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. All right, Susie, KT. Are you ready for today's podcast? Yeah, Robert. Of course we're ready. Because we are unstoppable. Yeah, baby. I put my arm on so you are strong. I am.
I put my arm on, I'll show you that I am I'm unstoppable I'm a Persia with no brakes I'm invincible Yeah, I would never sing a game I ain't so powerful I don't need batteries today I'm so confident Yeah, I'm unstoppable today
Hi, everybody. Welcome to the Women in Money podcast and ask KT anything because I know all about Boxing Day. Matter of fact, I know more about Boxing Day than Miss Susie, who's sitting in the studio with me right now. And giving her a look like, what is Boxing Day? I know what Boxing Day is. Boxing Day is one of my favorites. It's my favorite day after Christmas. And why is that? Because it's when you have all leftovers and you box them up.
You know, first of all, wait, everybody. That is a truth. We hope you had a great Christmas and Hanukkah and today. Oh, wait, we want us so happy. Quons. Everybody. Oh, all three at once has pretty much so. But everybody before we go on.
Welcome to the Women in Money podcast, as well as everybody smart enough to listen. And this is December 26th, 2024. And as Miss Travis just told you, boxing day, boxing day, boxing day. Now, let me just tell you briefly how I learned about boxing day.
Do you remember how I learned? Yes, I do. We were in Hong Kong. Tell everybody. And everybody that was in a helper for all the Asian families were all gathered in the square downtown and they all had boxed lunches. And that was Boxing Day. It's when you have all of the leftovers from Christmas for the next day. And I was like, what are they all doing, Katie? And that's
when she told me boxing day. So today, I have to eat everything out of a box. But that is beside the point. All right. Katie.
Did you have a good Christmas? I did. A very, very simple Christmas. It was lovely just being here on the island with very few people. Colo and you and I enjoyed it. And his wife arrives today. And we're very excited to welcome Annie for the very first time. And he's so nervous. I can't even begin to tell you. He is Kate. She's looking at me like,
Oh, don't see that, because he listens to these. We have a big welcome sign in his apartment, and he's very, very happy that she's coming finally. But we hope all of you enjoyed the holidays so far, no matter what tradition you happen to be celebrating.
But one thing that always goes on, no matter what, is needing to celebrate your money, your financial affairs. And that's what this podcast is all about, a celebration of you and your money. Katie, what is the first question? Okay, the first question I have is,
Greetings, Suzanne KT. Thank you for always putting a smile on my face. I love your banter. I love KT's sweet voice. And Susie, your laugh is adorable. I have a $25,000 bank CD maturing in February 2025. Here's my question. Should I pay off my car loan to reduce my monthly expenses?
So I can save a little more or what should I do with the 25,000 if you do not recommend I pay off my car loan. I'm 72 years old. My monthly auto payment is $351. The maturity date on that loan is
November, well, November, 2026. And the loan payoff amount is about $8,000. Does she happen to tell you what her income? She has social security. But what is her income? Her total amount of income she has. Okay, so the total amount of income she has is $4,965. Now, tell me what? Monthly. Does it give you the total expenses she has per month?
Yes, her expenses per month are about 4,700. Ooh, that's kind of tight, Susie. All right, so let me answer this then. And this is from Sharon. All right, Sharon. That's tight, isn't it? All right, so what would you tell her? Is this your quiz?
Well, I don't know if I wouldn't pay off the car loan. I'd be real careful with that $25,000 because I think she needs some of it. I don't think so. All right. You're the one that tells everyone what to do, what should Sharon do?
So, what I would do if I were you, because if you look further down on this email, KT, she does have $26,000 in a money market at fund, 40,000 in a Roth, 70,000 in IRA, 19,000 in mutual funds, and 30,000 in bonds. So, this $25,000 is from a CD that she hasn't even listed here, really. Okay. So, what would you have her do, knowing she has that money?
probably get rid of that car loan. You would have her take about 7,000, right? Yeah. Yeah. All right. So pay that off. All right. So that will reduce the expenses by $350 a month, right? That's my girl. There you go. 51. So that's what you would do. Yeah. Digging, digging, digging. Good job, Katie.
