Thanks to Suze Orman, I finally get it. I finally understand why it’s been so difficult for my family to stay afloat financially. Apparently, my current money woes have nothing to do with the national recession but are actually a result of my own ineptitude. I’m so grateful that she’s let me know this so that I can start right now to turn this thing around. Here’s some of her advice:
Cut out all unnecessary spending. What a brilliant idea! Why didn’t I think of that? Oh, wait. I did. Because I am a member of the working class, unlike Ms. Orman who is worth in excess of $32 million, my recession actually started a few years ago. Everything that could be eliminated has been eliminated for some time now. Lattes at Starbucks? Premium cable service? Are you kidding me? They’ve never been in my monthly budget. No, my current list of “unnecessary spending” includes the following: health insurance, dental expenses for my children, car repairs, eye exams, and mammograms. They’re easier to do without than home heating oil, food, and a place to live.
Pay off all credit card balances in full each month. This must be why she gets paid the big bucks, dispensing gems of advice like this. That’s right, Suze. I choose to carry a balance on my credit cards because I enjoy paying all of those obscene finance charges. Is she serious? What person willingly carries a credit card balance? She apparently isn’t aware that some of us had to rely on credit cards when the cost of gas and home heating oil skyrocketed. She also isn’t aware that some of us needed to use credit cards to pay for unexpected medical expenses because our meager savings were spent on frivolities such as mortgage payments and food when our income dried up. If my income is now decreased or non-existent, how on earth can I afford to pay off my credit card balances each month?
Save the equivalent of 8 months of living expenses. Here’s another “what planet is she living on?” moment. Remember when financial experts used to advise having 2 months’ worth of living expenses squirreled away in case of an emergency? Now we’re all apparently losers if we don’t have 8 months’ worth. 8 months! Go ahead; do the math for your own situation. Are you able to save that much currently, while being out of work or underemployed, and after losing your savings in the stock market collapse? Earth to Suze: if what we’re currently living in right now isn’t an emergency, I don’t know what is. At my current rate of indebtedness and underemployment, I should have enough saved in, oh, 85 years or so.
Pay off your mortgage early. Sure, Suze, I’ll get right on that. Right after I finish selling my eggs and my blood plasma in order to be able to afford this month’s mortgage payment. Are you on crack, woman? Just because you have the means to charter private jets at the cost of $500,000 per year, or toinvest "a million dollars in the stock market, because if I lose a million dollars, I don't personally care," not all of us do. Most people I know are too busy trying to avoid homelessness and do not have money left over to pay anything extra on anything. Perhaps it would be helpful if you took some time to find out how things really are among us bottom feeders, the ones from whom you’ve been amassing your $32 million net worth, before you dispense any more useless, psychologically punishing advice.
Instead of relying on out-of-touch financial experts for tips on how to survive the recession, perhaps we should all turn off the TV, survive the best we can, and stock up Prozac instead.
Comments
Ever since I graduated college (deeply in debt, because not one dime of the expenses came from my sole surviving parent, and how is an 18-22 year-old supposed to earn $25K/year while going to school full-time to break even?) the "financial experts" have tsk-tsked me for not a) SAVING MORE and b) INVESTING MORE.
Every financial advice book and talking head assumes you're not starting from the bottom of a 100-foot hole.
The "common wisdom" is useless for anybody who didn't get a golden rocket launch into adult life from upper-middle-class parents.
Hang in there, girlfriend. If life was more fair, you'd be earning bountiful bucks from your writing.
While I love Suze and I think she has given great advice over the years, I have to give it to you.....you are speaking for millions! I'm not convinced that I can scrounge up a month's salary to put in savings these days....I'm just trying to keep my head above water. Ugh! Rated for excellence in humor!
Mrs. Michaels - You're right. Prozac is unnecessary when there's chocolate. See? That's why I'm broke. All that frivolous spending.
Verbal - Yes - not all of us had the benefit of an easy beginning into adulthood and wading through the past several years has been anything but profitable. "The bottom of a 100-foot hole" describes it perfectly.
Julie - Her bit on the TODAY show is what sent me over the edge. She has no clue what it's like out there for real people.
m.a.h - ::shudder:: A dinner party with Suze Orman and Jim Cramer is the stuff of which nightmares are made. Thanks for the compliment on my writing, though. :)
OES - You said it! I've never been a fan of hers (that voice! dear God...) but now I refuse to give her any of my time at all.
