Ask KT & Suze Anything: When Is The Right Time To Self Insure?

Summary

Summary of "Ask KT & Suze Anything: When Is The Right Time To Self Insure?"

Podcast Title: Suze Orman's Women & Money (And Everyone Smart Enough To Listen)
Host/Author: Suze Orman Media
Episode Title: Ask KT & Suze Anything: When Is The Right Time To Self Insure?
Release Date: February 6, 2025

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Introduction

In this engaging episode of Women & Money, Suze Orman and her co-host KT dive into various listener questions, offering expert advice on personal finance matters. The episode emphasizes the importance of financial security, strategic investment, and making informed decisions to navigate complex financial landscapes.

Self-Insuring: When Is It the Right Choice?

[13:37] Suze Orman: Suze addresses Suzanne from Texas, who inquires about self-insuring her condo in Florida. Self-insuring involves setting aside funds to cover potential damages instead of paying high insurance premiums.

• Key Points:
  • Cost-Benefit Analysis: Suze highlights the exorbitant cost of insurance in Florida, citing a $28,000 annual premium for a 2,000 square foot condo as "ridiculous."
  • Risk Assessment: She emphasizes evaluating the likelihood of events like hurricanes. Given her condo's 21-year history without hurricane damage, Suze considers self-insuring a viable option.
  • Financial Readiness: The decision to self-insure hinges on one's ability to cover repair costs without jeopardizing financial security.

Notable Quote:

"If something happens to the condo, the outside and everything will be protected by the condo insurance for the building. The inside is what we will be responsible for." — Suze Orman [13:57]

Listener Questions and Expert Responses

1. Disagreement on Home Ownership for Seniors

[03:08] KT: A listener from Staten Island questions Suze's stance on home ownership for seniors, arguing that owning a home provides security against rising rents and eviction risks.

[06:16] Suze Orman: Suze counters by acknowledging the generational privilege of owning property when prices were lower. She points out the current barriers for younger generations, such as high property prices, insurance costs, and job instability, making home ownership less accessible today.

Notable Quote:

"It's okay because with insurance and things like that, it just might be too expensive." — Suze Orman [09:10]

2. Understanding Roth IRA vs. Roth 403B

[16:10] KT: Ashley seeks clarification on withdrawing funds from a Roth account before age 59½ without penalties.

[17:05] Suze Orman: Suze explains the differences between a Roth IRA and a Roth 403B. While Roth IRA contributors can withdraw their original contributions tax-free at any time, Roth 403B accounts have a mixed structure where withdrawals include both contributions and earnings, potentially incurring taxes and penalties if taken before the stipulated age and time frame.

Notable Quote:

"So you have to figure it out. But probably I would start with getting rid of his worst performers first if I wasn't able to offset things." — Suze Orman [21:26]

3. Managing Investments for Elderly Parents

[20:54] KT: Beth seeks advice on managing her 95-year-old father's investments to fund his care, contemplating whether to use existing investments or liquidate them for necessary funds.

[21:05] Suze Orman: Suze recommends assessing the investment portfolio's performance, prioritizing the liquidation of underperforming assets to minimize tax implications. She advises consulting with a financial or tax advisor to make informed decisions, ensuring that essential funds are available without unnecessary tax burdens.

Notable Quote:

"If I were you, I would actually sit down with either a financial advisor or a tax person, look at everything your dad has and do the ones that make the most sense." — Suze Orman [24:02]

4. Navigating Financial Fears Amid Political Uncertainty

[24:12] KT: Rachel expresses anxiety over political instability affecting her financial security, including concerns about market fluctuations, bank safety, and the potential invalidation of her same-sex marriage.

[24:46] Suze Orman: Suze addresses Rachel's fears by reassuring her about the stability of the stock market and the protection offered by FDIC-insured banks. Regarding the legal status of same-sex marriages, she explains that overturning such recognition would require a constitutional amendment, which is highly improbable given current public support. Suze encourages listeners to secure their marriages and not take them for granted.