All right, so Sharon, here's what I would tell you. If you did the numbers, just strictly the numbers, you would be financially better off if you did not pay off the car loan with that money and you actually invested it, but Katie's looking at me because she knows I just said she was right, and you invested it. You would be ahead over the next 23 months by quite a few hundred dollars, however,
what is the goal of money, K.T. Feel secure. You've got that right on point, as we say, on point unboxing day. I knew you were going to say that. Anyway, and as I look at your expenses,
You are only bringing in $265 more a month than you have going out. That is cutting it really close. If you took that $7,917 and paid it off, you'd have an additional $351 a month that you wouldn't have to pay. So that's like you'd have $616 more per month
than what you have in expenses. Now you have more cushion and that will make you feel more secure. And I just have a feeling when you feel more secure, your expenses will also go down because you won't be spending as much. So if I were you, I would so pay it off, I cannot tell you.
My next question is from Janet, your KT and Susie. I took out an annuity and then I found you. Actually, since listening to your podcast and reading and rereading the ultimate retirement guide for the past three years, I now have emergency savings and all of my must have documents
taken care of. My certified pre-owned car will be paid off in February and I have a plan and place to pay off my home. Thank you for all your advice and expertise. I'm 68 and retired with a pension from teaching. We love teachers, don't we? Oh, so much. Okay, so Janet's saying now on to getting rid of my annuity. Did you have a favorite teacher?
Mmm. I did. Who? I did. Um... And why? Bob Waltrun.
Bob Waldron. Why was Bob your favorite teacher? He taught history. I just loved him. Yeah. Yeah. And he also loved performing arts. He was a fabulous man. This was in high school, but young high school. He was the one that put on all the school plays. And I painted all the scenery for every play. And my twin sister was usually the lead. We were very popular, Lynn and I. But I loved him. All right. Okay. Ready?
Did you? Actually, I did. Who was your favorite? Well, there were many from Mrs. Brennan and Mrs. Hazel and Mrs. O'Donnell and Mr. Edwards. However, my favorite teacher was Mora Kritzewski. Oh. And she was my Hebrew school teacher.
And as a little girl, I never wanted to go to Brownies or be in Girl Scouts. I wanted to go to Hebrew school at a very young age. So every day I would go to regular school and then I'd have to get on a bus and go all the way down to where the synagogue was and they had Hebrew school. And I would be in there for a few hours every day until my mom and dad were off work and they could pick me up because we only had one car.
And Mora Krachevsky and Mora is Hebrew for teacher. There was something that I just loved about this woman. And every Friday when we would go to synagogue, because I would say, please, let's go. Can you imagine a little kid saying, can we go to services? No, no, I can't. And so we would go. And I would ask if I could sit with her.
Oh, and I would sit with her and she loved your teacher and she would hold my hand. And she would say, you know, Susie, I taught you the alphabet and she did. And now that you know the alphabet, just know that God will put together all the letters for you into words and you'll understand everything because the service was all in Hebrew. And there was just something about this woman that I loved and gave me a faith
Not necessarily in Judaism, but a faith that in God, the God for all. She inspired you in a big way. Can you see that in my face? Yes, she's getting all excited, reminiscing. And I wrote her a letter when I turned 20.
You did? And I told her what she meant to me. And I said, and she was older, and I said, one day, I bet I'm going to grow up and you're going to be proud of who you helped make me. But what's funny is I have no idea she ever saw what happened to me. Anyway, don't get me, Terry. Come on. What's the next question? All right. This is from Janet.
Look at you, you are getting emotional. I love you so much. You did love your teacher. Doesn't it feel good to love somebody? Yeah. I mean, really love somebody because you're in a relationship with them or whatever. Just love them for what they gave you. So Janet, be so proud that you are a retired teacher. Yeah.
and I hope you had students like Susie, like little Susie. So now she says, now Susie, on to getting rid of my annuity through Equitable. I have a variable and index link deferred annuity contract series B that I took out with money my dad left me when he died. In the six years, it went from $50,000 to $68,300.
