KT: Hi everybody. Good morning, Suze.
Suze: It is always a good morning with you, Ms. Travis.
KT: It's July 26, 2026.
Suze: No it's not, no it's not!
KT: Wait, wait, wait, wait, wait. OK, so we pre-recorded this
KT: podcast before we left for our trip.
KT: To Italy, Ciao Bella!
Suze: For her birthday. This is another Ask KT and Anything
Suze: combined with Suze School. Now why do I say that?
Suze: Because some questions require more of a detailed explanation. It's
Suze: more like a teaching part.
Suze: And others are just kind of answers to people's questions.
Suze: So therefore we're combining them kind of together. But are
Suze: you ready, KT?
KT: I'm ready. So that's how I'm opening today's podcast. On
KT: the Women and Money app. I got another little series
KT: of questions, but this one
KT: in particular, I think is really important. It says, Suze,
KT: when is the last calendar day I can contribute to
KT: a solo 401k?
Suze: Yeah, I'm kicking myself because KT, I should have had
Suze: that in the master class two weeks ago. What was
Suze: I thinking?
Suze: But here's what you need to get, all right. You
Suze: have to open, and by the way, if you don't
Suze: know what I'm talking about with a solo 401k or
Suze: a SEP IRA, go back two weeks from today and
Suze: listen to the master class on solo 401ks versus SEP IRAs,
Suze: and you'll find out that if you're self-employed, you are
Suze: crazy in most cases not to have a solo 401k. However,
Suze: the last day that you can open a solo 401k,
Suze: is December 31st, let's say this year, if you are
Suze: gonna open up one for 2026, you have to have
Suze: opened it up by December 31st, 2026. However, that doesn't
Suze: mean that you have to fund it by December 31st, 2026.
Suze: But here's what you need to know if you are
Suze: a sole proprietor.
Suze: When you open it up, and it has to be
Suze: opened by December 31st, 2026 if it's for this year,
Suze: you have to elect how much of your own salary
Suze: deferral you are going to put in it. You don't
Suze: have to do it. You just have to make that election.
Suze: And you have for the actual money you have till
Suze: the day that you file your taxes. So KT for
Suze: 2026 contributions that would be April 15th, 2027, or all
Suze: the way, by the way, like we do till October 15th,
Suze: 2027 if you file an extension. However, here's what everybody
Suze: needs to know because remember when you're self-employed,
Suze: you have two ways to go. You can be a
Suze: sole proprietor, right, KT? Or you could form an S corporation. OK. Now,
Suze: if you're an S corporation, and you pay yourself a paycheck,
Suze: a W-2, which chances are you will,
Suze: then your employee contribution, your employee has to come out
Suze: of that paycheck through your payroll, and that has to
Suze: be done by December 31st of this year. No extension, nothing.
Suze: Your employer hat or your employer contribution
Suze: can still wait until you file. Now how is that
Suze: for complication, KT? That was a little mini Suze School.
KT: Suze, tell everyone what is the difference between an S
KT: corp and a sole proprietorship.
Suze: All right, so before I go to an S corp, everybody,
Suze: let's just start simple.
Suze: A sole proprietorship. I always want you to think of
Suze: the name of something. A sole proprietorship means it is
Suze: just you. So maybe you're a freelance, you consult, you
Suze: sell things, and you've never filed any other special paperwork,
Suze: all right? It's just you and your business, same person.
Suze: The business makes $1.
Suze: And that $1 is yours and it goes right in
Suze: your personal tax return. Now, you may think that's just great, everybody,
Suze: but you probably didn't know that on that money, on
Suze: the profit, you're paying self-employment tax.
Suze: That's Social Security and Medicare, a little over 15% on
Suze: every dollar that you make. That's essentially how it is. So,
Suze: that's a sole proprietorship, very easy. You and your business
Suze: are one. But when you form an S corp,
Suze: you are not one with your business. The S Corp
Suze: is a separate business. It's not just you anymore, and you, everybody,
Suze: you become its employee. So therefore, you have to pay
Suze: yourself a real salary, like a paycheck, a W-2, just
Suze: like you work for anybody else. However, you only pay
Suze: Social Security and Medicare tax on your salary.
Suze: But the profit above your salary that comes to you
Suze: as a distribution, so there is no self-employment tax on it, none.
Suze: So bottom line, if your business is making serious money,
Suze: an S corp saves you thousands in payroll taxes every
Suze: single year.
Suze: So KT, you tell everybody in your opinion, why doesn't
Suze: everybody do that?