She really is utterly useless. The only people that I've ever seen her "help" are those that call in while completely in denial about their financial situation.
Taking advice from millionaires and billionaires, especially at times like this, is like eating Ex-lax when you have diarrhea. If you didn't know you had diarrhea, I guess any advice would be beneficial. I hate the pretentious morons like Orman, Trump and Soros. They're usually simply looking for strokes to their pathetic egos and are completely out of touch with the real world.
rated for the irritation factor
This post is 'right on the money.' "On paper" we look like we made a good income; however, after we pay the mortgage, tuition, medical expenses and multiple insurances, we live paycheck to paycheck like everyone else. We have NEVER saved 8 months of living expenses, mostly because we are trying to save for "retirement" (what a folly that has turned out to be-- for every $1 we put in we get .60 cents return... can that be right?).
When Suze comes on my husband turns off the television (same for Dr. Phil -- is there some sort of a similarity between the two other than being sponsored by Oprah?..)
Denese
As it is, like Carter advised a long long time ago, I will put on a sweater.
Bob and Ric - Thank you for stopping by!
Existence - Exactly! Her advice doesn't seem to be meant for people who actually need it.
Professor - YOU should be the one dispensing financial advice! I wish I'd known you prior to the downturn.
SeattleK8 - Homage? Oh hell no! Her appearance on the TODAY yesterday was the last straw for me. I certainly don't need a multimillionaire speaking condescendingly about a situation she knows nothing about.
C Berg - Aw, what would life be without chocolate?
JK - I wonder if she'd be as successful as she is without Oprah's support?
And the odd 'luxury' is a Good Thing while living hand-to-mouth. A moment of pleasure amidst the drudgery and worry.
There's this other guy, whose name I'm deliberately forgetting, who kept talking about buying a used car and paying for it in full as opposed to a new car. And I kept thinking, er, what if you can't pay for a car in full either way?!? Plus, when consideration of the car repairs a used car is likely to need much sooner and the need for a female to have reliable transportation at night, something that's not gonna crap out on the freeway ... lordy. He was clueless on reality. Or about people who took the bus.
Of course, he also pushed hard on 'invest in the market' because, you know, you can't go wrong there. Now, with all these people nearing retirement age whose savings have crapped out, I wonder what he's saying ...
Denese - I hear you. And as far as the people that Oprah chooses to support, her number one criteria must be their capability to annoy.
M B and fireeyes - Thank you!
Elizabeth - "putting on a sweater" is way too common-sense. Now if you want to know the cheapest place to charter a jet, she can help you out.
Odette - That's one of my gripes, too. Let's see, if I start saving now, I can probably afford to pay cash for a car in the year 3024.
Kudos for the de-construct. Funny, piercing, a great read.
I have well-to-do relatives, almost all highly placed in financial institutions, who keep asking me, since last october, if it is really "that bad" out there. At first i thought this was disingenuous, or that they wanted my region's take on things.
Over the last few weeks it has become very clear that they truly don't understand how pervasive and deep our collapse is. Still.
For Suze, it is a matter of "buckle up, get tough" because she can't sell her own third home right now, and figures we are similarly "inconvenienced". The depth of her disconnect for ordinary Americans is breathtaking and I cannot watch one second of her ever again.
Greg - It's no stretch of the imagination to see that there's a huge gap between the rich and the rest of us. I thought that the stock market tanking would have helped the very rich to see what the rest of us already knew, but clearly all it did was merely to make them less rich.
Malusinka - There's no doubt that totally clueless people like your roommate are out there, but for financial experts like Suze Orman to insinuate that those of us who are struggling are in that same category is outrageous. By the way, it's great to meet you. Thank you for stopping by.
I have mixed feelings about this. Like most experts, Orman assumes money is there and just needs to be managed properly. There is a vacuum out their for an advisor who can offer anything worthwhile to folks living paycheck to paycheck.
On the other hand, she was one of the first women to scream at women not to count on anyone to manage their finances. A much needed message. While she may have ridden this wave of early admirers for way too long, she did at one point get some people to open their eyes. For example: My wife keeps all her money in her own accounts. We both pay into a household account for regular expenses, which I manage. If I ever decide to get drunk and go to Vegas, I have no way of bringing her money with me. I had an aunt who did not do this. Her husband cleaned her out and left her homeless in her mid-60's.
