1 00:00:46,939 --> 00:00:51,400 Suze: January 11th, 2024. Take it KT 2 00:00:52,168 --> 00:00:55,740 KT: Welcome to the Women and Money podcast where you 3 00:00:55,750 --> 00:00:58,020 Suze: Wait, wait, you gotta do it right, KT. If you're 4 00:00:58,029 --> 00:00:58,630 Suze: gonna do it... 5 00:00:59,400 --> 00:01:01,439 Suze: and everybody smart enough to listen. 6 00:01:01,959 --> 00:01:05,250 KT: Right, I forgot about the everybodys 7 00:01:08,150 --> 00:01:10,529 Suze: Alright. And what is today? 8 00:01:10,629 --> 00:01:11,849 KT: January 11th. 9 00:01:12,220 --> 00:01:13,720 Suze: No, it's ask what? 10 00:01:16,589 --> 00:01:19,660 KT: All right, this is, we're off to a good start everybody. 11 00:01:19,900 --> 00:01:26,610 KT: January 11th 2024. It's the ask KT and Suze Anything 12 00:01:26,779 --> 00:01:29,470 KT: podcast and everyone's smart to listen. 13 00:01:30,580 --> 00:01:34,769 Suze: Welcome everybody. So if you have a question, you write 14 00:01:34,779 --> 00:01:39,569 Suze: to ask Suze Suze podcast at gmail.com 15 00:01:39,910 --> 00:01:43,149 Suze: and if KT chooses it or if I go through 16 00:01:43,160 --> 00:01:46,099 Suze: them and I happen to see one that I like 17 00:01:46,110 --> 00:01:49,699 Suze: I ask KT to choose it and I'll answer it 18 00:01:49,709 --> 00:01:52,809 Suze: here on the podcast. All right, girlfriend. 19 00:01:52,980 --> 00:01:57,230 KT: I have a selection of fabulous questions, but I'm gonna start 20 00:01:57,239 --> 00:02:01,529 KT: with something that isn't a question. This, everyone is an 21 00:02:01,540 --> 00:02:06,449 KT: example of what an unstoppable woman is. All about, this 22 00:02:06,459 --> 00:02:07,550 KT: is from Sarah. 23 00:02:08,000 --> 00:02:12,459 KT: Hi, Suze and KT. Hope this email finds you well. I've 24 00:02:12,470 --> 00:02:16,168 KT: been listening to your podcast for three years now and 25 00:02:16,179 --> 00:02:21,020 KT: have been empowered to make some great strides. You ready everyone. 26 00:02:21,830 --> 00:02:26,699 KT: Sarah left an unhealthy and financially abusive marriage. She opened 27 00:02:26,710 --> 00:02:32,339 KT: a Roth IRA saved six months plus for an emergency fund. 28 00:02:32,350 --> 00:02:37,639 KT: Opened an Alliant Ultimate Opportunity savings account, started investing in 29 00:02:37,649 --> 00:02:43,229 KT: index funds and CDs. And currently she's employed in an 30 00:02:43,240 --> 00:02:48,029 KT: institution that's helping her pay for grad school ready for the, 31 00:02:48,038 --> 00:02:49,589 KT: the best of all, Suze? 32 00:02:49,929 --> 00:02:54,380 KT: Sarah says, and I'm about to graduate as a family 33 00:02:54,389 --> 00:03:00,228 KT: nurse practitioner. This May. Bravo Sarah. So you are an 34 00:03:00,240 --> 00:03:04,479 KT: unstoppable woman. She said she's grateful and happy for all 35 00:03:04,490 --> 00:03:08,619 KT: of your robust lessons, Suze on finances and she has 36 00:03:08,630 --> 00:03:11,679 KT: so much more to learn and apply. But we're proud 37 00:03:11,690 --> 00:03:14,869 KT: of you and I love that you sent this love, love, love it. 38 00:03:15,538 --> 00:03:17,869 Suze: You know, I just have to say something which is 39 00:03:18,520 --> 00:03:21,500 Suze: a lot of times people write in and they have questions, 40 00:03:21,508 --> 00:03:24,198 Suze: some about their problems, some about not knowing what to 41 00:03:24,210 --> 00:03:27,929 Suze: do with money. But for those of you who are listening, 42 00:03:28,419 --> 00:03:32,228 Suze: you need to hear sometimes things like KT just read 43 00:03:32,240 --> 00:03:35,529 Suze: to know that there is hope that there is a 44 00:03:35,539 --> 00:03:38,360 Suze: way if you keep doing what we're telling you to 45 00:03:38,369 --> 00:03:41,809 Suze: do over and over again and you finally get it. 46 00:03:42,130 --> 00:03:45,139 Suze: You too can be a Sarah so proud of you. All right KT. 47 00:03:46,059 --> 00:03:49,490 KT: Ok. Now, here's another one that is just in, in 48 00:03:49,500 --> 00:03:53,210 KT: my opinion, I