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Transcript

When Do You Know You're Doing Everything Wrong? · Suze Orman's Women & Money (And Everyone Smart Enough To Listen)

• 0:08
  KT: Hi everybody. Good morning, Suze.
• 0:10
  Suze: It is always a good morning with you, Ms. Travis.
• 0:13
  KT: It's July 26, 2026.
• 0:16
  Suze: No it's not, no it's not!
• 0:16
  KT: Wait, wait, wait, wait, wait. OK, so we pre-recorded this
• 0:20
  KT: podcast before we left for our trip.
• 0:23
  KT: To Italy, Ciao Bella!
• 0:25
  Suze: For her birthday. This is another Ask KT and Anything
• 0:30
  Suze: combined with Suze School. Now why do I say that?
• 0:35
  Suze: Because some questions require more of a detailed explanation. It's
• 0:39
  Suze: more like a teaching part.
• 0:42
  Suze: And others are just kind of answers to people's questions.
• 0:45
  Suze: So therefore we're combining them kind of together. But are
• 0:51
  Suze: you ready, KT?
• 0:52
  KT: I'm ready. So that's how I'm opening today's podcast. On
• 0:56
  KT: the Women and Money app. I got another little series
• 0:59
  KT: of questions, but this one
• 1:00
  KT: in particular, I think is really important. It says, Suze,
• 1:05
  KT: when is the last calendar day I can contribute to
• 1:10
  KT: a solo 401k?
• 1:12
  Suze: Yeah, I'm kicking myself because KT, I should have had
• 1:15
  Suze: that in the master class two weeks ago. What was
• 1:18
  Suze: I thinking?
• 1:20
  Suze: But here's what you need to get, all right. You
• 1:23
  Suze: have to open, and by the way, if you don't
• 1:25
  Suze: know what I'm talking about with a solo 401k or
• 1:28
  Suze: a SEP IRA, go back two weeks from today and
• 1:33
  Suze: listen to the master class on solo 401ks versus SEP IRAs,
• 1:39
  Suze: and you'll find out that if you're self-employed, you are
• 1:43
  Suze: crazy in most cases not to have a solo 401k. However,
• 1:48
  Suze: the last day that you can open a solo 401k,
• 1:53
  Suze: is December 31st, let's say this year, if you are
• 1:57
  Suze: gonna open up one for 2026, you have to have
• 2:02
  Suze: opened it up by December 31st, 2026. However, that doesn't
• 2:10
  Suze: mean that you have to fund it by December 31st, 2026.
• 2:16
  Suze: But here's what you need to know if you are
• 2:19
  Suze: a sole proprietor.
• 2:22
  Suze: When you open it up, and it has to be
• 2:25
  Suze: opened by December 31st, 2026 if it's for this year,
• 2:30
  Suze: you have to elect how much of your own salary
• 2:34
  Suze: deferral you are going to put in it. You don't
• 2:37
  Suze: have to do it. You just have to make that election.
• 2:42
  Suze: And you have for the actual money you have till
• 2:45
  Suze: the day that you file your taxes. So KT for
• 2:48
  Suze: 2026 contributions that would be April 15th, 2027, or all
• 2:56
  Suze: the way, by the way, like we do till October 15th,
• 3:01
  Suze: 2027 if you file an extension. However, here's what everybody
• 3:07
  Suze: needs to know because remember when you're self-employed,
• 3:11
  Suze: you have two ways to go. You can be a
• 3:13
  Suze: sole proprietor, right, KT? Or you could form an S corporation. OK. Now,
• 3:20
  Suze: if you're an S corporation, and you pay yourself a paycheck,
• 3:24
  Suze: a W-2, which chances are you will,
• 3:28
  Suze: then your employee contribution, your employee has to come out
• 3:33
  Suze: of that paycheck through your payroll, and that has to
• 3:37
  Suze: be done by December 31st of this year. No extension, nothing.
• 3:44
  Suze: Your employer hat or your employer contribution
• 3:48
  Suze: can still wait until you file. Now how is that
• 3:52
  Suze: for complication, KT? That was a little mini Suze School.
• 3:56
  KT: Suze, tell everyone what is the difference between an S
• 4:00
  KT: corp and a sole proprietorship.
• 4:03
  Suze: All right, so before I go to an S corp, everybody,
• 4:06
  Suze: let's just start simple.
