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Suze Orman is part of the reason I even have an emergency fund saved up. Sure, her advice is not for everyone, but before she became popular - I wasn't even sure what an emergency fund was.
And sometimes, when I'm about to buy something expensive, I think to myself - "I think Suze will decline my purchase".... just like another poster above me.
Any home not in a trust here in ny and going to an heir has to go through probate. We have no quick claim deed process. Fees can run around 5% of the value.
With homes in the 400k plus range even a small home can run 20k.
It is very important to use a trust if you are in a state that has no quick claim process on real estate.
First, don't you mean "quitclaim" deed? I've never seen a "quick claim" deed. Also, it does appear that New York state does, in fact, recognize "quitclaim" deeds, although perhaps there is something in the probate process where they are not allowed.
Second, I'm looking online and I don't see anything indicating fees at 5% of value. I see the fees an executor can be entitled to is 5% on estates up to 100K and lower %ages beyond that, but I see nothing indicating 5% of total value. Also, in most probate cases the executor named in the will is also a beneficiary, so the "fees" really aren't applicable (the person is getting the assets one way or another).
If you could supply some information to support your claim, I'd be interested. For various reasons I'd be more than a little surprised to see probate fees on estates under 500K normally being at 5% of estate value.
I still think her advice on having an 8-month emergency fund is too extreme and she thinks it applies to everyone. Personally, for my situation, I think a 3-month emergency fund is sufficient. My monthly expenses are about $2,700, so an $8,000 cash emergency fund should be sufficient, for the following reasons:
1. If I lose my job, I am likely to be able to collect unemployment insurance, which would account for 75% of my expenses. And it lasts for a very long time.
2. If I lose my job, it's possible that I could receive a nice severance package. Happened to me before and worked very well.
3. I have a $3,000 credit card line.
4. I have $17,000 invested in stocks, which can easily be sold for cash online.
5. I have $20,000 in a Roth IRA which can be withdrawn at anytime, free of taxes and penalties.
6. I'm a renter, not a homeowner, and don't need to be concerned with home maintenance.
7. My parents are real estate millionnaires and have repeatedly offered me to help me financially in the event of an emergency (even though I never asked or took their offer).
8. I have no debt obligations whatsoever (no car payment, no credit card debt, no student loans, etc.).
9. I have a master's degree in accounting and have ALWAYS been able to find a job within 2-3 months with no problem, since it's a high-demand profession.
#1. Unemployment lasts 6 months in normal times. Not something you want to live on if you don't have to.
#2. Counting on a severance package? Murphy's law dictates when you count on something like that, it has a way of not happening.
#3. Living off credit cards as a substitute for a too small emergency fund? You're kidding, right?
#4. Selling stocks when unemployed usually meas you're selling them at reduced prices. Unemployment often hits a lot of people all at the same time, when times are bad & stock prices are down. Once again, Murphy's Law comes into play.
#5. Only the contributions to Roth IRAs can be withdrawn without penalty. Furthermore, Roth IRAs are a RETIREMENT SAVINGS vehicle, not an unemployment fund.
#6. That's nice, but not relevant. You still only have a 3 month liquid emergency fund.
#7. Counting on one's parents for a bailout. May be your values, but not mine. The research generally shows folks who count on others to bail them out from life's normal setbacks (and unemployment would be a normal setback, not an extraordinary one) generally don't do as well financially as those who count only on themselves.
#8. Still irrelevant. Bottom line is you still only have 3 months' worth of liquid savings.
#9. I had a friend like you who ALWAYS had a decent job....until he turned 49 and lost a good paying job. Then he went through 5 years of sporadic employment and ended up declaring bankruptcy (not exclusively because of spotty employment, but it was a major contributing factor). He was just like you. Never thought something like that could happen to him. Lots of phone calls to me telling me he wanted to end his life. Fortunately he got through it without killing himself. The stress added a lot of wrinkles to his face, though.
Quote:
Originally Posted by nep321
So, given my circumstances, would you agree that a 3-month cash emergency fund is sufficient?
Well no, but if Suze is going to generalize, I think her recommendations are too extreme, as I've said. I'm saying for ME an 8-month emergency fund is simply too much to attain. My monthly expenses are about $2,700 a month. That means I would need an emergency fund of about $22,000. It will take me years to reach that. And then what? The money just sits there in a bank account. And if I get laid off, I'm going to be entitled to $2,000 a month for unemplolyment insurance anyway (based on my income level). So I really don't see the need to have $22,000 in an emergency fund. Maybe more like $6,000 or $8,000 though, for a rainy day.
The 15% retirement would lead to about $2 million in savings for retirement, whereas saving 10% per month would lead to about $1 million, which seems to be plenty. And that's not even counting Social Security, inheritances (my parents are millionnaires) or other sources of wealth. But 15% just seems excessive to me.
And I certainly don't think I need a revocable trust.