selected this because of the headline. It 49 00:03:53,220 --> 00:03:54,229 KT: says poof 50 00:03:54,580 --> 00:03:59,529 KT: just like that. I am no longer financially secure. And 51 00:03:59,539 --> 00:04:03,960 KT: this refers to Suze's what ifs of life? This is 52 00:04:03,970 --> 00:04:08,520 KT: from Tina. And it said dear Susie, five months ago, 53 00:04:08,750 --> 00:04:12,070 KT: I lost sight of those first three qualities of a 54 00:04:12,080 --> 00:04:18,480 KT: wealthy woman, courage, harmony, and balance with the shocking news 55 00:04:18,488 --> 00:04:21,589 KT: of my husband's kidney cancer diagnosis. 56 00:04:22,089 --> 00:04:26,640 KT: Doctors gave us the worst case scenario. I panicked and 57 00:04:26,649 --> 00:04:30,928 KT: reached out to you regarding our finances. You listened, you 58 00:04:30,940 --> 00:04:34,510 KT: asked questions and put me at ease. I put on 59 00:04:34,519 --> 00:04:38,320 KT: my positive pants and tackled the crisis head on. 60 00:04:38,690 --> 00:04:43,599 KT: We applied for and received temporary disability income since he 61 00:04:43,609 --> 00:04:47,349 KT: could not work. His health insurance proved to be very 62 00:04:47,359 --> 00:04:53,299 KT: good with manageable co-pays. We thankfully had and have plenty 63 00:04:53,309 --> 00:04:57,079 KT: of money in our emergency savings account and are medically 64 00:04:57,089 --> 00:05:00,909 KT: debt free. The best possible outcome, financial 65 00:05:01,565 --> 00:05:06,114 KT: health wise. I am pleased to announce my husband is 66 00:05:06,126 --> 00:05:09,996 KT: now cancer free, Suze. Ring the bell, ding, ding, ding, ding, ding, ding, 67 00:05:10,156 --> 00:05:10,955 Suze: Ding, ding, ding. 68 00:05:11,286 --> 00:05:14,536 KT: His right kidney was removed completely. They were able to 69 00:05:14,545 --> 00:05:18,816 KT: save 87% of his left. He does not need dialysis. 70 00:05:18,825 --> 00:05:22,945 KT: He's been cleared, will return to work full time with 71 00:05:22,955 --> 00:05:23,234 KT: no 72 00:05:23,342 --> 00:05:29,130 KT: restrictions, best possible outcome. And again, I want to express 73 00:05:29,141 --> 00:05:33,082 KT: my gratitude to you Suze for not only your financial 74 00:05:33,092 --> 00:05:38,462 KT: wisdom but your calm your concern, your encouragement. When you 75 00:05:38,471 --> 00:05:43,682 KT: say people first, you mean it. Also, I must thank 76 00:05:43,690 --> 00:05:44,962 KT: you KT 77 00:05:45,988 --> 00:05:49,488 KT: for your sincere empathy and well wishes, when you read 78 00:05:49,500 --> 00:05:53,070 KT: my email on the podcast. You both created for me, 79 00:05:53,079 --> 00:05:58,488 KT: a more peaceful, joyful and loving world. Isn't that great? 80 00:05:59,549 --> 00:06:03,290 KT: I have goose bumps when I read this. So Tina, 81 00:06:03,299 --> 00:06:06,809 KT: thank you so much from Suze and me. We just 82 00:06:06,820 --> 00:06:11,130 KT: feel so happy to hear this news and to just 83 00:06:11,140 --> 00:06:12,010 KT: feel that 84 00:06:12,320 --> 00:06:17,019 KT: everything's going well for you. And I'm really happy that 85 00:06:17,029 --> 00:06:20,899 KT: you understand our people first and what that means. 86 00:06:22,190 --> 00:06:23,829 KT: All right. Now, let's get on with some questions. 87 00:06:24,440 --> 00:06:27,779 Suze: I have a thought right here right now, which is, 88 00:06:28,730 --> 00:06:32,480 Suze: it was people first. And remember for years on the 89 00:06:32,488 --> 00:06:36,738 Suze: Suze Orman show we ended it with, there's only one 90 00:06:36,750 --> 00:06:38,510 Suze: thing that we want you to remember when it comes 91 00:06:38,519 --> 00:06:41,779 Suze: to money and that's people first then money and things. 92 00:06:42,079 --> 00:06:46,368 Suze: And then all last year, it was about a more peaceful, 93 00:06:46,380 --> 00:06:52,750 Suze: loving and joyful world and it's kind of all goes together. So, KT, 94 00:06:52,760 --> 00:06:55,559 Suze: what do you think of this year on the Women 95 00:06:55,570 --> 00:06:56,869 Suze: and Money podcast, 96 00:06:57,269 --> 00:07:01,350 Suze: we do start ending it with people first then money, 97 00:07:01,359 --> 00:07:02,190 Suze: then things. What do you think? 