1 00:00:08,300 --> 00:00:10,199 KT: Hi everybody. Good morning, Suze. 2 00:00:10,300 --> 00:00:12,739 Suze: It is always a good morning with you, Ms. Travis. 3 00:00:13,100 --> 00:00:15,909 KT: It's July 26, 2026. 4 00:00:16,299 --> 00:00:16,347 Suze: No it's not, no it's not! 5 00:00:16,347 --> 00:00:20,219 KT: Wait, wait, wait, wait, wait. OK, so we pre-recorded this 6 00:00:20,219 --> 00:00:23,620 KT: podcast before we left for our trip. 7 00:00:23,989 --> 00:00:25,219 KT: To Italy, Ciao Bella! 8 00:00:25,799 --> 00:00:30,620 Suze: For her birthday. This is another Ask KT and Anything 9 00:00:30,620 --> 00:00:34,830 Suze: combined with Suze School. Now why do I say that? 10 00:00:35,119 --> 00:00:39,880 Suze: Because some questions require more of a detailed explanation. It's 11 00:00:39,880 --> 00:00:41,900 Suze: more like a teaching part. 12 00:00:42,229 --> 00:00:45,319 Suze: And others are just kind of answers to people's questions. 13 00:00:45,400 --> 00:00:51,400 Suze: So therefore we're combining them kind of together. But are 14 00:00:51,400 --> 00:00:52,119 Suze: you ready, KT? 15 00:00:52,130 --> 00:00:56,360 KT: I'm ready. So that's how I'm opening today's podcast. On 16 00:00:56,360 --> 00:00:59,619 KT: the Women and Money app. I got another little series 17 00:00:59,619 --> 00:01:00,880 KT: of questions, but this one 18 00:01:00,955 --> 00:01:05,355 KT: in particular, I think is really important. It says, Suze, 19 00:01:05,555 --> 00:01:10,154 KT: when is the last calendar day I can contribute to 20 00:01:10,154 --> 00:01:12,214 KT: a solo 401k? 21 00:01:12,514 --> 00:01:15,154 Suze: Yeah, I'm kicking myself because KT, I should have had 22 00:01:15,154 --> 00:01:18,525 Suze: that in the master class two weeks ago. What was 23 00:01:18,525 --> 00:01:19,613 Suze: I thinking? 24 00:01:20,000 --> 00:01:23,239 Suze: But here's what you need to get, all right. You 25 00:01:23,239 --> 00:01:25,559 Suze: have to open, and by the way, if you don't 26 00:01:25,559 --> 00:01:28,760 Suze: know what I'm talking about with a solo 401k or 27 00:01:28,760 --> 00:01:33,900 Suze: a SEP IRA, go back two weeks from today and 28 00:01:33,900 --> 00:01:39,720 Suze: listen to the master class on solo 401ks versus SEP IRAs, 29 00:01:39,940 --> 00:01:43,260 Suze: and you'll find out that if you're self-employed, you are 30 00:01:43,260 --> 00:01:48,500 Suze: crazy in most cases not to have a solo 401k. However, 31 00:01:48,580 --> 00:01:53,139 Suze: the last day that you can open a solo 401k, 32 00:01:53,419 --> 00:01:57,589 Suze: is December 31st, let's say this year, if you are 33 00:01:57,589 --> 00:02:02,019 Suze: gonna open up one for 2026, you have to have 34 00:02:02,019 --> 00:02:10,139 Suze: opened it up by December 31st, 2026. However, that doesn't 35 00:02:10,139 --> 00:02:16,259 Suze: mean that you have to fund it by December 31st, 2026. 36 00:02:16,339 --> 00:02:19,279 Suze: But here's what you need to know if you are 37 00:02:19,279 --> 00:02:21,600 Suze: a sole proprietor. 38 00:02:22,660 --> 00:02:25,259 Suze: When you open it up, and it has to be 39 00:02:25,258 --> 00:02:30,139 Suze: opened by December 31st, 2026 if it's for this year, 40 00:02:30,580 --> 00:02:34,138 Suze: you have to elect how much of your own salary 41 00:02:34,139 --> 00:02:37,820 Suze: deferral you are going to put in it. You don't 42 00:02:37,820 --> 00:02:42,059 Suze: have to do it. You just have to make that election. 43 00:02:42,470 --> 00:02:45,258 Suze: And you have for the actual money you have till 44 00:02:45,258 --> 00:02:48,759 Suze: the day that you file your taxes. So KT for 45 00:02:48,758 --> 00:02:56,160 Suze: 2026 contributions that would be April 15th, 2027, or all 46 00:02:56,160 --> 00:03:00,839 Suze: the way, by the way, like we do till October 15th, 47 00:03:01,080 --> 00:03:07,240 Suze: 2027 if you file an extension. However, here's what everybody 48 00:03:07,240 --> 00:03:10,800 Suze: needs to know because remember when you're self-employed, 49 00:03:11,490 --> 00:03:13,529 Suze: you have two ways to go. You can be a 50 00:03:13,529 --> 00:03:19,508 Suze: sole proprietor, right, KT? Or you could form an S corporation. OK. Now, 51 00:03:20,050 --> 00:03:24,850 Suze: if you're an S corporation, and you pay yourself a paycheck, 52 00:03:24,929 --> 00:03:27,929 Suze: a W-2, which chances are you will, 53 00:03:28,460 --> 00:03:33,418 Suze: then your employee contribution, your employee has to come out 54 00:03:33,419 --> 00:03:37,619 Suze: of that paycheck through your payroll, and that has to 55 00:03:37,619 --> 00:03:44,559 Suze: be done by December 31st of this year. No extension, nothing. 56 00:03:44,820 --> 00:03:48,000 Suze: Your employer hat or your employer contribution 57 00:03:48,514 --> 00:03:52,395 Suze: can still wait until you file. Now how is that 58 00:03:52,395 --> 00:03:55,914 Suze: for complication, KT? That was a little mini Suze School. 