• 4:08
  Suze: A sole proprietorship. I always want you to think of
• 4:13
  Suze: the name of something. A sole proprietorship means it is
• 4:18
  Suze: just you. So maybe you're a freelance, you consult, you
• 4:22
  Suze: sell things, and you've never filed any other special paperwork,
• 4:27
  Suze: all right? It's just you and your business, same person.
• 4:32
  Suze: The business makes $1.
• 4:34
  Suze: And that $1 is yours and it goes right in
• 4:38
  Suze: your personal tax return. Now, you may think that's just great, everybody,
• 4:43
  Suze: but you probably didn't know that on that money, on
• 4:46
  Suze: the profit, you're paying self-employment tax.
• 4:51
  Suze: That's Social Security and Medicare, a little over 15% on
• 4:57
  Suze: every dollar that you make. That's essentially how it is. So,
• 5:03
  Suze: that's a sole proprietorship, very easy. You and your business
• 5:08
  Suze: are one. But when you form an S corp,
• 5:12
  Suze: you are not one with your business. The S Corp
• 5:16
  Suze: is a separate business. It's not just you anymore, and you, everybody,
• 5:22
  Suze: you become its employee. So therefore, you have to pay
• 5:26
  Suze: yourself a real salary, like a paycheck, a W-2, just
• 5:31
  Suze: like you work for anybody else. However, you only pay
• 5:37
  Suze: Social Security and Medicare tax on your salary.
• 5:41
  Suze: But the profit above your salary that comes to you
• 5:45
  Suze: as a distribution, so there is no self-employment tax on it, none.
• 5:51
  Suze: So bottom line, if your business is making serious money,
• 5:56
  Suze: an S corp saves you thousands in payroll taxes every
• 6:01
  Suze: single year.
• 6:03
  Suze: So KT, you tell everybody in your opinion, why doesn't
• 6:07
  Suze: everybody do that?
• 6:08
  KT: S corps aren't that easy. All right, there's benefits, but
• 6:12
  KT: it costs you money, everybody. You have to set up
• 6:15
  KT: payroll services. You need a separate tax return, and the
• 6:20
  KT: IRS really takes a look to make sure your salary
• 6:24
  KT: is reasonable, so you can't get away with anything.
• 6:27
  Suze: You can't pay yourself $10,000, everybody and then take
• 6:31
  Suze: $200,000 in distributions. They will come after you for that.
• 6:37
  Suze: So KT tell everybody who should do in your opinion,
• 6:41
  Suze: an S corp versus a sole proprietor.
• 6:44
  KT: If you're just starting out, let's say you're a hairdresser,
• 6:46
  KT: you're just starting out, you're making modest profits. A sole
• 6:50
  KT: proprietor is fine. It's simple. It's clean. It's actually a
• 6:54
  KT: whole lot easier.
• 6:56
  KT: And, and a little less work in terms of filing
• 6:59
  KT: and keeping track of everything.
• 7:01
  Suze: You're doing great so far. You're about to get a
• 7:02
  Suze: ding ding ding.
• 7:04
  KT: Wait a minute. But Suze, if you start out and
• 7:06
  KT: let's say you have a great idea for a business
• 7:09
  KT: and that business after your first, second year starts to skyrocket,
• 7:14
  KT: let's say it goes beyond your wildest dreams.
• 7:18
  Suze: Actually, KT, it's if, wait, if it goes beyond what
• 7:21
  Suze: a reasonable salary would be for you, that is the key.
• 7:26
  Suze: If a reasonable salary for you is X and all
• 7:30
  Suze: of a sudden you've made 2 or 3 x, that's
• 7:33
  Suze: when you consult a CPA and look into getting an
• 7:38
  Suze: S corp. Just that simple KT next question.
• 7:42
  KT: OK, Suze, this next question is from Teresa, and I
• 7:45
  KT: can tell you something. She watched the Suze Orman show
• 7:50
  KT: because after reading this question, it is.
• 7:53
  KT: Definitely a can I afford it question.
• 7:56
  Suze: Oh well, that's easy, denied.
• 7:59
  KT: She said, Suze, I would like to buy a quiet
• 8:02
  KT: luxury handbag in a basic color that is timeless, meaning
• 8:08
  KT: I will keep it until I die.
• 8:11
  KT: She said, I'm 67 years old. I am a teacher.