98 00:07:02,619 --> 00:07:07,250 KT: And you stay safe and you will be what? Unstoppable. 99 00:07:07,559 --> 00:07:09,750 KT: Let's do it. We'll do it today. Everyone, you tell 100 00:07:09,760 --> 00:07:12,970 KT: us how we did, but let's do it for this podcast. 101 00:07:13,679 --> 00:07:14,359 KT: We have, we have 102 00:07:14,470 --> 00:07:17,690 KT: a new, we have a new mantra for 2024. 103 00:07:17,839 --> 00:07:18,480 Suze: Not a new one... 104 00:07:18,790 --> 00:07:20,209 KT: We have the best mantra. 105 00:07:21,339 --> 00:07:24,660 Suze: It's the very, very best one. And I just have 106 00:07:24,670 --> 00:07:27,809 Suze: to say one other thing about it when I say 107 00:07:27,820 --> 00:07:33,230 Suze: people first, then money, then things, I mean, you, 108 00:07:33,619 --> 00:07:36,170 Suze: I don't mean about you being generous and taking care 109 00:07:36,179 --> 00:07:39,850 Suze: of everybody and giving all your money away and buying gifts. 110 00:07:40,089 --> 00:07:45,589 Suze: I mean, taking care of yourself people first means you. All right KT. 111 00:07:46,950 --> 00:07:50,700 KT: I'm gonna start with some. Just die hard questions ready everyone. 112 00:07:51,010 --> 00:07:51,720 KT: Happy New Year. 113 00:07:52,140 --> 00:07:55,250 Suze: We're already 30 minutes into it. It's over. I'm joking. 114 00:07:56,130 --> 00:07:58,940 KT: Oh my God. I have so many great questions that 115 00:07:58,970 --> 00:07:59,790 KT: go on. Ok. 116 00:08:01,309 --> 00:08:05,140 KT: Happy. not April Fool's Day. It's Happy New Year. I 117 00:08:05,149 --> 00:08:09,149 KT: recently came across a podcast suggesting using the funds in 118 00:08:09,160 --> 00:08:09,730 KT: an HSA 119 00:08:10,540 --> 00:08:15,290 KT: as an additional retirement fund and not using those dollars 120 00:08:15,440 --> 00:08:20,140 KT: to pay for qualifying medical expenses. Is there a benefit 121 00:08:20,149 --> 00:08:25,399 KT: paying with after tax dollars versus those inside of the HSA? 122 00:08:25,500 --> 00:08:26,640 KT: I never heard of this, Suze. 123 00:08:26,880 --> 00:08:31,029 Suze: Listen, HSA is a health savings account and when you 124 00:08:31,040 --> 00:08:34,710 Suze: have a health savings account, it goes along with a 125 00:08:34,719 --> 00:08:39,559 Suze: very high deductible health insurance policy. Just know that 126 00:08:40,039 --> 00:08:43,130 Suze: you can use it for a retirement account if you want. 127 00:08:43,270 --> 00:08:45,710 Suze: But the best thing you can do is because as 128 00:08:45,719 --> 00:08:49,119 Suze: you get older, the majority of your expenses are going 129 00:08:49,130 --> 00:08:52,650 Suze: to be medical expenses and if you use it for 130 00:08:52,659 --> 00:08:56,459 Suze: qualified medical expenses can even be for long term care 131 00:08:56,549 --> 00:09:01,820 Suze: or long term care insurance. It's tax free. So don't 132 00:09:01,830 --> 00:09:04,939 Suze: go getting fancy schmancy n it. It's not worth it. 133 00:09:04,950 --> 00:09:05,840 Suze: Trust me. Go on. 134 00:09:05,940 --> 00:09:08,419 KT: Ok. Next question from Sam. 135 00:09:08,760 --> 00:09:12,988 KT: Hi, Suze and Katie. You wrote Katie. And sometimes they call 136 00:09:13,000 --> 00:09:15,858 KT: me Katie instead of KT. But I like both. We 137 00:09:15,869 --> 00:09:20,500 KT: established 529 plans for all three of our children. We 138 00:09:20,510 --> 00:09:24,380 KT: have two already finished with college. We now realize that 139 00:09:24,390 --> 00:09:27,630 KT: we may be left with rather large sums of money, 140 00:09:27,640 --> 00:09:32,820 KT: about 75,000 in them. After all three finished college 141 00:09:33,065 --> 00:09:36,204 KT: My spouse and I are comfortable and do not need 142 00:09:36,215 --> 00:09:40,335 KT: the funds. What would you recommend we do with that amount, 143 00:09:40,344 --> 00:09:45,015 KT: leave it for future potential grandkids. Other uh, other ideas. 