59 00:03:56,145 --> 00:04:00,735 KT: Suze, tell everyone what is the difference between an S 60 00:04:00,735 --> 00:04:03,235 KT: corp and a sole proprietorship. 61 00:04:03,345 --> 00:04:06,065 Suze: All right, so before I go to an S corp, everybody, 62 00:04:06,315 --> 00:04:08,035 Suze: let's just start simple. 63 00:04:08,839 --> 00:04:13,759 Suze: A sole proprietorship. I always want you to think of 64 00:04:13,759 --> 00:04:18,600 Suze: the name of something. A sole proprietorship means it is 65 00:04:18,600 --> 00:04:22,760 Suze: just you. So maybe you're a freelance, you consult, you 66 00:04:22,760 --> 00:04:27,380 Suze: sell things, and you've never filed any other special paperwork, 67 00:04:27,480 --> 00:04:32,140 Suze: all right? It's just you and your business, same person. 68 00:04:32,559 --> 00:04:34,420 Suze: The business makes $1. 69 00:04:34,850 --> 00:04:38,019 Suze: And that $1 is yours and it goes right in 70 00:04:38,019 --> 00:04:42,880 Suze: your personal tax return. Now, you may think that's just great, everybody, 71 00:04:43,260 --> 00:04:46,820 Suze: but you probably didn't know that on that money, on 72 00:04:46,820 --> 00:04:50,519 Suze: the profit, you're paying self-employment tax. 73 00:04:51,570 --> 00:04:57,890 Suze: That's Social Security and Medicare, a little over 15% on 74 00:04:57,890 --> 00:05:03,920 Suze: every dollar that you make. That's essentially how it is. So, 75 00:05:03,928 --> 00:05:08,369 Suze: that's a sole proprietorship, very easy. You and your business 76 00:05:08,369 --> 00:05:11,899 Suze: are one. But when you form an S corp, 77 00:05:12,859 --> 00:05:16,859 Suze: you are not one with your business. The S Corp 78 00:05:16,859 --> 00:05:22,260 Suze: is a separate business. It's not just you anymore, and you, everybody, 79 00:05:22,339 --> 00:05:26,570 Suze: you become its employee. So therefore, you have to pay 80 00:05:26,570 --> 00:05:31,618 Suze: yourself a real salary, like a paycheck, a W-2, just 81 00:05:31,619 --> 00:05:37,100 Suze: like you work for anybody else. However, you only pay 82 00:05:37,100 --> 00:05:40,859 Suze: Social Security and Medicare tax on your salary. 83 00:05:41,359 --> 00:05:45,488 Suze: But the profit above your salary that comes to you 84 00:05:45,488 --> 00:05:51,000 Suze: as a distribution, so there is no self-employment tax on it, none. 85 00:05:51,450 --> 00:05:55,869 Suze: So bottom line, if your business is making serious money, 86 00:05:56,269 --> 00:06:01,250 Suze: an S corp saves you thousands in payroll taxes every 87 00:06:01,250 --> 00:06:02,450 Suze: single year. 88 00:06:03,350 --> 00:06:07,279 Suze: So KT, you tell everybody in your opinion, why doesn't 89 00:06:07,279 --> 00:06:08,219 Suze: everybody do that? 90 00:06:08,559 --> 00:06:12,440 KT: S corps aren't that easy. All right, there's benefits, but 91 00:06:12,440 --> 00:06:15,920 KT: it costs you money, everybody. You have to set up 92 00:06:15,920 --> 00:06:20,678 KT: payroll services. You need a separate tax return, and the 93 00:06:20,678 --> 00:06:24,200 KT: IRS really takes a look to make sure your salary 94 00:06:24,200 --> 00:06:27,238 KT: is reasonable, so you can't get away with anything. 95 00:06:27,678 --> 00:06:31,950 Suze: You can't pay yourself $10,000, everybody and then take 96 00:06:31,950 --> 00:06:37,010 Suze: $200,000 in distributions. They will come after you for that. 97 00:06:37,290 --> 00:06:41,118 Suze: So KT tell everybody who should do in your opinion, 98 00:06:41,209 --> 00:06:44,308 Suze: an S corp versus a sole proprietor. 99 00:06:44,519 --> 00:06:46,850 KT: If you're just starting out, let's say you're a hairdresser, 100 00:06:46,928 --> 00:06:50,570 KT: you're just starting out, you're making modest profits. A sole 101 00:06:50,570 --> 00:06:54,170 KT: proprietor is fine. It's simple. It's clean. It's actually a 102 00:06:54,170 --> 00:06:55,730 KT: whole lot easier. 103 00:06:56,100 --> 00:06:59,750 KT: And, and a little less work in terms of filing 104 00:06:59,750 --> 00:07:01,159 KT: and keeping track of everything. 105 00:07:01,160 --> 00:07:02,829 Suze: You're doing great so far. You're about to get a 106 00:07:02,829 --> 00:07:03,589 Suze: ding ding ding. 107 00:07:04,149 --> 00:07:06,989 KT: Wait a minute. But Suze, if you start out and 108 00:07:06,988 --> 00:07:09,450 KT: let's say you have a great idea for a business 109 00:07:09,790 --> 00:07:14,640 KT: and that business after your first, second year starts to skyrocket, 110 00:07:14,980 --> 00:07:17,630 KT: let's say it goes beyond your wildest dreams. 111 00:07:18,029 --> 00:07:21,549 Suze: Actually, KT, it's if, wait, if it goes beyond what 112 00:07:21,549 --> 00:07:25,510 Suze: a reasonable salary would be for you, that is the key. 113 00:07:26,140 --> 00:07:30,109 Suze: If a reasonable salary for you is X and all 114 00:07:30,109 --> 00:07:33,739 Suze: of a sudden you've made 2 or 3 x, that's 115 00:07:33,739 --> 00:07:38,230 Suze: when you consult a CPA and look into getting an 116 00:07:38,230 --> 00:07:41,950 Suze: S corp. Just that simple KT next question. 