March 27, 2025 • 29 mins
On this episode of Ask KT and Suze Anything, Suze answers questions about RMDs, ROTHs, investing in art and wine. Plus, a baby sized “Can I Afford It?” quizzy and so much more!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Robert (00:28):
March 27, 2025. Welcome to the Women and Money podcast
as well as everyone smart enough to listen. Hi everybody. Robert,
the producer here. So it turns out there was a
major electrical failure on the island where Suze and KT live,
and of course you know that one needs electricity in
order to record a podcast.
(00:48):
And you should know by now that we don't like
to leave you without a show. So what we're going
to do today is revisit part of an Ask KT
and Suze Anything episode from a while back, and we're
going to jump right into it with KT asking the
first question.
KT (01:05):
This question's from Ed. He writes, I'll keep it short.
I'm 51. I have 10,000 in a bank account.
Would Suze suggest investing it in a low cost brokerage
account or using it to pay the taxes on converting
some of my somewhat hefty balance, $600,000 in a traditional
(01:26):
403B to a Roth 403B. Now Suze, remember Ed is 51.
Suze (01:33):
If it were me, Ed, I would absolutely take that
$10,000 since you want to take it and invest it
anyway in a brokerage account. I think that your money
would be far better converting money to a Roth 403B
where you will be also investing it.
But you're going to be investing it tax free, so yes,
(01:56):
I would be doing that if I were you, but
I would be checking it with my CPA. Yes, KT.
KT (02:03):
So next question, another man, Mike.
I love we get all these mixed up questions because
it's the Women of Money podcast, but I love when
men come on.
Suze (02:13):
I thought she was going to say I love answering
questions from all these mixed up men.
KT (02:18):
No, they're not. No, they're not mixed up. They're, they're listening.
So Mike says, I'm 61 years old and my wife
is 59. We are fortunate to have about $6 million
in retirement savings currently. Good for them.
Good for them, right, Suze?
Suze (02:35):
Can I just butt in for one second?
KT (02:37):
Yeah.
Suze (02:38):
So here's what's interesting.
A while ago I was being interviewed by someone and
they wanted to know how the questions that are coming
into this podcast differed from the questions that came in
for the Suze Orman show in 2001 all the way
(02:59):
up that I did, I think, to 2015.
Almost all the questions were I'm in debt. I don't
know what to do. I don't have any retirement. I
need to claim bankruptcy and on and on and on.
Very few, seriously, very few were about. I have a
million dollars here, $6 million there and on and on. Today,
(03:24):
the majority of the questions because most of those people
now that are writing in
listened to me from all of my books, watched me
on TV all those years.
And now they're all multimillionaires, the majority of them. They
(03:44):
all own one or two homes outright. They are all
doing so great. I cannot even stand it. I'm so
happy for them.
KT (03:53):
Well, that's a tribute to your work.
Suze (03:55):
So, but that's a tribute everybody to you can go
from less to more. You can have money in your life.
There is nobody out there that is excluded from being
able to do that. The only person that excludes you
from doing that is yourself, KT, go on.
KT (04:18):
So Mike is saying that he and his wife are very,
very fortunate, and they plan on working until they're
62, so he's 61, she's 59, perhaps late and, and
continue to work. My question is regarding RMDs. Have you
done an episode or do you plan on doing an
episode on what type of planning you should do 3
(04:41):
years prior to retirement? I find it all a bit confusing.
I'm not sure how to prepare.
If not, can you direct me to some resources on RMDs? I,
I love you, Suze. I love your podcast and the
community that's from Mike. We love you too, Mike,
Suze (05:01):
And the community that Mike is talking about is the
women and money community. And if you simply go on
Apple Apps or Google Play, you get to download the
app for free.
And it's on that app that I say a lot
of things that I do not say or do on
the podcast, you know, KT, I think I answered him,
(05:25):
but let me just tell you, Mike, the most important
thing I think you should do, most important thing.
You asked 3 years before RMD start, what should you do?
Why in the world would you wait for 3 years
(05:47):
before you take RMDs because you have to remember.
That they changed the RMD laws. I think it was
the Secure Act 2.0, and I think KT it was
December of 2022. They changed the rules. Why are you laughing?
KT (06:07):
Because I can't remember what they did in December 2022.
How do you remember all these dates? Oh my God,
she's a genius.
Suze (06:16):
No, don't say that. I don't like when you say
that anyway, anyway.
So they changed the rules, and these rules really apply
to you, Mike, even more than me. Obviously they changed
the rule from RMD starting at the age of 72
to 73, but the big change is that starting in 2033.
(06:41):
If you were born 1960 or later, RMDs don't start
until you are 75. Now think about that. Here you
are only 61, so that's 14 years from now. I
(07:03):
don't care about 3 years before your RMDs, and now
we have a really big problem.
Why don't you now if you can start to convert
money from a traditional IRA or a traditional 401k or
wherever it is to a Roth IRA, a Roth 401k?