• 8:14
  KT: I plan on retiring next year. I live in California
• 8:19
  KT: and will retire with a decent educator's pension. So she said,
• 8:23
  KT: right now, I have about $600,000 in a 403B.
• 8:29
  KT: And a 457. I have $200,000 in a CD. I
• 8:34
  KT: have $30,000 in savings, and my husband and I have
• 8:38
  KT: a house fund for emergencies of about $16,000. The most
• 8:44
  KT: I have ever spent on a handbag was $259.
• 8:51
  KT: And that was for Dooney and Burke, which is a
• 8:53
  KT: nice looking bag.
• 8:54
  Suze: I personally wouldn't know.
• 8:56
  KT: OK, so she said, I would really like to own
• 8:59
  KT: a nice designer bag, The Row, a Bottega Venita, Chanel,
• 9:06
  KT: anything between $1,500 but no more than $3,000. What is
• 9:12
  KT: your advice?
• 9:15
  Suze: Really?
• 9:17
  KT: What's your advice?
• 9:18
  Suze: My advice is let's hear what KT has to say
• 9:21
  Suze: to you.
• 9:22
  KT: OK, so Suze's asking me to answer this because she
• 9:25
  KT: knows I worked in the luxury business for many years
• 9:29
  KT: with all of these designer brands, and I have to
• 9:32
  KT: tell you something. If I were you, Teresa, I would
• 9:35
  KT: go to a consignment store or some of these online secondhand.
• 9:42
  KT: You know, um, opportunities where you can get a beautiful
• 9:46
  KT: designer bag for pennies on the dollar, and then you
• 9:50
  KT: satisfy both needs. You keep saving and you have a
• 9:55
  KT: designer bag that you really wanted.
• 9:57
  Suze: See, I knew you would give her the best answer.
• 10:00
  KT: What do you think?
• 10:00
  Suze: Well, I think your answer is absolutely correct, but here's
• 10:04
  Suze: my concern. My concern is this, Teresa, you're 67 years
• 10:10
  Suze: of age. And you plan on retiring next year. That
• 10:16
  Suze: means your income, everything stops.
• 10:21
  Suze: And at the time of life when you're retiring, this
• 10:24
  Suze: is when you want a designer bag. Usually, especially women,
• 10:31
  Suze: when they approach retirement and they know income is going
• 10:35
  Suze: to stop, rather than spend, that's when they take their
• 10:40
  Suze: money and they wanna save, save, save.
• 10:43
  Suze: But not you. So it makes me wonder why, why
• 10:49
  Suze: at this point in your life, why is now the
• 10:53
  Suze: time that you want a designer bag? Hey, if you
• 10:57
  Suze: were 40, 50 right now, I'd say, yeah, go ahead.
• 11:01
  Suze: But at 67, I'm just wondering why.
• 11:06
  Suze: So I'd like you to answer that question for yourself,
• 11:10
  Suze: and if you come up with the reason that makes
• 11:13
  Suze: sense that you want to spend that kind of money
• 11:17
  Suze: one year before you retire, OK, if it were me,
• 11:22
  Suze: I would not be doing it, but more important than
• 11:25
  Suze: you buying the bag, I want you to understand why.
• 11:30
  Suze: Why at this point in your life do you want
• 11:34
  Suze: to do that? Next question, KT.
• 11:36
  KT: OK, from Stacy. Hi, Suze. I saw where you mentioned
• 11:41
  KT: that paying off your mortgage is the most important thing
• 11:45
  KT: for retirement. I agree.
• 11:47
  Suze: One of them, yes.
• 11:48
  KT: OK, so here is my dilemma. I am 63 years old.
• 11:52
  KT: I owe $130,000 on my condo.
• 11:56
  KT: I make $110,000 per year and I have $300,000 in
• 12:03
  KT: my 401k. I only have $15,000 in saving because I
• 12:09
  KT: just put a big down payment on a car. I
• 12:12
  KT: also have about $60,000 in gold and silver that I
• 12:17
  KT: can sell. I am still working and don't plan to
• 12:20
  KT: retire anytime soon.
• 12:22
  KT: Any advice as to how to pay off my mortgage?
• 12:27
  Suze: Yes, stop spending money you don't have simply to impress
• 12:32
  Suze: people you don't even know or like, because anybody who
• 12:35
  Suze: buys a big car and they have to put a
• 12:37
  Suze: down payment on it, that's exactly why they're doing it.