117 00:07:42,149 --> 00:07:45,750 KT: OK, Suze, this next question is from Teresa, and I 118 00:07:45,750 --> 00:07:50,329 KT: can tell you something. She watched the Suze Orman show 119 00:07:50,709 --> 00:07:53,130 KT: because after reading this question, it is. 120 00:07:53,299 --> 00:07:56,380 KT: Definitely a can I afford it question. 121 00:07:56,609 --> 00:07:58,420 Suze: Oh well, that's easy, denied. 122 00:07:59,459 --> 00:08:02,160 KT: She said, Suze, I would like to buy a quiet 123 00:08:02,160 --> 00:08:08,220 KT: luxury handbag in a basic color that is timeless, meaning 124 00:08:08,220 --> 00:08:10,380 KT: I will keep it until I die. 125 00:08:11,459 --> 00:08:14,570 KT: She said, I'm 67 years old. I am a teacher. 126 00:08:14,859 --> 00:08:19,079 KT: I plan on retiring next year. I live in California 127 00:08:19,079 --> 00:08:23,739 KT: and will retire with a decent educator's pension. So she said, 128 00:08:23,850 --> 00:08:28,779 KT: right now, I have about $600,000 in a 403B. 129 00:08:29,170 --> 00:08:34,570 KT: And a 457. I have $200,000 in a CD. I 130 00:08:34,570 --> 00:08:38,809 KT: have $30,000 in savings, and my husband and I have 131 00:08:38,809 --> 00:08:44,729 KT: a house fund for emergencies of about $16,000. The most 132 00:08:44,729 --> 00:08:50,650 KT: I have ever spent on a handbag was $259. 133 00:08:51,000 --> 00:08:53,039 KT: And that was for Dooney and Burke, which is a 134 00:08:53,039 --> 00:08:54,119 KT: nice looking bag. 135 00:08:54,440 --> 00:08:55,840 Suze: I personally wouldn't know. 136 00:08:56,039 --> 00:08:59,780 KT: OK, so she said, I would really like to own 137 00:08:59,780 --> 00:09:06,260 KT: a nice designer bag, The Row, a Bottega Venita, Chanel, 138 00:09:06,880 --> 00:09:12,479 KT: anything between $1,500 but no more than $3,000. What is 139 00:09:12,479 --> 00:09:13,799 KT: your advice? 140 00:09:15,929 --> 00:09:16,630 Suze: Really? 141 00:09:17,450 --> 00:09:18,270 KT: What's your advice? 142 00:09:18,380 --> 00:09:21,559 Suze: My advice is let's hear what KT has to say 143 00:09:21,559 --> 00:09:21,890 Suze: to you. 144 00:09:22,049 --> 00:09:25,409 KT: OK, so Suze's asking me to answer this because she 145 00:09:25,409 --> 00:09:29,250 KT: knows I worked in the luxury business for many years 146 00:09:29,250 --> 00:09:32,409 KT: with all of these designer brands, and I have to 147 00:09:32,409 --> 00:09:35,969 KT: tell you something. If I were you, Teresa, I would 148 00:09:35,969 --> 00:09:41,510 KT: go to a consignment store or some of these online secondhand. 149 00:09:42,070 --> 00:09:46,369 KT: You know, um, opportunities where you can get a beautiful 150 00:09:46,830 --> 00:09:50,789 KT: designer bag for pennies on the dollar, and then you 151 00:09:50,789 --> 00:09:55,109 KT: satisfy both needs. You keep saving and you have a 152 00:09:55,109 --> 00:09:57,630 KT: designer bag that you really wanted. 153 00:09:57,869 --> 00:10:00,030 Suze: See, I knew you would give her the best answer. 154 00:10:00,099 --> 00:10:00,699 KT: What do you think? 155 00:10:00,869 --> 00:10:04,659 Suze: Well, I think your answer is absolutely correct, but here's 156 00:10:04,659 --> 00:10:10,609 Suze: my concern. My concern is this, Teresa, you're 67 years 157 00:10:10,609 --> 00:10:16,650 Suze: of age. And you plan on retiring next year. That 158 00:10:16,650 --> 00:10:20,070 Suze: means your income, everything stops. 159 00:10:21,090 --> 00:10:24,579 Suze: And at the time of life when you're retiring, this 160 00:10:24,580 --> 00:10:30,848 Suze: is when you want a designer bag. Usually, especially women, 161 00:10:31,219 --> 00:10:35,340 Suze: when they approach retirement and they know income is going 162 00:10:35,340 --> 00:10:40,020 Suze: to stop, rather than spend, that's when they take their 163 00:10:40,020 --> 00:10:43,299 Suze: money and they wanna save, save, save. 164 00:10:43,950 --> 00:10:49,080 Suze: But not you. So it makes me wonder why, why 165 00:10:49,080 --> 00:10:53,839 Suze: at this point in your life, why is now the 166 00:10:53,840 --> 00:10:57,799 Suze: time that you want a designer bag? Hey, if you 167 00:10:57,799 --> 00:11:01,299 Suze: were 40, 50 right now, I'd say, yeah, go ahead. 