(07:25):
Why don't you make sure that you're doing back door
Roths or whatever.
Because if you were to do that, then you wouldn't
be building on the money that you have in these
retirement accounts right now. You would actually be building your
Roth retirement accounts, so when the time comes, guess what?
(07:47):
Your RMDs won't be that big anyway, just so you know.
So that's really what I would be doing.
There's all kinds of things that I could tell you
to do that I'm sure I wrote you about, but
that is the most important thing I want you to consider,
all right, because if you start planning now, you'll be
(08:11):
very happy that you did 15 or 14 years from now.
All right, KT.
KT (08:20):
You don't like RMDs.
Suze (08:22):
I just think I'm mad at myself that we have
to take them. I told you before...
KT (08:27):
You told us a couple podcasts that you made a mistake.
Suze (08:30):
I made a serious mistake, and I was yelling at
the person I do all my money with. I was like,
while we were discussing what my RMDs are going to be,
when should we take them? Should we take them in
like kind? What should we do with them and things
like that.
And I said, and why the heck didn't we convert
(08:50):
in 2010 when we were able to convert all of it?
Who cares if I would have paid taxes? I was
allowed to pay taxes over 2011 and 2012, not 2010.
And for all these years I would have had all
this growth because I did magnificently truthfully, KT for us
(09:10):
during all those years and I'm like, what was wrong
with me?
KT (09:16):
What were you thinking?
Suze (09:17):
I was not thinking. All right.
KT (09:20):
All right, my, I, I love this question, Suze. This
is a need or a want question right from Eric.
Curious on your thoughts...
Suze (09:30):
Another man.
KT (09:30):
Yeah, I have. I picked a lot of guys. Suze,
curious on your thoughts on investing in art and wine,
both solo and I love this question and actively managed
with a company or through an app. So Eric's
asking your thoughts on investing in art and wine. I
(09:52):
love this question.
Suze (09:53):
Well, why don't you answer it.
KT (09:56):
Yes, yes, yes. However, I'm gonna answer if you can
afford it because it's if this is a need or
a want, it's really a want. And if you can
afford to invest in
art and wine boyfriend, as Suze would say do it. However...
Suze (10:13):
You don't know I would say that.
KT (10:14):
All right, so KT would say boyfriend, do it. Now wait,
KT has another bit of advice. I'd be very careful
in who I invested with in terms of a company
or an app.
I think it's really important that maybe you start some
direct investing either with a small gallery that you know,
(10:37):
or with the wineries themselves. Every great winery here, just
here in our own country in California
has fabulous programs and investigate what you want to do
before your investment.
Suze (10:51):
Oh she's so proud of her answer, everybody. Here's what
I would tell you, Eric. There are more things than
you realize when it comes to investing in art or wine.
It's storing the wine. We have a very big wine collection.
We do.
KT (11:08):
Yes, we do. Suze doesn't drink, by the way, everybody,
but has a sip maybe.
Suze (11:13):
When KT met me, I had already started to invest
in wine.
And I took her to a cellar that I had
in New York and she was very impressed with it.
And of course that investment went into her stomach, but
that is besides the point.
KT (11:31):
No, went into a fabulous fine glass. That's right, with
a great dinner.
Suze (11:36):
Yes, but it cost me a lot of money.
To store those wines just so you know it costs
us money today to store all the wines...
KT (11:49):
And insure them.
Suze (11:50):
And insure them. All right, now let's move on to art.
We invested in some art.
And we thought we were gonna do great with it,
and one of the pieces that we had evaluated the
other day actually has gone down in value rather than up.
(12:11):
And so when it also comes to art, you have
to insure your art so there is a cost to
protecting these investments and therefore you better take that into
consideration so Eric, you better know what you're doing because
chances are
(12:33):
it might not be as great as an investment as
you think after all the costs, especially if you don't
have a reputable person to guide you.
KT (12:45):
Start with the wine.
Suze (12:49):
Also, I have to say one other thing. Most people
who invest in serious pieces of art.
They invest because they love the art.
They love it. They love looking at it. They want
it around them. They don't necessarily care about selling it ever.
They just kind of want it, but KT, I know
(13:10):
we can go on here. Why don't you tell them
about the art that you missed investing in? Come on,
a quick story. Come on, KT.
KT (13:19):
I was very, very good friends with Andy Warhol, everybody.
Suze (13:24):
And tell him what you passed up.
KT (13:26):
And I remember, and I was young, I was a
young art director in New York at the time, and
I remember, and Andy loved me. He would, he would
take take me to Studio 54 and all those great
night spots in New York. So anyway, I remember one
day we were in his factory in New York City, and,
and he was doing all these silk screens of Chairman
(13:47):
Mao and different portraits, his famous portraits.
And he asked me if I wanted one, and I said,
how much is it? He said, for you $350 350 dollars, everybody.
