May 18, 2023 • 33 mins
On this Ask Suze and KT Anything episode, Suze answers questions about financial empowerment, Social Security after divorce, FICO scores, inflation and more.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Music (00:01):
(Music In)
Suze (00:33):
May 18th, 2023.
KT (00:37):
I'm so excited... hi, Suze, Good morning. I'm so excited today.
You know why...
Suze (00:41):
Here we go again, you know why we go, I do know why
KT (00:45):
Our niece and nephew and their parents, my little sister
and her husband are coming today
at about 1:30 to the island and I can't wait.
And for those of you that, that will listen to
something fun. Suze when her Starlink went down and she
wasn't able to record and was sitting around waiting and
learned some card tricks. I said, what are you doing?
(01:07):
And she was learning these really complicated mathematical card tricks.
I said, why are you doing that? And she looked
at me and I said, I know why...
Travis. Travis is our nephew who's 25 but he's been
spending almost every summer with us since he was three.
And when he was a little boy, he would sit
(01:29):
with his aunt Suze and learn magic tricks.
So she decided to have a little nostalgic reunion with
our Travis. So we're excited. They'll be here in this afternoon.
Suze (01:41):
You must be excited because you didn't even let me
say welcome to the Women
KT (01:47):
and Money podcast and Ask Suze...
Suze (01:52):
and KT Anything. Do you see how excited she is?
KT (01:56):
Yeah. And I, I miss, I miss you all. Who
do you miss the audience?
Suze (02:01):
You mean the podcast people? Why do you miss them?
KT (02:04):
Because I was gonna do Sunday with her. And she said, no, no, no,
I have to do something really important. I said, OK,
Suze (02:15):
KT is wanting to do every single podcast with me.
KT (02:20):
Let's vote.
Suze (02:21):
All right, you can write in, right? So we might
just have to make every podcast, Ask KT and Susie Anything.
And then...
KT (02:29):
Well, we're starting today with something a little different.
Suze (02:31):
What do have that's different?
KT (02:32):
I have all of my questions today for you from
the wall. I decided... Yeah. And it's kind of cool
because the people on the wall
wrote questions that related to the Sunday podcast that I
was not participating in.
Suze (02:50):
But KT you never participate in Suze Schools. So I
don't understand what the problem is here. But wait, wait,
I just need to wait, wait,
everybody. Let me try to calm her down. So I
can just tell you a few things here. When KT
says the wall, we have an app called The Women
(03:12):
and Money app and you can download it on Google
Play or Apple Apps and on the Women and Money app.
There is the wall, we call it, and that's where
everybody posts. And lately people have been posting their questions
or comments. And what's fabulous is that many people have
(03:36):
been answering them. Now, I watch what goes on there
and if somebody is wrong with their answer, I'll let
them know.
But KT... I didn't know you were even on the app.
KT (03:49):
Yeah, I like it. I like the wall is really cool.
Suze (03:52):
Why don't you post?
KT (03:54):
Do you know why? It's the same reason why I'm not on
Instagram or Twitter or any of those? The same reason..
Suze (04:03):
Tell everybody she's really bad at it.
KT (04:05):
I'm so bad at it. And when Suze and I
were first learning how to use all of this social
media and all of these apps and
programs, I was the worst and I made a few
big mistakes. I was like, well, I'd write something to
Suze and I'd want her to see it and I'd
(04:26):
hit the wrong thing or do the wrong and the
world had all this information or my message. I'm not
good at it. Alright.
Suze (04:34):
Anyway, so,
KT (04:35):
but I love reading the wall...
Suze (04:36):
What's happening on the Ask KT and Susie Anything podcast
is if you have a question,
you can either post it on the wall or you
could send it in via Ask Suze, S U Z
E podcast at gmail dot com. And, or you can
(04:57):
go on the Women and Money app as well. And
there is a special section that allows you to send
in your questions. And if KT chooses it, we will
answer it on this podcast KT.
KT (05:10):
Ok the first... are you ready? Are you ready, Suze?
Suze (05:14):
Obviously. Tell everybody what we're dressed in today.
KT (05:17):
Well, it's morning we have on our bathrobes and they
say Purnata, they're embroidered with a gray silk,
Suze (05:26):
which is the name of our home and our boat
and wine or the, you know, the wine that we
have and everything.
And Purnata in Hindi means perfection, which KT absolutely is.
KT (05:40):
So are you Suze. And so is this podcast and
we're going to start with our first comment, not a question,
a comment, but I want to share it with all
of you. So this says I have always paid off
my home early.
I've been listening to you Suze for years. Why? Not
because I stay in the house all my life... that's
(06:02):
made me laugh. But because I came from a family
of 10, with a mother that had a cerebral hemorrhage
when I was eight, I was the oldest daughter.
So Suze, that sense of security has been life changing
for me. I'm now 67 divorced and on my own
(06:23):
and I feel happy and secure.
Suze (06:26):
Why did you choose that, just out of curiosity.
KT (06:29):
I think it was an interesting comment to remind people
that listening or learning and becoming financially
empowered is really, really important and it does set you
free in a way.
Suze (06:44):
You know, I think it's very important to really get that
anything can happen at any time.
And I know that we all make these plans and
the plans are, we're gonna work till we're x years
of age. We'll have enough money. We'll pay off our
house then. But we never stop to think, Oh my God,
(07:04):
what if something happens? What if I can't work all
that time? But I wanna stay in my house. How
do I make my mortgage payment if I don't have
income
and examples like that of what can happen to a
mother or you or even what happened to me or
whatever it may be. You just never know. So I
(07:28):
will always think that the number one goal if you
know you're going to stay in the house forever
should be to pay the house off as soon as possible.