168 00:11:01,640 --> 00:11:05,340 Suze: But at 67, I'm just wondering why. 169 00:11:06,090 --> 00:11:10,630 Suze: So I'd like you to answer that question for yourself, 170 00:11:10,890 --> 00:11:13,849 Suze: and if you come up with the reason that makes 171 00:11:13,849 --> 00:11:17,210 Suze: sense that you want to spend that kind of money 172 00:11:17,210 --> 00:11:22,450 Suze: one year before you retire, OK, if it were me, 173 00:11:22,570 --> 00:11:25,369 Suze: I would not be doing it, but more important than 174 00:11:25,369 --> 00:11:29,969 Suze: you buying the bag, I want you to understand why. 175 00:11:30,719 --> 00:11:34,080 Suze: Why at this point in your life do you want 176 00:11:34,080 --> 00:11:36,079 Suze: to do that? Next question, KT. 177 00:11:36,890 --> 00:11:41,479 KT: OK, from Stacy. Hi, Suze. I saw where you mentioned 178 00:11:41,479 --> 00:11:44,780 KT: that paying off your mortgage is the most important thing 179 00:11:45,000 --> 00:11:47,199 KT: for retirement. I agree. 180 00:11:47,359 --> 00:11:48,289 Suze: One of them, yes. 181 00:11:48,400 --> 00:11:52,030 KT: OK, so here is my dilemma. I am 63 years old. 182 00:11:52,239 --> 00:11:56,079 KT: I owe $130,000 on my condo. 183 00:11:56,489 --> 00:12:03,250 KT: I make $110,000 per year and I have $300,000 in 184 00:12:03,250 --> 00:12:09,169 KT: my 401k. I only have $15,000 in saving because I 185 00:12:09,169 --> 00:12:12,799 KT: just put a big down payment on a car. I 186 00:12:12,799 --> 00:12:17,049 KT: also have about $60,000 in gold and silver that I 187 00:12:17,049 --> 00:12:20,330 KT: can sell. I am still working and don't plan to 188 00:12:20,330 --> 00:12:22,369 KT: retire anytime soon. 189 00:12:22,940 --> 00:12:27,219 KT: Any advice as to how to pay off my mortgage? 190 00:12:27,539 --> 00:12:32,619 Suze: Yes, stop spending money you don't have simply to impress 191 00:12:32,619 --> 00:12:35,580 Suze: people you don't even know or like, because anybody who 192 00:12:35,580 --> 00:12:37,380 Suze: buys a big car and they have to put a 193 00:12:37,380 --> 00:12:39,900 Suze: down payment on it, that's exactly why they're doing it. 194 00:12:40,179 --> 00:12:44,059 Suze: But that's besides the point. Here's my concern for you. 195 00:12:45,450 --> 00:12:49,010 Suze: You say that you want to own your home outright, 196 00:12:49,049 --> 00:12:51,770 Suze: all right, by the time you retire, even though you 197 00:12:51,770 --> 00:12:56,319 Suze: don't plan to retire any time soon. Number one, you 198 00:12:56,320 --> 00:12:58,330 Suze: want to make God laugh. Have you ever heard this? 199 00:12:58,650 --> 00:13:01,609 Suze: Show her your plan. You don't know. Are you in 200 00:13:01,609 --> 00:13:04,929 Suze: a car accident? Are you sick? What happens? Does your 201 00:13:04,929 --> 00:13:10,909 Suze: company close? You don't know how long you have to work. 202 00:13:11,010 --> 00:13:13,299 Suze: You don't know that. That's an unknown. 203 00:13:13,780 --> 00:13:16,598 Suze: So I always tell you invest in the known versus 204 00:13:16,599 --> 00:13:20,979 Suze: the unknown. The known is most likely you're still going 205 00:13:20,979 --> 00:13:23,780 Suze: to need a home to live in, whether you are 206 00:13:23,780 --> 00:13:28,319 Suze: working or not. The known is your biggest monthly expense 207 00:13:28,539 --> 00:13:34,020 Suze: is your mortgage payment. Therefore, if you know that you 208 00:13:34,020 --> 00:13:35,739 Suze: want to stay in that house for the rest of 209 00:13:35,739 --> 00:13:40,059 Suze: your life, then that should have been a long time now. 210 00:13:40,530 --> 00:13:43,099 Suze: That should have been for a long time your number 211 00:13:43,099 --> 00:13:45,979 Suze: one priority to have it paid off by the time 212 00:13:45,979 --> 00:13:50,380 Suze: you retire. But no, you decided to take money even 213 00:13:50,380 --> 00:13:55,289 Suze: though all you have is $15,000 in an emergency fund. Really? 214 00:13:55,320 --> 00:14:00,299 Suze: All right. You decided to take emergency fund money from 215 00:14:00,299 --> 00:14:04,900 Suze: savings to put a large down payment on a car. Why? 216 00:14:05,299 --> 00:14:10,159 Suze: So your monthly payments could be smaller. Are you kidding me? 217 00:14:10,559 --> 00:14:18,099 Suze: And, you have $60,000 in gold and silver. Do what 218 00:14:18,400 --> 00:14:22,590 Suze: it already has gone up. Here's the bottom line. If 219 00:14:22,590 --> 00:14:25,400 Suze: it were me, this is what I would do. I 220 00:14:25,400 --> 00:14:29,059 Suze: would sell the gold and the silver, all of it. 221 00:14:29,559 --> 00:14:31,840 Suze: Maybe you have a capital gain. Maybe you don't. I 222 00:14:31,840 --> 00:14:34,599 Suze: don't know. You'll have to check that out before you 223 00:14:34,599 --> 00:14:37,840 Suze: sell it. If you could take that money and put 224 00:14:37,840 --> 00:14:39,840 Suze: it into your mortgage. 