I don't watch Orman's show. I have merely caught a few snippets. When I see her, I find myself thinking, "I wish my daughter would watch this."
It's also the moralizing factor that is constantly disturbing. I did the wrong things, you did the right things. WTF?
Mty mother and I go head to head with arguments, even though we're often on the same side. I respect my mom because she puts Suze Orman to shame in terms of smart investing, nest egging, penny pinching, saving.
My mom has it all figured out. She lost about a third of her retirement savings in the collapse, due to her "insane notion" that those stocks would be insured.
She grows tomatos in her tiny back yard. She owns her house outright - because she lives in a quasi bad neighborhood in a depressed city. I think she exemplifies urban renewal, and I look forward to gardening with her in April.
Suze Orman can kiss my ass, because I refuse to even bother with people giving advice for profit. My mom gives advice for free, (not that I always LOVE that advice), and lives her life according to her values, opinions and smarts.
She's 75 and thriving - and I plan to live life according to her, not according to profiteers who want to make me feel bad about being poor.
Poor is the new sexy!
Thanks for posting this.
Maybe I should continue to work after school programs and Saturday programs just to keep my head above water.
Rated because that Suze is a damn NUT!
I am very much with you on this topic. From reading many columns on financial "advice," I've come to the conclusion that the experts set up advice for those to whom it's easy to give advice--college students just starting out, newly married and having good credit, just retired and with good credit. No one wants the challenge of someone with middling credit, three jobs, overbearing school loans, no savings, no family and no discretionary income. Guess the default advice is work 'till you're dead!
NO. No pleasure for you, prole! Your life is to be one endless string of drudgery, in which you strive for nothing but crumbs of the wealth enjoyed by your betters.
Why are they better, you ask? Why, because they are rich, of course.
Maybe, those who "know better" think she does that as a simple service, and all her money is made elsewhere, and she herself is not really in business, but a public servant with only the interests of others at stake.
And please remember: Suze, like Martha Stewart and other women entrepreneurs, made their own money on their own good ideas. I don't think we should begrudge them. Suze has written some sensible books and has made her own fortune. No one handed her (or JK Rowling to think of another gazillionaire) anything... What does it say about us that we find it amusing to make fun of her? Or what really is sound advice for a certain class of citizen? Her advice may not work for us but it would work well for those making, say, upwards of 75000 grand a year who are afraid they might lose a job. My husband and I have friends who have put away 2 years worth of salary over the past several years and it looks like they will need it. The wife is just about to lose her high end job and she's the primary wage earner, their house is upside down in value, and well, you know that song. They were solidly upper middle class until they weren't. Not everyone is poor. Yet.
Rated for Nailing it on the Head.
Thanks for the enjoyable read - Please get one of those brown lunch bags you have been putting your jelly sandwiches in and start taking deep breathes into the bag - in/out/in/out - now there feel better - oh - your right what is good for you can be very bad for me -
Anyway, great post. Rated.
Apparently it never occurs to PWM that if you're not making enough money to support your family, you really don't need a handful of dollars a month from tax cuts. What you need is hundreds of dollars a month from more REVENUE.
We need an economic solution that starts at the bottom of the food chain, with those of us who need better paying jobs and more income from our small businesses.
Dave Ramsey is better in some respects and worse in others. His budgeting information is very practical and helpful, but he's so dead-set against social services and government regulation that he'd never suggest bankruptcy or food stamps even when they really were financially the best option for someone genuinely struggling. And people in his forums actively mock those who get food stamps, it's sickening. By that standard, I guess, Suze doesn't seem so bad... but it seems sad that there's nobody in a similar position who's willing to put some time and effort into saying, "Here's how to find out if you qualify for social services and get them if you do. Here's where to go for emergency needs. Here's the 'essentials' you can do without for six months." That kind of thing.
Great writing Lisa!
Clearly, I'm lazy and spending my money on frivolous things. Such as major medical as my company doesn't provide insurance and I was selfish enough to have a chronic illness and become suddenly sick. My credit has also taken a nose dive, which obviously is because I'm careless and irresponsible and has nothing to do with hospitalizations or the fact I cannot afford my meds or to see a doctor regularly. I deserve my fate. She deserves her $32 million dollar income telling me how to live.