All right KT, that was a nice comment.
KT (07:41):
The next question. Um and again, these are all from the
wall and as I read them, when you're listening, you'll
find a common thread. This is from a community
and this community feels very safe with each other.
(12:06):
So next question is Suze, what exactly can happen if
your treasury bills mature in June and debt ceiling isn't lifted?
Is this suggestion that you don't get any of your
money back at all?
Suze (12:21):
So, here's what everybody really needs to understand.
Nobody knows for sure.
However, the one woman who probably knows as much as
anybody could possibly know when it comes to this topic.
What happens if we don't raise the debt ceiling? Is
(12:45):
Sheila Bair the right who was the chairman of the
FDIC and she was on this podcast and she also
is a very, very good friend of mine.
So just yesterday, I wrote her and I said, people
are going crazy. Can you just tell me what can really,
(13:09):
really happen? And then, you know, I wrote her all
the things that you're asking and everything and here is exactly,
and I am quoting her. She says, hi Suze,
I hate that all of this drama around the debt
limit is scaring people. I don't think our government will
default on its debt. At the 11th hour, they will
(13:33):
reach some kind of agreement,
Should that not happen, yes, I believe this administration will
invoke the 14th amendment to keep financing the government and
make good on its obligations. Now, remember everybody, I talked
about the four
14th amendment just in last Sunday's podcast. She then goes
(13:58):
on to say in my view, there would be a
strong legal argument to support that action. She's talking about
the 14th amendment. I hope it doesn't come to that
because it would likely result in a long legal battle.
But that would be better than a government default. However,
(14:20):
bottom line,
they will not lose their money in treasuries. I don't
think again that the government would default on any of
its obligations, but I am sure it would never default
on its obligations to investors in US treasuries. So that
(14:42):
is exactly what Sheila Bair says.
KT (14:45):
So just um the question that came in has so
many responses on the wall that say, hey, I have
the same question. I have two T bills that mature
in June. Another one said, watching this question. Thank you.
I have the same question too. Many, many people responded.
Suze (15:04):
So and I know that many of you are afraid
and the truth of the matter is it isn't looking
good everybody. I'll tell you that it's not
and it's not looking good because President Biden very shortly
has to leave for the G7. When are they gonna
negotiate all this? You know, June is right around the corner.
(15:27):
So we'll see what happens. But the one person that
I put 100% of my faith behind that really knows.
Not a pundit, not a news person, not even me
is somebody who has had to work with this for
a long, long time during the 2007, 2008 and so smart.
(15:52):
All right, Next KT
KT (15:53):
OK, Suze, thank you so much for the synthesis of
what you learn.
I have to say it's a little tough to swallow
one percenters claiming that a new normal of 3 to 4%
inflation is actually good for the economy.
Suze (16:12):
Alright, stop for one second there, KT. What KT is referring to
that this poster is referring to, is last Sunday in
Suze's school,
I was doing a summary of just a few of
the things that I learned in this conference that I
took where there were over 50 speakers that were the...
(16:34):
not just speakers, they were economists, they were just all brilliant.
Number one, right? And one of the people laid out,
why
not only do they think that our normal now inflation
rate will be 3 possibly 4% but more likely 3%
(16:56):
and laid out a scientific study as to why that
would actually end up being good for the economy versus bad.
And this poster did not like it at all, obviously.
KT (17:09):
Let me finish why... ready? Do these folks understand what it means for
retirees or those of us saving for retirement? Those of
us who buy groceries every week, let Powell raise rates
and get inflation down to 2%.
I'm really really tired of talking heads who care more
(17:30):
about their portfolios, let's be honest, than about the cost
of living for the rest of us trying to assuage us.
Inflation is good. Don't you worry. That is utter nonsense
and capitalism at its true worst. So that's a very
strong statement.
Suze (17:49):
It's a strong statement and I just want to tell you,
it's a very, very inaccurate statement.
There is nothing... you may say let poll raise the
fed funds rate to get inflation down. But if you
saw all the evidence that was provided not to make these,
(18:11):
these people richer, but to really save the economies so
that everything doesn't crash,
right? But that if Powell continues to raise the fed
funds rate,
we very probably will go into a deep recession and
inflation will come down. But so will the stock market
(18:32):
so will jobs so will everything. So it's a very,
very delicate balance. And I think you cannot take just
a very simplistic view of, oh, we'll be fine if
there's no inflation. You talk about retirees,
where did retirees get to put their money when inflation
(18:56):
was almost at nothing and interest rates therefore were at nothing.
They were making 0% on their retirement in terms of savings,
money market accounts. I mean, I remember with Alliant Credit
Union when we offered all of you 00.6% you just
couldn't believe it.
(19:16):
There has to be a place for people to be
able to put money and get 4% on it or 5%
so they can earn income and not have to be
forced to go into the stock market to get dividends
and take risk with their money.
Also, you don't want everything to be in a situation
(19:37):
where people are losing their jobs. Everything is crashing because why?
The feds raise their rates, inflation comes down and everything,
you know, isn't that simple. So I ask you to
have faith
that you may say the one percenters you have to
know I am a one percenter. KT is a one percenter.
(20:01):
So do not put me and certain other people into
a category that we don't care and we only care
about our own portfolios and everything like that. I just
want to say you're really off base there, but I
honor your opinion, which is why obviously KT read it,
(20:22):
but it's not as accurate as you think, KT next.
KT (20:26):
So Suze, this is a great one. I, I really
like this and I'm curious to hear your answer, Suze
on your Sunday podcast. I do want to hear what
your idea would be to rate people's credit worthiness if
there was no FICO score. It's a great question.