225 00:14:40,349 --> 00:14:44,309 Suze: That you currently have towards principal, make sure it goes 226 00:14:44,309 --> 00:14:49,669 Suze: towards principal. Now all you owe is $70,000 and if 227 00:14:49,669 --> 00:14:53,429 Suze: you continue to pay your monthly mortgage like you do 228 00:14:53,429 --> 00:14:58,429 Suze: right now or do it on a biweekly schedule where 229 00:14:58,429 --> 00:15:00,789 Suze: you actually do it every two weeks, which means you 230 00:15:00,789 --> 00:15:02,989 Suze: make one extra payment a year. 231 00:15:03,940 --> 00:15:07,859 Suze: You will have that mortgage paid off sooner than you 232 00:15:07,859 --> 00:15:13,539 Suze: have any idea. That is number one. Number two, you 233 00:15:13,539 --> 00:15:16,179 Suze: make $110,000 a year. 234 00:15:16,780 --> 00:15:20,859 Suze: And you're 63 years of age and you only have 235 00:15:20,859 --> 00:15:26,340 Suze: now $15,000 in savings. You need to take a hard 236 00:15:26,340 --> 00:15:30,799 Suze: look at yourself and what are you spending your money 237 00:15:30,799 --> 00:15:35,179 Suze: on because you don't say you're married, you don't say 238 00:15:35,179 --> 00:15:38,489 Suze: that you have kids, you use the word I throughout 239 00:15:38,489 --> 00:15:39,919 Suze: this entire thing. 240 00:15:40,570 --> 00:15:45,650 Suze: You know, and so therefore, you also have $300,000 in 241 00:15:45,650 --> 00:15:49,750 Suze: a 401k. It's not even a Roth 401k. 242 00:15:50,780 --> 00:15:54,739 Suze: So that means you don't have $300,000 in there because 243 00:15:54,739 --> 00:15:56,309 Suze: when you go to take it out you're going to 244 00:15:56,309 --> 00:16:00,409 Suze: owe ordinary income tax on it. So you have done 245 00:16:01,659 --> 00:16:05,309 Suze: everything wrong. You just have, and that is me standing 246 00:16:05,309 --> 00:16:09,070 Suze: in your truth for you because you wrote in and 247 00:16:09,070 --> 00:16:11,830 Suze: you didn't write in to get me to tell you 248 00:16:11,830 --> 00:16:15,309 Suze: what you could do. You already knew you need to 249 00:16:15,309 --> 00:16:16,489 Suze: stand in your truth. 250 00:16:17,280 --> 00:16:20,250 Suze: And you need to make you and your life and 251 00:16:20,250 --> 00:16:25,109 Suze: your money in savings and investment your number one priority 252 00:16:26,039 --> 00:16:27,750 Suze: over flashy things. 253 00:16:28,820 --> 00:16:32,739 Suze: Such as a car. All right, KT, next. 254 00:16:33,299 --> 00:16:38,140 KT: OK, this is from Maria, a simple one liner which 255 00:16:38,140 --> 00:16:43,299 KT: I love everybody. Maria asks Suze, does a living revocable 256 00:16:43,299 --> 00:16:47,010 KT: trust need to be registered at the county you live in? 257 00:16:47,340 --> 00:16:51,140 Suze: No, it does not, never has and never will. Now 258 00:16:51,140 --> 00:16:53,659 Suze: maybe there's some places that do, but not that I 259 00:16:53,659 --> 00:16:55,299 Suze: know of. All right, go on next. 260 00:16:55,780 --> 00:16:59,289 KT: So, from Diane. I don't have a trust because I 261 00:16:59,289 --> 00:17:03,690 KT: don't have any executor for my estate. I have no 262 00:17:03,690 --> 00:17:07,670 KT: family members, and most of my friends are older or gone. 263 00:17:07,969 --> 00:17:10,770 KT: I tried to hire an attorney, and she did not 264 00:17:10,770 --> 00:17:15,010 KT: want to be the executor. I'm leaving my entire estate 265 00:17:15,010 --> 00:17:19,209 KT: to charity, and I'm 76 years old. I don't know 266 00:17:19,209 --> 00:17:23,369 KT: what to do, and I'm very concerned. So, Suze, how 267 00:17:23,369 --> 00:17:26,889 KT: will the documents work if I don't have any one 268 00:17:27,489 --> 00:17:29,729 KT: to distribute my assets. 269 00:17:30,560 --> 00:17:33,310 KT: So I think, and she wrote, please enlighten me. So 270 00:17:33,310 --> 00:17:35,079 KT: can you please enlighten her? 271 00:17:35,180 --> 00:17:38,390 Suze: I can. And here's the first thing I'm gonna tell you. 272 00:17:38,800 --> 00:17:40,959 Suze: You don't have a will. You don't have a trust 273 00:17:40,959 --> 00:17:43,599 Suze: because of this excuse that you don't have an executor. 274 00:17:43,920 --> 00:17:47,479 Suze: Guess what? You have one. If you die, and this 275 00:17:47,479 --> 00:17:50,959 Suze: is true for everybody, if you die without a will, 276 00:17:51,160 --> 00:17:55,959 Suze: without a trust, the state that you live in deems 277 00:17:55,959 --> 00:17:59,399 Suze: that you have died intestate succession. 278 00:18:00,030 --> 00:18:05,109 Suze: And your assets will pass according to the succession rules 279 00:18:05,109 --> 00:18:09,130 Suze: of the state that you live in plus probate fees, OK? 280 00:18:09,510 --> 00:18:12,390 Suze: So let's just say your mother was still alive and 281 00:18:12,390 --> 00:18:14,900 Suze: you had kids, all right, maybe half would go to 282 00:18:14,900 --> 00:18:15,829 Suze: your mother or 283 00:18:15,979 --> 00:18:18,430 Suze: father, half would go to your kids. If you don't 284 00:18:18,430 --> 00:18:21,189 Suze: have any relatives or anybody, maybe they're going to look 285 00:18:21,189 --> 00:18:26,109 Suze: for cousins, uncles, aunts, but you already have one, whether 286 00:18:26,109 --> 00:18:29,000 Suze: you know it or not. You want to take power 287 00:18:29,000 --> 00:18:31,969 Suze: over your money. There's a few things you can do, 288 00:18:32,550 --> 00:18:36,709 Suze: depending on where your assets are. I'm assuming you have 289 00:18:36,709 --> 00:18:39,550 Suze: bank accounts, maybe you have a brokerage account, maybe you 290 00:18:39,550 --> 00:18:40,810 Suze: have a retirement account. 