Published on Apr 20, 2020

  • Health and wealth are intertwined – people who are experiencing job loss and mounting bills have increased stress and anxiety.
  • People who are still receiving a paycheck need to be saving money in case they catch the virus and are unable to work.
  • Create legal documents now, including a power of attorney and a living revocable trust with an incapacity clause, to protect you and your family in the event of illness or death.
  • Keep contributing to your 401K and don't refinance your home for a term longer than your existing loan.

Video Transcript

JOHN WHYTE: Welcome to Coronavirus in Context. I'm Dr. John Whyte, Chief Medical Officer at WebMD. You've heard the phrase "health is wealth." But they're probably more related than you might think. To talk about this today is my guest Suze Orman, who really needs no introduction.

She is an award-winning television host. She is the author of 10 consecutive "New York Times" best-selling books, and she is consistently named as one of the most powerful women in business and finance. Suze, thanks for joining me.

SUZE ORMAN: Anytime, doc, anytime.

JOHN WHYTE: Well, here's this relationship between health and wealth. And it means different things to other people. What does it mean to you?

SUZE ORMAN: Yeah, it's funny, because I knew we were going to be doing this interview today. And I was thinking to myself that, you know, when it comes to your health, you never really think about your health till you're not healthy. Now, all that sounds like, oh my god, I have to go see a doctor, and now you're not well. And you don't think about it. With your money, you tend to not think about your money either, believe it or not, unless your money gets sick. And all of a sudden things like now are happening, and so now you're like worried about it and you're freaked about it.

But what's very interesting is that the similarities between health and wealth are tenfold. What's so sad is that when your money isn't doing well, like times like this, is the market going to come back? Am I going to have my job? And you care about your job not because of what you do, because your job makes you money. All of a sudden you find that you are totally stressed.

And the more stressed you are, the more afraid you are. And the more afraid you are, the more your immune system goes down and the sicker you get. So I've always said health and wealth are one. I don't know which one is more important, to tell you the truth.

JOHN WHYTE: And we talked about this study that was in The Journal of the American Medical Association a couple of years ago that showed this sudden loss of wealth. In that setting, they were talking about starting a business and it going under, not about what we're talking today. But it increases stress. It increases depression. It actually decreased their longevity.

So I've read a lot of prescriptions as a physician. But what's your financial prescription right now for consumers who are just really stressed and worried?

SUZE ORMAN: Yeah, you know, here's what people need to understand. I wish it were just as easy where you took a pill or you got a shot or there was a vaccine that protected you. The truth of the matter is, when it comes to your own wealth, you have to be your own doctor. And the best prescription that you could give yourself is to take action and deal with the things that are going wrong right now.

If you don't have money to pay your bills, you need to pick up the phone and call your creditors. If you can't pay your mortgage payment or your landlord, you have to pick up the phone and contact them. Same thing with your student loan payments, your car payments, your insurance companies. So this is the time, when everything is going wrong and you are just paralyzed with fear, that you have to be a warrior.

And you can't turn your back on this battlefield, in the same way that you're always afraid when you go to a doctor, they have you do a test. You get an MRI. You get a CAT scan. Until you get that, the results of that test, you're like oh my god and you're scared to death until you hear the results.

So then what happens is this with your money. You're scared to death to make these calls. You're scared to death that maybe these creditors are going to say no to you or give you some bad news. No. This is the time you have to take action and call people. You have to know what to do with your 401(k)'s.

JOHN WHYTE: Do we look at our 401(k) statement or do we not even go online and check? What do you advise?

SUZE ORMAN: Here's what I advise. If you have five, 10, 15, 20 years till you need this money and you know your 401(k) is diversified into either an index fund or the different mutual funds that are in there, don't even look at it. But also--

JOHN WHYTE: Don't even look.

SUZE ORMAN: Don't look.

JOHN WHYTE: Don't be moving things?

SUZE ORMAN: No, because most of the people in a 401(k), they don't have many choices. They're in a small cap or a large cap or a medium cap or an index fund. So however you were diversified before, just stay that way.