Suze (13:59):
And what did you say?
KT (14:00):
I said, Well, let me think about it. Maybe, maybe
I'll get one next month or so. I didn't think
at all about it.
Suze (14:07):
And you thought that you could never really afford it
at that time.
KT (14:10):
No, no, no, no, I, I could afford it.
Suze (14:12):
But you didn't do it.
KT (14:13):
I didn't do it. Why? Because I thought I could
just do this anytime we're friends.
Suze (14:18):
Now just tell everybody what that sells for today.
KT (14:21):
I don't really know the exact price of his prints today, millions, millions, many,
many millions. He had the Marilyn Monroe. He had quite
a few famous great, great portraits. Grace Kelly, Grace Kelly
was a beautiful one. Yeah, all right,
Suze (14:39):
So anyway, you, you probably.
Shouldn't listen to KT. All right, go on.
KT (14:45):
OK, so next question. Stick with the wine.
Suze (14:49):
There was another thing she passed up that would have
made her so wealthy. It's not even funny, but we
can talk about that another time.
KT (14:56):
Coffee, right? The coffee story? OK.
All right, next question. Let's get into my questions. I
have a mountain of questions. Hi, Suze. Let me start
by acknowledging you as a trailblazer and beacon of light
for all of us women who want to take charge
of our lives and finances. Thank you. And I am,
(15:19):
this is from Darchase.
She said, I am a recently widowed retired veteran's spouse.
Equity in the home that we purchased in 2005 has doubled.
The present mortgage rate is 3.5% with a balance of 116,000.
The home was built in 1986. It's presently worth about 270,000.
(15:45):
Suze, I would like to do some renovations, and I've
been thinking about using the equity to acquire upfront cash.
A 30-year refinance loan, especially with rates in excess of 7%,
is out of the question.
What would you suggest as an alternative to acquire cash
without losing my current rate of 3.5%?
Suze (16:09):
Here's the scoop, girlfriend. You didn't list in this email,
and first of all, both Katy and I are very,
very sorry for your loss.
And the truth of the matter is that if you
want to do some renovations, you didn't tell us any
other alternatives that you have for cash, meaning a retirement account,
(16:30):
an investment account, anything else. I'm going to assume this
is the only way that you can do it. So
if I were you, I would simply do, even though
I don't suggest it right now because interest rates are
so high.
But I would seriously simply not refinance my home. I
would try to do a home equity line of credit
(16:53):
in the hope that they see that you have enough
income and everything to qualify for that. When interest rates
go back down again, if you want, you could then
possibly refinance all of it back to maybe 3.5% or
who knows what, but
here's something that I just want to say for all
(17:13):
of you if you ever do refinance in any situation,
if you have, let's say, a 30 year mortgage, you
have been paying on it now for 7 years.
You have 23 years left now. Interest rates have come
(17:34):
down and you've decided, all right, I want to refinance,
and if you refinance for another 30 years now you
have totally obliterated the reason that you should really be refinancing.
So if interest rates come down.
And you do refinance and let's say you owe 23
(17:58):
years still on your mortgage, then you would refinance for
20 years, never refinance for longer than the period of
time you currently have left on your mortgage. Alright KT
got any more for me or is that it?
KT (18:17):
That was it.
Suze (18:18):
Are you sure?
KT (18:19):
Yes.
Suze (18:20):
All right, cause guess what I have for you.
A quizzy and everybody, this is a great quizzy. I
love this quizzy, but it's not just for KT, as
I say every week, it's for you as well. How
would you answer this question, because there will be many
of you out there who happen to be in this
(18:40):
exact situation. Are you ready, KT?
KT (18:43):
I'm ready.
Suze (18:45):
This is from Ashley, and I picked it because I
bet there's a lot of our younger listeners that are
in this exact situation.
Hi Suze and KT, you two are the best all
in capitals. You helped me fund my first Roth, buy
(19:06):
our first place in New York City and start investing
on my own. I fired my financial adviser, whom I
never heard from. Dollar cost averaging, yeah, baby. So here
I am at another big life step.
Having a baby, it's so easy to calculate the cost
(19:31):
of affording a home, but it's so hard, all in capitals,
to find info on whether you're financially secure enough to
take care of another tiny human.
KT (19:45):
So sweet, Ashley.
Suze (19:47):
And she says, I'm this is all not only some
of it in capitals, but bolded.
I'm very worried about the financial stress of this step,
even if it's an amazing one.
Just the cost of daycare in our area, write it down,
(20:09):
KT is $3500 a month.
And my husband and I are willing to postpone kids
till it makes sense financially. Adoption is always an option.
KT (20:24):
Good good for her. Good for you, Ashley.
Suze (20:26):
I have to tell you that. But here is Ashley's
situation now, everybody, that you have to write down. The
monthly income is about $10,000 after taxes plus bonuses.
And so therefore it's about in my estimation, and I'm
the one doing this about $15,000 a month after taxes.
