Podcast Episode - Ask KT & Suze Anything: What is the Key to Be Successful?

On this edition of Ask KT and Suze Anything, Suze answers questions about what it means to be successful, saving for young children and getting out of debt.  Plus, a quizzie about what you can put in a Roth and more!

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Podcast Transcript:

Suze: September 19th, 2024. Welcome everybody to What KT?

KT: Women and Money podcast. Ask KT and Suze Anything!

Suze: Anything you want to know what's so great about this particular podcast? Where are we, KT?

KT: We're in Spain.

Suze: We're in Spain. That's where we're really, really we are and we still have three more days here before we come back. All right, KT, what do you got for me?

KT: OK. My first question is from Nola.

Suze: Look how shiny your hair is today. Why is it so shiny?

KT: I used, I used one of your shampoos that makes it real shine.

Suze: You did?

KT: I did. I love Aveda everybody. I've been using that shampoo forever because it smells so delicious. But today I used a shampoo. I was in the garden. I made a huge mess. So we're doing this podcast in the evening. Usually we do these first thing in the morning, but I was so dirty and messy. I took a really long shower and I used one of Suze's special shampoos and it made my hair super shiny.

Suze: It's so great. I love it. All right. Anyway,

KT: OK. So this is from Nola and

Suze: By the way, Ask KT and Suze Anything edition as KT just said, if you want, you can send in a question to ask Suze Suze podcast at gmail.com. And if chosen by KT, we will answer it. I do just wanna let you know there are thousands and thousands that have been sent in. So if KT has chosen,

Suze: oh, you are lucky.

KT: I chose Nola because it sounds kind of Spanish.

Suze: And is it true you told me earlier right before you sat down that you chose ones that really you felt had never been asked before on the podcast.

KT: I tried to.

Suze: So these are all like new topics.

KT: Some of them are, some of them are, but

Suze: a lot of them are right. So I'm so I'm so excited.

KT: Ok. Are we ready? Ok. From, from Nola. She said, Suze, I opened a Roth IRA with $500 outside of my Roth TSP from my federal job. Do we even need, need more than one Roth IRA? And then Noah said, I'm trying to figure out if I should leave the $500 or just transfer it into my work Roth TSP. The fee is about $200. Is that ridiculous or what?

Suze: And tell me that the,

KT: and then, then Nola said that's 50% of what I have in there. I have 75,000 in my federal Roth TSP. So, what's that about? That's a new question. First time I heard

Suze: I was gonna, I was gonna say, did KT just start this podcast with a question about a Roth. Are you kidding me?

KT: What about the fee business?

Suze: Here's the thing? Nola. It's like, no, you should not be doing that. No. La. got it anyway. So that is ridiculous. It is ridiculous. In fact, most Roth IRAs in great companies there is no account minimum and no fee. If I were you, I would take that $500 out and I would open up a Roth IRA with Fidelity, Schwab e-Trade even Ally. Normally, I would also say Vanguard, but Vanguard can charge you a lot more. They may ask for a larger deposit than 500 to open and it's usually, I think 3000 or something. So Fidelity, Schwab, e-Trade, even Ally Investment go there. That's what I would do. But here's what's so great. KT about this question.

Suze: Nola actually figured out that even though she had $500 in there, her fee was almost 50% which is why it's really, really important that you don't look at the amount of money that you're paying because you might think oh, 200 isn't that much? You look at the percentage of the fee in comparison to the amount of money under deposit to see. Is it worth it or not? All right. Ok.

KT: Next is from Gina and I picked this one in particular because it, it rings true. With what we've been talking about as far as relationships with money. Ready. Hi, Suze and KT. I'm 40 years old and I'm terrified about retirement.

KT: I have a 401k with my employer and yes, they match contributions. I've read your book. I've listened to the podcast. I still feel very intimidated and lost when it comes to getting more out of the 401k.

KT: Meaning putting money in other investments like stocks. I'm interested in the must have documents, but I'm also terrified, I'll get them and won't know the first step to take. Now, the reason I picked this is for this reason.

KT: Then Gina goes on to say I have a partner who's absolutely terrible with money and doesn't even have a savings account. I try to educate her on some of your principles that it is possible to save money even after all the bills are paid. So she goes on and on and on. But she wants to know is she on the right path? What should she do?

Suze: What path is she on? She's on the fear path.

KT: Fear and fear is what... it's an obstacle,

Suze: Fear, shame and anger the three internal obstacles to wealth. Gina, I have to tell you you're 40 years of age and yes, you have a 401k with your employer. However, you should have a Roth 401k with your employer and even if they match and they match to the traditional side pre-tax, that's fine. So you say that you've read my books and listened to my podcast, but you still have a traditional 401k. So let's make one tiny move at a time.