Someone needs to tell her sponsors that we don't take kindly to people with a golden spoon in their mouths telling us we deserve to be poor.
live on dividends while you do university, a degree from harvard puts you in company with president bush, a great door-opener.
after you have your first million in municipal bonds, you have the security to look around for a suitable middle-class partner. your combined assets should allow you to reproduce.
this 'life counseling' is so easy, that i marvel anyone gets paid for it.
This type of advice may not be for everyone, but I think it is helpful to a lot of people out there.
Forget requiring personal finance classes in high school--although I think that would be a good idea. But really, this is not a hard concept to learn. A kindergartner who gets a five-dollar weekly allowance and who wants to borrow five more dollars to buy a toy can be told he has the choice of waiting another week and saving up, or of taking the loan and paying back six dollars. It will only take a few of those loans before the kid gets it and learns to save up instead. Somehow, though, a lot of people missed this lesson growing up, and now we're all paying for it.
(Warren Buffett recently gave an impromptu financial talk to a troop of Girl Scouts at an Omaha Dairy Queen--his advice to the girls was simple. Don't buy things with credit cards, because the interest rate on them is 18-20%, and "as rich as I am, I'd go broke if I had to pay 20% on money I'd borrowed.")
I try to keep in mind that there are people out there who could actually take Orman's advice before it's too late. I also watched a couple of her shows and remember her telling callers that they shouldn't make many of the purchases they were contemplating, so I give her a little credit for that.
That said, I wish she would actually give some advice that people on the edge could use. For example, she keeps saying to never, never pull from your 401K, which is good advice in normal times. However, rarely if ever, does she or anyone else point out that you can take money from a 401K to prevent foreclosure and not have to pay the 10% penalty. It's a hassle, but I know it can be done because we did it 15 years ago.
Keep giving the traditional advice, but also tell people how to make the really tough choices once the fire is jumping up to the roof.
Orman was born on the South Side of Chicago, Illinois, in 1951 to Russian-Jewish immigrants Ann and Morry Orman, who ran a deli in Hyde Park. Orman came from a working class background and has said that she did not "grow up with money."
She was an undergraduate at the University of Illinois at Urbana-Champaign, from which she holds a B.A. in social work. In 1973, she moved with friends to Berkeley, California and lived for three months in a van on Hearst Avenue. She soon became a waitress at the Buttercup Bakery on College Avenue. In 1980, a longtime customer gave Orman a loan of $50,000 to help her fulfill her dream of opening her own restaurant. Orman invested the money at Merrill Lynch, but four months later was broke again, after she was swindled by her stockbroker.
Knowing that she couldn't make the money back as a waitress, and having started learning more about finances and investing, Orman returned to Merrill Lynch and entered their training program to become an account executive. She discovered through her training that her stockbroker had committed an illegal act and she thus sued Merrill Lynch. Suze received the entire $50,000 back plus interest and was able to pay back her former customer.
After she completed the training, she was hired by the firm and remained there until 1983 when she left to take a position as a vice president of investments at Prudential Bache Securities. In 1987, Orman resigned and opened her own financial planning firm, the Suze Orman Financial Group, in Emeryville, California. She acted as director of the firm until 1997, when she stepped down as her writing career took off with the publication of her second book.
Lived on the streets in a van, waitressed for seven years, got swindled and boot strapped herself. Doesn't sound too privileged. Sounds like a hard worker who crashed and burned, but learned from the experience.
Easy to hate on her now that she's made good.
For something with a great taste, try Oban scotch instead. Damned good stuff.
BBE - I don't necessary care about being Suze Orman but I'd love to have her bank account balance.
Jimmy - Suze Orman did offer great advice to women who'd been largely kept in the dark about finances. Since then, she's attemped to broaden her audience but with advice that's not relevant to today's economic climate.
Saturn - I'm so glad to see you here! I just wish that she would consider the current financial crisis when offering her advice. Is she really helping anyone who's in need of advice right now by telling them to put away 8 months' worth of living expenses? Not anyone in my social class anyway.
Ann24 - I can understand why she focuses so much on FICO scores. They are now used by just about every bank and creditor to determine creditworthiness. However, if the goal is to get the score as high as possible, this is not going to be accomplished by her advice to pay off your balance each month. A large part of a FICO score is the ratio of credit balances to total available credit. If you pay off your cards each month, there's no reason for the credit card company to increase your credit limit, which will make that ratio a lot narrower. Thank you so much for stopping by.