• 12:40
  Suze: But that's besides the point. Here's my concern for you.
• 12:45
  Suze: You say that you want to own your home outright,
• 12:49
  Suze: all right, by the time you retire, even though you
• 12:51
  Suze: don't plan to retire any time soon. Number one, you
• 12:56
  Suze: want to make God laugh. Have you ever heard this?
• 12:58
  Suze: Show her your plan. You don't know. Are you in
• 13:01
  Suze: a car accident? Are you sick? What happens? Does your
• 13:04
  Suze: company close? You don't know how long you have to work.
• 13:11
  Suze: You don't know that. That's an unknown.
• 13:13
  Suze: So I always tell you invest in the known versus
• 13:16
  Suze: the unknown. The known is most likely you're still going
• 13:20
  Suze: to need a home to live in, whether you are
• 13:23
  Suze: working or not. The known is your biggest monthly expense
• 13:28
  Suze: is your mortgage payment. Therefore, if you know that you
• 13:34
  Suze: want to stay in that house for the rest of
• 13:35
  Suze: your life, then that should have been a long time now.
• 13:40
  Suze: That should have been for a long time your number
• 13:43
  Suze: one priority to have it paid off by the time
• 13:45
  Suze: you retire. But no, you decided to take money even
• 13:50
  Suze: though all you have is $15,000 in an emergency fund. Really?
• 13:55
  Suze: All right. You decided to take emergency fund money from
• 14:00
  Suze: savings to put a large down payment on a car. Why?
• 14:05
  Suze: So your monthly payments could be smaller. Are you kidding me?
• 14:10
  Suze: And, you have $60,000 in gold and silver. Do what
• 14:18
  Suze: it already has gone up. Here's the bottom line. If
• 14:22
  Suze: it were me, this is what I would do. I
• 14:25
  Suze: would sell the gold and the silver, all of it.
• 14:29
  Suze: Maybe you have a capital gain. Maybe you don't. I
• 14:31
  Suze: don't know. You'll have to check that out before you
• 14:34
  Suze: sell it. If you could take that money and put
• 14:37
  Suze: it into your mortgage.
• 14:40
  Suze: That you currently have towards principal, make sure it goes
• 14:44
  Suze: towards principal. Now all you owe is $70,000 and if
• 14:49
  Suze: you continue to pay your monthly mortgage like you do
• 14:53
  Suze: right now or do it on a biweekly schedule where
• 14:58
  Suze: you actually do it every two weeks, which means you
• 15:00
  Suze: make one extra payment a year.
• 15:03
  Suze: You will have that mortgage paid off sooner than you
• 15:07
  Suze: have any idea. That is number one. Number two, you
• 15:13
  Suze: make $110,000 a year.
• 15:16
  Suze: And you're 63 years of age and you only have
• 15:20
  Suze: now $15,000 in savings. You need to take a hard
• 15:26
  Suze: look at yourself and what are you spending your money
• 15:30
  Suze: on because you don't say you're married, you don't say
• 15:35
  Suze: that you have kids, you use the word I throughout
• 15:38
  Suze: this entire thing.
• 15:40
  Suze: You know, and so therefore, you also have $300,000 in
• 15:45
  Suze: a 401k. It's not even a Roth 401k.
• 15:50
  Suze: So that means you don't have $300,000 in there because
• 15:54
  Suze: when you go to take it out you're going to
• 15:56
  Suze: owe ordinary income tax on it. So you have done
• 16:01
  Suze: everything wrong. You just have, and that is me standing
• 16:05
  Suze: in your truth for you because you wrote in and
• 16:09
  Suze: you didn't write in to get me to tell you
• 16:11
  Suze: what you could do. You already knew you need to
• 16:15
  Suze: stand in your truth.
• 16:17
  Suze: And you need to make you and your life and
• 16:20
  Suze: your money in savings and investment your number one priority
• 16:26
  Suze: over flashy things.
• 16:28
  Suze: Such as a car. All right, KT, next.
• 16:33
  KT: OK, this is from Maria, a simple one liner which
• 16:38
  KT: I love everybody. Maria asks Suze, does a living revocable
• 16:43
  KT: trust need to be registered at the county you live in?
• 16:47
  Suze: No, it does not, never has and never will. Now
• 16:51
  Suze: maybe there's some places that do, but not that I
• 16:53
  Suze: know of. All right, go on next.