291 00:18:41,689 --> 00:18:46,379 Suze: You could designate right here and right now upon your 292 00:18:46,380 --> 00:18:50,729 Suze: death what's known as a pay on death account. You die, 293 00:18:51,060 --> 00:18:55,359 Suze: name the charities now that you want to get your money. 294 00:18:56,030 --> 00:18:58,109 Suze: You own a home. You could do a transfer on 295 00:18:58,109 --> 00:19:00,589 Suze: death account if you want. Who is to get your 296 00:19:00,589 --> 00:19:03,270 Suze: home if you have one? If that's to go to 297 00:19:03,270 --> 00:19:08,189 Suze: a charity, then do that. But you name it now 298 00:19:08,189 --> 00:19:12,069 Suze: while you still can, and that's the easiest way to 299 00:19:12,069 --> 00:19:15,879 Suze: take care of it. But I'm actually not that concerned 300 00:19:16,229 --> 00:19:18,989 Suze: about where your money goes when you have died. 301 00:19:19,709 --> 00:19:24,250 Suze: I'm concerned about what happens if something happens to you 302 00:19:24,420 --> 00:19:28,050 Suze: and how do we use your money to pay your bills, 303 00:19:28,180 --> 00:19:30,540 Suze: write your checks if you even write checks any more, 304 00:19:30,869 --> 00:19:34,420 Suze: to pay for a nursing home, to do all those things. Who, 305 00:19:34,550 --> 00:19:37,469 Suze: Diane is going to do that for you? All of 306 00:19:37,469 --> 00:19:41,589 Suze: a sudden you become incapacitated. You have a stroke. Anything 307 00:19:41,589 --> 00:19:42,599 Suze: can happen. 308 00:19:43,369 --> 00:19:47,849 Suze: So, you need to designate a durable power of attorney 309 00:19:47,849 --> 00:19:50,770 Suze: for health care, who can make health care decisions for you. 310 00:19:51,089 --> 00:19:56,250 Suze: So the must-have documents really can serve you well now. 311 00:19:57,209 --> 00:20:00,449 Suze: If you really don't have any friends, if you don't 312 00:20:00,449 --> 00:20:04,050 Suze: have anybody in your life, then you're in a situation 313 00:20:04,050 --> 00:20:08,890 Suze: where you need to hire a professional trustee, and there 314 00:20:08,890 --> 00:20:12,930 Suze: are firms that do that. Many banks will do that 315 00:20:12,930 --> 00:20:16,689 Suze: for you. Many brokerage firms may be will do that 316 00:20:16,689 --> 00:20:20,810 Suze: for you. You never know, but you will find somebody, 317 00:20:20,849 --> 00:20:24,188 Suze: but you need to get on it right now. But 318 00:20:24,770 --> 00:20:26,790 Suze: not taking action now. 319 00:20:27,800 --> 00:20:30,708 Suze: Just because you have an excuse of I don't have 320 00:20:30,709 --> 00:20:35,510 Suze: an executive for my estate just doesn't hold water with me. 321 00:20:35,900 --> 00:20:39,709 Suze: So tomorrow you are to make calls and you are 322 00:20:39,709 --> 00:20:43,270 Suze: to make pay on death accounts, find a trustee, and 323 00:20:43,270 --> 00:20:47,909 Suze: get yourself the must-have documents and do this now. Go 324 00:20:47,910 --> 00:20:50,260 Suze: to musthavedocs.com. Yes, KT. 325 00:20:51,060 --> 00:20:54,349 KT: OK, this next one and my final question. 326 00:20:54,650 --> 00:20:59,410 KT: It is fabulous, Suze. I love this. It's from Mary. 327 00:20:59,530 --> 00:21:03,510 KT: She said, KT KT, KT, please, please, please pick me. 328 00:21:03,969 --> 00:21:08,400 KT: And then she said, Help our beautiful 94 year old mom. 329 00:21:08,890 --> 00:21:14,729 KT: Love this question. My 94-year-old mom has about $10,000 in 330 00:21:14,729 --> 00:21:18,010 KT: credit card debt and has only been able to make 331 00:21:18,010 --> 00:21:22,889 KT: the minimum payments. Suze, the account is not delinquent, but 332 00:21:22,890 --> 00:21:24,449 KT: it's becoming a burden. 333 00:21:24,949 --> 00:21:28,300 KT: She has no other debt. She does have a reverse 334 00:21:28,300 --> 00:21:33,140 KT: mortgage and lives on Social Security and a teacher's pension. 335 00:21:33,660 --> 00:21:38,180 KT: She has early memory loss from multiple mini strokes, but 336 00:21:38,180 --> 00:21:42,579 KT: she's still remarkably independent. I moved in with her this 337 00:21:42,579 --> 00:21:47,180 KT: year to help care for her, though she's amazingly physically 338 00:21:47,180 --> 00:21:49,369 KT: capable for her age. 339 00:21:49,800 --> 00:21:54,260 KT: The five of us kids help with expenses when needed, 340 00:21:54,520 --> 00:21:57,520 KT: but we're at a point where we need to prioritize 341 00:21:57,520 --> 00:22:02,000 KT: our own financial future. If she doesn't have this credit 342 00:22:02,000 --> 00:22:06,599 KT: card debt, she could cover her monthly expenses. What do 343 00:22:06,599 --> 00:22:07,420 KT: you recommend? 