(20:51):
They have $86,000 in an emergency fund.
Their retirement investments are about $138,000.
Their monthly expenses are $6000 including mortgage insurance, food, and transport.
(21:16):
Now what I'm not exactly clear about with all this,
everybody is, does that include the savings into retirement accounts
and things like that? I'm not sure, but we will
just take her word for it that it's $6000.
So the question is, KT, with all of that.
(21:39):
Do you think
that she has enough money at this point in time
to have a baby. Everybody think about it. Please add
in at least the cost of day care.
And she does not say how old she is just
(22:01):
so you know.
KT (22:03):
OK.
I, I have my answer.
Suze (22:07):
That was quick. I can't wait to hear this.
KT (22:09):
All right, so her expenses right now, including daycare with
the baby.
It is about $9500 a month. Let's say those bonuses
don't really come to fruition as much as we want
them to. So you're, you're estimating $15,000 a month of income.
Suze (22:27):
Yeah, and I'm the reason I'm doing that, KT, is
she also says their annual income before taxes
is $237,000. So in the state of New York you
have cities...
KT (22:39):
Right, right, right, right. So, so let me just get
to my point.
Suze (22:42):
I feel comfortable with that $15,000.
KT (22:44):
OK, so let me just get to the point here.
I would wait a little bit before I had the baby,
and I'll tell you why. I think if you have
a little bit of a, I would put another bucket
in your list here called Baby Fund. I would build
a little more of a cushion.
Just for the what ifs of having a baby, and
(23:05):
I would eliminate the most important thing you put in
this email, which is the word stress. You cannot get
pregnant and enjoy 9 months before your little tiny human
arrives and have any stress. So just wait maybe 2
years if you can. We don't again, we don't know
how old you are.
(23:26):
But if you could wait 2 years, you could probably
acquire a great deal of money in just a baby fund.
Suze (23:34):
So that's your answer.
KT (23:35):
That's my answer.
Suze (23:36):
There is no right or wrong answer here.
KT (23:38):
No, because we love babies and we think it's great.
Suze (23:42):
So let me tell you how I think about this
and what I would tell you to do, Ashley, right?
And again, I'm not going to approve or deny because
you're the one once again.
That has to make this decision, but I just want
to give you a little bit more information about how
to make this decision.
(24:02):
Your income and bonuses again after tax 15,000 we all
know that 86,000 and emergency savings expenses and things like that.
All right, we all know your money. What is not
in this equation is the cost of a child today.
Forget daycare. Forget that there are costs to having a
(24:25):
child and it comes out to be approximately
$25,000 a year till about the age of 17 or
18 and that does not include, by the way saving
for college so what we have to do is we
(24:46):
have to add
$2000 to your actual cost, not just $3500 a month,
but another $2000 a month. So that's $5500 added to
what you say of $6000. So let's just say your
monthly expenses now are $12,000 a month.
(25:09):
So here's what I would like you to do to
see if you're figuring things correctly.
If it is true.
That your expenses are $12,000 a month and now you
have approximately $15,000 a month of income.
(25:32):
The difference there is $3000 a month, correct, Ashley, for
you to just get by with this child. Therefore, for
the next 6 months, I want you to play having
a child.
In fact, what you should do is put away anywhere
(25:54):
from 3 to $6000 a month into a high yield
money market account and see how it feels that you
have this child and you have an additional, let's just
say $6000 of expenses from what you have right now.
(26:17):
Because I'm just going to assume that the difference between
what your expenses are now and your income you're putting
away in savings. So let's just say you do increase
by $6000 a month.
You put $6000 a month away for one year and
(26:38):
see how it feels. Now you have to ask yourself
the question. Was that easy for you to do? You
should set a date at the first of every month
that you put that money away. Can you put it
away on the 1st of every month, or is it
too hard for you to do that? Can you not
(27:00):
afford it?
Was there a month that you could not do it?
Was your lifestyle changed dramatically because you had to do that?
And if it was changed, how did it change? Now,
obviously your life's going to change when you have a baby,
and you're going to be just like everybody else. You're
(27:22):
gonna experience love, at least this is what everybody else says,
more than you've ever experienced love in your life, so
it's going to be fabulous.
However, can you easily afford it before the baby comes?
Now here's the good news. If you're able to do that,
(27:43):
let's say put $6000 a month away for a year.
Now you have an additional $72,000 my love, to add
to your emergency fund which will then bring you to
a total of $158,000 and that's one year
(28:05):
of living expenses if something goes wrong so that you
can maintain everything even if you can't work or whatever
it may be. That is how I would decide if
I were you, if you could easily afford a child
without stress.
(28:25):
KT, how was my answer?
KT (28:27):
Ding ding ding ding ding.
Suze (28:28):
Thank you, girlfriend. All right, everybody, there's only one thing
that we want you to remember, and it's this:
KT (28:34):
People first.