• 16:55
  KT: So, from Diane. I don't have a trust because I
• 16:59
  KT: don't have any executor for my estate. I have no
• 17:03
  KT: family members, and most of my friends are older or gone.
• 17:07
  KT: I tried to hire an attorney, and she did not
• 17:10
  KT: want to be the executor. I'm leaving my entire estate
• 17:15
  KT: to charity, and I'm 76 years old. I don't know
• 17:19
  KT: what to do, and I'm very concerned. So, Suze, how
• 17:23
  KT: will the documents work if I don't have any one
• 17:27
  KT: to distribute my assets.
• 17:30
  KT: So I think, and she wrote, please enlighten me. So
• 17:33
  KT: can you please enlighten her?
• 17:35
  Suze: I can. And here's the first thing I'm gonna tell you.
• 17:38
  Suze: You don't have a will. You don't have a trust
• 17:40
  Suze: because of this excuse that you don't have an executor.
• 17:43
  Suze: Guess what? You have one. If you die, and this
• 17:47
  Suze: is true for everybody, if you die without a will,
• 17:51
  Suze: without a trust, the state that you live in deems
• 17:55
  Suze: that you have died intestate succession.
• 18:00
  Suze: And your assets will pass according to the succession rules
• 18:05
  Suze: of the state that you live in plus probate fees, OK?
• 18:09
  Suze: So let's just say your mother was still alive and
• 18:12
  Suze: you had kids, all right, maybe half would go to
• 18:14
  Suze: your mother or
• 18:15
  Suze: father, half would go to your kids. If you don't
• 18:18
  Suze: have any relatives or anybody, maybe they're going to look
• 18:21
  Suze: for cousins, uncles, aunts, but you already have one, whether
• 18:26
  Suze: you know it or not. You want to take power
• 18:29
  Suze: over your money. There's a few things you can do,
• 18:32
  Suze: depending on where your assets are. I'm assuming you have
• 18:36
  Suze: bank accounts, maybe you have a brokerage account, maybe you
• 18:39
  Suze: have a retirement account.
• 18:41
  Suze: You could designate right here and right now upon your
• 18:46
  Suze: death what's known as a pay on death account. You die,
• 18:51
  Suze: name the charities now that you want to get your money.
• 18:56
  Suze: You own a home. You could do a transfer on
• 18:58
  Suze: death account if you want. Who is to get your
• 19:00
  Suze: home if you have one? If that's to go to
• 19:03
  Suze: a charity, then do that. But you name it now
• 19:08
  Suze: while you still can, and that's the easiest way to
• 19:12
  Suze: take care of it. But I'm actually not that concerned
• 19:16
  Suze: about where your money goes when you have died.
• 19:19
  Suze: I'm concerned about what happens if something happens to you
• 19:24
  Suze: and how do we use your money to pay your bills,
• 19:28
  Suze: write your checks if you even write checks any more,
• 19:30
  Suze: to pay for a nursing home, to do all those things. Who,
• 19:34
  Suze: Diane is going to do that for you? All of
• 19:37
  Suze: a sudden you become incapacitated. You have a stroke. Anything
• 19:41
  Suze: can happen.
• 19:43
  Suze: So, you need to designate a durable power of attorney
• 19:47
  Suze: for health care, who can make health care decisions for you.
• 19:51
  Suze: So the must-have documents really can serve you well now.
• 19:57
  Suze: If you really don't have any friends, if you don't
• 20:00
  Suze: have anybody in your life, then you're in a situation
• 20:04
  Suze: where you need to hire a professional trustee, and there
• 20:08
  Suze: are firms that do that. Many banks will do that
• 20:12
  Suze: for you. Many brokerage firms may be will do that
• 20:16
  Suze: for you. You never know, but you will find somebody,
• 20:20
  Suze: but you need to get on it right now. But
• 20:24
  Suze: not taking action now.
• 20:27
  Suze: Just because you have an excuse of I don't have
• 20:30
  Suze: an executive for my estate just doesn't hold water with me.
• 20:35
  Suze: So tomorrow you are to make calls and you are
• 20:39
  Suze: to make pay on death accounts, find a trustee, and
• 20:43
  Suze: get yourself the must-have documents and do this now. Go
• 20:47
  Suze: to musthavedocs.com. Yes, KT.
• 20:51
  KT: OK, this next one and my final question.