144 00:09:45,505 --> 00:09:46,973 KT: Can you use it? Can you keep it for... 145 00:09:48,594 --> 00:09:54,335 Suze: Sure, your grandkids, other things like that? So $75,000 fabulous if 146 00:09:54,344 --> 00:09:57,054 Suze: you don't need the money, leave it in there 147 00:09:57,150 --> 00:10:02,530 Suze: for potential grandchildren. Because now you've got an incredible jump 148 00:10:02,539 --> 00:10:06,449 Suze: on that money increasing and increasing and increasing and it 149 00:10:06,460 --> 00:10:09,349 Suze: may be that no money has to be added to 150 00:10:09,359 --> 00:10:14,549 Suze: that at all, to fund their college educations. How fabulous 151 00:10:14,559 --> 00:10:17,669 Suze: is that? Of course, if you wanna just withdraw it, 152 00:10:17,820 --> 00:10:21,130 Suze: you will pay taxes on any amount above what you 153 00:10:21,140 --> 00:10:21,250 Suze: originally 154 00:10:21,604 --> 00:10:25,284 Suze: put in plus a 10% penalty. And I know a 155 00:10:25,294 --> 00:10:27,804 Suze: lot of people are gonna say to you, oh, why 156 00:10:27,815 --> 00:10:31,005 Suze: don't you just put it into a Roth IRA you 157 00:10:31,015 --> 00:10:34,005 Suze: can do. So, first of all, the maximum that you 158 00:10:34,015 --> 00:10:39,284 Suze: can do in a Roth IRA is only $35,000 in total. 159 00:10:39,294 --> 00:10:43,084 Suze: That's less than half of what you already have left 160 00:10:43,094 --> 00:10:45,405 Suze: over at $75,000. 161 00:10:45,710 --> 00:10:48,969 Suze: It's so complicated. It's not even worth it. So either 162 00:10:48,979 --> 00:10:52,250 Suze: take it out, pay the penalties and taxes or leave 163 00:10:52,260 --> 00:10:53,330 Suze: it in for the grandkids. 164 00:10:54,179 --> 00:10:56,449 KT: I'd go with the grandkids. Papa. 165 00:10:56,630 --> 00:11:00,549 Suze: Why not? Obviously they don't need the money. So, why not? 166 00:11:00,559 --> 00:11:02,520 Suze: What a fabulous idea. 167 00:11:04,200 --> 00:11:07,169 KT: All right. This next one's from David. And David, you 168 00:11:07,179 --> 00:11:11,919 KT: are so clever. I picked this right away. It said 401k, 169 00:11:11,929 --> 00:11:15,419 KT: but he wrote 401 "Katastrophe. 170 00:11:15,729 --> 00:11:16,969 Suze: Is that why you picked it? 171 00:11:16,979 --> 00:11:20,940 KT: Yeah. 401 catastrophe. I loved it. Hello, KT and Suze 172 00:11:20,950 --> 00:11:24,010 KT: Happy New Year. I love seeing the pictures of you 173 00:11:24,020 --> 00:11:25,260 KT: posted on the women 174 00:11:25,359 --> 00:11:28,630 KT: and Money app. David, I'm afraid to ask you what 175 00:11:28,640 --> 00:11:29,959 KT: she posted there. 176 00:11:29,969 --> 00:11:32,590 KT: Do you love that? She doesn't look? I don't look. 177 00:11:32,599 --> 00:11:34,789 KT: And I'm always afraid like, what is she putting up 178 00:11:34,809 --> 00:11:35,280 KT: here of us? 179 00:11:35,289 --> 00:11:38,330 Suze: And by the way, for those of you who don't 180 00:11:38,409 --> 00:11:41,340 Suze: use the women and Money app and you can download 181 00:11:41,349 --> 00:11:45,500 Suze: it in Google Play or Apple apps, you can download 182 00:11:45,510 --> 00:11:46,380 Suze: it for free. 183 00:11:46,940 --> 00:11:50,500 Suze: I do give advice on there. I will tell you 184 00:11:50,510 --> 00:11:54,439 Suze: sometimes what I think about things financially and sometimes it's 185 00:11:54,450 --> 00:11:58,239 Suze: entertaining by, I post pictures that I really don't post 186 00:11:58,250 --> 00:11:59,760 Suze: anywhere else. All right. 187 00:11:59,929 --> 00:12:03,919 KT: Ok. So David said Suze for 14 years, I've been 188 00:12:03,929 --> 00:12:10,880 KT: consistently putting money into my employers 401k, evenly distributing it 189 00:12:10,890 --> 00:12:13,869 KT: across four different funds with each paycheck. 