Notable Quote:

"If you're out there and thinking about [getting married], go ahead and do it, but don't do it just to do it." — Suze Orman [25:45]

Personal Stories and Community Support

Suze and KT share personal anecdotes, such as Suze's real estate investments in the 1980s and her ongoing friendships, to illustrate financial principles and the value of community support. They highlight listener Marilyn's encouraging experience post-divorce, emphasizing the importance of seeking support during challenging times.

Notable Quote:

"One thing we want you to remember when it comes to your money is: People first, then money, then fishing, then things." — Suze Orman [35:59]

Final Thoughts and Upcoming Segments

The episode concludes with a teaser for an upcoming "Suze School" webinar, where Suze plans to delve deeper into investment strategies like lump sum investing, dollar cost averaging, and value cost averaging. She reiterates the core message of prioritizing people over money to maintain financial and personal well-being.

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Key Takeaways

1. Self-Insuring: A viable option when insurance costs are prohibitively high and one is financially prepared to cover potential losses.
2. Generational Financial Shifts: Understanding that past privileges in real estate may not be replicable for younger generations due to current economic conditions.
3. Investment Vehicle Nuances: Differentiating between Roth IRA and Roth 403B structures is crucial for avoiding unexpected taxes and penalties.
4. Elder Financial Management: Prioritizing the liquidation of underperforming assets and seeking professional advice can optimize financial support for elderly parents.
5. Legal and Financial Security for Same-Sex Couples: While political changes pose minimal immediate threats, securing marriages legally is essential.

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This episode of Women & Money offers comprehensive insights into self-insuring, investment strategies, and managing financial anxieties amidst external uncertainties. Suze Orman's expertise, combined with KT's thoughtful moderation, provides listeners with practical advice and reassurance to navigate their financial journeys confidently.

Transcript

[Susie Orman]

Hi, everybody. Suzio here. Now, what is the goal of money? The goal of money is for you to be secure. And there is no better way for you to be secure than having an emergency savings account. It is essential for your financial foundation. So all of you should be participating in the Ultimate Opportunity savings account at Alliant Credit Union. Go to myalliant.com to find out more. And be secure.

[KT]

We are strong we are wise we.

[Susie Orman]

Will not apologize we are here we will thrive Together we will rise we're the faith and everything it takes we are strong we are wise together we re February 6, 2025. Welcome, everybody, to the Women in Money podcast, as well as everybody smart enough to listen. Guess who's in the house this morning?

[KT]

Kt.

[Susie Orman]

Why you say it like that?

[KT]

Because. Why wouldn't I be?

[Susie Orman]

I don't know.

[KT]

Actually, it's Thursday.

[Susie Orman]

Well, sometimes it was Sunday.

[KT]

No, no, no, no, no. K.T. and Susie are always Thursday. Occasionally, I join you for susie's school.

[Susie Orman]

However, Ms. Travis, you're gonna change it up. You asked, and people answered on the email.

[KT]

They want me all the time.

[Susie Orman]

They want you all the time.

[KT]

Okay, you got me. You got me all the time. I'll do it Sunday, Thursday, and I won't charge overtime.

[Susie Orman]

Oh, well, it's a deal. I'll take it. All right, sweetheart.

[KT]

Susie, it's almost Valentine's Day.

[Susie Orman]

What are we gonna do?

[KT]

I don't know. I was gonna ask you, do you have anything special in mind?

[Susie Orman]

Well, we're gonna be in Florida, because if any of you care, maybe you want to come out. We're going to see Kathy Griffin on February 15, Miami, and I think it's at the Jackie Gleason Theater. And as you know, Kathy is a very good friend of ours, an old, old pal friend. And she said, yes, you better be there. Be there. So we. KT and I will be there. Are you gonna be there, too? If so, you best say hi to us. All right, kt.

[KT]

Okay, so here we go. My first question is about.

[Susie Orman]

Wait, we didn't tell anybody what this really. What happens today? She's looking like, what?

[KT]

What happens today?

[Susie Orman]

This is where you write in.

[KT]

Oh, you write in. But don't they know that by now?

[Susie Orman]

Do all of you listeners.

[KT]

Okay, so the new listeners. Here you go. Ready? Go, Susie.