Suze: What I want you to do your very first move is you're going to go to the hr person and all your new contributions are going to go in a Roth 401k. You're just gonna start there. You don't have to put money in other investments like stocks and things like that. If you're fully maxing out your Roth 401k and possibly a Roth IRA as well, now you say that you're afraid and terrified of the must have documents. I can tell you that millions and millions and millions have been used over the past years. There is nothing to be terrified about. 

Suze: They guide you every inch of the way. There's an 800 number, there's a live chat. There's all these things that you can use and you have nothing to lose by just trying. You don't use it, you lose. If you do use it now you've gained. So that's just something that you might want to think about. What I'm really, really concerned about is that at the age of 40 you're in a relationship with somebody who is absolutely terrible with money and doesn't have a savings account.

Suze: You try to educate her and all of that. You have to look at that very, very seriously because if your partner isn't good with money doesn't feel like they can do anything with it and isn't interested in it. Remember, I always say that what somebody does with their money is how they feel about who they are. 

Suze: So, you have to really come to the understanding of, is this the person you really want to be with? Maybe it is. But I just want you to look at that at the age of 40. I don't like when you say so, basically when retirement comes, I'll most likely be supporting her as well. You're 40 years old and you have $48,000 in savings. That's it.

Suze: That's it. You should have more than that a lot and you want to use it for a down payment on a house. Oh, no, you don't because you need at least 8 to 12 months of emergency savings accounts plus a 20% down payment. But you say that you have a $5000 car loan and about $300 in credit card debt.

Suze: So what do you need to start doing right now? You have to get out of credit card debt. You have to stay out of credit card debt and you have to get rid of the car loan and start saving more and more money. The best place for you to really be doing that. Really is Alliant Credit Union.

Suze: You put $100 a month away every month for 12 consecutive months, they'll give you $100 fabulous. Your partner should be doing the same thing with you. So my suggestion to the two of you is this, try doing that together, encourage each other, show each other that anything when it comes to money is possible and go from there. So KT it's so important that I went into detail on that one is that please really look at your relationships with honesty and truth and make decisions...

KT: Wait 'till you hear this one here. This is, here's why everyone needs to really look at a relationship. This is from Joanne.

KT: It breaks my heart. She said, Suze, my lifetime partner passed away last November. He supported me, paid all my bills, gave me a monthly salary to live on. I'm 70 years old, retired and since his passing, I've accumulated over $100,000 in debt to live on and survive. There are so many consolidation companies out there. Please tell me, Suze, which is the best one since I will need to consolidate this large credit card debt. There you go, people you need to know together.

Suze: However, what's great about this one, KT is that in the last email we were talking about Gina and her partner. But what would happen to her partner if Gina died?

KT: Same as Joanne.

Suze: If Gina died, she might end up like Joanne right now. So don't think you are doing people favors by not educating them and including them in finances. All right, Joanne, here's what confuses me. So at the age of 70 you have now accumulated $100,000 in debt. Ok? And just simply consolidating the debt still means that it has to be paid.

Suze: But if you pay it and you still don't have any money, how are you going to support yourself? 70 believe it or not, is not that old? Are you working? Is there anything you can do to make money because you have to bring in obviously more money or reduce your expenses tremendously.

Suze: Do you have a home that you're living in that maybe is paid for and maybe you need to what sell it, but you need to look at other things besides just consolidating this debt, it may be since you owe $100,000. Listen to me closely when you owe more than what you are worth, you are technically bankrupt that normally there is no way for you to get out of this debt. So you might have to and I don't say this lightly and I understand, but you may have to even look at claiming bankruptcy to get out of this debt. But the consolidation companies I don't think are the answer for you here.

Suze: So I don't know which one is best because I actually don't believe in consolidation companies. If anything, I believe in the NFCC.org a nonprofit that looks at what you owe. They work with you on a five year plan to pay off your debt, but I'm very concerned here. Really, I'm concerned.

Suze: You really need to look realistically at this and see what else can you do? But you obviously need to cut down on your expenses big time.

Suze: I hate this.

KT: I know you do and listen to the next one.

Suze: What are you doing to me here, Travis?

KT: Wait, this is from Alba and this is something that we hear over and over and over again. You're ready. I have a beautiful seven month old granddaughter and I want to make sure she's got a nice savings. What do you suggest I should start with? And where should I put it? And what kind of bank account? I am clueless, Suze so far I have $1500 saved for her.

Suze: Well, this one's easy. What would you tell her, KT?

KT: No, I would.

KT: Oh, well, first of all, she should go to Alliant.