190 00:12:14,304 --> 00:12:17,465 KT: I've wondered if this is a wise approach. Am I 191 00:12:17,474 --> 00:12:22,375 KT: genuinely diversified is for funds too few or too many? 192 00:12:22,505 --> 00:12:26,895 KT: So David's asking similar to individual stocks where it's advised 193 00:12:26,905 --> 00:12:31,544 KT: not to let one stock surpass 4% of your portfolio. 194 00:12:31,625 --> 00:12:36,375 KT: How does this guideline apply to funds in a 401k? 195 00:12:36,844 --> 00:12:40,034 Suze: So, truthfully, David, it doesn't apply to funds in a 401k 196 00:12:40,044 --> 00:12:40,734 Suze: at all 197 00:12:41,099 --> 00:12:46,000 Suze: because in a 401k, you have mutual funds and you 198 00:12:46,010 --> 00:12:49,199 Suze: usually have index funds that can have 500 stocks in it, 199 00:12:49,210 --> 00:12:53,859 Suze: 3000 stocks in it. And you're already diversified. The reason 200 00:12:53,869 --> 00:12:57,059 Suze: that you don't want more than 4% of your money 201 00:12:57,159 --> 00:13:01,039 Suze: in one individual stock, which means if you had money 202 00:13:01,049 --> 00:13:01,960 Suze: to invest, 203 00:13:02,429 --> 00:13:06,830 Suze: you would need 25 stocks with 4% in each one 204 00:13:06,840 --> 00:13:10,239 Suze: to be truly diversified. A lot of people think you 205 00:13:10,250 --> 00:13:13,020 Suze: even need more than that. You should have 50 stocks 206 00:13:13,030 --> 00:13:17,809 Suze: to be truly diversified. So it doesn't apply to mutual 207 00:13:17,820 --> 00:13:22,000 Suze: funds in terms of your 401k and the four different funds, 208 00:13:22,010 --> 00:13:23,090 Suze: it would depend 209 00:13:23,219 --> 00:13:27,719 Suze: which funds you have chosen. But you could do the 210 00:13:27,729 --> 00:13:31,949 Suze: total US stock market index fund and be totally diversified. 211 00:13:31,960 --> 00:13:34,869 Suze: That way you could do a mid cap fund, you 212 00:13:34,880 --> 00:13:37,719 Suze: could do a small cap fund, you could do things 213 00:13:37,729 --> 00:13:41,000 Suze: like that and if you happen to work for a 214 00:13:41,010 --> 00:13:43,900 Suze: good company and they are offering 215 00:13:44,599 --> 00:13:49,270 Suze: you their stock, you absolutely could take advantage of that 216 00:13:49,280 --> 00:13:51,030 Suze: as well. All right. 217 00:13:51,039 --> 00:13:55,520 KT: Hello, Suze and KT. I absolutely love your podcast. I 218 00:13:55,530 --> 00:13:58,500 KT: am 50 going through a divorce. But I have a 219 00:13:58,510 --> 00:14:02,669 KT: question about some life insurance I carry besides the life 220 00:14:02,679 --> 00:14:05,819 KT: insurance I have at my job, I have a term 221 00:14:05,830 --> 00:14:11,789 KT: policy 300,000 on myself 50 on the soon to be 222 00:14:11,799 --> 00:14:12,750 KT: ex husband. 223 00:14:13,140 --> 00:14:18,449 KT: And this policy has 10,000 on each of our grandchildren. 224 00:14:18,840 --> 00:14:21,619 KT: And I don't need insurance on the grandkids, but they 225 00:14:21,630 --> 00:14:24,780 KT: said it was free with our policy. I have had 226 00:14:24,789 --> 00:14:30,159 KT: this policy for three years now paying $154 a month. 227 00:14:30,210 --> 00:14:33,919 KT: Should I keep this or drop it? I'm so confused 228 00:14:33,929 --> 00:14:37,419 KT: and would appreciate your advice. Thank you so much. So 229 00:14:37,489 --> 00:14:39,000 KT: it's a term policy. 230 00:14:39,010 --> 00:14:41,650 Suze: So, Rebecca, here's the first thing you have to ask 231 00:14:41,659 --> 00:14:42,359 Suze: yourself 232 00:14:42,780 --> 00:14:45,700 Suze: if something were to happen to you. 233 00:14:46,869 --> 00:14:50,210 Suze: All of a sudden you aren't here anymore. Is there 234 00:14:50,219 --> 00:14:55,200 Suze: anybody who is financially dependent upon you that will suffer 235 00:14:55,210 --> 00:15:00,450 Suze: a financial loss? If the answer to that question is no, 236 00:15:00,900 --> 00:15:05,359 Suze: you do not need any term life, whole life, any 237 00:15:05,369 --> 00:15:09,369 Suze: type of insurance. What so ever period. 238 00:15:09,760 --> 00:15:12,340 Suze: So that's the answer to your question. 