KT: S corps aren't that easy. All right, there's benefits, but
KT: it costs you money, everybody. You have to set up
KT: payroll services. You need a separate tax return, and the
KT: IRS really takes a look to make sure your salary
KT: is reasonable, so you can't get away with anything.
Suze: You can't pay yourself $10,000, everybody and then take
Suze: $200,000 in distributions. They will come after you for that.
Suze: So KT tell everybody who should do in your opinion,
Suze: an S corp versus a sole proprietor.
KT: If you're just starting out, let's say you're a hairdresser,
KT: you're just starting out, you're making modest profits. A sole
KT: proprietor is fine. It's simple. It's clean. It's actually a
KT: whole lot easier.
KT: And, and a little less work in terms of filing
KT: and keeping track of everything.
Suze: You're doing great so far. You're about to get a
Suze: ding ding ding.
KT: Wait a minute. But Suze, if you start out and
KT: let's say you have a great idea for a business
KT: and that business after your first, second year starts to skyrocket,
KT: let's say it goes beyond your wildest dreams.
Suze: Actually, KT, it's if, wait, if it goes beyond what
Suze: a reasonable salary would be for you, that is the key.
Suze: If a reasonable salary for you is X and all
Suze: of a sudden you've made 2 or 3 x, that's
Suze: when you consult a CPA and look into getting an
Suze: S corp. Just that simple KT next question.
KT: OK, Suze, this next question is from Teresa, and I
KT: can tell you something. She watched the Suze Orman show
KT: because after reading this question, it is.
KT: Definitely a can I afford it question.
Suze: Oh well, that's easy, denied.
KT: She said, Suze, I would like to buy a quiet
KT: luxury handbag in a basic color that is timeless, meaning
KT: I will keep it until I die.
KT: She said, I'm 67 years old. I am a teacher.
KT: I plan on retiring next year. I live in California
KT: and will retire with a decent educator's pension. So she said,
KT: right now, I have about $600,000 in a 403B.
KT: And a 457. I have $200,000 in a CD. I
KT: have $30,000 in savings, and my husband and I have
KT: a house fund for emergencies of about $16,000. The most
KT: I have ever spent on a handbag was $259.
KT: And that was for Dooney and Burke, which is a
KT: nice looking bag.
Suze: I personally wouldn't know.
KT: OK, so she said, I would really like to own
KT: a nice designer bag, The Row, a Bottega Venita, Chanel,
KT: anything between $1,500 but no more than $3,000. What is
KT: your advice?
Suze: Really?
KT: What's your advice?
Suze: My advice is let's hear what KT has to say
Suze: to you.
KT: OK, so Suze's asking me to answer this because she
KT: knows I worked in the luxury business for many years
KT: with all of these designer brands, and I have to
KT: tell you something. If I were you, Teresa, I would
KT: go to a consignment store or some of these online secondhand.
KT: You know, um, opportunities where you can get a beautiful
KT: designer bag for pennies on the dollar, and then you
KT: satisfy both needs. You keep saving and you have a
KT: designer bag that you really wanted.
Suze: See, I knew you would give her the best answer.
KT: What do you think?
Suze: Well, I think your answer is absolutely correct, but here's
Suze: my concern. My concern is this, Teresa, you're 67 years
Suze: of age. And you plan on retiring next year. That
Suze: means your income, everything stops.
Suze: And at the time of life when you're retiring, this
Suze: is when you want a designer bag. Usually, especially women,
Suze: when they approach retirement and they know income is going
Suze: to stop, rather than spend, that's when they take their
Suze: money and they wanna save, save, save.
Suze: But not you. So it makes me wonder why, why
Suze: at this point in your life, why is now the
Suze: time that you want a designer bag? Hey, if you
Suze: were 40, 50 right now, I'd say, yeah, go ahead.
Suze: But at 67, I'm just wondering why.
Suze: So I'd like you to answer that question for yourself,
Suze: and if you come up with the reason that makes
Suze: sense that you want to spend that kind of money
Suze: one year before you retire, OK, if it were me,
Suze: I would not be doing it, but more important than
Suze: you buying the bag, I want you to understand why.
Suze: Why at this point in your life do you want
Suze: to do that? Next question, KT.
KT: OK, from Stacy. Hi, Suze. I saw where you mentioned
KT: that paying off your mortgage is the most important thing
KT: for retirement. I agree.
Suze: One of them, yes.
KT: OK, so here is my dilemma. I am 63 years old.