If I figured it correctly, that is a 36.6% rate of growth. The question is, do I have to cash out the annuity or can a brokerage firm have the money transferred for me? Or she's now asking, can you do a Susie school? The teacher wants you to do a Susie school. So how does she, can she do that? You might know what's funny, KT.
I'll tell you what's funny here is that I actually saw this, and I wrote Janet, and I told her exactly what I thought she should do. Well, tell us what you told Janet. But before I tell you what I told Janet to do,
Can I just do a very quick Susie school on why annuities are so bad? Go for it. So Janet put in $50,000 six years ago.
It's now worth $68,300. So in six years, it grew $18,300. That happens to be only a 5.4% approximately common annual rate of growth, which is horrific.
In today's market in the last six years that is horrific you janet were in an annuity that was an index annuity that was index according to the stand and pause five hundred index this year alone. It's up almost thirty percent are you kidding me.
So number one, an indexed annuity is not a good investment because you only get a percentage of what the index goes up. You do not get the entire thing. That's number one. Number two, Janet, if you decide to surrender this annuity now, then all $18,300
of growth is going to be taxable to you as ordinary income. If you had simply put that $50,000 in a mutual fund, same thing, mutual fund, ETF, whatever it may be, and you wanted to cash out now and it's been six years, that would be taxed to you as capital gains. Big, big difference. Number two,
Let's just say you decided to keep that annuity. You died and now it goes down to your beneficiaries. They are going to owe ordinary income tax on anything above that $50,000 in this case, $18,300.
If you had that in a mutual fund and you died and they inherited it, guess what? That $18,300 would be non-taxable to them because they would get a step up in cost basis on it. So do you all start to now understand why I don't like annuities? One thing I also just have to say, Katie,
If Janet was not 68, let's say she was 57, she's under 59 and a half and she cash this out, there would be a 10% federal tax penalty.
on at number one. Number two is that all annuities in most cases come with a surrender charge. And she could very well still be under a surrender charge of four, five, three percent, whatever it is, if she caches it out before the surrender period is over.
Yeah, what should she do? So assuming, my dear Janet, as I wrote you, that you did put in $50,000 with money, you've already paid taxes on, and assuming that you are no longer in a surrender period for this annuity, if it were me, I would surrender $9,150 right now before the end of the year
which is half of your gain. That's what I would do, and I would pay taxes on it. Now, what's interesting is that all interest or gains are taxed before you get your original money back.
January 1st, I would then just surrender the rest of the $59,150, which is totally what's left. You would own taxes on $9,150 for next year, taxes on that, and that's what I would do just that, easy.
Hi, KT, next question. What? I think I'm still spinning on what to do. No, but let me tell you why I took so much time with that. All people think about when they buy an annuity is what the financial salesperson told them, which is you can make money tax deferred. You don't have to pay taxes on this until you withdraw the money.
Blah, blah, blah. If you invest in this and you die and you have less in here, if it's worth less than your original amount, your beneficiaries will get as much as you originally put in. That's how it is sold. What most people don't understand is if you invest in an ETF or a mutual fund or even an individual stock, you don't pay taxes on it until you sell it.
So it's tax deferred anyway, but at a capital gains rate versus ordinary income tax and on and on. So that's why I went into it so much. Just do me all a favor. Can you stay away from them? All right. All right. Next question is from Teresa.
This question really confuses me. It says, what is the best credit score to have when buying a home, 720 or more? And which FICO score is used? I don't understand this. She writes 5, 6, 4, 7, 8, 10. What does that mean, Susie? If that confused all of you as well.
There are many different FICO scores, believe it or not. Many reiterations as to how FICO figures what your FICO score is. Again, FICO stands for Fair Isaac Corporation, the company that originally created the score and most creditors.
only use a fight-go score. They do not use a vantage score, so any of those scores that maybe you get for free, that isn't what 80% of your creditors actually use.