[Susie Orman]

So if you have a question and you want KT to possibly choose it so that I can answer it on this podcast, just write into asksusypodcast. That's s u z e podcastmail.com. all right?

[KT]

Okay. I picked this one because this one is a little bit. They don't agree with you, which is very rare. I'm not gonna mention the name, but why?

[Susie Orman]

Because I'm going to yell at them.

[KT]

No, I was asked, and it's. I don't.

[Susie Orman]

So there's somebody.

[KT]

It's a woman, and she said.

[Susie Orman]

Please stop. She disagrees with me.

[KT]

Disagrees with.

[Susie Orman]

She's embarrassed to use her name.

[KT]

Yes, because she's embarrassed probably to disagree with the great Susie Orman. But here you go, Susie and Heisen.

[Susie Orman]

Just use her name. Come on, kt, use her name.

[KT]

I'm being respectful, but I will tell everyone she's from Staten Island.

[Susie Orman]

All right, go on.

[KT]

Hi, Susie and kt, thank you for always having an interesting podcast. Podcast. Regarding podcast number 644, do you even.

[Susie Orman]

Know what that one was?

[KT]

I don't know who remembers numbers? But if all of you are wondering why Ms. Staten island disagreed, go to podcast 644, have a listen, and then listen to this. I disagree with you about home ownership as a senior, so I wanted to say something. She's writing to us saying, as a senior. Does she know that we're seniors? Like really senior?

[Susie Orman]

We're older than senior.

[KT]

Yeah, we're older. What are we? What category are we?

[Susie Orman]

Senior plus senoritas.

[KT]

Oh, senoritas. All right, all right. As a senior, I would be terrified if I was a renter. Watching uncontrolled rents unpredictably go way up with the housing shortage.

[Susie Orman]

Yes.

[KT]

And the cost for moving to a cheaper apartment is high, so folks are stuck. Susie, at the time my partner and I bought a townhouse in Staten Island, New York in 1984.

[Susie Orman]

Are you kidding me? She's comparing 1984 to now. Are you just kidding me, Ms. Staten Island?

[KT]

She's a senior. My rent for one bedroom was about to be raised to 4. $400 in a nearby neighborhood. His in Brooklyn was around the same, maybe 450. So we would have wasted so much money in rent over the years. Yes, we've had big surprise maintenance costs, but at least it's not rent going to someone else's property. And this is in bold, everyone. And we can't be evicted, which is as close as one can get to security. You might disagree with that, Susie. And now, so Ms. Staten island said, you suggest one might save a million dollars in roth Investments over 40 years. That implies one with no home ownership has unsecured money he can afford to lose. A million is barely a backup now for old age. In 40 years, it will be a pittance. I don't know, a million dollars. In 40 years, what would it really be, Susie?

[Susie Orman]

Well, probably at about a 2 1/2% inflation rate, around $375,000. Right around there.

[KT]

Well, there you go.

[Susie Orman]

All right, so wait. So let's get realistic here. All of us who are older lived in a very privileged time. We lived in a time when real estate was really so inexpensive. I can't tell you. I remember when this incredibly large house in Berkeley, California was $17,000.

[KT]

You do?

[Susie Orman]

Yeah. And then the next year, it was 34,000 KT. I bought that huge home, 97 Tunnel Road, for $40,000.

[KT]

I remember you showed it to me.

[Susie Orman]

I bought my house up in the Oakland Hills for $65,000, and then it sold for what, $900,000. Whatever. So the thing is, Ms. Staten island, is that you have to also, as you've gotten older now, you have to appreciate the fact that all of us were able to buy things at a time when they were far less expensive and that it just made sense to own real estate. Today. I can't even imagine what is your house worth? What are you going to sell it for? And is anybody going to be able to even buy it? So we were privileged. So while you may be able to disagree with me, and I respect that, today, for those who are younger, the millennials and all of them, it's incredibly difficult to buy a home that Average prices are $400,000, that least $80,000 down. Insurance is through the roof. Property taxes are through the roof. The jobs aren't stable. They're being displaced by artificial intelligence. If you're working for the federal government, well, you've just been laid off. There are tens of thousands of jobs that are going away. So while you get to enjoy the fact that you own it outright and you can't be evicted, you also have to be understanding of why somebody like Suze Orman says it's okay to just rent. It's okay because with insurance and things like that, it just might be too expensive. Now you're in Staten Island, I just have to say this.