Suze: Here's what I would do if I were you. And the reason KT said Alliant Credit Union,

Suze: I would take that $1500 and open up an ultimate opportunity savings account in your name at Alliant Credit Union. Then I would open up a custodian one in your granddaughter's name. And then I would transfer $100 a month into the Ultimate Opportunity Savings account for your granddaughter. And if you transfer in $100 a month, every single month, for 12 consecutive months, Alliant Credit Union will put in $100 plus both of you will be earning about 3.10% on your money. So, that's what I would be doing if I were you. Because if you look at 100 a month and you get 100 it's like a 16% return on your money. Are you all crazy not to be doing that? All right, KT.

KT: And she's only seven months old. Her granddaughter. Can you imagine if she keeps doing it? All right. Next is from Heather. Heather said hi, Suze. I'm a 40 year old mom of two little ones under three. I'm married but I'm a stay at home mom. I have $40,000 in student loan debt and about 4000 in credit card debt. I'm trying to find the best way to knock down the debt without taking too much out of our food budget, which is super high. We live in a rural area with no job options unless I drive 70 miles away and still need to find childcare. Would it be better to get a job and find childcare or just to pay minimums on the bills or stay at home and pay maybe a few extra bucks towards our principal debt?

KT: So they're really trying

Suze: You notice the theme you've done here, right.

KT: Help, help,

Suze: You know, and I think KT did that because some of the emails that came in did say Suze, we understand that all the people that have listened to you for 20 years, 30 years are now multimillionaires, but we've just started listening to you. So you haven't been talking lately about debt and credit cards and we all need help. So, I guess KT took that to heart because that's what the theme seems to be today. Heather, here's what I would do if I were you, which is, I would look to get a job at home.

Suze: There are jobs that you can do online at home where you can make money at home while you're staying with the kids. There are many things out there. So I would look for that type of work to bring in extra money.

Suze: Obviously, you have $40,000 in student loan debt. Just so curious, even though you didn't say, what was that student loan debt for? What degree did you get that could possibly help you earn money. Now you say that you're married, you live in a rural place. The other thing is this and I say this with all the love in my heart.

Suze: I've always noticed that when a mother isn't making enough money to support her kids, she not only has one job, she sometimes will have two jobs, three jobs, she will do anything to make sure that her family is ok. I understand that your husband is working. I don't know what he is doing.

Suze: But if he's working a job where he comes home at five o'clock at night, then at seven o'clock at night, he should go be a waiter. He should go do anything he can do to make extra money for you to save money to get yourself out of debt because you have $4000 of credit card debt.

Suze: So you're obviously living above your means and it's only going to get worse. So I have to tell you that's what I would do. And I just have to say this, Katie didn't read this part of the email because she just handed it to me. But you say we're desperately wanting to find a house to buy as we're in a single bedroom apartment, it's cozy, but the kids are getting bigger.

Suze: You cannot afford to purchase a home when you have $4000 in credit card debt. Nothing in savings to pay down debt. You'd have to take money from the food budget. We have to get a realistic grasp on what is happening here and your husband needs to be more of a participant and you need to bring home money while staying home with the kids.

Suze: KT don't give me any more of these.

KT: Well, this next one's pretty good. You ready? My husband and I have just paid off all my credit card. Thank you. I only want one and he only wants one. Now, this is where Amy needs your help. She said I heard closing a credit card can hurt our credit score. Will it be better to transfer all balances to one card for each or just close the ones with higher interest rates and or annual fees. Please help. I don't know what to do. Now I picked this because Suze, this is like going back to credit card 101. So let's tell Amy what you've been saying your entire career.

Suze: So it is true. Closing a credit card will hurt your credit score.

Suze: The reason it will hurt your credit score, especially if you still have balances on your credit card is it will decrease your credit limit ratio because each credit card has a credit limit. If you close the credit card down, you then close the credit limit down which increases your debt. What you currently owe to the total amount of credit limit available to you. And that accounts for 30 to 35% of your score. So what's important is number one, you shouldn't be paying a fee on any of these credit cards. There are credit cards out there that do not have an annual fee. That is number one. 

Suze: Number two, it would be great if you did transfer the balances to a card that had a 0% interest rate, but even gave you more of a credit limit. So you didn't hurt your debt to credit limit ratio score. So that's what I would be doing if you could. But again, before you close down credit cards, make sure that you have opened up new credit cards for no fees that have a higher credit limit on it so that when you close down the old ones, you haven't increased your debt to credit limit ratio. All right.

KT: All right. This next one from James, you're gonna love dear Suze. So great to hear you're back in the ocean again with KT beside you. I love that James.

Suze: She still hasn't used her ocean ticket.