239 00:15:12,659 --> 00:15:16,900 KT: All right, next one is from Mark. Hi, Sue and KT. 240 00:15:17,359 --> 00:15:20,619 KT: I just printed my Suze checklist to make sure that 241 00:15:20,630 --> 00:15:25,530 KT: 2024 is in focus. Vintage Suze advice was that if 242 00:15:25,539 --> 00:15:28,619 KT: I did not invest the contributions, a Roth could do 243 00:15:28,630 --> 00:15:33,219 KT: a double duty as an emergency fund with interest rates 244 00:15:33,229 --> 00:15:36,299 KT: temporarily inflated. I was wondering if I could put my 245 00:15:36,309 --> 00:15:41,539 KT: contributions safely into a money market fund within my Roth. 246 00:15:41,599 --> 00:15:42,859 KT: What are your thoughts? 247 00:15:43,140 --> 00:15:43,239 Suze: Do it. 248 00:15:43,789 --> 00:15:44,630 Suze: Next KT. 249 00:15:46,159 --> 00:15:50,869 Suze: That hasn't changed everybody. Remember in a Roth IRA, you 250 00:15:50,880 --> 00:15:53,869 Suze: can take out your original contributions, the money that you 251 00:15:53,880 --> 00:15:59,469 Suze: put in at any time, regardless of your age or 252 00:15:59,479 --> 00:16:03,270 Suze: how long it's been there without penalty or 253 00:16:03,414 --> 00:16:04,474 Suze: taxes. 254 00:16:04,484 --> 00:16:07,275 KT: I love this, Mark and I didn't tell Suze this 255 00:16:07,284 --> 00:16:10,635 KT: extra bit that you wrote. His mom and dad were 256 00:16:10,645 --> 00:16:13,905 KT: both are, are our age. You and me actually born 257 00:16:13,914 --> 00:16:16,474 KT: the same year as you, Suze. And they passed when 258 00:16:16,484 --> 00:16:19,895 KT: Mark was very young and his mom was a Citibank 259 00:16:19,905 --> 00:16:23,554 KT: executive and he said if she were here, I imagine 260 00:16:23,565 --> 00:16:27,145 KT: that your advice would be similar to what his, his 261 00:16:27,155 --> 00:16:27,674 KT: mom 262 00:16:29,039 --> 00:16:32,609 Suze: Oh, see now she's crying. Yeah, Mark, I hope on 263 00:16:32,619 --> 00:16:36,590 Suze: some level I can always serve to be your financial mama. 264 00:16:38,679 --> 00:16:39,190 KT: That's sweet. Ok. 265 00:16:39,640 --> 00:16:43,020 KT: Hi, Suze and KT. 40 year old mom here who 266 00:16:43,030 --> 00:16:47,320 KT: loves you both. Thank you for your amazing podcast. Is 267 00:16:47,330 --> 00:16:51,830 KT: it possible and advisable to dollar cost average into a 268 00:16:51,840 --> 00:16:56,460 KT: backdoor Roth? For background, we already contribute the match in 269 00:16:56,469 --> 00:17:03,760 KT: my husband's 403 B and max out my TSP 50% Roth, 50% traditional. 270 00:17:03,940 --> 00:17:06,569 KT: Thank you so much. Oh, wait, I forgot the rest 271 00:17:06,579 --> 00:17:07,839 KT: of the sentence. 272 00:17:08,130 --> 00:17:11,560 KT: It said, is it possible and advisable to dollar cost 273 00:17:11,569 --> 00:17:15,969 KT: average into the backdoor Roth Ira? Or should we just 274 00:17:15,979 --> 00:17:20,589 KT: wait until we save the combined 14,000 over the course 275 00:17:20,599 --> 00:17:23,989 KT: of the year and do the backdoor conversions in a 276 00:17:24,000 --> 00:17:28,389 KT: lump sum transaction. That's from Chelsea. 277 00:17:28,400 --> 00:17:31,000 Suze: Yeah, Chelsea, here's the first thing I would say to you: 278 00:17:31,079 --> 00:17:31,909 Suze: Why do 279 00:17:32,040 --> 00:17:35,219 Suze: backdoor Roth? And for those of you who don't know 280 00:17:35,500 --> 00:17:39,250 Suze: there are income limitations for a Roth IRA and once 281 00:17:39,260 --> 00:17:44,300 Suze: you exceed those income limitations, you no longer qualify for 282 00:17:44,310 --> 00:17:47,719 Suze: a Roth IRA. But there is a legal way to 283 00:17:47,729 --> 00:17:52,089 Suze: go through the back door and get money into a Roth. 284 00:17:52,109 --> 00:17:55,819 Suze: And that is what Chelsea is asking. However, Chelsea, 285 00:17:56,270 --> 00:18:01,929 Suze: you just said in here that your husband contributes 50% 286 00:18:01,939 --> 00:18:06,939 Suze: to his Roth TSP and 50% to a traditional TSP. 287 00:18:07,060 --> 00:18:11,609 Suze: Why in the world would you not contribute 100% to 288 00:18:11,619 --> 