KT: I owe $130,000 on my condo.
KT: I make $110,000 per year and I have $300,000 in
KT: my 401k. I only have $15,000 in saving because I
KT: just put a big down payment on a car. I
KT: also have about $60,000 in gold and silver that I
KT: can sell. I am still working and don't plan to
KT: retire anytime soon.
KT: Any advice as to how to pay off my mortgage?
Suze: Yes, stop spending money you don't have simply to impress
Suze: people you don't even know or like, because anybody who
Suze: buys a big car and they have to put a
Suze: down payment on it, that's exactly why they're doing it.
Suze: But that's besides the point. Here's my concern for you.
Suze: You say that you want to own your home outright,
Suze: all right, by the time you retire, even though you
Suze: don't plan to retire any time soon. Number one, you
Suze: want to make God laugh. Have you ever heard this?
Suze: Show her your plan. You don't know. Are you in
Suze: a car accident? Are you sick? What happens? Does your
Suze: company close? You don't know how long you have to work.
Suze: You don't know that. That's an unknown.
Suze: So I always tell you invest in the known versus
Suze: the unknown. The known is most likely you're still going
Suze: to need a home to live in, whether you are
Suze: working or not. The known is your biggest monthly expense
Suze: is your mortgage payment. Therefore, if you know that you
Suze: want to stay in that house for the rest of
Suze: your life, then that should have been a long time now.
Suze: That should have been for a long time your number
Suze: one priority to have it paid off by the time
Suze: you retire. But no, you decided to take money even
Suze: though all you have is $15,000 in an emergency fund. Really?
Suze: All right. You decided to take emergency fund money from
Suze: savings to put a large down payment on a car. Why?
Suze: So your monthly payments could be smaller. Are you kidding me?
Suze: And, you have $60,000 in gold and silver. Do what
Suze: it already has gone up. Here's the bottom line. If
Suze: it were me, this is what I would do. I
Suze: would sell the gold and the silver, all of it.
Suze: Maybe you have a capital gain. Maybe you don't. I
Suze: don't know. You'll have to check that out before you
Suze: sell it. If you could take that money and put
Suze: it into your mortgage.
Suze: That you currently have towards principal, make sure it goes
Suze: towards principal. Now all you owe is $70,000 and if
Suze: you continue to pay your monthly mortgage like you do
Suze: right now or do it on a biweekly schedule where
Suze: you actually do it every two weeks, which means you
Suze: make one extra payment a year.
Suze: You will have that mortgage paid off sooner than you
Suze: have any idea. That is number one. Number two, you
Suze: make $110,000 a year.
Suze: And you're 63 years of age and you only have
Suze: now $15,000 in savings. You need to take a hard
Suze: look at yourself and what are you spending your money
Suze: on because you don't say you're married, you don't say
Suze: that you have kids, you use the word I throughout
Suze: this entire thing.
Suze: You know, and so therefore, you also have $300,000 in
Suze: a 401k. It's not even a Roth 401k.
Suze: So that means you don't have $300,000 in there because
Suze: when you go to take it out you're going to
Suze: owe ordinary income tax on it. So you have done
Suze: everything wrong. You just have, and that is me standing
Suze: in your truth for you because you wrote in and
Suze: you didn't write in to get me to tell you
Suze: what you could do. You already knew you need to
Suze: stand in your truth.
Suze: And you need to make you and your life and
Suze: your money in savings and investment your number one priority
Suze: over flashy things.
Suze: Such as a car. All right, KT, next.
KT: OK, this is from Maria, a simple one liner which
KT: I love everybody. Maria asks Suze, does a living revocable
KT: trust need to be registered at the county you live in?
Suze: No, it does not, never has and never will. Now
Suze: maybe there's some places that do, but not that I
Suze: know of. All right, go on next.
KT: So, from Diane. I don't have a trust because I
KT: don't have any executor for my estate. I have no
KT: family members, and most of my friends are older or gone.
KT: I tried to hire an attorney, and she did not
KT: want to be the executor. I'm leaving my entire estate
KT: to charity, and I'm 76 years old. I don't know
KT: what to do, and I'm very concerned. So, Suze, how
KT: will the documents work if I don't have any one
KT: to distribute my assets.
KT: So I think, and she wrote, please enlighten me. So
KT: can you please enlighten her?
Suze: I can. And here's the first thing I'm gonna tell you.
Suze: You don't have a will. You don't have a trust
Suze: because of this excuse that you don't have an executor.