• 20:54
  KT: It is fabulous, Suze. I love this. It's from Mary.
• 20:59
  KT: She said, KT KT, KT, please, please, please pick me.
• 21:03
  KT: And then she said, Help our beautiful 94 year old mom.
• 21:08
  KT: Love this question. My 94-year-old mom has about $10,000 in
• 21:14
  KT: credit card debt and has only been able to make
• 21:18
  KT: the minimum payments. Suze, the account is not delinquent, but
• 21:22
  KT: it's becoming a burden.
• 21:24
  KT: She has no other debt. She does have a reverse
• 21:28
  KT: mortgage and lives on Social Security and a teacher's pension.
• 21:33
  KT: She has early memory loss from multiple mini strokes, but
• 21:38
  KT: she's still remarkably independent. I moved in with her this
• 21:42
  KT: year to help care for her, though she's amazingly physically
• 21:47
  KT: capable for her age.
• 21:49
  KT: The five of us kids help with expenses when needed,
• 21:54
  KT: but we're at a point where we need to prioritize
• 21:57
  KT: our own financial future. If she doesn't have this credit
• 22:02
  KT: card debt, she could cover her monthly expenses. What do
• 22:06
  KT: you recommend?
• 22:07
  Suze: So you know, I'm a little confused here because $10,000
• 22:10
  Suze: of credit card debt is nothing.
• 22:12
  Suze: I have a feeling that Mary meant to say she
• 22:15
  Suze: has about $100,000 in credit card debt and, and yes,
• 22:21
  Suze: because $10,000 in credit card debt, KT, the minimum payment
• 22:25
  Suze: due would be like $200 a month, $300 a month.
• 22:28
  Suze: It's a burden when it's $2,000 or $3,000 a month.
• 22:32
  Suze: All right, so Mary, I'm just going to make the
• 22:34
  Suze: assumption that when you wrote this, you wanted to put
• 22:38
  Suze: down $100,000 and instead you put down $10,000.
• 22:42
  Suze: If you really did mean $10,000 then something is radically
• 22:47
  Suze: wrong and the five kids should each come up with
• 22:50
  Suze: $2,000 each and pay off that debt. But I just
• 22:54
  Suze: can't believe that $10,000 of credit card debt is that
• 22:59
  Suze: big of a burden. So I'm going to go with
• 23:02
  Suze: my feelings, KT, and say it's $100,000. So you need
• 23:06
  Suze: to listen to me here, which is this first of all.
• 23:12
  Suze: You know, mama has already a reverse mortgage. She's been
• 23:17
  Suze: living far beyond her means for a long, long time.
• 23:23
  Suze: You say she has no other debt. Well, that's great.
• 23:26
  Suze: $100,000 of credit card debt, a reverse mortgage, lives on
• 23:30
  Suze: Social Security and a teacher's pension, and blah, blah blah blah.
• 23:34
  Suze: My real concern is here.
• 23:37
  Suze: She has memory loss and it could get bad and
• 23:41
  Suze: even though you moved in with her, that doesn't mean
• 23:46
  Suze: necessarily that you're going to be able to take care
• 23:48
  Suze: of her really.
• 23:50
  Suze: It just does because sometimes they wander, they'll leave the
• 23:54
  Suze: house in the middle of the night, all kinds of things,
• 23:58
  Suze: and you'll find that even though you love her, you
• 24:01
  Suze: moved in with her, you might not be able to
• 24:04
  Suze: let her stay there, all right, so you should number one,
• 24:09
  Suze: be looking at a memory care facility just in case
• 24:12
  Suze: you have to move her into one, all right.
• 24:17
  Suze: That's number one. If you do have to move her
• 24:20
  Suze: into one now, you may need to sell the house,
• 24:24
  Suze: but because she has a reverse mortgage on the home,
• 24:29
  Suze: I don't know how long she has had this home
• 24:32
  Suze: for on a reverse mortgage. There may be equity in
• 24:36
  Suze: her home, and there may not be very much equity
• 24:39
  Suze: in her home.
• 24:41
  Suze: So it just depends how long she has had a
• 24:44
  Suze: reverse mortgage, and given that she is 94, why do
• 24:48
  Suze: I think she's had one for at least 15 or
• 24:50
  Suze: 20 years already.