00:18:16,968 Suze: your Roth TSP? Why would you not take advantage of 289 00:18:17,060 --> 00:18:20,179 Suze: that? So there are things that are easier to do 290 00:18:20,189 --> 00:18:25,520 Suze: than a backdoor Roth. However, remember the way that you 291 00:18:25,530 --> 00:18:30,419 Suze: create a backdoor Roth is you deposit money into a 292 00:18:30,430 --> 00:18:35,180 Suze: traditional IRA that you say is non deductible. So you 293 00:18:35,189 --> 00:18:37,719 Suze: do not get a tax write off for it. 294 00:18:38,079 --> 00:18:41,060 Suze: You could dollar cost average and put money into that 295 00:18:41,069 --> 00:18:44,639 Suze: every single month and then at the end of the year, 296 00:18:44,750 --> 00:18:49,939 Suze: do a backdoor Roth with the entire amount at once. There you go. 297 00:18:50,989 --> 00:18:54,069 KT: Ok. So this is my last question and I think 298 00:18:54,079 --> 00:18:58,050 KT: it's important, Suze because sometimes I'm concerned that 299 00:18:58,500 --> 00:19:01,550 KT: our listeners give each other advice and it may not 300 00:19:01,560 --> 00:19:04,449 KT: be the right advice. And here's an example that you 301 00:19:04,459 --> 00:19:07,810 KT: might agree with me. I gave a beloved family member 302 00:19:07,819 --> 00:19:10,679 KT: some advice that I am now worrying will cost her 303 00:19:10,689 --> 00:19:15,890 KT: a penalty. She's 72 years old, a widow for almost 304 00:19:15,900 --> 00:19:20,020 KT: 20 years. She owns her home, is receiving a pension 305 00:19:20,060 --> 00:19:24,290 KT: as a surviving spouse and is working off the books 306 00:19:24,300 --> 00:19:28,050 KT: and not declaring that income on her taxes. 307 00:19:28,290 --> 00:19:32,310 KT: This job should only last about another year. She lives 308 00:19:32,319 --> 00:19:36,930 KT: on her savings, IRA and surviving spouse pension. It'll be 309 00:19:36,939 --> 00:19:41,689 KT: tight but doable. I encouraged her... Here's the advice... to 310 00:19:41,699 --> 00:19:45,270 KT: open a Roth IRA and last year we funded it 311 00:19:45,280 --> 00:19:50,589 KT: with the maximum contribution is her pension recognized as earned 312 00:19:50,599 --> 00:19:54,030 KT: income for the purpose of a Roth IRA. 313 00:19:54,449 --> 00:19:58,429 KT: Will she be subject to a penalty because of my mistake? 314 00:19:59,439 --> 00:20:02,719 Suze: So it's funny you pick that because everybody as you know, 315 00:20:02,729 --> 00:20:05,199 Suze: I do read these and go through them. I don't 316 00:20:05,209 --> 00:20:08,349 Suze: know which one. KT will pick. Sometimes I read one 317 00:20:08,359 --> 00:20:10,619 Suze: and I say to her, can we just do this one? 318 00:20:10,630 --> 00:20:15,339 Suze: It's important I happened to write this person directly and 319 00:20:15,349 --> 00:20:16,560 Suze: answered her. But... 320 00:20:16,729 --> 00:20:19,069 KT: Did she make she made a mistake? 321 00:20:19,079 --> 00:20:23,619 Suze: Yes, she made a mistake. A pension is not considered earned income 322 00:20:24,739 --> 00:20:28,280 Suze: earned income is when you work you pay taxes on 323 00:20:28,290 --> 00:20:32,099 Suze: it and you've earned that money and you claim it 324 00:20:32,109 --> 00:20:33,770 Suze: and you claim it, just 325 00:20:33,780 --> 00:20:35,000 Suze: start by claiming 326 00:20:35,010 --> 00:20:39,040 Suze: it. How do you fix this? So, your beloved family 327 00:20:39,050 --> 00:20:44,839 Suze: member has until April 15th of this year to file 328 00:20:44,849 --> 00:20:49,670 Suze: income taxes. If she wanted to, she could claim 329 00:20:50,130 --> 00:20:54,448 Suze: this year the money that she made last year that 330 00:20:54,459 --> 00:20:59,030 Suze: was off the books and pay taxes on it and 331 00:20:59,040 --> 00:21:01,609 Suze: it's not gonna be that much because it's obvious that 332 00:21:01,619 --> 00:21:05,310 Suze: she doesn't make that much money. But then she can 333 00:21:05,319 --> 00:21:08,599 Suze: qualify for a Roth as long as she's made at 334 00:21:08,609 --> 00:21:12,130 Suze: least $7000 in taxable income or 335 00:21:12,439 --> 00:21:16,060 Suze: whatever amount of income she did make is the amount 336 00:21:16,069 --> 00:21:20,790 Suze: that she can put in legally up to $7000. However, 337 00:21:20,869 --> 00:21:24,099 Suze: she doesn't want to do that, have her withdraw all 338 00:21:24,109 --> 00:21:27,329 Suze: the money, do it sooner than later and just pay 339 00:21:27,339 --> 00:21:28,619 Suze: taxes on 340 00:21:28,979 --> 00:21:33,040 Suze: any interest or money that it made just that simple. 