Suze (20:48):
Let me tell you why
I think FICO and credit scores. Remember FICO stands for
Fair Isaac Corporation, the company that created the credit score
and it is the legitimate credit score that almost 80%
of the lenders look at when they decide what interest
(21:08):
rate they are going to give you. The higher your
FICO score, the lower your interest rate, the lower your
FICO score, the higher your interest rate.
All right, I'm gonna tell the story.
I'm on the Suze Orman Show, which by the way,
you can go to Freevee and watch all 600 episodes.
(21:28):
I'm on the Suze Orman show and we have a
caller
and the caller is telling me that they have a
really great FICO score, but in order to have a
good FICO score, they have been taking out payday loans
(21:49):
in order to pay the minimum payment due on their
credit cards. And I said, what did you just say?
And they said, yeah, that's how I do it because
I have to keep my FICO score up so that
when I apply for credit, I can get credit, but
they were paying for their credit cards from where from
(22:12):
payday loans. Then another caller, same thing
I'm keeping my FICO score up by taking money out
of my 401k plan as a loan just so I
could pay the minimum payment due, Suze on my credit cards.
That's when I started to realize that FICO had no
(22:33):
way of knowing where was the money coming from
that people were using to at least pay the minimum
payment due and be on time with their credit card
payments and other credit payments. They didn't have a clue.
And then it came to pass that there were many
(22:57):
people that didn't want a credit card because they'd rather
pay in cash
and because they were paying in cash, they were actually
penalized because they didn't have a FICO score because the
only way for you to have a FICO score would
(23:17):
be to have some type of credit that you paid on.
So if you didn't have any credit, you didn't have
a FICO score. If you didn't have a FICO score, Well,
now you couldn't get anything. You couldn't get a telephone,
you couldn't get Direct TV. You couldn't get a car,
you couldn't rent a car, nothing. And then I started
(23:41):
to realize that people were punished for pain in cash,
but they were rewarded by paying the minimum payment due
on their credit cards, even if the interest on their
credit card was 20 some odd percent.
That made absolutely no sense to me whatsoever. So therefore,
(24:07):
I really think that the system doesn't make any sense.
I just have to say one other thing about this
that you got me started... During the pandemic and KT
was my witness here. I called the FICO people
and I said to them, listen to me, you need
(24:27):
to put a freeze on everybody's FICO score as to
what it was before the pandemic hit
because nobody should be penalized for having lost a job,
not being able to make payments and all the things
that the pandemic would have brought on to households they
(24:50):
absolutely wouldn't listen to me. And I was like, what
is wrong with all of you? So while it's true,
we live in a FICO world.
There's got to be a better way to do it.
Do we do it by you make a mortgage payment
with cash that gives you credit, you pay your rent
(25:10):
with cash meaning you send in a check or whatever
it is. So when I say cash, I mean that
you get credit for that when you just use cash
as much as you use credit,
that you get a reward for not having any debt,
(25:30):
not carrying anything like that and you still get to
see your ability to pay. Do you pay your utilities
on time? Do you pay your Direct TV bill on time?
Do you pay everything on time? Even if you pay
it in cash? I just think FICO is totally outdated.
Next question, KT.
KT (25:52):
Well, I still have, I'm still a FICO on my mind.
Here's another one. I think we should get rid of
the FICO rating. Do you think it's a good idea
to check your score every time your financial institution allows
you to on the monthly statement? I never do because
I do not know if it affects my FICO score
(26:12):
or not. What are your thoughts, Suze?
Suze (26:14):
So, here's the thing, I think it's great that you have
a financial institution
that allows you to check your FICO score for free
every month I would do. So, you know when you
check a FICO score, they know very well. Are you
checking your own score just to make sure that it's ok?
Or are you a financial institution that's checking your FICO score?
(26:38):
Because maybe you want to take out a loan with
them and they look at, for instance, you go to
shop for a mortgage,
you want to make sure that you get all your
mortgage checks within a two week period of time
because then FICO knows that you're shopping for the best
(26:58):
rate for a mortgage. If you start having businesses, you know,
check your FICO score all the time. They know that
you are applying for a lot of credit and then
they get scared and then yes, it hurts your FICO score.
But when an individual checks their FICO score, it doesn't
hurt it at all.
Why should you check it all the time? Because we
(27:21):
happen to live in a day and an age when
identity theft is rampant. And one of the easiest ways
for you to know if somebody has stolen your identity
is if your FICO score all of a sudden goes
down for absolutely no reason,
then you go, oh my God. And then you check
(27:43):
it and you find out what's going on. So that's
why it's not a bad idea to check it all
the time.
Although KT, I can't remember the last time we checked
our FICO scores. The truth of the matter is the
reason we don't check our FICO scores, now, all the
time is our credit is frozen. It is locked down. So,
(28:06):
even if we went to check our FICO scores, we
wouldn't be able to check it ourselves at all without
unfreezing our credit.
But do I think it's better to have frozen credit
than check your FICO scores all the time? Oh, you
bet I do. All right.
KT (28:24):
Ok, Suze. You ready for next... Now, we're going into
the Roth world.
Suze (28:28):
I'm not going to have a quizzie for you.
KT (28:31):
All right. Are you ready?
Are there significant disadvantages to using contributions to a Roth
IRA as a one year emergency fund versus housing an
emergency fund in a high yield savings account and, or
laddered CDs? Are the savings account and CD options significantly
(28:53):
better than using Roth IRA contributions.
Suze (28:58):
All right KT... pop quizzie!
KT (28:59):
Absolutely. Yes.
Yes. Yes.
Are you asking me which one's better?
Suze (29:09):
Kind of...
KT (29:10):
Ok. Go.