There are many people making 15% less than you who can survive on that lesser paycheck, so I'm sure you can too, which means you can put in 15% for retirement. The more the better IMHO.
First, don't you mean "quitclaim" deed? I've never seen a "quick claim" deed. Also, it does appear that New York state does, in fact, recognize "quitclaim" deeds, although perhaps there is something in the probate process where they are not allowed.
Second, I'm looking online and I don't see anything indicating fees at 5% of value. I see the fees an executor can be entitled to is 5% on estates up to 100K and lower %ages beyond that, but I see nothing indicating 5% of total value. Also, in most probate cases the executor named in the will is also a beneficiary, so the "fees" really aren't applicable (the person is getting the assets one way or another).
If you could supply some information to support your claim, I'd be interested. For various reasons I'd be more than a little surprised to see probate fees on estates under 500K normally being at 5% of estate value.
i believe the ny quick claim deed is not used much if at all for passing after death except to get it into the trust . it is used for divorce and gifting for the most part . the quick claim deed is not an actual deed showing ownership
it only gives up the listed persons rights and claims to the property. it is not a warranteed deed much like you expect when you buy a property.
in ny these are the reasons for a quick claim deed, all pretty much involve you being alive.:
■transfer property to or from a revocable living trust
■transfer property to one spouse as part of a divorce
■settle an ambiguity about inherited property
■settle uncertainties about other kinds of claims (such as an easement)
■transfer one co-owner's interest to another co-owner
■change the way owners hold title to the property
i have heard grumblings about it not being accepted by title insurance companies as proof of ownership here as there is no proof that other heirs or lein holders will not come out of the wood work..
the probate process does exactly that, they search and confirm there are no other heirs.
while the executor can take up to 5% you generally have an attorney cost and court costs too. if i remember ,the court costs start around 1200.00 bucks for a 400k house which is a typical tiny house here and go up from there depending what documents get filed. the process can take 9 to 18 months as well.
paying a years worth of real estate taxes and expenses on a property you are waiting to sell is alot of money as well.
we had to have a real estate business probated and legal and probate costs ran into six figures.
it should have been near zero costs but there was some wording missing from the trust document and we ended up having to probate things. it sucked!
until you go through this stuff you have no idea how expensive and complex things can get . that is why i am dead set against using those on line kits for wills and trusts.
you don't even need a big estate.
my ex wife inherited a house from her mom. the will read and to my child beth i leave all my possesions and house .
we had a refinance killed at the closing when the title company said the word "only" as in only child was missing .
they stopped the closing, we had to pay all the attorneys for the day ,lost our low interest rate and had to get signed affidavitts from relatives there were no other children.
that one word cost us a few thousand bucks in fees.
the disaster with the trust and the business was another horror story and a reason you should only use estate attorneys who do this stuff all day and not some general practioner to do your estate paper work.
quick claims can present the same issues since they are not warranteed deeds.
Last edited by mathjak107; 10-18-2013 at 03:04 AM..
Does EVERYone need a trust? No. But how about just being smart with your money -- with just BASIC stuff? .....like knowing you can't spend more than you make. That doesn't take any deep financial intelligence. Neither does knowing it's best to have money saved for an emergency.
It's sad that people need to be TOLD things like pay the mortgage/rent first...then utilities, etc....(and save SOMETHING for an emergency fund)...and then spend disposable income if you have it.
Do I want more in emergency savings? Sure. And I am doing that at MY own comfortable pace.
Personally I watch Suze "infotainment." I learn some things, yet other things are totally too basic for me.
I marvel that grown accomplished professional people with more than 1,000 month in disposable income, hundreds of thousands saved in various vehicles, will call her and ask if they can afford to spend 500 on whatever.....and need SO to tell them whether they can 'afford' something.
When I spend - or buy what I want -- I am NOT thinking "Suze will say I can't afford it." I, myself, know wether I can't afford it. And I'm not calling her, who I know already doesn't let people over 40 buy anything unless they have a half mill in retirement, 8 months EF....who tells everyone to work until 70...yet tells someone who is 45 they don't have enough saved. We'll if I'm working another 30 years, you mean to say I can't by a dog (or take a trip, NOW) -- because that $1,500 in 20 years could grow until xx.xx amount, or it's be xx number of months on xyz. I could also drop dead tomorrow so can I get SOME material thing I want -- just because! huh Suze?
I SOOOO wish she'd let people on the show that disagree with her. Or not even who disagree, but who at least MIGHT point out that what she says isn't gospel. So there could be a real DISCUSSION about her advice. But she's too full of herself for that. and it's her show of course, so why open herself to be shown to give conflicting advice or not Saint Suze.