[KT]

It's expensive.

[Susie Orman]

You're in Staten Island. There are people in Florida who own their homes outright, and they have to sell because their insurance has gone up so much. They can't afford their insurance payments even though they own the house outright. So don't be too judgmental. It depends on who you are, where you live, their income and everything like that. Next. Okay, I suggest that a million dollars In a roth investment over 40 years, right, implies with no home ownership. No, I didn't imply that. But what I was trying to do is make a point with the woman who is interviewing me. Simply, it's better to have something than nothing. And if you can't afford a home, alright, at least start saving for the future. The example of $1 million was $100 a month over 40 years. And that would give you a million dollars. What if it were $200 a month or $500 a month? Something is better than nothing. And to understand compounding helps you no matter what. So don't be so snippety that a million dollars will only be a pittance. $376,000, even 40 years from now, is not a a pittance. There are people who would love to have just $10,000. So be more gracious, my dear. One next. KT.

[KT]

Okay, this is from Marilyn. And the subject said, in the same boat as Juliana. Oh.

[Susie Orman]

So wait, let me remind everybody about Juliana. Who?

[KT]

Juliana.

[Susie Orman]

A week or so ago, I asked all of you who might have advice for Juliana, because she was actually the quizzy, I think, anyway, to write in and give her advice. Why? Because she is in this abusive relationship. She's been separated and she's so confused. Should she divorce him? Should she not? And she's just scared to make a move. So I thought maybe all of you could help her. And she's gotten about 50, by the way, responses to her situation. But obviously KT chose to read.

[KT]

I like this one. This is important. It said, hi, Susie. This. This past summer.

[Susie Orman]

Juliana, I hope you're listening.

[KT]

All right, yeah.

[Susie Orman]

Go for it, kt.

[KT]

Hi, Susie. This past summer, you advised me when I went through a very ugly and contested divorce from a similar man. So her man or husband was similar to Juliana's. It was very hard emotionally and financially, as it cost me $174,000 in legal fees. I am now on the other side and am in a much better place. I promise, Juliana, it will get better. I even started dating, which I never thought I would. It feels amazing to go out with a man who values and respects you. My children are very happy to see me out of a bad marriage as well. Please tell Juliana she can reach out to me if she needs support or has questions about my experience. Don't go through it alone. Reach out to those who love you. And ready? This is the finale. And get a therapist. So, Marilyn, thank you so much for being kind enough to take the time to send that in to Juliana.

[Susie Orman]

Thank you to all of you who took the time to do so. I'll try my best to get all of them to Juliana. Right. And I do have to cross out all your names and everything to protect all of you. But anyway, I'll try my best to do so. But thanks, everybody. Seriously. You know, kt, supporting each other, the people that listen to the Women and Money podcast, and everybody smart enough to listen, the majority of everybody really are so kind and good and supportive and we appreciate that so, so very much. Okay.

[KT]

Okay, Next is from Suzanne. Good morning, Susie and kt. You mentioned last Sunday you will self insure your home.

[Susie Orman]

You bet.

[KT]

Please teach us what to look at to know when it's right to self insure. Thank you for everything you do. Now Suzanne's from Texas, so she's interested obviously in self insuring.

[Susie Orman]

So Suzanne, here's what you have to take in consideration. I'll just tell you as far as we go, to pay $28,000 thousand dollars a year for a really 2,000 square foot condo, that's all it is, is just ridiculous.

[KT]

In Florida.

[Susie Orman]

In Florida is ridiculous because they also let you know if you make one little claim, even if it's a little claim, they're going to cancel you. So my looking at it is, all right, if something happens to the condo, the outside and everything will be protected by the condo insurance for the building. The inside is what we will be responsible for. So I look at everything and I just think, all right, I rather come up with whatever it's going to cost to fix everything than have to pay $28,000 a year. Now, my big fear is hurricanes. So it's possible that we could get hit this summer after I've canceled. It's also possible that for the 20 some odd years that we have lived there and we've gone through many hurricanes, can you believe we've lived there? How long have we lived there? 20, 21 years?