Suze: Guess what? You have one. If you die, and this
Suze: is true for everybody, if you die without a will,
Suze: without a trust, the state that you live in deems
Suze: that you have died intestate succession.
Suze: And your assets will pass according to the succession rules
Suze: of the state that you live in plus probate fees, OK?
Suze: So let's just say your mother was still alive and
Suze: you had kids, all right, maybe half would go to
Suze: your mother or
Suze: father, half would go to your kids. If you don't
Suze: have any relatives or anybody, maybe they're going to look
Suze: for cousins, uncles, aunts, but you already have one, whether
Suze: you know it or not. You want to take power
Suze: over your money. There's a few things you can do,
Suze: depending on where your assets are. I'm assuming you have
Suze: bank accounts, maybe you have a brokerage account, maybe you
Suze: have a retirement account.
Suze: You could designate right here and right now upon your
Suze: death what's known as a pay on death account. You die,
Suze: name the charities now that you want to get your money.
Suze: You own a home. You could do a transfer on
Suze: death account if you want. Who is to get your
Suze: home if you have one? If that's to go to
Suze: a charity, then do that. But you name it now
Suze: while you still can, and that's the easiest way to
Suze: take care of it. But I'm actually not that concerned
Suze: about where your money goes when you have died.
Suze: I'm concerned about what happens if something happens to you
Suze: and how do we use your money to pay your bills,
Suze: write your checks if you even write checks any more,
Suze: to pay for a nursing home, to do all those things. Who,
Suze: Diane is going to do that for you? All of
Suze: a sudden you become incapacitated. You have a stroke. Anything
Suze: can happen.
Suze: So, you need to designate a durable power of attorney
Suze: for health care, who can make health care decisions for you.
Suze: So the must-have documents really can serve you well now.
Suze: If you really don't have any friends, if you don't
Suze: have anybody in your life, then you're in a situation
Suze: where you need to hire a professional trustee, and there
Suze: are firms that do that. Many banks will do that
Suze: for you. Many brokerage firms may be will do that
Suze: for you. You never know, but you will find somebody,
Suze: but you need to get on it right now. But
Suze: not taking action now.
Suze: Just because you have an excuse of I don't have
Suze: an executive for my estate just doesn't hold water with me.
Suze: So tomorrow you are to make calls and you are
Suze: to make pay on death accounts, find a trustee, and
Suze: get yourself the must-have documents and do this now. Go
Suze: to musthavedocs.com. Yes, KT.
KT: OK, this next one and my final question.
KT: It is fabulous, Suze. I love this. It's from Mary.
KT: She said, KT KT, KT, please, please, please pick me.
KT: And then she said, Help our beautiful 94 year old mom.
KT: Love this question. My 94-year-old mom has about $10,000 in
KT: credit card debt and has only been able to make
KT: the minimum payments. Suze, the account is not delinquent, but
KT: it's becoming a burden.
KT: She has no other debt. She does have a reverse
KT: mortgage and lives on Social Security and a teacher's pension.
KT: She has early memory loss from multiple mini strokes, but
KT: she's still remarkably independent. I moved in with her this
KT: year to help care for her, though she's amazingly physically
KT: capable for her age.
KT: The five of us kids help with expenses when needed,
KT: but we're at a point where we need to prioritize
KT: our own financial future. If she doesn't have this credit
KT: card debt, she could cover her monthly expenses. What do
KT: you recommend?
Suze: So you know, I'm a little confused here because $10,000
Suze: of credit card debt is nothing.
Suze: I have a feeling that Mary meant to say she
Suze: has about $100,000 in credit card debt and, and yes,
Suze: because $10,000 in credit card debt, KT, the minimum payment
Suze: due would be like $200 a month, $300 a month.
Suze: It's a burden when it's $2,000 or $3,000 a month.
Suze: All right, so Mary, I'm just going to make the
Suze: assumption that when you wrote this, you wanted to put
Suze: down $100,000 and instead you put down $10,000.
Suze: If you really did mean $10,000 then something is radically
Suze: wrong and the five kids should each come up with
Suze: $2,000 each and pay off that debt. But I just
Suze: can't believe that $10,000 of credit card debt is that
Suze: big of a burden. So I'm going to go with
Suze: my feelings, KT, and say it's $100,000. So you need
Suze: to listen to me here, which is this first of all.
Suze: You know, mama has already a reverse mortgage. She's been
Suze: living far beyond her means for a long, long time.
Suze: You say she has no other debt. Well, that's great.