Suze (28:35):
Then money.
KT (28:36):
Then things.
Suze (28:36):
Now you stay safe. See you soon. Bye bye.
March 27, 2025. Welcome to the Women and Money podcast
as well as everyone smart enough to listen. Hi everybody. Robert,
the producer here. So it turns out there was a
major electrical failure on the island where Suze and KT live,
and of course you know that one needs electricity in
order to record a podcast.
(00:48):
And you should know by now that we don't like
to leave you without a show. So what we're going
to do today is revisit part of an Ask KT
and Suze Anything episode from a while back, and we're
going to jump right into it with KT asking the
first question.
KT (01:05):
This question's from Ed. He writes, I'll keep it short.
I'm 51. I have 10,000 in a bank account.
Would Suze suggest investing it in a low cost brokerage
account or using it to pay the taxes on converting
some of my somewhat hefty balance, $600,000 in a traditional
(01:26):
403B to a Roth 403B. Now Suze, remember Ed is 51.
Suze (01:33):
If it were me, Ed, I would absolutely take that
$10,000 since you want to take it and invest it
anyway in a brokerage account. I think that your money
would be far better converting money to a Roth 403B
where you will be also investing it.
But you're going to be investing it tax free, so yes,
(01:56):
I would be doing that if I were you, but
I would be checking it with my CPA. Yes, KT.
KT (02:03):
So next question, another man, Mike.
I love we get all these mixed up questions because
it's the Women of Money podcast, but I love when
men come on.
Suze (02:13):
I thought she was going to say I love answering
questions from all these mixed up men.
KT (02:18):
No, they're not. No, they're not mixed up. They're, they're listening.
So Mike says, I'm 61 years old and my wife
is 59. We are fortunate to have about $6 million
in retirement savings currently. Good for them.
Good for them, right, Suze?
Suze (02:35):
Can I just butt in for one second?
KT (02:37):
Yeah.
Suze (02:38):
So here's what's interesting.
A while ago I was being interviewed by someone and
they wanted to know how the questions that are coming
into this podcast differed from the questions that came in
for the Suze Orman show in 2001 all the way
(02:59):
up that I did, I think, to 2015.
Almost all the questions were I'm in debt. I don't
know what to do. I don't have any retirement. I
need to claim bankruptcy and on and on and on.
Very few, seriously, very few were about. I have a
million dollars here, $6 million there and on and on. Today,
(03:24):
the majority of the questions because most of those people
now that are writing in
listened to me from all of my books, watched me
on TV all those years.
And now they're all multimillionaires, the majority of them. They
(03:44):
all own one or two homes outright. They are all
doing so great. I cannot even stand it. I'm so
happy for them.
KT (03:53):
Well, that's a tribute to your work.
Suze (03:55):
So, but that's a tribute everybody to you can go
from less to more. You can have money in your life.
There is nobody out there that is excluded from being
able to do that. The only person that excludes you
from doing that is yourself, KT, go on.
KT (04:18):
So Mike is saying that he and his wife are very,
very fortunate, and they plan on working until they're
62, so he's 61, she's 59, perhaps late and, and
continue to work. My question is regarding RMDs. Have you
done an episode or do you plan on doing an
episode on what type of planning you should do 3
(04:41):
years prior to retirement? I find it all a bit confusing.
I'm not sure how to prepare.
If not, can you direct me to some resources on RMDs? I,
I love you, Suze. I love your podcast and the
community that's from Mike. We love you too, Mike,
Suze (05:01):
And the community that Mike is talking about is the
women and money community. And if you simply go on
Apple Apps or Google Play, you get to download the
app for free.
And it's on that app that I say a lot
of things that I do not say or do on
the podcast, you know, KT, I think I answered him,
(05:25):
but let me just tell you, Mike, the most important
thing I think you should do, most important thing.
You asked 3 years before RMD start, what should you do?
Why in the world would you wait for 3 years
(05:47):
before you take RMDs because you have to remember.
That they changed the RMD laws. I think it was
the Secure Act 2.0, and I think KT it was
December of 2022. They changed the rules. Why are you laughing?
KT (06:07):
Because I can't remember what they did in December 2022.
How do you remember all these dates? Oh my God,
she's a genius.
Suze (06:16):
No, don't say that. I don't like when you say
that anyway, anyway.
So they changed the rules, and these rules really apply
to you, Mike, even more than me. Obviously they changed
the rule from RMD starting at the age of 72
to 73, but the big change is that starting in 2033.
(06:41):
If you were born 1960 or later, RMDs don't start
until you are 75. Now think about that. Here you
are only 61, so that's 14 years from now. I
(07:03):
don't care about 3 years before your RMDs, and now
we have a really big problem.
Why don't you now if you can start to convert
money from a traditional IRA or a traditional 401k or
wherever it is to a Roth IRA, a Roth 401k?
(07:25):
Why don't you make sure that you're doing back door
Roths or whatever.