Suze (29:12):
Right. That was your answer to this question? Yes? (Wrong answer noise)
KT (29:16):
No. Yes. It's better to use the ladder CDs.
Suze (29:20):
All right. Everybody listen to me closely. You too, Miss Travis. Right.
The first part of the question, this is a quizzie...
Are there significant disadvantages to using contributions to a Roth
IRA as a one year emergency fund versus housing an
(29:41):
emergency fund in high yield savings accounts? We'll just stop
it there? Yes or no.
Is there...
KT (29:52):
Use the Roth.
Suze (29:54):
That's your answer there...Why?
KT (29:54):
Well, you don't want to break into a, um, a
high yield.
Suze (30:00):
No, no, that's not the reason. It's the right answer.
Wrong reason again. So... (wrong answer noise)
KT (30:05):
Well wait a minute, let me, let me think about it
because with Roth, you can take money out and put
it back in
Suze (30:10):
No you cannot, I don't know where you got that idea.
KT (30:13):
All right. So, tell me the, tell me what to do.
Me and that Roth... That guy named Roth. All right,
tell me what to do.
Suze (30:21):
All right, everybody listen to me closely. Any money that
you originally put into a Roth,
you can withdraw without any taxes or penalties whatsoever.
Within a Roth IRA, you can invest your money in
a high yield savings account or a money market fund
(30:44):
that pays you a 4% rate or whatever. And that
could be like your emergency fund. Now, obviously
you cannot take the interest out of a Roth IRA
until you've had it for at least five years and
59 a half for it to be tax free.
But one of the reasons that I like using a
(31:07):
Roth IRA as an emergency fund,
especially if you invest it properly where it's safe. It's sound,
there are no penalties. You can get your money out
whenever you want, but it's earning a high interest rate
is because there's a maximum that you can put into
(31:28):
a Roth every single year.
And if you were able to, let's say you were
under 50, put in $6500 this year, you put in
whatever the limit is next year. But let's just say
it's 6500 and 6500 and you haven't needed to use it.
And at the same time, possibly, you're also building up
(31:51):
an emergency fund outside of a Roth IRA by saving money.
Eventually, maybe you have enough savings outside of a Roth
IRA as well. But you didn't miss all of those
years of being able to put $6500 into a Roth.
(32:12):
And then you have all this money that's in a
Roth that you then can actually invest. What you would
never want to do. However, is within a Roth,
invest in a certificate of deposit if you are using
the Roth as your emergency fund. Why? Because there is
(32:35):
usually a 3 to 6 month penalty to get your
money out. However,
it is possible that you could, if you knew that
you had at least three months of an emergency fund somewhere,
you could do a three month CD, a four month CD,
five month CD, six month CD, seven month CD. So
(33:01):
you did have money coming to every single month, right?
That's the ladder.
KT (33:08):
That's what's great about Alliant.
Suze (33:12):
Now, what's great about Alliant Credit Union that many of you may not realize when we say
a 3 to 6 month CD. If you read it closely,
you can get that rate, which is currently 4.5% for
three months, four months, five months up to you. So
you could buy $1000 let's say, in each one, then
(33:33):
you got a six month at four and three quarters percent.
It would be six month, seven month, eight month, nine month,
10 month, up to one year, you can do a
little in each one of those as well. So it's not,
it's just a three month CD or a six month CD.
Then if you wanted, you could do a one year
(33:56):
and so forth.
However, I really think for an emergency fund within a
Roth IRA, if you are going to use it that way,
you really are better off in a high yield savings
account and, or money market fund just for the simplicity
(34:16):
of it.
All right.
But I do want to say one other thing, the
interest rate on the 12 month certificate of deposit and
the 18 month certificate of deposit. So 5% for the
one year, 5.15% for the 18 months at Alliant Credit
(34:39):
Union is really something I want all of you to
look at.
It doesn't mean that you can't have three months and six months.
But as I said, last week I have not had
one person write me and say to me, I'm worried
about my money that's in a certificate of deposit.
(35:03):
And I'm just gonna say this, there was a woman
at the conference and there were only four women who
spoke at the conference. Danielle was one of them who
is so brilliant, it's not even funny. You can look
up her bio. I posted everybody that spoke.
She said the following... right after this conference was over,
(35:25):
she was going to go and open up certificates of
deposits at seven different places.
Right. So it's interesting. She chose to actually do certificates
of deposits within the $250,000 limit to keep her money
(35:46):
safe and sound. I will forever tell you, I believe
at this point in time, credit unions are still far
more conservative in what they do with money right now,
especially Alliant Credit union
than many banks. Although there are many incredible banks out
there like Stern's Bank in Minnesota. Oh my God, Kelly,
(36:10):
who is the CEO, cares about all of you. So,
when you know your bankers or you know your credit
unions and they are offering you really great
interest rates right now with what's going on, you might
want to take advantage of it.
KT (36:27):
OK Everybody, this is KT, I'm gonna take us out.
Suze (36:30):
You are, you never do.
KT (36:32):
Yeah. But you know what I want you to all vote.
Do you want me Sunday with her or not?
Do you want me like two Sundays a month? The
first Sunday of the month, the last Sunday of the month...
Suze (36:44):
Are you woman enough to take their answers?
KT (36:46):
Yes. if you don't want me, that's fine. I'll go fishing. Ok. Everyone,
we just want you to remember one thing
every day when you wake up.
Suze (36:57):
You are to say the following today, wherever I go, I will create...
KT (37:03):
a more peaceful, joyful and loving world.
Suze (37:06):
And if you do what's gonna happen?
KT (37:09):
You will be unstoppable.
Suze (37:10):
All right, see you Sunday and say hi to KT's family.