I am sure that Suze Orman is a delightful person, and I do not blame her for the economic mess that we're in currently. In fact, her advice is sound for people who are starting at a stable place in life with no debt. She's also given wonderful advice to women who had previously been uninformed about finances, perhaps because their husbands always paid the bills, or they were never taught about managing money in the first place. No complaints there.
My complaint with her is that she is now offering advice intended specifically to help people through the current recession but without any of it being relevent to the current situation. How can people save 8 months of living expenses if they're barely paying their mortgages? How can credit cards be paid in full each month if they needed to be used as a last resort because all other cash has been spent or lost in the market crash?
Yes, she came from humble beginnings, but judging from her out-of-touch advice, she seems to have forgotten what it's like to live humbly. Thank you for your comments. I hope I've helped to better explain my intent.
For many other reasons, not excluding her year-round tan, Suze O. bugs the crap out of me.
I was raised by a parent who grew up in abject (chewing the inside of your cheeks because you're so hungry all the time) poverty. I have had a job since the day after I turned 14 (ahh Mcdonalds!). No golden spoon here, just a really hard worker. I've cleaned houses, public bathrooms, waited tables, wrote other people's dissertations etc. I can remember how joyful I felt when I only needed to work one job to support myself comfortably.
I really resent the idea only wealthy middle class people have the means or where-with-all to create financial stability for themselves. Life is hard, rise above it.
The Buzz - Actually, I have read Dave Ramsey's book and I agree that his advice is practical and spot-on.
1IM - Aw, yes; can't forget about the vodka. Thank you for your kind words. :)
aim - Yes, that's what I mean. She's been making money off of women like me and then telling those same women that their hardship is their own fault. Also, she's doling out financial advice that she says is meant for a broad audience to help survive the recession but the advice is only relevent for the select few who already have a savings, zero balances on credit cards and student loans, and who are still adequately employed. I'm with you; I'm going to take advice from your mom!
Great post, and I've got a bellyful of righteous fire now, too.
Great post. I have shared your thoughts for eons. While I am not quite Rush Limbaugh, hoping for the failure of our president and our economy, I can't help but feel relief that while the rest of the country is in a downward spiral, I have a little time to get caught up. For the first time I don't have guilt that I am the only one who isn't living the high life.
what she talks about are goals. yes these are extraordinary times,and can call for extraordinary steps, sometimes. look before you leap.and thank you.
I also have a friend who just leased a BMW and is constantly buying new goodies--an iPhone, Coach bags, vacations to Las Vegas, etc. She's in debt and has almost no savings despite having a decent income.
I have tremendous sympathy with anyone who has lost their job and/or has medical expenses--I went through both those things myself and it was hell. But the reality is a lot of people are still living beyond their means and are setting themselves up for financial disaster. Those people are the audience for Suze Ormon.
From the Midwest - I had thought that one good thing coming out of the economic crisis would be that the rich, who were heavily invested in the stock market, would finally get a taste of how the other half struggles. It seems that the only thing that happened is that most of us became poorer while all of them only become less rich.
Olga - Yes, I did catch your sarcasm and I think it's wonderfully appropriate. :)
Gabriel - Nice to meet you. Sadly, the "work-til-you're-dead" approach is going to be the only option for most of us.
Well What - Yes, that's what it feels like: we don't deserve any luxuries (like mammograms, huh?) unless we've had only good fortune, a great start in life, a high income, and invested just perfectly.
Michael - Bwahahaha!
Homer - Not quite sure how to respond to that.
Ben - Hmmm....sounds like a conflict of interest for sure.
angrymom - Bwahaha! I know what your saying but the image of you stockpiling liquor is a riot.
Lisa - I don't begrudge anyone profiting from a clever idea. I sure wish I could come up with one. My gripe with Suze Orman is that her advice for surviving the recession is no different from the advice she gives in good times (with the exception that she now wants us to save 8 months' worth of living expenses.) I just wish that she was more in touch with what we're all going through.
Df33 - YES, YES, YES! That's EXACTLY what I mean. Wages have decreased to the point that not only is saving impossible, but credit use is necessary to survive. Thanks for the blog recommendation. I will definitely check it out. Nice to meet you, by the way.
MissOjib - That's just it. Most of us have already cut everything that we can cut. It's bare-bones living now.
Gramps - I have to laugh about the brown paper bags. I don't even buy them; I re-use the ones that I happen to get from the pharmacy, etc. Is that frugal enough?
Kent - It's a crime that your post didn't receive better traffic; it's that good. I hope that people reading the comments here will check it out. Thanks for including a hotlink.