[KT]

Yeah, 21 years. 21 maybe. Going on 22 years.

[Unknown]

Whoa.

[Susie Orman]

Can you believe it?

[KT]

Yeah.

[Susie Orman]

Anyway, and we love it. There's. We've never been hit by a hurricane yet. So if I were to say, okay, can I go five years maybe and not being hit, and that would be $150,000 savings, which would probably be enough to fix everything. But regardless, it's right for us to self insure because the truth of the matter is, no matter what happened in that condo, we can easily afford to fix it and it will not on any level affect us financially in terms of our security or anything. So that's kind of how when you know it's right is if you drop your insurance and this next week or whatever, the place is destroyed, can you afford to replace it totally on your own? And it's easy to do. All right, kt.

[KT]

All right. Next is from Ashley. It's about a Roth. All right, so ready? Everywhere I go, I'm told.

[Susie Orman]

Which by the way, I have to say something, everybody. So I told kt today was supposed to be a Roth quizzy, not for her. And she keeps saying I'm not ready. I said, when are you going to be ready? What did you say?

[KT]

Two weeks.

[Susie Orman]

You said two months. You said two months. So don't think I forgot, everybody. But no way. I have the quizzy right here. I've done the quizzy. I looked at her and she said, I'm not doing that. Right. I'm not doing it. I'm not doing it.

[KT]

I'm letting Susie answer this Roth question.

[Susie Orman]

All right, go on.

[KT]

But I'm not doing a quizzy. So here's what Ashley said.

[Susie Orman]

Put her foot down.

[KT]

She said, everywhere I go, I'm told I will have to pay penalties and possibly taxes if I withdraw contributions from a 403Roth before I am 59 and a half years of age. And if the account hasn't been open for at least five years.

[Susie Orman]

Yes.

[KT]

So then she said, and I just tell them that Susie Orman says that you can take out contributions only my post tax contributions, not my employer's pre tax at any time without penalties. Susie, am I wrong? Did I misunderstand you?

[Susie Orman]

You did misunderstand me.

[KT]

Oh, Ashley. All right, let Susie explain.

[Susie Orman]

When it comes To a Roth 403B, when it comes to a Roth IRA, please everybody understand the difference. A Roth IRA is an individual retirement account that you yourself open up, usually at a brokerage firm or whatever it may be. When that is the case, you can take out any of your original contributions that you put in, regardless of age or how long the account has been open without any taxes or penalties. It's the earnings that have to stay in there for at least five years and you have to be 59 and a half years of age. But in a Roth, you have the ability to just take out contributions. In a Roth 403B, that is not how it works, my dear Ashley, because they do a combination. You just can't take out contributions from a Roth 403. So what happens is they do a calculation. Let's say you had $50,000 in your Roth 403 30,000 were your contributions, 20,000 were growth. So if you were to divide 30 by 50,000, that's 60%. 20 by 50,000, that's 40%. So if you wanted to just, let's say, take out $10,000 of your contributions, 60% of that $10,000 would be considered contributions totally tax free. No problem. The 40% or $4,000 of that $10,000 is going to be considered earnings. If it hasn't been in there for at least five years and you're not at least 59 and a half years of age or older, you're not only going to have to pay ordinary income taxes on that 4,000, you're going to have to pay a 10% penalty as well. So you have mixed up a Roth IRA with a Roth 403 or 401 or tsp. There you go. All right.

[KT]

Okay. We straightened her out.

[Susie Orman]

That should have been your quizzy.

[KT]

It should have. I would have. I would have never gotten it.

[Susie Orman]

That's why my voice has gotten so hoarse over the years.

[KT]

Okay.

[Susie Orman]

I'm always going like this to kt.