That's come in. All right, bye bye, everybody.
Music (37:24):
(Music Out)
(Music In)
Suze (00:33):
May 18th, 2023.
KT (00:37):
I'm so excited... hi, Suze, Good morning. I'm so excited today.
You know why...
Suze (00:41):
Here we go again, you know why we go, I do know why
KT (00:45):
Our niece and nephew and their parents, my little sister
and her husband are coming today
at about 1:30 to the island and I can't wait.
And for those of you that, that will listen to
something fun. Suze when her Starlink went down and she
wasn't able to record and was sitting around waiting and
learned some card tricks. I said, what are you doing?
(01:07):
And she was learning these really complicated mathematical card tricks.
I said, why are you doing that? And she looked
at me and I said, I know why...
Travis. Travis is our nephew who's 25 but he's been
spending almost every summer with us since he was three.
And when he was a little boy, he would sit
(01:29):
with his aunt Suze and learn magic tricks.
So she decided to have a little nostalgic reunion with
our Travis. So we're excited. They'll be here in this afternoon.
Suze (01:41):
You must be excited because you didn't even let me
say welcome to the Women
KT (01:47):
and Money podcast and Ask Suze...
Suze (01:52):
and KT Anything. Do you see how excited she is?
KT (01:56):
Yeah. And I, I miss, I miss you all. Who
do you miss the audience?
Suze (02:01):
You mean the podcast people? Why do you miss them?
KT (02:04):
Because I was gonna do Sunday with her. And she said, no, no, no,
I have to do something really important. I said, OK,
Suze (02:15):
KT is wanting to do every single podcast with me.
KT (02:20):
Let's vote.
Suze (02:21):
All right, you can write in, right? So we might
just have to make every podcast, Ask KT and Susie Anything.
And then...
KT (02:29):
Well, we're starting today with something a little different.
Suze (02:31):
What do have that's different?
KT (02:32):
I have all of my questions today for you from
the wall. I decided... Yeah. And it's kind of cool
because the people on the wall
wrote questions that related to the Sunday podcast that I
was not participating in.
Suze (02:50):
But KT you never participate in Suze Schools. So I
don't understand what the problem is here. But wait, wait,
I just need to wait, wait,
everybody. Let me try to calm her down. So I
can just tell you a few things here. When KT
says the wall, we have an app called The Women
(03:12):
and Money app and you can download it on Google
Play or Apple Apps and on the Women and Money app.
There is the wall, we call it, and that's where
everybody posts. And lately people have been posting their questions
or comments. And what's fabulous is that many people have
(03:36):
been answering them. Now, I watch what goes on there
and if somebody is wrong with their answer, I'll let
them know.
But KT... I didn't know you were even on the app.
KT (03:49):
Yeah, I like it. I like the wall is really cool.
Suze (03:52):
Why don't you post?
KT (03:54):
Do you know why? It's the same reason why I'm not on
Instagram or Twitter or any of those? The same reason..
Suze (04:03):
Tell everybody she's really bad at it.
KT (04:05):
I'm so bad at it. And when Suze and I
were first learning how to use all of this social
media and all of these apps and
programs, I was the worst and I made a few
big mistakes. I was like, well, I'd write something to
Suze and I'd want her to see it and I'd
(04:26):
hit the wrong thing or do the wrong and the
world had all this information or my message. I'm not
good at it. Alright.
Suze (04:34):
Anyway, so,
KT (04:35):
but I love reading the wall...
Suze (04:36):
What's happening on the Ask KT and Susie Anything podcast
is if you have a question,
you can either post it on the wall or you
could send it in via Ask Suze, S U Z
E podcast at gmail dot com. And, or you can
(04:57):
go on the Women and Money app as well. And
there is a special section that allows you to send
in your questions. And if KT chooses it, we will
answer it on this podcast KT.
KT (05:10):
Ok the first... are you ready? Are you ready, Suze?
Suze (05:14):
Obviously. Tell everybody what we're dressed in today.
KT (05:17):
Well, it's morning we have on our bathrobes and they
say Purnata, they're embroidered with a gray silk,
Suze (05:26):
which is the name of our home and our boat
and wine or the, you know, the wine that we
have and everything.
And Purnata in Hindi means perfection, which KT absolutely is.
KT (05:40):
So are you Suze. And so is this podcast and
we're going to start with our first comment, not a question,
a comment, but I want to share it with all
of you. So this says I have always paid off
my home early.
I've been listening to you Suze for years. Why? Not
because I stay in the house all my life... that's
(06:02):
made me laugh. But because I came from a family
of 10, with a mother that had a cerebral hemorrhage
when I was eight, I was the oldest daughter.
So Suze, that sense of security has been life changing
for me. I'm now 67 divorced and on my own
(06:23):
and I feel happy and secure.
Suze (06:26):
Why did you choose that, just out of curiosity.
KT (06:29):
I think it was an interesting comment to remind people
that listening or learning and becoming financially
empowered is really, really important and it does set you
free in a way.
Suze (06:44):
You know, I think it's very important to really get that
anything can happen at any time.
And I know that we all make these plans and
the plans are, we're gonna work till we're x years
of age. We'll have enough money. We'll pay off our
house then. But we never stop to think, Oh my God,
(07:04):
what if something happens? What if I can't work all
that time? But I wanna stay in my house. How
do I make my mortgage payment if I don't have
income
and examples like that of what can happen to a
mother or you or even what happened to me or
whatever it may be. You just never know. So I
(07:28):
will always think that the number one goal if you
know you're going to stay in the house forever
should be to pay the house off as soon as possible.
All right KT, that was a nice comment.