If you're buying a home, and I'll just break this down for all of you. Kati, you're going to die because here's another long one for you. You're going to do a FICO Susie school? I am. So FICO score eight is the one that's mostly widely used by creditors for general credit decisions. And that kind of includes whether they're going to give you a credit card or not, or a personal loan, and sometimes even auto loans.
However, it depends on what the specific score is that the lender happens to use. So you should be asking them. But again, FICO score 8 is the score that is most commonly used for just general credit decisions.
I hope I get this right. It's most popular used by banks and creditors, things like that. However, FICO score number two, four, and five are the ones that are mostly used by mortgage lenders.
And these are the classic FICO scores, KT, that you and I used to talk about years and years ago, and are part of the models that are mandated by Fannie Mae and Freddie Mac. Now, let's say you want to get an auto loan. Let's just say you do. The auto score eight or nine are the ones that are usually used by auto lenders, just so you know.
And if you're really doing credit application, as I said before, you're sticking with number eight. And that's kind of what you need to know. I think we have to clarify. If I understand it correctly, Susie, these numbers are the numbers of the score system used by creditors, banks, so on and so forth. Am I FICO? Yes, now.
There's two different numbers. There's your actual FICO score KT. Right. And FICO scores run anywhere from like 300 up to 850. To answer Teresa's question, you want a FICO score of about 760 or above. Doesn't matter. 760 all the way to 850. It'll be the same to get the lowest interest rate. But you need to know that is your FICO score.
went on the model number two, four, or five, which is what is used for mortgages. And I think I just want to say something. The model numbers that are stated here from her asking the question, are numbers that are used B to B? Yes. Yes. So we have to explain to everybody. Yes, but you have to know which model to you. She obviously knew about them.
So it's you have to look at your score for that model to know where you really fall.
Okay, that's all. It's really not that complicated. Okay. But I don't want people to be confused after teaching them for two decades about their personal FICO score versus a model number used by a creditor or bank. But you understand why it matters? Yes, I do. All right. Then they shouldn't be confused if you understand. All right. Sorry, Katie.
Okay, are we ready to move on? I am. All right. So this is next question. Is a Merry Christmas? Hello, Susie and Katie. I would like to know how you feel about Robin Hood. Is it good for buying and selling stocks? This is from Marilyn. I tell Marilyn, what do you think about Robin Hood? I used to call Susie Robin Hood.
Why made you stop? Because there's a company called Robinhood. I don't want them to think you're endorsing Robinhood the company. Well, like I am. Okay. Right. And that I like them. A few years ago, I want to let you touch them with a 10-foot pole, seriously. But they have adapted their ways of being. And now I think they are a fine brokerage firm that you absolutely can't invest in. They've also been a pretty interesting stock investment.
if you want to speculate as well. Anyway, go on Katie. Next question from Susan. Hi, Susan, Katie. I've been married to my high school sweetheart for a little over a year now. We are both 67 and so grateful to have found each other again. We are very happy. We both have children from previous marriages, and I have a will and a trust leaving my assets to my children as does he.
Now she said, I'm selling my house in California and we'll have a profit of about $700,000. This is my only asset aside from a small Alliant account and a Schwab account. My husband has about $80,000 in an IRA. The house I'm selling is one I inherited from my mother. I would like to keep this money fairly liquid and extremely safe with little risk.
I may invest $200,000 to $300,000 of it in our eventual second home. If we sell his home as well, my plan is that we will both contribute equal amounts to the new home. The rest I would like to put in a combination of Alliance CDs and maybe a Vanguard Vue, B-O-O. I would very much appreciate your advice. She said, it's a little scary, but I know I can trust you and I think I can do this.
So I love that you've found her high school sweetheart, but you've only been married for a little over a year now, which really, Susan is a very, very short period of time. It just is regardless of how long ago you knew him.
when you sell the house that you have that you inherited and you take two or three hundred thousand of that and put it in a house with your husband equal amounts if you happen to put it in title joint tenancy with right of survivorship if you were to die your half automatically goes to him
And if his half or his trust or will says that it's to go to his kids, you have disinherited yours. How you hold title to property overrides the wishes of your trust, your will, his trust, and his will. Understand what I'm saying to you here.