Now, the only thing I would say is if you are in a bond fund within your 401(k) plan, I'm not so sure I would stay in bonds at this point in time. I think you would have a better opportunity of making more money, especially if you're five 10, 15 years away, in being in your mutual funds within your 401(k).

You have to look at this that we've already come up tremendously from the bottom. We're only like 5,000 points below where we were when the market was at its high. So everybody should also have seen, you know, some recovery. We were in ICU.

JOHN WHYTE: Yes. Yes, we were.

SUZE ORMAN: Now we're out of ICU.

JOHN WHYTE: Life support. We're on a step down.

SUZE ORMAN: We're actually out of the hospital right now, and we're simply recovering. So things at this point, if you look at the money in your 401(k)'s and you keep contributing, you're going to be very happy.

JOHN WHYTE: So keep contributing?

SUZE ORMAN: Absolutely.

JOHN WHYTE: Do we refinance our homes?

SUZE ORMAN: You know, you can refinance your homes, but if and only if you follow my instructions here. So here's your prescription for--

JOHN WHYTE: Show me the prescription.

SUZE ORMAN: There's my prescription for you. And it's this. You've been paying your 30-year mortgage, and you've been paying on it for eight years, let's just say. And you have 22 years left. Do not go refinancing for another 30 years, because even though you may be at a lower interest rate, you've just added eight more years onto your mortgage. So whatever the length of your mortgage, if it's 22 years-- that's the remaining term-- refinance for 20. Refinance for 15. But do not refinance for more than the length of your term that is remaining on your mortgage.

Also, try not to refinance when the costs to refinancing are really high, because then it might not make sense because your savings may not make up for the amount of money that you pay to refinance. So be very careful. But if you could save one percentage point right now and reduce your term and have it not cost you anything, you go for it.

JOHN WHYTE: Right. And all this does relate to our health. To your point, if we're stressed about our finances, that's going to impact how we sleep, our immune system. You and I even talked about, is now the time to make big purchases? Or do you say hold on.

SUZE ORMAN: I would absolutely say hold on, and for many reasons. And now it comes back to your health. You all think that, all right, maybe you still have a job. Maybe you're one of the lucky ones. We have 20 million people on unemployment right now.

But maybe you're one of the lucky ones that still is getting a paycheck. You still can work from home or you're still going into work, whatever it may be. Or soon you're going to be able to go back, and you're getting a paycheck and everything's good.

But you don't have eight months to a year of cushion. You aren't fully funding your retirement account. But you're seeing a really good buy out there and you're thinking, I'm going to buy a house. I'm making enough money. I'm going to buy a new car. I'm making enough money.

And all of a sudden, two weeks from now you get hit with the virus. Or forget the virus. You get in a car accident. Something can happen to you, and there goes your health and now you're not working. Especially in an economy like this, I would not be buying a home at this point in time. I would be touching it with a 10-foot pole.

I would not be buying a car at this point in time, especially a brand new one. Why? Because look at the car industry. They have so much inventory right now. Car sales are down like 25%. Home mortgages are low. The interest rate. The value of the homes, I think, are going to come down. Many people are going to be defaulting on mortgages. I would not be buying right now. Save your money. Save your money. Save your money.

JOHN WHYTE: Save the money in the bank? There's no interest rates.

SUZE ORMAN: Listen, I'd rather have money than no money. So a bank, or better yet a credit union, because credit unions tend to really work with you and give you a little bit higher interest rate. But I'd rather have some money than have my money disappear.

JOHN WHYTE: One of the things that we talked about earlier that I think is so important-- and you've been a leader in this-- is trying to get people to remember you need to create a will. You need to have that durable power of attorney for health affairs, not just advanced directives. Can you talk a little bit about that and how you're really leading in the industry to get people to start thinking about this?

SUZE ORMAN: You know, everybody, for years I've been telling you, you really need to hope for the best. But you really need to plan for the worst. You have to. Why is it that some of us got the virus and some of us didn't? Why do some of us get cancer and some of us don't? And we always go through our lives thinking, it's never going to happen to me. Then all of a sudden, it happens to me. And you don't have the documents in place today to protect your tomorrows.