KT (07:41):
The next question. Um and again, these are all from the
wall and as I read them, when you're listening, you'll
find a common thread. This is from a community
and this community feels very safe with each other.
(12:06):
So next question is Suze, what exactly can happen if
your treasury bills mature in June and debt ceiling isn't lifted?
Is this suggestion that you don't get any of your
money back at all?
Suze (12:21):
So, here's what everybody really needs to understand.
Nobody knows for sure.
However, the one woman who probably knows as much as
anybody could possibly know when it comes to this topic.
What happens if we don't raise the debt ceiling? Is
(12:45):
Sheila Bair the right who was the chairman of the
FDIC and she was on this podcast and she also
is a very, very good friend of mine.
So just yesterday, I wrote her and I said, people
are going crazy. Can you just tell me what can really,
(13:09):
really happen? And then, you know, I wrote her all
the things that you're asking and everything and here is exactly,
and I am quoting her. She says, hi Suze,
I hate that all of this drama around the debt
limit is scaring people. I don't think our government will
default on its debt. At the 11th hour, they will
(13:33):
reach some kind of agreement,
Should that not happen, yes, I believe this administration will
invoke the 14th amendment to keep financing the government and
make good on its obligations. Now, remember everybody, I talked
about the four
14th amendment just in last Sunday's podcast. She then goes
(13:58):
on to say in my view, there would be a
strong legal argument to support that action. She's talking about
the 14th amendment. I hope it doesn't come to that
because it would likely result in a long legal battle.
But that would be better than a government default. However,
(14:20):
bottom line,
they will not lose their money in treasuries. I don't
think again that the government would default on any of
its obligations, but I am sure it would never default
on its obligations to investors in US treasuries. So that
(14:42):
is exactly what Sheila Bair says.
KT (14:45):
So just um the question that came in has so
many responses on the wall that say, hey, I have
the same question. I have two T bills that mature
in June. Another one said, watching this question. Thank you.
I have the same question too. Many, many people responded.
Suze (15:04):
So and I know that many of you are afraid
and the truth of the matter is it isn't looking
good everybody. I'll tell you that it's not
and it's not looking good because President Biden very shortly
has to leave for the G7. When are they gonna
negotiate all this? You know, June is right around the corner.
(15:27):
So we'll see what happens. But the one person that
I put 100% of my faith behind that really knows.
Not a pundit, not a news person, not even me
is somebody who has had to work with this for
a long, long time during the 2007, 2008 and so smart.
(15:52):
All right, Next KT
KT (15:53):
OK, Suze, thank you so much for the synthesis of
what you learn.
I have to say it's a little tough to swallow
one percenters claiming that a new normal of 3 to 4%
inflation is actually good for the economy.
Suze (16:12):
Alright, stop for one second there, KT. What KT is referring to
that this poster is referring to, is last Sunday in
Suze's school,
I was doing a summary of just a few of
the things that I learned in this conference that I
took where there were over 50 speakers that were the...
(16:34):
not just speakers, they were economists, they were just all brilliant.
Number one, right? And one of the people laid out,
why
not only do they think that our normal now inflation
rate will be 3 possibly 4% but more likely 3%
(16:56):
and laid out a scientific study as to why that
would actually end up being good for the economy versus bad.
And this poster did not like it at all, obviously.
KT (17:09):
Let me finish why... ready? Do these folks understand what it means for
retirees or those of us saving for retirement? Those of
us who buy groceries every week, let Powell raise rates
and get inflation down to 2%.
I'm really really tired of talking heads who care more
(17:30):
about their portfolios, let's be honest, than about the cost
of living for the rest of us trying to assuage us.
Inflation is good. Don't you worry. That is utter nonsense
and capitalism at its true worst. So that's a very
strong statement.
Suze (17:49):
It's a strong statement and I just want to tell you,
it's a very, very inaccurate statement.
There is nothing... you may say let poll raise the
fed funds rate to get inflation down. But if you
saw all the evidence that was provided not to make these,
(18:11):
these people richer, but to really save the economies so
that everything doesn't crash,
right? But that if Powell continues to raise the fed
funds rate,
we very probably will go into a deep recession and
inflation will come down. But so will the stock market
(18:32):
so will jobs so will everything. So it's a very,
very delicate balance. And I think you cannot take just
a very simplistic view of, oh, we'll be fine if
there's no inflation. You talk about retirees,
where did retirees get to put their money when inflation
(18:56):
was almost at nothing and interest rates therefore were at nothing.
They were making 0% on their retirement in terms of savings,
money market accounts. I mean, I remember with Alliant Credit
Union when we offered all of you 00.6% you just
couldn't believe it.
(19:16):
There has to be a place for people to be
able to put money and get 4% on it or 5%
so they can earn income and not have to be
forced to go into the stock market to get dividends
and take risk with their money.
Also, you don't want everything to be in a situation
(19:37):
where people are losing their jobs. Everything is crashing because why?
The feds raise their rates, inflation comes down and everything,
you know, isn't that simple. So I ask you to
have faith
that you may say the one percenters you have to
know I am a one percenter. KT is a one percenter.
(20:01):
So do not put me and certain other people into
a category that we don't care and we only care
about our own portfolios and everything like that. I just
want to say you're really off base there, but I
honor your opinion, which is why obviously KT read it,
(20:22):
but it's not as accurate as you think, KT next.
KT (20:26):
So Suze, this is a great one. I, I really
like this and I'm curious to hear your answer, Suze
on your Sunday podcast. I do want to hear what
your idea would be to rate people's credit worthiness if
there was no FICO score. It's a great question.