Because if you were to do that, then you wouldn't
be building on the money that you have in these
retirement accounts right now. You would actually be building your
Roth retirement accounts, so when the time comes, guess what?
(07:47):
Your RMDs won't be that big anyway, just so you know.
So that's really what I would be doing.
There's all kinds of things that I could tell you
to do that I'm sure I wrote you about, but
that is the most important thing I want you to consider,
all right, because if you start planning now, you'll be
(08:11):
very happy that you did 15 or 14 years from now.
All right, KT.
KT (08:20):
You don't like RMDs.
Suze (08:22):
I just think I'm mad at myself that we have
to take them. I told you before...
KT (08:27):
You told us a couple podcasts that you made a mistake.
Suze (08:30):
I made a serious mistake, and I was yelling at
the person I do all my money with. I was like,
while we were discussing what my RMDs are going to be,
when should we take them? Should we take them in
like kind? What should we do with them and things
like that.
And I said, and why the heck didn't we convert
(08:50):
in 2010 when we were able to convert all of it?
Who cares if I would have paid taxes? I was
allowed to pay taxes over 2011 and 2012, not 2010.
And for all these years I would have had all
this growth because I did magnificently truthfully, KT for us
(09:10):
during all those years and I'm like, what was wrong
with me?
KT (09:16):
What were you thinking?
Suze (09:17):
I was not thinking. All right.
KT (09:20):
All right, my, I, I love this question, Suze. This
is a need or a want question right from Eric.
Curious on your thoughts...
Suze (09:30):
Another man.
KT (09:30):
Yeah, I have. I picked a lot of guys. Suze,
curious on your thoughts on investing in art and wine,
both solo and I love this question and actively managed
with a company or through an app. So Eric's
asking your thoughts on investing in art and wine. I
(09:52):
love this question.
Suze (09:53):
Well, why don't you answer it.
KT (09:56):
Yes, yes, yes. However, I'm gonna answer if you can
afford it because it's if this is a need or
a want, it's really a want. And if you can
afford to invest in
art and wine boyfriend, as Suze would say do it. However...
Suze (10:13):
You don't know I would say that.
KT (10:14):
All right, so KT would say boyfriend, do it. Now wait,
KT has another bit of advice. I'd be very careful
in who I invested with in terms of a company
or an app.
I think it's really important that maybe you start some
direct investing either with a small gallery that you know,
(10:37):
or with the wineries themselves. Every great winery here, just
here in our own country in California
has fabulous programs and investigate what you want to do
before your investment.
Suze (10:51):
Oh she's so proud of her answer, everybody. Here's what
I would tell you, Eric. There are more things than
you realize when it comes to investing in art or wine.
It's storing the wine. We have a very big wine collection.
We do.
KT (11:08):
Yes, we do. Suze doesn't drink, by the way, everybody,
but has a sip maybe.
Suze (11:13):
When KT met me, I had already started to invest
in wine.
And I took her to a cellar that I had
in New York and she was very impressed with it.
And of course that investment went into her stomach, but
that is besides the point.
KT (11:31):
No, went into a fabulous fine glass. That's right, with
a great dinner.
Suze (11:36):
Yes, but it cost me a lot of money.
To store those wines just so you know it costs
us money today to store all the wines...
KT (11:49):
And insure them.
Suze (11:50):
And insure them. All right, now let's move on to art.
We invested in some art.
And we thought we were gonna do great with it,
and one of the pieces that we had evaluated the
other day actually has gone down in value rather than up.
(12:11):
And so when it also comes to art, you have
to insure your art so there is a cost to
protecting these investments and therefore you better take that into
consideration so Eric, you better know what you're doing because
chances are
(12:33):
it might not be as great as an investment as
you think after all the costs, especially if you don't
have a reputable person to guide you.
KT (12:45):
Start with the wine.
Suze (12:49):
Also, I have to say one other thing. Most people
who invest in serious pieces of art.
They invest because they love the art.
They love it. They love looking at it. They want
it around them. They don't necessarily care about selling it ever.
They just kind of want it, but KT, I know
(13:10):
we can go on here. Why don't you tell them
about the art that you missed investing in? Come on,
a quick story. Come on, KT.
KT (13:19):
I was very, very good friends with Andy Warhol, everybody.
Suze (13:24):
And tell him what you passed up.
KT (13:26):
And I remember, and I was young, I was a
young art director in New York at the time, and
I remember, and Andy loved me. He would, he would
take take me to Studio 54 and all those great
night spots in New York. So anyway, I remember one
day we were in his factory in New York City, and,
and he was doing all these silk screens of Chairman
(13:47):
Mao and different portraits, his famous portraits.
And he asked me if I wanted one, and I said,
how much is it? He said, for you $350 350 dollars, everybody.
Suze (13:59):
And what did you say?
KT (14:00):
I said, Well, let me think about it. Maybe, maybe
I'll get one next month or so. I didn't think
at all about it.