344 00:22:07,920 --> 00:22:10,699 Suze: So you know, I'm a little confused here because $10,000 345 00:22:10,699 --> 00:22:12,219 Suze: of credit card debt is nothing. 346 00:22:12,810 --> 00:22:15,968 Suze: I have a feeling that Mary meant to say she 347 00:22:15,969 --> 00:22:21,290 Suze: has about $100,000 in credit card debt and, and yes, 348 00:22:21,530 --> 00:22:25,729 Suze: because $10,000 in credit card debt, KT, the minimum payment 349 00:22:25,729 --> 00:22:28,410 Suze: due would be like $200 a month, $300 a month. 350 00:22:28,650 --> 00:22:31,540 Suze: It's a burden when it's $2,000 or $3,000 a month. 351 00:22:32,050 --> 00:22:34,530 Suze: All right, so Mary, I'm just going to make the 352 00:22:34,530 --> 00:22:38,530 Suze: assumption that when you wrote this, you wanted to put 353 00:22:38,530 --> 00:22:41,849 Suze: down $100,000 and instead you put down $10,000. 354 00:22:42,194 --> 00:22:47,395 Suze: If you really did mean $10,000 then something is radically 355 00:22:47,395 --> 00:22:50,395 Suze: wrong and the five kids should each come up with 356 00:22:50,395 --> 00:22:54,915 Suze: $2,000 each and pay off that debt. But I just 357 00:22:54,915 --> 00:22:59,675 Suze: can't believe that $10,000 of credit card debt is that 358 00:22:59,675 --> 00:23:02,025 Suze: big of a burden. So I'm going to go with 359 00:23:02,025 --> 00:23:06,675 Suze: my feelings, KT, and say it's $100,000. So you need 360 00:23:06,675 --> 00:23:10,974 Suze: to listen to me here, which is this first of all. 361 00:23:12,060 --> 00:23:17,060 Suze: You know, mama has already a reverse mortgage. She's been 362 00:23:17,060 --> 00:23:22,699 Suze: living far beyond her means for a long, long time. 363 00:23:23,020 --> 00:23:26,239 Suze: You say she has no other debt. Well, that's great. 364 00:23:26,420 --> 00:23:30,459 Suze: $100,000 of credit card debt, a reverse mortgage, lives on 365 00:23:30,459 --> 00:23:34,449 Suze: Social Security and a teacher's pension, and blah, blah blah blah. 366 00:23:34,739 --> 00:23:37,000 Suze: My real concern is here. 367 00:23:37,989 --> 00:23:41,469 Suze: She has memory loss and it could get bad and 368 00:23:41,469 --> 00:23:46,310 Suze: even though you moved in with her, that doesn't mean 369 00:23:46,310 --> 00:23:48,869 Suze: necessarily that you're going to be able to take care 370 00:23:48,869 --> 00:23:49,929 Suze: of her really. 371 00:23:50,800 --> 00:23:54,800 Suze: It just does because sometimes they wander, they'll leave the 372 00:23:54,800 --> 00:23:57,979 Suze: house in the middle of the night, all kinds of things, 373 00:23:58,160 --> 00:24:01,680 Suze: and you'll find that even though you love her, you 374 00:24:01,680 --> 00:24:04,880 Suze: moved in with her, you might not be able to 375 00:24:04,880 --> 00:24:09,030 Suze: let her stay there, all right, so you should number one, 376 00:24:09,040 --> 00:24:12,879 Suze: be looking at a memory care facility just in case 377 00:24:12,880 --> 00:24:16,659 Suze: you have to move her into one, all right. 378 00:24:17,199 --> 00:24:20,359 Suze: That's number one. If you do have to move her 379 00:24:20,359 --> 00:24:24,660 Suze: into one now, you may need to sell the house, 380 00:24:24,920 --> 00:24:28,619 Suze: but because she has a reverse mortgage on the home, 381 00:24:29,199 --> 00:24:32,479 Suze: I don't know how long she has had this home 382 00:24:32,479 --> 00:24:36,479 Suze: for on a reverse mortgage. There may be equity in 383 00:24:36,479 --> 00:24:39,800 Suze: her home, and there may not be very much equity 384 00:24:39,800 --> 00:24:40,739 Suze: in her home. 385 00:24:41,260 --> 00:24:44,139 Suze: So it just depends how long she has had a 386 00:24:44,140 --> 00:24:48,419 Suze: reverse mortgage, and given that she is 94, why do 387 00:24:48,420 --> 00:24:50,979 Suze: I think she's had one for at least 15 or 388 00:24:50,979 --> 00:24:52,439 Suze: 20 years already. 389 00:24:53,239 --> 00:24:57,729 Suze: So we have a very, very serious situation here, Mary, 390 00:24:58,130 --> 00:25:02,449 Suze: and this is where the kids, all the kids, the 391 00:25:02,449 --> 00:25:06,699 Suze: five of you, need to get together and really look 392 00:25:06,699 --> 00:25:10,040 Suze: at what is the current equity in her home if 393 00:25:10,040 --> 00:25:14,000 Suze: the reverse mortgage was to be paid off. How much 394 00:25:14,000 --> 00:25:20,040 Suze: does a memory care facility really cost? And if, in fact, 395 00:25:20,199 --> 00:25:21,760 Suze: now listen to me closely. 396 00:25:22,780 --> 00:25:25,530 Suze: You've done that and they can't really attach a home 397 00:25:25,530 --> 00:25:28,659 Suze: or take anything away from her or whatever. You've sold 398 00:25:28,660 --> 00:25:32,698 Suze: the home. She has no assets. If she really has 399 00:25:32,699 --> 00:25:40,314 Suze: $100,000 of credit card debt after you have arranged everything 400 00:25:40,314 --> 00:25:42,899 Suze: for her and you know what's really going on. 401 00:25:44,140 --> 00:25:48,188 Suze: If that was my mother, I would consider claiming bankruptcy. 