Suze (20:48):
Let me tell you why
I think FICO and credit scores. Remember FICO stands for
Fair Isaac Corporation, the company that created the credit score
and it is the legitimate credit score that almost 80%
of the lenders look at when they decide what interest
(21:08):
rate they are going to give you. The higher your
FICO score, the lower your interest rate, the lower your
FICO score, the higher your interest rate.
All right, I'm gonna tell the story.
I'm on the Suze Orman Show, which by the way,
you can go to Freevee and watch all 600 episodes.
(21:28):
I'm on the Suze Orman show and we have a
caller
and the caller is telling me that they have a
really great FICO score, but in order to have a
good FICO score, they have been taking out payday loans
(21:49):
in order to pay the minimum payment due on their
credit cards. And I said, what did you just say?
And they said, yeah, that's how I do it because
I have to keep my FICO score up so that
when I apply for credit, I can get credit, but
they were paying for their credit cards from where from
(22:12):
payday loans. Then another caller, same thing
I'm keeping my FICO score up by taking money out
of my 401k plan as a loan just so I
could pay the minimum payment due, Suze on my credit cards.
That's when I started to realize that FICO had no
(22:33):
way of knowing where was the money coming from
that people were using to at least pay the minimum
payment due and be on time with their credit card
payments and other credit payments. They didn't have a clue.
And then it came to pass that there were many
(22:57):
people that didn't want a credit card because they'd rather
pay in cash
and because they were paying in cash, they were actually
penalized because they didn't have a FICO score because the
only way for you to have a FICO score would
(23:17):
be to have some type of credit that you paid on.
So if you didn't have any credit, you didn't have
a FICO score. If you didn't have a FICO score, Well,
now you couldn't get anything. You couldn't get a telephone,
you couldn't get Direct TV. You couldn't get a car,
you couldn't rent a car, nothing. And then I started
(23:41):
to realize that people were punished for pain in cash,
but they were rewarded by paying the minimum payment due
on their credit cards, even if the interest on their
credit card was 20 some odd percent.
That made absolutely no sense to me whatsoever. So therefore,
(24:07):
I really think that the system doesn't make any sense.
I just have to say one other thing about this
that you got me started... During the pandemic and KT
was my witness here. I called the FICO people
and I said to them, listen to me, you need
(24:27):
to put a freeze on everybody's FICO score as to
what it was before the pandemic hit
because nobody should be penalized for having lost a job,
not being able to make payments and all the things
that the pandemic would have brought on to households they
(24:50):
absolutely wouldn't listen to me. And I was like, what
is wrong with all of you? So while it's true,
we live in a FICO world.
There's got to be a better way to do it.
Do we do it by you make a mortgage payment
with cash that gives you credit, you pay your rent
(25:10):
with cash meaning you send in a check or whatever
it is. So when I say cash, I mean that
you get credit for that when you just use cash
as much as you use credit,
that you get a reward for not having any debt,
(25:30):
not carrying anything like that and you still get to
see your ability to pay. Do you pay your utilities
on time? Do you pay your Direct TV bill on time?
Do you pay everything on time? Even if you pay
it in cash? I just think FICO is totally outdated.
Next question, KT.
KT (25:52):
Well, I still have, I'm still a FICO on my mind.
Here's another one. I think we should get rid of
the FICO rating. Do you think it's a good idea
to check your score every time your financial institution allows
you to on the monthly statement? I never do because
I do not know if it affects my FICO score
(26:12):
or not. What are your thoughts, Suze?
Suze (26:14):
So, here's the thing, I think it's great that you have
a financial institution
that allows you to check your FICO score for free
every month I would do. So, you know when you
check a FICO score, they know very well. Are you
checking your own score just to make sure that it's ok?
Or are you a financial institution that's checking your FICO score?
(26:38):
Because maybe you want to take out a loan with
them and they look at, for instance, you go to
shop for a mortgage,
you want to make sure that you get all your
mortgage checks within a two week period of time
because then FICO knows that you're shopping for the best
(26:58):
rate for a mortgage. If you start having businesses, you know,
check your FICO score all the time. They know that
you are applying for a lot of credit and then
they get scared and then yes, it hurts your FICO score.
But when an individual checks their FICO score, it doesn't
hurt it at all.
Why should you check it all the time? Because we
(27:21):
happen to live in a day and an age when
identity theft is rampant. And one of the easiest ways
for you to know if somebody has stolen your identity
is if your FICO score all of a sudden goes
down for absolutely no reason,
then you go, oh my God. And then you check
(27:43):
it and you find out what's going on. So that's
why it's not a bad idea to check it all
the time.
Although KT, I can't remember the last time we checked
our FICO scores. The truth of the matter is the
reason we don't check our FICO scores, now, all the
time is our credit is frozen. It is locked down. So,
(28:06):
even if we went to check our FICO scores, we
wouldn't be able to check it ourselves at all without
unfreezing our credit.
But do I think it's better to have frozen credit
than check your FICO scores all the time? Oh, you
bet I do. All right.
KT (28:24):
Ok, Suze. You ready for next... Now, we're going into
the Roth world.
Suze (28:28):
I'm not going to have a quizzie for you.
KT (28:31):
All right. Are you ready?
Are there significant disadvantages to using contributions to a Roth
IRA as a one year emergency fund versus housing an
emergency fund in a high yield savings account and, or
laddered CDs? Are the savings account and CD options significantly
(28:53):
better than using Roth IRA contributions.
Suze (28:58):
All right KT... pop quizzie!
KT (28:59):
Absolutely. Yes.
Yes. Yes.
Are you asking me which one's better?
Suze (29:09):
Kind of...
KT (29:10):
Ok. Go.
Suze (29:12):
Right. That was your answer to this question? Yes? (Wrong answer noise)
KT (29:16):
No. Yes. It's better to use the ladder CDs.