There are four must-have documents that every single one of you must have. You must have a living rebuttable trust. You must have a will. You must have an advanced directive and a durable power of attorney for health care. And you must have a financial power of attorney. Why do you need those four documents? Because depending on different situations, each one of those documents will help you.

And sometimes, you know, it's not just about how do your beneficiaries get your assets. It's about what happens to you if you become incapacitated. If you become incapacitated, a will is not going to help you. A will is simply a document that says where your assets go upon your death, and it does it in the most cost-ineffective way possible. In fact, the less money you have, the biggest mistake you will ever make is having a will.

A living revokable trust-- a living revokable trust with an incapacity clause in it. If you became incapacitated, you've already named somebody within there. Who is going to sign your checks for you, who's going to pay your bills for you if you can't do it on your own?


SUZE ORMAN: And I can go on and on. And so many people need to understand that, especially with kids, once they turn 18 years of age or older, you know, you don't have authority, mommy and daddy, over your kids anymore. So if they end up in the hospital, you can't make decisions for them. So if your kid had an advanced directive and a durable power of attorney for health care giving you the right to make decisions for them, now you can help your kid in need. And I could go on and on.

JOHN WHYTE: But people don't like to think about these things. So now, is it a time for them to kind of retool?

SUZE ORMAN: Yeah. And now you're seeing it right in front of your eyes. You're seeing 35,000 deaths just here in the United States, all deaths possibly of people that weren't even sick just a month ago, healthy people.

And now I'm getting emails constantly from my "Women and Money" podcast saying, Suze, my spouse just died. I can't believe it. The house was just in his name, and now I have to go through probate to get the house that he left to me in the will. I'm like, I didn't know that. I don't have that kind of money. I mean, and on and on and on. Please don't let it happen to you, people. All of you, you really should be looking into these must-have documents.

JOHN WHYTE: And it really shows the connection between health and wealth. Are you optimistic about where we might be by end of year?

SUZE ORMAN: Well, am I optimistic about the health crisis or am I optimistic about the financial crisis?

JOHN WHYTE: You can do both, because you're well versed.

SUZE ORMAN: I have a feeling that come September-- not now. I get scared. I have to tell you, honestly, it's scaring me when everybody's talking about they're opening up the United States. Now, I want you to think about this. Here's health and wealth. Why are they opening up the United States, or they want to?

Because they want the money. They want the money, for obviously-- you want money. But the United States wants to, let's get back to business. Let's go do all this so that we have some support here. Now, it's because if we open up and the virus comes back, we don't have enough tests. You know the whole routine.

I think it's the most ridiculous thing I've ever heard. So I think that really, by September, you know, people won't be quite as afraid. I'd like to see it shut till September, to tell you the truth, till everybody had a test. But they want to do it because of the wealth factor, all right?

As far as the stock market goes, I think you're going to see it go up and down and up and down. And I think finally, by February of next year really, it's going to be on solid footing. So would I be investing right now? Yeah, I have to tell you. And I would be doing it on a dollar-cost averaging basis, which is how you invest in your 401(k) plans every month. Don't go taking large sums of money here and investing it all at once. Pick out what you want, and little by little every single month keep doing it month in and month out, and years from now you will be so happy that you did.

JOHN WHYTE: Tell us what you're working on.

SUZE ORMAN: Oh my goodness, I'm working on so many things--

JOHN WHYTE: I know you are. I know you are.


SUZE ORMAN: The main thing I'm working on right now is really my "Women and Money" podcast. And subtitle to that is, "and the men smart enough to listen."

JOHN WHYTE: OK, all right. I'm going to listen.

SUZE ORMAN: All right. And because I've never wanted to segregate. You know, money's for everybody. It's not just for women. It's for everybody. We've got to come together that way.

But I'm really working on where, you know, you have a place twice a week to come to and really learn about your money, learn about the emotions of money, learn about all kinds of things about money so that therefore, your health can stay intact.

JOHN WHYTE: You're always giving us good tips. And I want to thank you, Suze Orman, for these tips that you've given us today helping us to understand the relationship between health and wealth. And thank you for watching "Coronavirus in Context." I'm Dr. John Whyte.