WhatsamattaU - I love your comment. It's true. What we really need is higher revenue, not more tax cuts. That extra $5 per week I'll save with a tax cut is not going to help much, but if I could get my income back up to where it was in 1999, I'd be a happy camper.
Monique - Thank you! :)
LandP - Mmmm...chocolate bunnies. Do you make them or buy them? I appreciate you stopping by to commiserate with me. I'll buy one of your pencils. :)
Susan - Yes, thank you... You've said it so much better than I did. Suze Orman's advice is helpful in the long term. Short-term in the middle of an economic crisis? Eh, not so much. It's like being told to measure for curtains for your mansion while you're living in your car. Not practical for the current circumstances. There's a huge need right now for survival advice.
Susanne - The treading water part takes all of the work, doesn't it?
Renaissance Lady - Someone in your situation is exactly the type of person I am trying to represent. You've tried to do it the right way but economic conditions and a spell of bad luck have ruined your plans.
Al Loomis - Yep, easy-peasy! Maybe you should be on TV instead of Suze.
jenshrader - Ha! I'm enjoying your "don't play in traffic" advice and your mom's "payday loan" advice. Thank you so much for your very nice comment. :)
cartouche - Thank you for the compliment. I have a feeling my senators are too busy responding to Stimulus hate mail or praise mail (Arlen Specter is one of my senators.)
wakingupslowly - Wow, thank you!!
I can't stand that smarmy bitch anymore!! She can say anything she wants sitting on her $32 million (oh, no... I mean $16 million...) She 's so out of touch with us working folk, she's laughable....as you have so adroightly pointed out!
And I hear she's not even lisenced to be a financial advisor! Hey folks.... Let's NOT WATCH HER AT ALL ANYMORE!!!!!
Leeandra - Warren Buffet is right; credit cards are evil. I just wish there was another way when you've exhausted all other options.
David - Eh, what can I say? Sometimes we all need to stomp our feet and scream, "it's not fair!" It worked in third grade, didn't it?
flyover52 - yes, that's it exactly: how about some advice for when, as you so eloquently describe, "the fire is jumping to the roof."
BBE - I'm not hating on Suze because she's successful. I'm annoyed at her ability to offer any practical advice for the current times. I want her to remember those hard times and tell us how she got through them, not that we need to save 8 months for an emergency when we're already living paycheck to (hopefully) paycheck.
Homer - Again, I'm just not really sure how to respond to you.
Bob - Thanks for the tip about the scotch. I think angrymom already has some stockpiled.
icemilkcoffee - Like your stock market example suggests, no one can possibly know the right thing to do in all instances. We have to do what's best for our own situation. I certainly don't want to be treated in a condescending fashion for it, though!
Mary - Ugh - experts! The only ones worse than money experts are weight loss experts: eat less, exercise more. Well, now, isn't THAT something new to try!
Good call on the prozac -- it comes in generic now!
My parents have never run a balance on any of their credit cards. Ever.
They raised three kids and put them through college, and for the first 13 years of my life, they did it on one income.
It wasn't easy, and I'm sure it wasn't fun for them a lot of the time. But you know what?
They did it.
So you'll excuse me if I don't buy the woe is me and I can't do it because of this that and the other.
If my parents could raise three kids and put them through college without ever running a balance on their credit cards, then it is possible.
Oh yeah, and they weren't born rich, either. My dad came here with $1,000 in his pocket and that was all he had.
sueinaz - Thank you for sharing your point of view. It certainly sounds as if you've worked very hard and done everything as you should have. I'm not belittling your accomplishments because you deserve every good thing that has come your way. I greatly admire your tenacity. I just hope that you're aware that there are people out there who work very hard, too, but life has thrown them insurmountable obstacles, causing them to get off-track financially. These are the people who need help getting back up; people who work two and three jobs and still can't make enough money to keep their home; people who've lost their job through no fault of their own, but because of a skittish society reeling from the economic crisis. These people don't need a lecture; they need a game plan. Telling them to save for 8 months' living expenses doesn't seem to be of much help.
Wayne - You always make me laugh!
Shiral - Just promise that you'll use that belly full of righteous fire for good, not evil, purposes. :)
Katina - That's another issue right there: schooling. Why is it so hard for so many in this country to be able to afford college? I hope that you can find a job soon.