[KT]

Okay. This is from Beth. I like this one because it's. So many of us are in the same boat here. As my dad's power of attorney for finances, I may soon need to decide which investments to redeem so he can receive the care he needs. He is 95 years old. He has a good daughter. Most of his assets are in mutual funds with only a small portion in an ira. He does not have long term care insurance. Number one, I'm guessing, should I use his regular investments first? But how do I decide which ones to use? The best performing, the worst performing. Number two, should I liquidate a sum of money now for easy access? A year's worth, more or less. So Beth wants to do the right.

[Susie Orman]

Thing and ask if you remember, I think it was last week, I answered, you picked a question very similar.

[KT]

Similar to that which had. Yeah. Numbers. Amounts of money.

[Susie Orman]

How come you're picking the same type of question? Because it's because.

[KT]

Yeah, I think because many people that we know are in this situation of taking care of elderly parents. The decisions and just the conversations are so awkward and difficult.

[Susie Orman]

Yeah, but this one isn't about an awkward or difficult.

[KT]

No, this one is for Beth, too.

[Susie Orman]

This is for you to do something just that simple. So here's the scoop, my friend, which is, if I were you, I would not just do little by little because anything can happen at any time to the stock market. And therefore Your father is 95 now. He could live another five years. My mother lived till 97 and it was because she didn't really want to live any longer or she really would have lived till 100 or she'd probably still be alive today, Katie. Probably. Anyway. So if I were you and I were in this situation, I would figure out a lump sum of money that I know I'm going to need for my dad for at least three years. And depending on where his investments are, I would look and talk to a tax person. And I would look, especially if it's outside of a retirement account. I would cash out of the ones that were the best performing he has gains in and I would sell the ones that he has losses in if there are any. And I would offset the two so he doesn't owe any taxes on it. If it's outside of a retirement account and he doesn't have any gains to offset, then I would do only the ones really that had the losses in it and let the winners continue to go so he doesn't have to pay taxes on it because I don't know how large of a capital gain or an ordinary income he's going to have. But if I were you, the best advice I could give you is I would actually sit down with either a financial advisor or a tax person, look at everything your dad has and do the ones that make the most sense. Also, I just have to say this. Remember upon his death, death, when you get this, especially if it's outside of a retirement account, if he's going to leave it to you, you get a step up in basis on all the stocks and anything else he has where he has a tremendous gain. And then if you sell it, there's no taxes. So you have to figure it out. But probably I would start with getting rid of his worst performers first if I didn't wasn't able to offset things. Okay.

[KT]

All right, Susie, next question is from Rachel. This kind of made me chuckle because the subject says fear and politics.

[Susie Orman]

I'm not gonna do politics.

[KT]

We don't do politics. I'm not making any comment, but obviously Rachel said, Susie, I'm freaking out about all the political stuff. I'm worried about the money I have in the market. I'm worried about the money I have in the banks. I'm worried they will invalidate my marriage. I'm worried about so many things right now and I don't know how to feel okay about the future. Will the must have documents cover me and my same sex spouse if they overturn recognition of my Marriage.

[Susie Orman]

So you know kt, she's asking two different questions. Oh, she's just financially scared to death. You're asking, is the market going to be okay? Is money going to be okay? And all of that. I would tell you I wouldn't worry about it. I wouldn't. Because I think this year in particular is going to be a really great year for the stock market, possibly into 2026. Believe it or not, the money that you have in banks are FDIC insured, hopefully, if you're with the 250,000 or many beneficiaries. So I wouldn't be worried about those things. Would I be worried about gay marriage being invalidated, which obviously kind of affects KT and myself. But we were married in South Africa. We don't even have a license here in the United States.

[KT]

What we have is acknowledged and recognized worldwide.