Suze (29:20):
All right. Everybody listen to me closely. You too, Miss Travis. Right.
The first part of the question, this is a quizzie...
Are there significant disadvantages to using contributions to a Roth
IRA as a one year emergency fund versus housing an
(29:41):
emergency fund in high yield savings accounts? We'll just stop
it there? Yes or no.
Is there...
KT (29:52):
Use the Roth.
Suze (29:54):
That's your answer there...Why?
KT (29:54):
Well, you don't want to break into a, um, a
high yield.
Suze (30:00):
No, no, that's not the reason. It's the right answer.
Wrong reason again. So... (wrong answer noise)
KT (30:05):
Well wait a minute, let me, let me think about it
because with Roth, you can take money out and put
it back in
Suze (30:10):
No you cannot, I don't know where you got that idea.
KT (30:13):
All right. So, tell me the, tell me what to do.
Me and that Roth... That guy named Roth. All right,
tell me what to do.
Suze (30:21):
All right, everybody listen to me closely. Any money that
you originally put into a Roth,
you can withdraw without any taxes or penalties whatsoever.
Within a Roth IRA, you can invest your money in
a high yield savings account or a money market fund
(30:44):
that pays you a 4% rate or whatever. And that
could be like your emergency fund. Now, obviously
you cannot take the interest out of a Roth IRA
until you've had it for at least five years and
59 a half for it to be tax free.
But one of the reasons that I like using a
(31:07):
Roth IRA as an emergency fund,
especially if you invest it properly where it's safe. It's sound,
there are no penalties. You can get your money out
whenever you want, but it's earning a high interest rate
is because there's a maximum that you can put into
(31:28):
a Roth every single year.
And if you were able to, let's say you were
under 50, put in $6500 this year, you put in
whatever the limit is next year. But let's just say
it's 6500 and 6500 and you haven't needed to use it.
And at the same time, possibly, you're also building up
(31:51):
an emergency fund outside of a Roth IRA by saving money.
Eventually, maybe you have enough savings outside of a Roth
IRA as well. But you didn't miss all of those
years of being able to put $6500 into a Roth.
(32:12):
And then you have all this money that's in a
Roth that you then can actually invest. What you would
never want to do. However, is within a Roth,
invest in a certificate of deposit if you are using
the Roth as your emergency fund. Why? Because there is
(32:35):
usually a 3 to 6 month penalty to get your
money out. However,
it is possible that you could, if you knew that
you had at least three months of an emergency fund somewhere,
you could do a three month CD, a four month CD,
five month CD, six month CD, seven month CD. So
(33:01):
you did have money coming to every single month, right?
That's the ladder.
KT (33:08):
That's what's great about Alliant.
Suze (33:12):
Now, what's great about Alliant Credit Union that many of you may not realize when we say
a 3 to 6 month CD. If you read it closely,
you can get that rate, which is currently 4.5% for
three months, four months, five months up to you. So
you could buy $1000 let's say, in each one, then
(33:33):
you got a six month at four and three quarters percent.
It would be six month, seven month, eight month, nine month,
10 month, up to one year, you can do a
little in each one of those as well. So it's not,
it's just a three month CD or a six month CD.
Then if you wanted, you could do a one year
(33:56):
and so forth.
However, I really think for an emergency fund within a
Roth IRA, if you are going to use it that way,
you really are better off in a high yield savings
account and, or money market fund just for the simplicity
(34:16):
of it.
All right.
But I do want to say one other thing, the
interest rate on the 12 month certificate of deposit and
the 18 month certificate of deposit. So 5% for the
one year, 5.15% for the 18 months at Alliant Credit
(34:39):
Union is really something I want all of you to
look at.
It doesn't mean that you can't have three months and six months.
But as I said, last week I have not had
one person write me and say to me, I'm worried
about my money that's in a certificate of deposit.
(35:03):
And I'm just gonna say this, there was a woman
at the conference and there were only four women who
spoke at the conference. Danielle was one of them who
is so brilliant, it's not even funny. You can look
up her bio. I posted everybody that spoke.
She said the following... right after this conference was over,
(35:25):
she was going to go and open up certificates of
deposits at seven different places.
Right. So it's interesting. She chose to actually do certificates
of deposits within the $250,000 limit to keep her money
(35:46):
safe and sound. I will forever tell you, I believe
at this point in time, credit unions are still far
more conservative in what they do with money right now,
especially Alliant Credit union
than many banks. Although there are many incredible banks out
there like Stern's Bank in Minnesota. Oh my God, Kelly,
(36:10):
who is the CEO, cares about all of you. So,
when you know your bankers or you know your credit
unions and they are offering you really great
interest rates right now with what's going on, you might
want to take advantage of it.
KT (36:27):
OK Everybody, this is KT, I'm gonna take us out.
Suze (36:30):
You are, you never do.
KT (36:32):
Yeah. But you know what I want you to all vote.
Do you want me Sunday with her or not?
Do you want me like two Sundays a month? The
first Sunday of the month, the last Sunday of the month...
Suze (36:44):
Are you woman enough to take their answers?
KT (36:46):
Yes. if you don't want me, that's fine. I'll go fishing. Ok. Everyone,
we just want you to remember one thing
every day when you wake up.
Suze (36:57):
You are to say the following today, wherever I go, I will create...
KT (37:03):
a more peaceful, joyful and loving world.
Suze (37:06):
And if you do what's gonna happen?
KT (37:09):
You will be unstoppable.
Suze (37:10):
All right, see you Sunday and say hi to KT's family.
That's come in. All right, bye bye, everybody.
Music (37:24):
(Music Out)
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