Suze (14:07):
And you thought that you could never really afford it
at that time.
KT (14:10):
No, no, no, no, I, I could afford it.
Suze (14:12):
But you didn't do it.
KT (14:13):
I didn't do it. Why? Because I thought I could
just do this anytime we're friends.
Suze (14:18):
Now just tell everybody what that sells for today.
KT (14:21):
I don't really know the exact price of his prints today, millions, millions, many,
many millions. He had the Marilyn Monroe. He had quite
a few famous great, great portraits. Grace Kelly, Grace Kelly
was a beautiful one. Yeah, all right,
Suze (14:39):
So anyway, you, you probably.
Shouldn't listen to KT. All right, go on.
KT (14:45):
OK, so next question. Stick with the wine.
Suze (14:49):
There was another thing she passed up that would have
made her so wealthy. It's not even funny, but we
can talk about that another time.
KT (14:56):
Coffee, right? The coffee story? OK.
All right, next question. Let's get into my questions. I
have a mountain of questions. Hi, Suze. Let me start
by acknowledging you as a trailblazer and beacon of light
for all of us women who want to take charge
of our lives and finances. Thank you. And I am,
(15:19):
this is from Darchase.
She said, I am a recently widowed retired veteran's spouse.
Equity in the home that we purchased in 2005 has doubled.
The present mortgage rate is 3.5% with a balance of 116,000.
The home was built in 1986. It's presently worth about 270,000.
(15:45):
Suze, I would like to do some renovations, and I've
been thinking about using the equity to acquire upfront cash.
A 30-year refinance loan, especially with rates in excess of 7%,
is out of the question.
What would you suggest as an alternative to acquire cash
without losing my current rate of 3.5%?
Suze (16:09):
Here's the scoop, girlfriend. You didn't list in this email,
and first of all, both Katy and I are very,
very sorry for your loss.
And the truth of the matter is that if you
want to do some renovations, you didn't tell us any
other alternatives that you have for cash, meaning a retirement account,
(16:30):
an investment account, anything else. I'm going to assume this
is the only way that you can do it. So
if I were you, I would simply do, even though
I don't suggest it right now because interest rates are
so high.
But I would seriously simply not refinance my home. I
would try to do a home equity line of credit
(16:53):
in the hope that they see that you have enough
income and everything to qualify for that. When interest rates
go back down again, if you want, you could then
possibly refinance all of it back to maybe 3.5% or
who knows what, but
here's something that I just want to say for all
(17:13):
of you if you ever do refinance in any situation,
if you have, let's say, a 30 year mortgage, you
have been paying on it now for 7 years.
You have 23 years left now. Interest rates have come
(17:34):
down and you've decided, all right, I want to refinance,
and if you refinance for another 30 years now you
have totally obliterated the reason that you should really be refinancing.
So if interest rates come down.
And you do refinance and let's say you owe 23
(17:58):
years still on your mortgage, then you would refinance for
20 years, never refinance for longer than the period of
time you currently have left on your mortgage. Alright KT
got any more for me or is that it?
KT (18:17):
That was it.
Suze (18:18):
Are you sure?
KT (18:19):
Yes.
Suze (18:20):
All right, cause guess what I have for you.
A quizzy and everybody, this is a great quizzy. I
love this quizzy, but it's not just for KT, as
I say every week, it's for you as well. How
would you answer this question, because there will be many
of you out there who happen to be in this
(18:40):
exact situation. Are you ready, KT?
KT (18:43):
I'm ready.
Suze (18:45):
This is from Ashley, and I picked it because I
bet there's a lot of our younger listeners that are
in this exact situation.
Hi Suze and KT, you two are the best all
in capitals. You helped me fund my first Roth, buy
(19:06):
our first place in New York City and start investing
on my own. I fired my financial adviser, whom I
never heard from. Dollar cost averaging, yeah, baby. So here
I am at another big life step.
Having a baby, it's so easy to calculate the cost
(19:31):
of affording a home, but it's so hard, all in capitals,
to find info on whether you're financially secure enough to
take care of another tiny human.
KT (19:45):
So sweet, Ashley.
Suze (19:47):
And she says, I'm this is all not only some
of it in capitals, but bolded.
I'm very worried about the financial stress of this step,
even if it's an amazing one.
Just the cost of daycare in our area, write it down,
(20:09):
KT is $3500 a month.
And my husband and I are willing to postpone kids
till it makes sense financially. Adoption is always an option.
KT (20:24):
Good good for her. Good for you, Ashley.
Suze (20:26):
I have to tell you that. But here is Ashley's
situation now, everybody, that you have to write down. The
monthly income is about $10,000 after taxes plus bonuses.
And so therefore it's about in my estimation, and I'm
the one doing this about $15,000 a month after taxes.
(20:51):
They have $86,000 in an emergency fund.
Their retirement investments are about $138,000.
