Women in our community asked real-life questions and she delivered invaluable advice around debt management, retirement, investing and so much more. Listen in and learn how to best navigate this complex time and ensure your finances are secure. However, some may say her true claim to fame is having been spoofed on Saturday Night Live four times. Orman was an account executive at Merrill Lynch from to , served as Vice President-Investments for Prudential-Bache Securities from to , then directed the Suze Orman Financial Group from to How do I get my name off that loan?
So, the biggest mistake anybody can make ever with money is to co-sign a loan. So, you might end up having to pay for it. Okay, next one. That was great. You have to play home. If something goes wrong, you need a new roof, your air conditioning goes down, your windows, anything can happen. So you have to play home or play house. What does that mean? Am I making sense to all of you? You need an eight-month emergency fund besides that. You should be totally out of credit card debt.
You should have a secure job and you should really know about the house that you are buying. All those things are there? Go ahead and buy. We have equity in our home. Do we refinance and pay off my loans or no?
Help us. I have to tell you, I would take out the equity in my home or refinance my home and pay off my student loan debt. I guarantee you that if you are ready, are working and you have the student loan debt, probably your interest rate is at 6. So yeah, I would take the equity out and pay off the student loan debt.
At I would want you to do two things. I want you to max out your Roth IRA, number one, but number two, I want you also to refinance your student loan that you have. That is crazy. So reduce the interest rate on your student loan. So I want you to do that. That is such good advice. I think a lot of people will want to know that they can refinance that student loan.
Yeah, there is all kinds of ways as credit unions are fabulous places for you to look at to refinance student loans. You have to do both of those things. So you all have to be very careful and understand all the different kinds of Roth IRAs there are. Plan on driving yours for at least seven to ten years regular tune-ups will help keep it running longer. Consider buying a used or certified pre-owned car rather than a brand new one. If you get a three-year loan, you have plenty of life left in your car, and money that once went to car payments is freed up for other financial needs.
And please, avoid leasing. Since you don't own the car, you never have a time when you are driving your car free and clear.
Also, raising your deductible or designating one car to be used for low-mileage driving under 15, miles a year can reduce your insurance premiums by 15 percent or more. Separate Savings from Investments Now we're ready to move on to how you put your money to work for you and your family. There is a vitally important difference between money you need to save and money you need to invest, yet it's a distinction many people don't grasp.
Money you know you need or want to spend in the next few years is savings. Money you keep handy for an emergency belongs in savings. Money you hope to use soon for a down payment on a house belongs in savings. And all savings belong in a low-risk bank savings account or money market account. The goal is to keep your money safe so that when you go to use it, it will be there. Money you won't need to use for at least seven years is money for investing. The goal here is to have your account grow over time to help you finance a distant goal, such as building a retirement fund.
Since your goal is in the future, money for investing belongs in stocks. As I'll explain later, the potential inflation-beating returns that only stocks can deliver make them the right choice for a successful long-term investment strategy.
Know Your Credit Score The big takeaway from the meltdown of is that banks are going to be a lot less eager to lend money to you. You will need a sparkling financial personality: a FICO score above , solid verifiable income, a manageable amount of existing debt—to get good offers for credit cards, auto loans, mortgages and refinancings.
And you can expect lenders to continue to tighten the screws on your existing credit lines; all the credit they loved to give you before now makes them nervous. Get your credit score by going to MyFico. If your score is below , two of the best ways to improve it are to pay your bills on time and push yourself to reduce your credit card balances.
It means you were invested in stocks, and that's exactly where you should be invested—assuming your retirement is at least a decade away. Only stocks offer the chance of high returns that outpace the annual 3 to 4 percent inflation rate. In your 20s and 30s, aim to keep 80 percent in stocks and just 20 percent in bonds; you have time to ride out stock swings.
As you age, slowly ramp up the percentage in bonds; in your 50s and 60s, consider keeping 40 percent or more in bonds to help buoy your portfolio when stocks are slumping. The biggest mistake you can make is to stop investing in your retirement accounts or to shift money from stocks into "safe" money market accounts.