• 24:53
  Suze: So we have a very, very serious situation here, Mary,
• 24:58
  Suze: and this is where the kids, all the kids, the
• 25:02
  Suze: five of you, need to get together and really look
• 25:06
  Suze: at what is the current equity in her home if
• 25:10
  Suze: the reverse mortgage was to be paid off. How much
• 25:14
  Suze: does a memory care facility really cost? And if, in fact,
• 25:20
  Suze: now listen to me closely.
• 25:22
  Suze: You've done that and they can't really attach a home
• 25:25
  Suze: or take anything away from her or whatever. You've sold
• 25:28
  Suze: the home. She has no assets. If she really has
• 25:32
  Suze: $100,000 of credit card debt after you have arranged everything
• 25:40
  Suze: for her and you know what's really going on.
• 25:44
  Suze: If that was my mother, I would consider claiming bankruptcy.
• 25:49
  Suze: Only if they can't take the house away from her,
• 25:53
  Suze: because the rules of bankruptcy is once you owe more
• 25:58
  Suze: than what you make, you are already technically bankrupt now.
• 26:04
  Suze: That debt is not going to pass down to the
• 26:06
  Suze: five kids. You could very easily, believe it or not,
• 26:10
  Suze: just stop paying it, and what are they going to do.
• 26:14
  Suze: Really it's unsecured debt. It's not secured by the house.
• 26:19
  Suze: Will it ruin her FICO score? Absolutely it will. But
• 26:22
  Suze: the truth of the matter is, who cares? Who cares
• 26:27
  Suze: about a FICO score when you are 94 years of age?
• 26:31
  Suze: So there are many things that you can do here.
• 26:35
  Suze: But if she really can't afford it.
• 26:39
  Suze: And she probably used that money to live on, so
• 26:44
  Suze: she didn't go on and buy all these fancy things
• 26:46
  Suze: and everything.
• 26:48
  Suze: Those are some ideas that you might want to think
• 26:51
  Suze: about again. Listen to my answer. Do you sell the home?
• 26:57
  Suze: Do you claim bankruptcy? Will they allow her to keep
• 27:00
  Suze: the home? Is there any equity in the home, or
• 27:03
  Suze: does it just make sense? And you should see a
• 27:06
  Suze: bankruptcy lawyer to claim bankruptcy or just stop paying the
• 27:12
  Suze: credit card and let it go into default ruins her
• 27:16
  Suze: FICO score.
• 27:18
  Suze: But there's nothing really much more they can do about
• 27:20
  Suze: that really because it's unsecured debt. Now maybe they could
• 27:25
  Suze: sue her, who knows, but they're not going to at
• 27:27
  Suze: this point in time. Those are some of your alternatives
• 27:33
  Suze: that you're going to have to decide what you should do.
• 27:38
  Suze: All right, KT, and that was kind of heavy, huh?
• 27:41
  Suze: It's been years since I suggested possible bankruptcy.
• 27:45
  KT: But I'm glad you did because I think that's probably
• 27:49
  KT: the best solution right now. But, she won't, the, the mother,
• 27:54
  KT: like she's 94 and she's racked up that much credit card debt?
• 27:58
  Suze: Maybe we don't know how she's lived for the past
• 28:00
  Suze: x amount of years, and this goes back to what
• 28:03
  Suze: I think I said in last Sunday's, right, podcast. Kids
• 28:09
  Suze: get involved with your parents' money sooner than later. Parents,
• 28:15
  Suze: let your kids get involved with your money, because this
• 28:20
  Suze: situation never should have happened ever. And again, Mary, if
• 28:25
  Suze: it is only $10,000 of credit card debt, great. Each
• 28:29
  Suze: of you can put in $2,000 each, get rid of
• 28:32
  Suze: the debt, and you're fine, but no way is $10,000
• 28:36
  Suze: doing this to your mother. No way.
• 28:40
  Suze: All right, KT.
• 28:41
  KT: That's a wrap, Suze.
• 28:42
  Suze: That's a wrap. And listen, next week, August 2nd, I'm
• 28:47
  Suze: gonna be doing a master class on required minimum distributions.
• 28:52
  Suze: You will love it, so make sure you tune in.
• 28:57
  Suze: We love you all, and there's only one thing we
• 29:00
  Suze: want you to remember when it comes to your money,
• 29:03
  Suze: and it is this:
• 29:04
  KT: People first, then money, then things.
• 29:06
  Suze: Now you stay safe. All right, bye bye.