Therefore, you are never to put this $700,000 into his name on any level as joint tenants. You are always to keep it in your name under your separate account. Period. Do you hear me?
He could be the greatest guy in the world, but it is your inheritance for your children. His money is his inheritance for his children. So what would I do? If you are going to buy a house with him and you put two or three hundred thousand in it, you each should own it as tenants in common. And you could do that within a trust.
And what that means is that on your death, your half goes to your children upon his death. It goes to his children. And you could give each other a life estate in that house, which means you get to live in there. But upon that person's death, it gets divided
according to where you want your assets to go. So, number one, that's what I would be doing if I were you. In terms of what should you do with the rest of the money, I don't really know enough about you to really tell you, obviously, the Lion Credit Union CDs are a great place as well as treasury notes at this period of time, giving a nice interest rate. If you want growth,
You might want to wait till Keith Fitzgerald comes out with his thing in a month or so or whenever it does. We're just all patiently waiting. But just go easy with that money. And for now, just leave it in like an account in either Schwab in their government money market account or something like that. All right. I hope that was clear.
Okay, next question is from Sandra. I like this question, Susie. What, you didn't like the others? No, but I like this one because listen to this. We experience it ourselves. I'm 57 and I live in a 52-year-old condo in Miami.
We have had several assessments and another one coming up next month for a total of $42,000 in the last few years. I owe 69,000 on my condo. We have many delinquent owners that live in my building to the sum of half a million dollars. I'm considering putting my condo up for sale, but the realtor is advising me that I will have to pay the assessment in full before the closing. Is that true?
I have eight years before I retire. I'm not sure what the right thing to do is sell and go rent or just hold tight. I'm afraid the assessments are not going to end and many unit owners will not be able to pay their part. The rest of us will get stuck picking that up too.
I hope you can give me some guidance. You know, this is another funny one. I answered her directly because this is a really serious situation. It is. And I laid it out. Do one, two, three, four, five things you need to know. And with that said, everybody, if you want and you have a question,
Just write in to ask Susie, S-U-Z-E podcast at gmail.com. If KT chooses it, it will be on the podcast, but I go through these questions every once in a while. And if I see one that catches my attention, that needs truly an answer right away, I answer it.
most of the time, not all the time, but most of the time, it just depends how many has come in. So this one was Sandra, and the truth of the matter is just to summarize it, that these things that are happening, especially in condos in Miami, in Florida, that are older than 20 years of age,
They are getting assessments. They're deteriorating. And because of that collapse of that condo where many people were killed, now the Miami laws are making it so that you have to bring the condo up to date. And given that they've all let it go for so long, these assessments are not little. Some are $100,000. Some are $200,000 or more.
And a lot of people are just moving out. They don't care. They think they're just going to absolutely walk away from it, which is why so many people are in arrears in the building. So first of all, Sandra's realtor is absolutely correct. If you were able to sell it, Sandra, you would have to pay the special assessment before closing.
But the fact that this is happening, many buyers are very reluctant to buy something that has existing special assessments on it. Also, this is going to be a very difficult sell for you because you almost have to disclose to the new buyer that there are a high number of delinquent owners in your building.
And when they realize that, it can make your unit more difficult to sell, and especially, it could impact the sale price. And I could go on and on and on. Given the age of your building, which is 52 years of age, it's more likely that you're going to need a lot of assessments in the future. And so it's very difficult what should you do.
If you really want out, then you're going to have to put, in my opinion, a price on this condo that somebody will go, I'll chance this. Oh, it's worth, let's just say it's worth 300,000. And she only wants Sandra wants 150,000 for it. And she's paid for the assessment.
I'll take it, but you're going to have to make an offer that is so enticing to somebody. I can't even tell you. Otherwise, chances are, you're going to be stuck right there, right? And remember, continued assessments and a high delinquency rate is going to continue to negatively impact your property's value over time.