[Susie Orman]

But anyway, more important than that. But here's what everybody is writing me who's worried about the invalidation of gay marriage or same sex marriage. Truthfully, the only way to completely ban same sex marriage nationwide would be through a constitutional KT amendment where they would be defining marriage as a man and a woman. Now, what's interesting about this because KT is looking at me as if I should know this, right? But anyway, is this would require 2/3 KT of Congress and the ratification of almost, I think it's 38 states to get rid of it, which in my opinion is highly, highly improbable. And why is that? Because the current public support of same sex marriage is 70%. So I don't think a lot of these states are going to really jeopardize everybody voting them out next time. However, will marriages that are existing become null and void? I don't think so. However, it may be that marriages in the future won't be allowed to happen. And that is an absolute possibility. Therefore, if you're out there, if you're gay, you've been thinking about getting married, I would do it. Stop thinking, stop thinking about it. Right. Wait, I just have to tell a little story, even though I know we may run a little late. We were on that cruise ship Olivia, remember? And there were two women and I was speaking there and two women stood up who had been together forever. And essentially they said to me, this was after same sex marriage was legalized in the United States. And I said, oh, so you're going to get married? They said, no, what for? I said, what do you mean, what for? They said, we love each other, everything's okay. I said, do you know how hard all of us worked to get same sex marriage legalized. I gave talk to senators. I did so much. It was like it was essential. Especially when you love somebody like I love kt. Of course you want to be able to get married. And they said, nah, it's all right. And I said, don't wait. Don't take something for granted. Cause you never know when it will go away. And here we are today with. I've gotten over 50 emails like this KT asking this question. So don't take it for granted. If you're out there and thinking about it, go ahead and do it, but don't do it just to do it. And then you're gonna have to get divorced. And then you're gonna be like all these other people that write in and go, you're fighting. And it just cost you $176,000 in legal fees. All right, next. KT. Di Moore.

[KT]

I'm done, I'm done. Do you have a quizzy?

[Susie Orman]

Of course I have a quizzy.

[KT]

All right, give me my quizzy.

[Susie Orman]

Wait, you're just done that quick?

[KT]

I'm finished. Yeah.

[Susie Orman]

That's all you picked?

[KT]

Mm.

[Susie Orman]

All right then. Quizzy time. Ding a ding, ding, ding, dingy. Oh, look, I have my marriage ring on everybody. Look, Katie, nice.

[KT]

So pretty.

[Susie Orman]

Yeah, because yesterday I had to do a webinar and I wanted everybody to see that I was married. So do you hear it banging on the desk?

[KT]

I hear it. That's why I keep looking at her. Don't bang your rings.

[Susie Orman]

All right, so. But that's what that noise is in case you hear it now. Ready?

[KT]

What's my quizzy?

[Susie Orman]

This is from Brent. All right. Good afternoon, Suzy. Now all of you know Quizzy isn't just for kt. This is for you to be able to answer this as well. Good afternoon, Suzy. I'm reaching out for your guidance regarding my parents financial situation which has been weighing heavily on me. My mother is already retired and only has Social Security as her retirement plan. My father, who is 68, is looking to retire soon. They are still married. Unfortunately, they've never been strong with managing money and have a history of on again, off again credit debt often resolved through bankruptcy in the past. However, they no longer qualify for that option. Obviously that's KT because they filed just a few years ago so they can't do it again. Currently they have approximately $60,000 in credit card debt.

[KT]

Oh my God.

[Susie Orman]

And they owe about 110,000 on their mortgage. Remember, they're only in their 60s, they are about to receive $98,000 as a tax free inheritance from the sale of my grandmother's home. Additionally, my father has around 250,000 in his 401k. My question is, should they use the inheritance to pay off their mortgage or should they use it to pay off their credit card debt? Think about it, 98,000 tax free. Daddy has $250,000 in a 401k. Should they use the inheritance to pay off their mortgage or their credit card debt?

[KT]

I'm ready with my answer.

[Susie Orman]

What is it?

[KT]

I think they absolutely should pay off the mortgage. But there's going to be some money left over, right?

[Susie Orman]

No, they're not going to have enough. Right. Their mortgage is 110,000. They only have 98,000 coming in. Yeah. So they're going to owe still $12,000.

[KT]

Pay off the mortgage?

[Susie Orman]

Absolutely. Your final answer?

[KT]

I think so.

[Susie Orman]

You sure?

[KT]

Yeah.

[Susie Orman]

Oh, I'm so happy to be able to do this to you. Are you ready?

[KT]

Yeah.

[Susie Orman]

My hoarse voice. Are you ready?

[KT]

Yeah.