341 00:21:33,640 --> 00:21:36,319 KT: Call it, call it a day. Do you have a 342 00:21:36,380 --> 00:21:37,489 KT: quizzy for me? 343 00:21:37,739 --> 00:21:40,889 Suze: I do have a quizzy for you. And it's interesting. Ok, 344 00:21:41,189 --> 00:21:43,188 Suze: let me, it's a different one. So I'm not even 345 00:21:43,199 --> 00:21:47,079 Suze: going to talk about what quizzy are. So, are you ready? Dear, 346 00:21:47,089 --> 00:21:48,329 Suze: Suze and KT, 347 00:21:49,119 --> 00:21:57,129 Suze: doesn't the song lyric... she is talking about Unstoppable by Sia, 348 00:21:58,219 --> 00:22:03,530 Suze: doesn't the song lyric strike you as defensive and arrogant? 349 00:22:03,680 --> 00:22:08,599 Suze: Just wondering. Wait, wait. Yes, I do believe in strength 350 00:22:08,699 --> 00:22:12,670 Suze: but truly strong women can be vulnerable too. 351 00:22:13,380 --> 00:22:16,929 KT: Oh, my goodness. So is the quizzy to ask KT, 352 00:22:16,939 --> 00:22:19,839 KT: what do I think of that comment? All right, here's 353 00:22:19,849 --> 00:22:25,859 KT: my answer. It's Sia are we crazy? That's an amazing song. 354 00:22:25,869 --> 00:22:30,479 KT: It's an unstoppable uplifting, huge song 355 00:22:30,714 --> 00:22:35,044 KT: that is being used everywhere in the world. Suze has 356 00:22:35,425 --> 00:22:38,944 KT: Sia's blessing to have this as our theme song on 357 00:22:38,954 --> 00:22:40,114 KT: the podcast. 358 00:22:40,194 --> 00:22:43,344 Suze: So this isn't a ding, ding, ding or incorrect, but 359 00:22:43,354 --> 00:22:46,785 Suze: here's just what I want to say to you about 360 00:22:46,795 --> 00:22:47,905 Suze: this comment. 361 00:22:48,660 --> 00:22:53,238 Suze: There's nothing about the song or what the song says 362 00:22:53,250 --> 00:22:59,040 Suze: that encompasses all of life. Of course, strong women are vulnerable. 363 00:22:59,050 --> 00:23:03,180 Suze: You hear KT cry, you hear me cry a lot 364 00:23:03,189 --> 00:23:06,520 Suze: of times both of us get afraid. However, 365 00:23:07,140 --> 00:23:10,750 Suze: when we can feel vulnerable, when we feel like we 366 00:23:10,760 --> 00:23:14,829 Suze: don't really know what to do or whatever, it's really 367 00:23:14,839 --> 00:23:19,219 Suze: important to have something that lifts you up and ties 368 00:23:19,229 --> 00:23:22,479 Suze: you to your strength within that allows you to show 369 00:23:22,489 --> 00:23:25,369 Suze: the world who you are that allows you to be 370 00:23:25,380 --> 00:23:28,130 Suze: as strong as you are meant to be because more 371 00:23:28,140 --> 00:23:32,689 Suze: than women being vulnerable and whatever, they're also not as 372 00:23:32,699 --> 00:23:36,239 Suze: powerful in many cases as they were born to be. 373 00:23:36,609 --> 00:23:41,839 Suze: So nope, it's not arrogant. It is a necessity that 374 00:23:41,849 --> 00:23:47,510 Suze: women and men and anybody smart enough to listen, take 375 00:23:47,520 --> 00:23:52,310 Suze: that stance. So to end this podcast in our new 376 00:23:52,319 --> 00:23:55,569 Suze: way for the year, there's really only one thing that 377 00:23:55,579 --> 00:23:57,949 Suze: we want you to remember when it comes to your money. 378 00:23:57,959 --> 00:23:59,349 Suze: And what is that, K 379 00:23:59,359 --> 00:24:02,909 KT: People first, then money, then things. 380 00:24:02,920 --> 00:24:06,099 Suze: And if you can just get the correct order of money, 381 00:24:06,930 --> 00:24:11,989 Suze: I promise you you will be unstoppable.