So these are all the things you have to think about, but you should consult a financial advisor, you know, absolutely make sure you attend the HOA meetings to find out what do they have planned, how are they going to help you, and consider also legal advice, because maybe a kind of lawyer can help you understand your rights and the association's options.
for dealing with delinquent owners. I can go on and on, but that's approximately what you have to do. The reason that I liked that you picked this one, KT, is this isn't just affecting Sandra. It might affect us in the condo that we live in. We've been in there a number of years. It's going on 25 years of age.
And I've been told that work needs to be done on it. Now in our situation, thankfully nobody's in arrears and it's a wealthy enough building really that people have the money to pay the assessments. But don't just think that buying a condo in Florida is the key to making money in real estate. It may become your greatest nightmare yet.
All right, Susie, this next question for you is from Susanna. This is our last one, right? Yeah. And because I went so long and you already did your quizzi upfront, we don't have a quizzi for you today. Okay, well, this is a good one. Hello, Susie and KT. I'm 51 single no kids.
Is having my trust as a beneficiary to my bank brokerage accounts instead of opening new accounts under my trust name? Okay. If having my trust as the primary beneficiary, do I need a secondary beneficiary? Right. And the answer to that question, Susanna, is no, no, no. Go to the trouble of changing your accounts to the title of the trust. Why is that?
Because all right, if you die and your beneficiary happens to be the trust, no big deal. You avoided probate, so to speak. Maybe. Maybe not depends how you did everything. However, the problem is what if you don't die and you're incapacitated.
And now it's just in your name with the beneficiary being your trust. Remember, one of the goals of having a living trust is that in case of an incapacity, your successor trustee can step in and pay your bills, do all kinds of things for you. So no, it is not okay to have the beneficiary just be the trust. You are to open it up in your trust name, change the title.
All right, KT. What do you think? Boxing day. Boxing day. What's in my box today? Let's go get, let's have some goodies in the box. No, what's in the box?
What's our leftover? What's my leftover? Well, we have. We have a lot of leftovers. I will surprise me. I'm going to surprise the thing, everybody. No sweets for you. But before we go on, today is December 26. And yesterday, December 25 was Jimmy Buffett's 78th birthday.
Yeah, Jimmy, we miss you. We miss you so much. So, so much. I can't even tell you. And we've been playing Melekalikimaka, all your songs. We played it all day yesterday for your birthday. But wherever you are, my dear Jimmy,
Please know that these two little mermaids of yours miss you so very, very much. So Susie, we still have one more podcast in 2024. That's Sunday. Maybe I'm going to come on with you. Maybe I'm going to take the day off. No, maybe I'll do it with you. Maybe I'm going to take the day off. Don't take the day off. Maybe we need to give Robert a day off.
No, we need a year-end. Oh, we do. We need a year-end. We need a summary. We, Robert, why don't you do our year-end funny one? Yeah, Robert. What's wrong with you? Let Robert do a year-end Sunday Susie school that isn't a school at all. It's Sunday fun with Susie a year-end.
Well, let's see what he can do. All right. But until either then or next year or whatever, we always wish you a very happy new year. We'll do it again in just a few more days. But just in case, happy new year. We love you all very much. And Katie.
Do you want to announce anything? Well, it's not an announcement. We owe a big thank you at this year and to our friend, Sia, who's made us all so happy and made us what, Susie. Unstoppable.
I'm unstoppable. I'm a butcher with no brakes. I'm invincible. I wonder every single day. Mine's a powerful. I don't need batteries to play. I'm so confident.
I'm unstoppable today I'm unstoppable today I'm unstoppable today I'm unstoppable today I'm unstoppable today
Hi everybody, Susie O'Hare. 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 myalliant.com, that's M-Y-A-L-L-I-A-N-T.com, and look into opening an ultimate opportunity savings account, putting at least $100 a month every single month for 12 consecutive months,
earn 3.10% interest on your money right now and get $100 at the end. Are you kidding me? It's the best deal out there. Start saving right now. Now, there's Susie Orman media nor Susie Orman is acting as a certified financial planner advisor, a certified financial analyst, an economist, CPA account or lawyer. Now, there's Susie Orman media nor Susie Orman
make any recommendations as to any specific securities or investments, or 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 Susie Orman Media nor Susie 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.