[Susie Orman]

Ding a ding, a ding a ding a ding, a ding a ding. Absolutely the correct answer. The reason everybody that it is the correct answer is that you never want them to get in a situation where they're not able to pay their mortgage and then their house is taken away from them. Remember, credit card debt is, you know, it's just credit card debt, it's not attached to anything. So given that they're not going to have any income or anything, what are the credit card companies going to do? All right, so if I were you, my dear Brent, I would take the 98,000 and I would pay the mortgage on the home. Then I would withdraw. As soon as your father retires, I would withdraw at least 12 more thousand dollars to pay off the mortgage totally. Then they own the house outright. Now the question is they still have $60,000 in credit card debt. Well, I don't know. What do you do with that now? Do you take the money that they were paying towards the mortgage and now they put that towards the credit card debt and sooner than later they will be out of credit card debt. That is how I would do it if I were you. And then be very careful about how they use that money in their 401k. And because I'm telling you, it could be really difficult if they just take it all out. I would, however, take the money that's in the 401k and do an IRA rollover with it. And then maybe if they don't have a lot of income Maybe just start converting some little by little to a Roth IRA if they're not going to need it to live on. All right, kt, that's a wrap. What are you doing today?

[KT]

Fishing.

[Susie Orman]

Kt, you have been fishing every single day.

[KT]

I'm trying to catch something special and I haven't been able to.

[Susie Orman]

And what is that, kt?

[KT]

A really nice tuna.

[Susie Orman]

That is why everybody, every single morning she is out the door by 6:00am with Kolo. I, on the other hand, can't go because somebody in the family has to work. But. And she doesn't get back usually. Until when, Katie?

[KT]

No, Lately I've been going out very, very early. But coming back midday, you know what.

[Susie Orman]

The tides are, two or three or four.

[KT]

The tides are six hours, everybody. So you fish a to.

[Susie Orman]

Yeah. Anyway. So you're going to go do it again? Yeah, maybe I'll go with you.

[KT]

Oh, yes. When Susie comes, it's so lucky. We catch, catch, catch, catch.

[Susie Orman]

All right. But until Sunday, when I am going to do a Susie School to hopefully try to explain to all of you the difference between lump sum investing, dollar cost averaging investing, and value cost averaging investing, which Mr. Keith Fitzgerald taught me about. I hope that you will listen because it's really a fascinating thing.

[KT]

I'll be there. I'll be there. And if I don't get, if I don't understand what she's saying, I'm going to ask her to explain it again. And if KT gets it, all of you will get it.

[Susie Orman]

All right, so until Sunday, there's really only one thing we want you to remember when it comes to your money and is what People first, then money, then fishing, then things and things. And if you do that, you stay safe and strong. You will be. KT wants to say it. Unstoppable. But you all still will rise together. Bye. Bye. We are strong, we are wise we will not apologize we are here we will thrive Together we will rise we're the faith and everything it takes we are strong, we are wise Together we will rise. Hi, everybody. Suzy O here. Now, if you are looking for a way to start saving to get the most out of your money, I want you to go to my alignment, that's M Y A L L I a n t.com and look into opening an ultimate opportunity savings account. Put in at least $100 a month every single month for 12 consecutive months. Earn 3.10% interest on your money right now and get a hundred dollars at the end. Are you kidding me? It's the best deal out there. Start saving right now.

[Unknown]

Neither Susie Orman Media nor Susie Orman is acting as a Certified Financial Plan Advisor, a Certified Financial Analyst, an economist, cpa, accountant, or lawyer. Neither Suze Orman Media nor Suze Orman make any recommendations as to any specific securities or investments. All content contained in this podcast is for informational and general purposes only and does not constitute financial accounting or legal advice. You should consult your own tax, legal and financial advisors regarding your particular situation. Neither Suze Orman Media nor Suze Orman accepts any responsibility for any losses which may arise from accessing or reliance on information in this podcast and to the fullest extent permitted by law, we exclude all liability for loss damages, direct or indirect, arising from the use of this information. The must have documents discussed in this podcast are legal documents created by a lawyer and distributed by Hay House.