402 00:25:49,510 --> 00:25:53,250 Suze: Only if they can't take the house away from her, 403 00:25:53,869 --> 00:25:58,410 Suze: because the rules of bankruptcy is once you owe more 404 00:25:58,589 --> 00:26:04,089 Suze: than what you make, you are already technically bankrupt now. 405 00:26:04,390 --> 00:26:06,698 Suze: That debt is not going to pass down to the 406 00:26:06,699 --> 00:26:10,219 Suze: five kids. You could very easily, believe it or not, 407 00:26:10,270 --> 00:26:13,410 Suze: just stop paying it, and what are they going to do. 408 00:26:14,060 --> 00:26:18,929 Suze: Really it's unsecured debt. It's not secured by the house. 409 00:26:19,290 --> 00:26:22,969 Suze: Will it ruin her FICO score? Absolutely it will. But 410 00:26:22,969 --> 00:26:27,459 Suze: the truth of the matter is, who cares? Who cares 411 00:26:27,459 --> 00:26:31,569 Suze: about a FICO score when you are 94 years of age? 412 00:26:31,900 --> 00:26:35,520 Suze: So there are many things that you can do here. 413 00:26:35,939 --> 00:26:38,900 Suze: But if she really can't afford it. 414 00:26:39,780 --> 00:26:44,329 Suze: And she probably used that money to live on, so 415 00:26:44,329 --> 00:26:46,270 Suze: she didn't go on and buy all these fancy things 416 00:26:46,270 --> 00:26:47,188 Suze: and everything. 417 00:26:48,010 --> 00:26:51,569 Suze: Those are some ideas that you might want to think 418 00:26:51,569 --> 00:26:56,790 Suze: about again. Listen to my answer. Do you sell the home? 419 00:26:57,089 --> 00:27:00,199 Suze: Do you claim bankruptcy? Will they allow her to keep 420 00:27:00,199 --> 00:27:03,650 Suze: the home? Is there any equity in the home, or 421 00:27:03,650 --> 00:27:06,729 Suze: does it just make sense? And you should see a 422 00:27:06,729 --> 00:27:12,449 Suze: bankruptcy lawyer to claim bankruptcy or just stop paying the 423 00:27:12,449 --> 00:27:16,489 Suze: credit card and let it go into default ruins her 424 00:27:16,489 --> 00:27:17,469 Suze: FICO score. 425 00:27:18,130 --> 00:27:20,819 Suze: But there's nothing really much more they can do about 426 00:27:20,819 --> 00:27:25,698 Suze: that really because it's unsecured debt. Now maybe they could 427 00:27:25,699 --> 00:27:27,859 Suze: sue her, who knows, but they're not going to at 428 00:27:27,859 --> 00:27:33,280 Suze: this point in time. Those are some of your alternatives 429 00:27:33,459 --> 00:27:37,979 Suze: that you're going to have to decide what you should do. 430 00:27:38,959 --> 00:27:41,670 Suze: All right, KT, and that was kind of heavy, huh? 431 00:27:41,680 --> 00:27:45,880 Suze: It's been years since I suggested possible bankruptcy. 432 00:27:45,959 --> 00:27:49,020 KT: But I'm glad you did because I think that's probably 433 00:27:49,479 --> 00:27:53,760 KT: the best solution right now. But, she won't, the, the mother, 434 00:27:54,119 --> 00:27:57,629 KT: like she's 94 and she's racked up that much credit card debt? 435 00:27:58,209 --> 00:28:00,359 Suze: Maybe we don't know how she's lived for the past 436 00:28:00,359 --> 00:28:03,880 Suze: x amount of years, and this goes back to what 437 00:28:03,880 --> 00:28:09,229 Suze: I think I said in last Sunday's, right, podcast. Kids 438 00:28:09,229 --> 00:28:14,890 Suze: get involved with your parents' money sooner than later. Parents, 439 00:28:15,260 --> 00:28:20,260 Suze: let your kids get involved with your money, because this 440 00:28:20,260 --> 00:28:25,188 Suze: situation never should have happened ever. And again, Mary, if 441 00:28:25,189 --> 00:28:29,540 Suze: it is only $10,000 of credit card debt, great. Each 442 00:28:29,540 --> 00:28:32,270 Suze: of you can put in $2,000 each, get rid of 443 00:28:32,270 --> 00:28:36,369 Suze: the debt, and you're fine, but no way is $10,000 444 00:28:36,890 --> 00:28:39,670 Suze: doing this to your mother. No way. 445 00:28:40,290 --> 00:28:41,430 Suze: All right, KT. 446 00:28:41,530 --> 00:28:42,670 KT: That's a wrap, Suze. 447 00:28:42,770 --> 00:28:47,930 Suze: That's a wrap. And listen, next week, August 2nd, I'm 448 00:28:47,930 --> 00:28:52,670 Suze: gonna be doing a master class on required minimum distributions. 449 00:28:52,949 --> 00:28:57,349 Suze: You will love it, so make sure you tune in. 450 00:28:57,939 --> 00:29:00,979 Suze: We love you all, and there's only one thing we 451 00:29:00,979 --> 00:29:02,920 Suze: want you to remember when it comes to your money, 452 00:29:03,140 --> 00:29:03,619 Suze: and it is this: 453 00:29:04,380 --> 00:29:06,760 KT: People first, then money, then things. 454 00:29:06,859 --> 00:29:10,359 Suze: Now you stay safe. All right, bye bye.