Instead of worrying that your account is down, remember that your money buys more shares of your retirement funds. The more shares you own now, the more you will make when the market recovers. Buy and hold is the way to go. Diversify Your Assests Try to reduce any company stock you own in your k to less than 10 percent of your total retirement assets.
Mutual funds and exchange-traded funds ETFs are ideal for retirement savings because they own dozens of stocks in their portfolios. If you're flummoxed by all the investing options in your k , look for a "target retirement" or "life cycle" fund. Then pick the specific portfolio that dovetails with your expected retirement age and you're all set; you will be invested in a mix of stock and bond funds appropriate for your age.
Rowe Price, and Vanguard all offer these one-and-done options. Try to love your home for what it is: a haven for you and your family, not a path to riches.
I think she would say Lisa I love you so much sweetheart. There's no reason for you to hold on to the house that I left you. Please just sell it and I can see from up here that real estate is really going for great prices right now.
And I bet you that if you just put it on the market and sold it as is you would get a nice lump sum of money for that and then I want you to take that money and I want you to absolutely pay off your condo with it and then you'll have even more money that you can put aside and have a great emergency fund and start to invest and be just great. I love you so much Lisa and I miss you and I'm always looking down upon you.
So, Lisa I have to tell you if I were your mama that is what I would be telling you and that is what I think you should do.
And then you would cut your bills at that property. You would just let it go. So, sometimes you really you have to just let things go. So, sometimes I have a saying it's your profound fear of loss that keeps you from gain. If you lose the house that your mama lived in, you're not losing anything, you're gaining the freedom that she would want you to have. Next question. My dear KT. Okay next question is from Jackie. Hi Suze. I've been a follower of yours for years.
And this was formerly from her work K. So, Jackie is 74 years old, again that's why the RMD is coming up because it happens, after you're 72 right Suze? Yes, unless it's a long story but yes essentially now it does. The interest I've been getting is 2. Interest is so low and I'll barely make any money on it. This is all the money I have and I do not want to risk losing it. She's again 74 and conservative. So, there's two things that you can actually do with it.
You could purchase a Series I bond with it and get about a 3. So, if you think you don't need it, that's a great place for you to put it. However, if you want access to it and you want to be able to get it at any time you want and you want to earn one of the highest interest rates out there. I really asking all of you to go to myalliant.
But the other reason I'm just going to say this and I'm just jumping the gun a little bit here, KT, I'm going to let the cat out of the bag a little bit and I know, yes, I know we're not ready. No, a little no. Let me just say this. More so, then people who haven't done it by the time I really make this announcement.
Your lips are sealed. Her lips are really sealed, if you can. But it's been on the fence about doing this or you haven't done it yet or you opened up an account and you didn't fund it.
I am telling you, you want to do it. You want to do it? All right, okay. We're not ready. Her lips are sealed but keep listening to the podcast because very shortly she's going to make an announcement that you let's say this.
If you have an account, you will be entitled to participate in Suze's announcement. How about that? Big time. Next is from Claudia. This is from Claudia. Thank you so much for all the advice and knowledge you provide. My husband and I have finally funded our emergency fund. Yeah baby. We have no credit card debt. And we feel we're in a good place to start saving for our kids who are eight and five years old.
We would like to get some advice as to what the best plan is to help our kids save for the future. Whether they opt to go to college or not. We were thinking of opening a account. We'd like to be able to save money for them and have a good financial start in life without impacting their ability to receive financial assistance for college. How do we do that?
Well, my dear Claudia, you've already made a little bit of a mistake. So, when they go to college and you apply for financial aid, let's say you continue to do that and you all of a sudden had a whole lot of money in a UGMA account, that's going to count against the kid for financial aid.
So, you're far better off having a 5 29 either prepaid account or a savings account to fund a kid's college education for each for each child. And if they decide that they don't want to go to college for some reason. Everything that you put in, you'll just be able to take out. So, kids are always so incredibly thankful for any financial assistance that they get from their parents in terms of not having to take out a student loan.