She calls back people to see if they bought what she denied them...but they only put people on who DIDN"T buy...why not a person who said I bought it anyway and am glad I did!
a good question is can you quick claim to an heir and then the heir gets a warranteed deed later on?
i wonder if that avoids probate ? my guess is no only because a title search will not indicate other heirs that could lay claim to that property and didn't. it only searches exsisting claims.
the job of the probate court is to notify the blood line that there is a will whether they are listed or not in the will as to recieve something. in the case of the trust and will we had the issue with we had to pay the court to retain investigators who had to track down two estranged step children who were specifically written out of the will and trust .
the court still had to notify them in case they wanted to contest. which of course they did.
probate court noticed that since my wifes deceased first husband predeceased his mother that the will and trust had no sentance pertaining to what happens in that case. that makes the intentions of the will and or trust questionable as to whether they are defective documents .
no matter how simple you think a probate will be you never know the complications and expenses until the court gets involved.
i am now a big believer in doing things right even though there are short cuts that seem easier. . use a trust for real estate and do not take short cuts like quick claim deeds to heirs.
quick claims have a use but depending on your state they may present alot of grief later on.
so far in my own life my ex wifes paper work had a flaw in it and that had gone through probate and my current wifes family had a flaw the probate court zoomed in on.
that is two different families with different lawyers doing the documents .
it shows you that what you think is a no brainer in paper work and any canned forms are just fine really may not be as simple as you think.
as the probate judge said to us " it is clear what the intentions were but i as the judge cannot re-write history and add or subtract words to the documents "
Last edited by mathjak107; 10-18-2013 at 03:57 AM..
Does EVERYone need a trust? No. But how about just being smart with your money -- with just BASIC stuff? .....like knowing you can't spend more than you make. That doesn't take any deep financial intelligence. Neither does knowing it's best to have money saved for an emergency.
It's sad that people need to be TOLD things like pay the mortgage/rent first...then utilities, etc....(and save SOMETHING for an emergency fund)...and then spend disposable income if you have it.
Do I want more in emergency savings? Sure. And I am doing that at MY own comfortable pace.
Personally I watch Suze "infotainment." I learn some things, yet other things are totally too basic for me.
I marvel that grown accomplished professional people with more than 1,000 month in disposable income, hundreds of thousands saved in various vehicles, will call her and ask if they can afford to spend 500 on whatever.....and need SO to tell them whether they can 'afford' something.
When I spend - or buy what I want -- I am NOT thinking "Suze will say I can't afford it." I, myself, know wether I can't afford it. And I'm not calling her, who I know already doesn't let people over 40 buy anything unless they have a half mill in retirement, 8 months EF....who tells everyone to work until 70...yet tells someone who is 45 they don't have enough saved. We'll if I'm working another 30 years, you mean to say I can't by a dog (or take a trip, NOW) -- because that $1,500 in 20 years could grow until xx.xx amount, or it's be xx number of months on xyz. I could also drop dead tomorrow so can I get SOME material thing I want -- just because! huh Suze?
I SOOOO wish she'd let people on the show that disagree with her. Or not even who disagree, but who at least MIGHT point out that what she says isn't gospel. So there could be a real DISCUSSION about her advice. But she's too full of herself for that. and it's her show of course, so why open herself to be shown to give conflicting advice or not Saint Suze.
She calls back people to see if they bought what she denied them...but they only put people on who DIDN"T buy...why not a person who said I bought it anyway and am glad I did!
it always blows my mind when those folks who do have quite a bit of dough call and ask if they can afford some small expenditure.
i am like ,how clueless can someone be.
on the other hand you have those financial train wrecks who have nooooo money and they have some stupid expenditure they want to make and you know they shouldn't even be thinking about doing it..
but remember , that is why many watch the show, for its financially ignorant people who prove to be entertaining just for their stupidity..
Location: Chapel Hill, NC, formerly NoVA and Phila
9,777 posts, read 15,786,780 times
Reputation: 10886
Quote:
Originally Posted by synchronicity
The post above mine notes this, but where do people get the idea that ALL money in a Roth IRA can be withdrawn "at any time, free of taxes and penalties"? Because it's NOT TRUE!
You can withdraw an amount UP TO YOUR CONTRIBUTIONS free of taxes and penalties (assuming the Roth has been in extistence for over 5 years), but a withdrawal of amounts above that (prior to age 59 and a half) is taxable as income AND subject to the 10% "excise tax" penalty, save in certain limited circumstances.
Main point is that all dollars in a Roth IRA can not just be yanked out at any time with no tax consequences.
Assuming you are under 59 1/2, your Roth IRA does not have to be in existance for over 5 years to withdraw your contributions free of taxes and penalties. You have to wait 5 years only if your Roth was converted from a traditional IRA. Otherwise, you can withdraw your contributions at any time for any reason without penalty.
TV needs more sophisticated personal finance shows - CNN used to have Gerri Willis who had a decent Money show (she's now on Fox Business). I listen to Ric Edelman's 2 hr podcast everyweek - I've never really watched his PBS show but hear that it's pretty "light" with consumer stuff. Clark Howard is the same way - Anyone recommend a good weekly show that really helps the average investor?
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