Their monthly expenses are $6000 including mortgage insurance, food, and transport.
(21:16):
Now what I'm not exactly clear about with all this,
everybody is, does that include the savings into retirement accounts
and things like that? I'm not sure, but we will
just take her word for it that it's $6000.
So the question is, KT, with all of that.
(21:39):
Do you think
that she has enough money at this point in time
to have a baby. Everybody think about it. Please add
in at least the cost of day care.
And she does not say how old she is just
(22:01):
so you know.
KT (22:03):
OK.
I, I have my answer.
Suze (22:07):
That was quick. I can't wait to hear this.
KT (22:09):
All right, so her expenses right now, including daycare with
the baby.
It is about $9500 a month. Let's say those bonuses
don't really come to fruition as much as we want
them to. So you're, you're estimating $15,000 a month of income.
Suze (22:27):
Yeah, and I'm the reason I'm doing that, KT, is
she also says their annual income before taxes
is $237,000. So in the state of New York you
have cities...
KT (22:39):
Right, right, right, right. So, so let me just get
to my point.
Suze (22:42):
I feel comfortable with that $15,000.
KT (22:44):
OK, so let me just get to the point here.
I would wait a little bit before I had the baby,
and I'll tell you why. I think if you have
a little bit of a, I would put another bucket
in your list here called Baby Fund. I would build
a little more of a cushion.
Just for the what ifs of having a baby, and
(23:05):
I would eliminate the most important thing you put in
this email, which is the word stress. You cannot get
pregnant and enjoy 9 months before your little tiny human
arrives and have any stress. So just wait maybe 2
years if you can. We don't again, we don't know
how old you are.
(23:26):
But if you could wait 2 years, you could probably
acquire a great deal of money in just a baby fund.
Suze (23:34):
So that's your answer.
KT (23:35):
That's my answer.
Suze (23:36):
There is no right or wrong answer here.
KT (23:38):
No, because we love babies and we think it's great.
Suze (23:42):
So let me tell you how I think about this
and what I would tell you to do, Ashley, right?
And again, I'm not going to approve or deny because
you're the one once again.
That has to make this decision, but I just want
to give you a little bit more information about how
to make this decision.
(24:02):
Your income and bonuses again after tax 15,000 we all
know that 86,000 and emergency savings expenses and things like that.
All right, we all know your money. What is not
in this equation is the cost of a child today.
Forget daycare. Forget that there are costs to having a
(24:25):
child and it comes out to be approximately
$25,000 a year till about the age of 17 or
18 and that does not include, by the way saving
for college so what we have to do is we
(24:46):
have to add
$2000 to your actual cost, not just $3500 a month,
but another $2000 a month. So that's $5500 added to
what you say of $6000. So let's just say your
monthly expenses now are $12,000 a month.
(25:09):
So here's what I would like you to do to
see if you're figuring things correctly.
If it is true.
That your expenses are $12,000 a month and now you
have approximately $15,000 a month of income.
(25:32):
The difference there is $3000 a month, correct, Ashley, for
you to just get by with this child. Therefore, for
the next 6 months, I want you to play having
a child.
In fact, what you should do is put away anywhere
(25:54):
from 3 to $6000 a month into a high yield
money market account and see how it feels that you
have this child and you have an additional, let's just
say $6000 of expenses from what you have right now.
(26:17):
Because I'm just going to assume that the difference between
what your expenses are now and your income you're putting
away in savings. So let's just say you do increase
by $6000 a month.
You put $6000 a month away for one year and
(26:38):
see how it feels. Now you have to ask yourself
the question. Was that easy for you to do? You
should set a date at the first of every month
that you put that money away. Can you put it
away on the 1st of every month, or is it
too hard for you to do that? Can you not
(27:00):
afford it?
Was there a month that you could not do it?
Was your lifestyle changed dramatically because you had to do that?
And if it was changed, how did it change? Now,
obviously your life's going to change when you have a baby,
and you're going to be just like everybody else. You're
(27:22):
gonna experience love, at least this is what everybody else says,
more than you've ever experienced love in your life, so
it's going to be fabulous.
However, can you easily afford it before the baby comes?
Now here's the good news. If you're able to do that,
(27:43):
let's say put $6000 a month away for a year.
Now you have an additional $72,000 my love, to add
to your emergency fund which will then bring you to
a total of $158,000 and that's one year
(28:05):
of living expenses if something goes wrong so that you
can maintain everything even if you can't work or whatever
it may be. That is how I would decide if
I were you, if you could easily afford a child
without stress.
(28:25):
KT, how was my answer?
KT (28:27):
Ding ding ding ding ding.
Suze (28:28):
Thank you, girlfriend. All right, everybody, there's only one thing
that we want you to remember, and it's this:
KT (28:34):
People first.
Suze (28:35):
Then money.
KT (28:36):
Then things.
Suze (28:36):
Now you stay safe. See you soon. Bye bye.
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