Suze: $100,000 of credit card debt, a reverse mortgage, lives on
Suze: Social Security and a teacher's pension, and blah, blah blah blah.
Suze: My real concern is here.
Suze: She has memory loss and it could get bad and
Suze: even though you moved in with her, that doesn't mean
Suze: necessarily that you're going to be able to take care
Suze: of her really.
Suze: It just does because sometimes they wander, they'll leave the
Suze: house in the middle of the night, all kinds of things,
Suze: and you'll find that even though you love her, you
Suze: moved in with her, you might not be able to
Suze: let her stay there, all right, so you should number one,
Suze: be looking at a memory care facility just in case
Suze: you have to move her into one, all right.
Suze: That's number one. If you do have to move her
Suze: into one now, you may need to sell the house,
Suze: but because she has a reverse mortgage on the home,
Suze: I don't know how long she has had this home
Suze: for on a reverse mortgage. There may be equity in
Suze: her home, and there may not be very much equity
Suze: in her home.
Suze: So it just depends how long she has had a
Suze: reverse mortgage, and given that she is 94, why do
Suze: I think she's had one for at least 15 or
Suze: 20 years already.
Suze: So we have a very, very serious situation here, Mary,
Suze: and this is where the kids, all the kids, the
Suze: five of you, need to get together and really look
Suze: at what is the current equity in her home if
Suze: the reverse mortgage was to be paid off. How much
Suze: does a memory care facility really cost? And if, in fact,
Suze: now listen to me closely.
Suze: You've done that and they can't really attach a home
Suze: or take anything away from her or whatever. You've sold
Suze: the home. She has no assets. If she really has
Suze: $100,000 of credit card debt after you have arranged everything
Suze: for her and you know what's really going on.
Suze: If that was my mother, I would consider claiming bankruptcy.
Suze: Only if they can't take the house away from her,
Suze: because the rules of bankruptcy is once you owe more
Suze: than what you make, you are already technically bankrupt now.
Suze: That debt is not going to pass down to the
Suze: five kids. You could very easily, believe it or not,
Suze: just stop paying it, and what are they going to do.
Suze: Really it's unsecured debt. It's not secured by the house.
Suze: Will it ruin her FICO score? Absolutely it will. But
Suze: the truth of the matter is, who cares? Who cares
Suze: about a FICO score when you are 94 years of age?
Suze: So there are many things that you can do here.
Suze: But if she really can't afford it.
Suze: And she probably used that money to live on, so
Suze: she didn't go on and buy all these fancy things
Suze: and everything.
Suze: Those are some ideas that you might want to think
Suze: about again. Listen to my answer. Do you sell the home?
Suze: Do you claim bankruptcy? Will they allow her to keep
Suze: the home? Is there any equity in the home, or
Suze: does it just make sense? And you should see a
Suze: bankruptcy lawyer to claim bankruptcy or just stop paying the
Suze: credit card and let it go into default ruins her
Suze: FICO score.
Suze: But there's nothing really much more they can do about
Suze: that really because it's unsecured debt. Now maybe they could
Suze: sue her, who knows, but they're not going to at
Suze: this point in time. Those are some of your alternatives
Suze: that you're going to have to decide what you should do.
Suze: All right, KT, and that was kind of heavy, huh?
Suze: It's been years since I suggested possible bankruptcy.
KT: But I'm glad you did because I think that's probably
KT: the best solution right now. But, she won't, the, the mother,
KT: like she's 94 and she's racked up that much credit card debt?
Suze: Maybe we don't know how she's lived for the past
Suze: x amount of years, and this goes back to what
Suze: I think I said in last Sunday's, right, podcast. Kids
Suze: get involved with your parents' money sooner than later. Parents,
Suze: let your kids get involved with your money, because this
Suze: situation never should have happened ever. And again, Mary, if
Suze: it is only $10,000 of credit card debt, great. Each
Suze: of you can put in $2,000 each, get rid of
Suze: the debt, and you're fine, but no way is $10,000
Suze: doing this to your mother. No way.
Suze: All right, KT.
KT: That's a wrap, Suze.
Suze: That's a wrap. And listen, next week, August 2nd, I'm
Suze: gonna be doing a master class on required minimum distributions.
Suze: You will love it, so make sure you tune in.
Suze: We love you all, and there's only one thing we
Suze: want you to remember when it comes to your money,
Suze: and it is this:
KT: People first, then money, then things.
Suze: Now you stay safe. All right, bye bye.