Ask
Suze
Orman
FINANCIALconnection
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Q&A with Suze Orman
The Costco Connection
P.O. Box 34088
Seattle, WA 98124-1088,
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Also:
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Inheritance woes
■
Post-job 401(k)
■
Credit rating
Where to put
the extra cash
By Suze Orman
One of our sons has a 401(k), which has,
of course, lost a great deal of value. He and
my husband agree with your strategy of investing whatever additional income he has
(over and above the 401(k) and regular living expenses) in more stock. I disagree. He is
two years in to a 30-year, $200,000 mortgage
with $1,700-per-month payments. When he
goes to retire in nine or 10 years, if he is still
faced with $1,700 payments, there is no way
his 401(k) will cover that plus living expenses. On the other hand, if excess monies are
applied to the principal of the mortgage, in
nine or 10 years, his mortgage could be renegotiated into lower monthly payments. What
do you think?
Iris Bellinger, Chewelah, WA
what squabbling over the estate comes down to. On
the other hand, if each child is willing to calmly
write down what he or she considers a “fair share”
and then respectfully discuss any differences of
opinion, this creates an environment of respect that
honors the parents.
Suze Orman’s TV
show airs Saturday
nights on CNBC. Suze
can be contacted at
w ww.suzeorman.com.
My husband was laid off after 10 years. Our
401(k) is still in the company that laid him
off. Because of the economy and the fact
that we are adding nothing to it, we are losing money. What should we do to at least
not lose any more?
George and Susan Phillips, Lebanon, OR
FIRST,LETMEbeveryveryclear:Ihavealwayssaid
invest in the market only with money that you do
notneedforatleast10yearsorlonger—preferably
longer. So we are not indisagreement; we are actually
intotalagreement.Ihavealsoalwayssaidifyouare
in your 50s and living in the home you expect to
retire in, then working to get the mortgage paid off
beforeyouretirecanmaketerrificsenseinthatit
eliminates one of the biggest retirement expenses. So
what do I think? It is sad when people say I have said
something that I have not! Hope we are clear now.
IF YOU ARE IN your 30s or 40s, you have plenty of
time, assuming you are in good investments, to wait
for a market recovery. If you are in your 50s or 60s
and have all of the 401(k) invested in stocks and you
are going to need income from that money within 10
years, that’s not wise. Regardless, in most cases it
makes no sense whatsoever to leave money in an ex-employer’s 401(k) plan. I recommend doing what is
called a direct IRA rollover. This involves moving
your 401(k) into an IRA rollover account at a discount brokerage or mutual fund company. Once the
money is rolled over you are free to choose any
investments you want for that account; you are no
longer restricted to the offerings within the 401(k).
When a family faces the death of their par-
ents, a monster called “my fair share” ap-
pears. I am looking for something to say,
someplace to point people, someplace to
helpsiblingscome tounderstanding. You
created a road map in your original per-
sonal finance. Could you please road-
mapthis?
Pat Ferguson, Columbus, OH
T HE BEST SOLUTION is for every parent to have a revocable living trust and a
will that clearly spells out everything.
That circumvents any sibling standoffs;
what Mom and Dad have authorized
intheirestatepapersistheonlyroad
map needed.
If that wasn”t taken care of, then
I would sit everyone down and ask
them if they are determined to
disrespect their parents, for that is
MARC ROYCE
How do you get a “perfect” credit rating score?
Lawrence Lutzke, via e-mail
THERE ARE FAR BE T TER ways to spend your time
than aiming for credit score perfection. FICO credit
scores can range from 350 to 850. All you need to
focus on is keeping your score above 760; that is
enough to put a sparkle in the eyes of lenders and
anyone who checks your score. The two steps that
will give you the best shot at a 760-plus score: Always
pay your bills on time, and don’t carry a balance on
your credit cards. If you do run a balance, aim to
keep it to less than 10 percent of your combined
credit lines on all of your cards; above 10 percent
and it starts to nick at your credit score. C
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