KT: All right, quick question. My banker recently told me long term interest rate for CDs may actually go up. Not sure if this relates to inverted yield curve slowly changing again. Your thoughts, James from Seattle.

Suze: James. Get a new banker. KT, that's the most ridiculous thing I've ever heard. All right.

KT: Now, this one is from Leslie saving too much for college. Hi, KT and Suze. I wanna help my Children two and almost five to be successful and pay for college for them right now. That's not gonna make them successful. Right now, we have just over 38,000 between the two kids saved in a 529. I know part of it can roll over to a Roth IRA if they don't use it, but not all of it. I'm worried that they might not go to college or maybe get scholarships for this reason. Would you recommend saving money in a market fund versus a 529?

Suze: Leslie, whether you put money in a 529 plan or not? What you have to really understand because it bothers me that you want to help your Children be successful and pay for college for them. The reason that I am as successful as I am today is that I knew my parents didn't have the money to send me to college and I had to pay for myself. I learned that if I wanted something, I had to provide it for myself, and I'm still providing everything for myself. And that allowed me also to take care of my mother to take care of things. And I loved that not my mother taking care of me.

Suze: So to be successful isn't about money. To be successful is knowing you have what it takes to do anything and everything in this world you want to do with that said you are far better off if you are going to save for their college education to do it in a 529 plan because in many states, you didn't say what state you live in the money you put in is tax deductible. It grows tax free and trust me, chances are they're going to go to school. Why would they not? And if they get scholarships, you get to take the money out. And this thing about, you know, it could go over to a Roth. 

Suze: Oh, please. That's so ridiculous. I can't even tell you there are so many rules and regulations with that, that should not even be part of the equation. So do a 529 plan. And if, in fact you think that maybe they won't as time goes on, stop contributing to it. Just that simple. And maybe you pay for one year for them, or maybe two years and that's it. And then let them get loans for the rest and pay it off themselves. That's what I would tell you.

Suze: Quizzie time, KT.

KT: Ok.

Suze: Are you ready?

KT: I'm ready.

Suze: I love this one. I love this one so much. It's from Marcus.

KT: What did Marcus need?

Suze: He says hi, KT and Suze. I'm 17 years old. I made $1017 of gross pay this summer. Plus I did some job training stuff and got $600 in a visa gift card from that agency. Here's his question. Can I contribute $1617 dollars into the custodial Roth? My parents set up for me. My net pay was $918.70. I wanna report the $600 in gift cards on my taxes so I can invest it. My parents claim me as a dependent. Thank you. 

Suze: So, KT, here is your Roth kind of question for you, which is 17 year old made $1017 in gross pay after taxes. However, it was only $918 and he made $600 in a gift card on a visa. Can he contribute 1017 a year? Can he contribute 1617 this year or can he only put in $918? Because that was his net pay,

KT: I think for the Roth he can put in $918. I don't think you can put a gift, you have to put earned income, but that's not earned

Suze: the gift card. Ding, ding, ding the gift card. He cannot convert and put into a Roth. But can he put in his gross pay of $1017 or only his net pay of $918?

KT: I think the net,

Suze: That's it? So he can't put in the earned income. Just the net?

KT: I think you only put in the net,

KT: (Suze makes the wrong answer noise) You can put, but if you...

Suze: Don't, don't try to

KT: put in the total amount

Suze: So he can put in 1017 of his gross pay because that is what he earned. That was his earnings. KT and that he can put in but not the $600 of his card. But here's what I want you to know Marcus.

Suze: You are 17 years of age. If you just put in $1000 a year, that's it. $1000 a year every year for 53 years till you were 70 that's only $53,000 over those 53 years. And let's say in your Roth, you earned an average annual rate of return of 10%.

Suze: Marcus, how much do you think you would have at the end of 53 years? I want you all to think about it. He put in right, $53,000. That's all he put in 53,000, over 53 years. And do all of, you know that at the end of 53 years, at 10% annual average rate of return, he would have $1.8 million at a 12% annual average rate of return. Marcus. You'd have almost $4 million in your Roth. I mean, do you not find that amazing? That's less than $100 a month. 

Suze: All right, KT brings us to the end of this podcast. Now, everybody knows there's only one thing that we want them to remember when it comes to their money and it's people first then money, then things. Say it in Spanish, KT:

KT: Las personas primero, Luego, el dro e Luego, Las Cosas.

Suze: Yeah KT and if you stay safe and healthy, you will be unstoppable. How do you say unstoppable?

KT: I think it's...

KT: I don't know, I don't know, unstoppable. I don't know. Unstoppable. I have to say unstoppable.

Suze: See you next time. Bye bye.