba, she said. Suze, people first, especially daughters.
What can parents do to protect their most precious asset?
What are the must-have documents for 18 year olds? A
health care proxy. Can you talk about this on your podcast?
Suze (25:12):
You bet I can. And here's what all of you
need to know that I don't think you know.
Which is once somebody turns 18 years of age, you
no longer can legally make decisions for them if your
daughter ends up in the hospital.
(25:33):
And let's just say on life support and you want
to take her off life support, you cannot, you cannot
make legal decisions for them at all. So to that end,
obviously one of the most important documents to have for
yourself is an advanced directive and durable power of attorney
(25:54):
for health care, but you also need to have it
for your 18 year olds or older.
Until they're married and everything and somebody else takes that
decision away of what to do. So a while ago
we created what's known as the ultimate protection pack for 18+,
(26:18):
and it's simply an advance directive and durable power of
attorney for health care, and this is where your daughter
has to give you.
That power to make decisions for her or your son.
So if you're interested in that, everybody, it's on the
(26:38):
Women and Money community app, I think it's under Suze Shop.
You can see it there or if you go to Suzeorman.com/offer.
You'll see the things that we offer right there, especially
if you don't have the app. And by the way,
while I'm talking about this, some of you wrote me
(27:01):
and said that you want to buy the Ultimate Retirement
Guide for 50+ the updated version in soft back, but
when we brought it out in hardback, you offered it
for $10 free shipping, and now when they go to Amazon,
it's like $16 plus shipping.
So if you go to Suzeorman.com/offer, you will see the
(27:26):
soft back there for $10 free shipping as well as
on the Women and Money community app where it says shop.
So do that. So my dear Elba.
You should go and get that immediately and have your
daughter sign it over for you to make decisions. All right,
(27:49):
by the way, everybody, I think it's only $38. It's
not going to break the bank. All right, it's something like that.
KT (27:55):
It's great if you have kids in school.
Suze (27:57):
And you know by the way, that's Suze
Shareware as well. If you have 3 kids, you have
10 kids, you can use it for all of them. Oh,
your sister has kids. You can then take it, give
her the activation code, and she could do all her kids.
So again, everything I do is Suze Shareware. All right,
KT (28:18):
All right. This question is from Sean. And Sean said, Hello, Suze,
short and to the point.
How does retirement affect your FICO? I retired five years ago,
and I've maintained my FICO to be between 821 and 850. However,
I also have not applied for new credit. Now that
(28:41):
I have no income, if I need a new car,
is it best to put it solely in my husband's
name since I have zero income?
I just wanted to assure I don't lose that score.
I'm proud of it. Long time follower.
Suze (28:58):
So what's sweet is that, I love that you have
a great FICO score, Sean, but nobody's going to lend
you money simply because you have a great FICO score.
What they want to see is that do you have
the income to pay them back? So yes, you should
put it into your husband's name.
(29:18):
Um, because he has income, just that simple.
KT (29:22):
All right, my final question, Suze, is from Marie. She said,
Dear Suze, my house is on the market, and once
it is sold, I need to send the money overseas
to Belgium. I would like to leave America and return home.
She wrote 30 years, so I think she's ready to
go back, yeah.
(29:43):
I am with a credit union here in Florida. I
hear terrible stories of losing so much money to the
exchange rate, US dollars to euros. Question, what is the
most economical way to do this transaction?
I am 69 years old. This is all the money
I will have. I have a dual citizenship US and Belgium.
(30:07):
Thank you.
Suze (30:08):
It's sad because right now the euro to the dollar
is up 15%
from just a little bit ago, so you're going to
lose at least 15 or 16% now. So that's a
big deal. I wish you had done this just maybe
quite a few months ago. When were we in Spain, KT?
KT (30:32):
Um, about 6-7 months ago...
Suze (30:34):
Right there, so it went from 110 down to $102.
So if you had done it then, you would have
been at almost parity, which for every $1 you converted,
you got almost $1. But now for every dollar you convert,
you're going to get only about 85 cents on the dollar.
So I'll tell you what I do.
(30:55):
All right, I happen to use a company called Revolut,
R E V O L U T, and I have
to tell you they offer, in my opinion, a competitive
rate when it comes to exchanges and pretty much low fees,
so I do that.
(31:17):
Also, however, for large amounts of money, I want you
to look into a company called Wise W I S E, before,
I think they were called TransferWise, but Wise is widely
recommended just so you know for large international transfers because
it uses what's called the real mid-market exchange rate, which is.
(31:41):
Totally transparent and they have a low fee, so that
means you get more money for your euros to your
dollars than most banks, credit unions, or wire services. So
look into those two things and maybe you should wait
just a little bit to see if our dollar gets stronger,
(32:02):
which it should be right now, but it's not, which
is not a good thing. All right, everybody, KT, that's it.
That's a wrap.
KT (32:11):
That's a wrap.
Suze (32:12):
So everybody, there's one more thing I do want to
tell you that I want you to do, and that's
I want you to start going to my YouTube, the
official Suze Orman YouTube channel. I'm starting to post videos
again there.
So, and I want you to look at them. You
would go to youtube.com/@ Suze Orman. Just go there and
(32:39):
give it a try. All right, everybody, and by the way,
while you're there, make sure you subscribe and don't forget
to click on that little bell so every time I
post something,
you get notified. So until Sunday I have no idea
what I'm going to do for Suze School. Let's see
what happens to this world, right? So anyway, there's only
(33:02):
one thing we want them to know and what is it, KT?
KT (33:04):
People first.
Suze (33:06):
Then money.
KT (33:06):
Then things.
Suze (33:07):
Now you stay safe. Bye bye.
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