This next question is from Stephanie. I like this question, Suze because of her career, what she does. I would assume you like every question. No, but some of them I really resonate with and I like Stephanie's a lot because we both you and I have many friends that are in the same boat as Stephanie.
Not necessarily financially speaking, but for the career. So, hi Suze and KT. My concern is this I work in the performing arts and I tend to treat my income with a famine approach. In essence, that's the part we both relate to.
Right, Suze. We not know the approach, but we understand friends. We have many friends that have the same career dilemma. Because you never know. In essence, every time I get paid, I presume it will be my last paycheck. So, I like to hold onto money and look at it. I thought that was funny, maybe not the wisest.
Additionally, I bought my first home at 26 which is how I'm able to have so much equity at a youngish age. My question is, how can I immediately and easily diversify my assets to increase my chances of growth from this point? I know that I'm heavily invested in real estate with little attention to an investment portfolio, but maybe I can just pick it up from here.
So, and then she, she goes on to be very gracious saying Suze, you were both doing God's work and women like me everywhere, are so grateful for your help and guidance. But Stephanie, we have a lot of friends just like you that have that career unknown. And Suze is going to tell you what she thinks. I always tell you what I think everybody. So, here's the thing Steph is that I don't know how much you love this home. I don't know if you know this is a place that you would like to spend the rest of your life and or not.
Financially purely financially speaking, oh, you bet it makes sense to sell at the high right now. But I got news if I were you and I was selling right now, I don't think I would be buying right now when it's a good time to sell. So, if I were you, even though I know rents are kind of high right now as well, I would seriously think about selling and renting even if I was going to rent for a year, two, or three because by then maybe real estate prices will come back down a little bit to normal.
Maybe yes, maybe no. Or maybe you can find a really good buy for a condominium and make sure if you buy a condominium you listen to last Sunday's podcast with all the things that can go wrong when purchasing a condominium. But that, that would absolutely not only diversify you, but it would give you a lot of cash that would probably make you feel a lot more secure.
Now, here's a thing though, that I want to say more about what you should do with your money. I want to talk to you just very briefly about your thought process. Because your thoughts create your destiny, and for all of you who um know who Oprah is and if you don't, like what is wrong with all of you.
But that's besides the point, if you go to Oprah's podcast, it's the podcast that aired on July 6th, just a little bit ago. Oprah did a recap of one of the first times I was ever on the Oprah Winfrey show with her.
And it really talks about the beginning of the Nine Steps to Financial Freedom. And we have people on and you can learn a lot about how your thoughts create your destiny. So, while it's true that you can be conservative when you get something and that you treat that money like it's you might not get another paycheck. I don't want you to think about that like that in your head. I want you to transform those thoughts to, of course you're great.
Of course, you're going to get another job. Of course, you're going to get another roll. Of course, you're going to be an incredible star one day and everybody's going to know your name, you might want to start thinking like that. But I really suggest for all of you to go and listen to Oprah's podcast on July 6th, I think you will learn an incredible amount about how money works and how you can manifest things in your own life.
All right, KT, Time for my quizzie. Now this is a difficult quizzie and as I've told all of you before, it's important that you think about things before you just answer. So, it's not always just a quick answer, but sometimes there's choices that we have to make when we get older or whatever in terms of where money comes from.
I just want you to think about this in terms of the answer. This is from Beth. Beth says I have more than enough from my pension and Widows Social Security to cover expenses and have money left for small wants. I have seen lots of advice on how to save for retirement, but not a lot on how to spend.
So, we get this everybody. She covers everything. So, where if she wants money, which one of those three accounts should she go to first? How old is she? She's Well, she owns her home outright, right. She's totally debt free and she has enough money for all of her current monthly expenses from her social security, this isn't about her covering her expenses.
Which one, maybe the Roth? Because she doesn't have to pay taxes on that. So, is that your final answer? For now, yes. I knew it.
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