Greer - I know what you're saying. For once, the entire country is losing (some more than others, but that's another story.) Very nice to meet you.
Silkstone - Don't apologize for believing that you can still save while earning very little. That's precisely the sort of advice I want to hear. I want to believe that I can come out of this financially intact instead of spiralling further down, through no fault of my own. I will check out your "Affluence" post. You should consider posting about your advice. It would be timely for sure.
AR - I'm sure you're right; there are still people out there who are in major money denial. Perhaps my essay is a bit narrow in that I hadn't considered that population. The people who I encounter are in a similar predicament as I am: income decreased, expenses increased. If people are making good money and still being foolish with their money, then absolutey, let Suze have a go at 'em! By the way, it's very nice to meet you.
Elise - I'm thrilled to see you in my comment thread! Why did you refer to Suze's $16 million? Did she lose half of what she had? I hope she managed to put away that 8 months' of living expenses. Those private jets are expensive. Thank you for stopping by (and for joining Open Salon!)
Whew! I think I responded to everyone. I apologize in case I missed anyone. It was NOT intentional. Thank you ALL for stopping by to read my post and leave such terrific comments. I truly appreciate it, even if you didn't agree with me.
Cindy - Thank you! We're going to be needing that generic Prozac, being without health insurance and all that.
Tony - I was hoping you'd show up. You always give good advice. I hope that you will consider this a challenge to tell all of us who maybe aren't making it through this recession so nicely what we can do NOW to get back on track.
By the way, I'm sorry, but I don't think that your argument about your parents putting three kids through college holds a lot of cred these days. It was a lot easier to support a family when you went to college (how many years ago?) than it is today. How much was your tuition? The cheapest tuition I've found (I have a kid in college) is $12,000 per year at a state school. That was likely the amount of all four years of school for you at a private school. I'm not being argumentative; I just think things are very different now. Incomes have gone down while the cost of everything has gone up exponentially.
Please message me if you do decide to do an advice post. Thanks for stopping by.
Gas used to cost more than $4 a gallon. Now it's at around $2 a gallon.
You had to scrape and scrimp and struggle to fill up the tank when it was $4 a gallon but you managed to find a way to do it, right?
Okay. So pretend that gas is still $4 a gallon and take the difference between what it cost you to fill up the tank then and what it costs you to fill up the tank now.
Let's say you've got a 15 gallon tank and fill up your car every two weeks. That means every two weeks, you've got an extra $30. That's an extra $60 a month.
Take $30 of that, and put it into a money market fund or a savings account at your bank. And take $30 of that and pay that much more on your credit card.
At the end of the year, you will have put $360 into savings, and you will have collected interest on it. And you will have paid an extra $360 on your credit cards and saved the interest you would have paid on that.
Is this a panacea? Is this a magic bullet?
Absolutely not. But you know the proverb about how a journey of a thousand miles starts with a single step?
This is that single step.
I should have learned from my parents, because I screwed up. In November 2007, my total credit card debt was approximately $34K. Why? Because sales is a very economically sensitive career field, and I lost my job in 2002. When I got a new one, it paid a lot less than what I was used to. But I insisted on continuing to live like I did before I lost my job in 2002.
Well, the net effect of that was racking up $34K in credit card debt until I got pissed off about it and did something about it.
I entered a debt management program. The credit cards were closed, and the interest rates were reduced. Citi dropped it to 9.9 percent; Macy's to eight percent; Discover to 6.99 percent; Chase to six; and B of A to four.
As of January 2009, my credit card balance was down to $25K. I've paid $9K off over the course of 13 months. I will be debt free in December 2011. And you better believe that once I am debt free, I will not do this again.
Do you need all of the credit cards you have? If you do not, then I'd suggest you contact a credit counseling company and see if you can enroll in a debt management program. You will be required to close the cards you enter in the program but if you can, it will be worth it.
If I didn't enter the program, I would need until August 2043 to pay off the balance I owed. I'd also pay $311K in interest.
Because I entered this program, I will pay off the balance I owe in December 2011. And I will pay
I will pay $2,317 in interest.
You do the math. Pay the credit card companies $311K and take until 2043 to pay off the balance? Or pay them $2K and pay it off in 2011?
You can do the same thing. I'm not one of the masters of the universe collecting seven digit bonuses. I'm just a middle class -- okay, maybe upper middle class -- guy who made a mistake and found a way to fix the problem it created.
It's reasonable advice for those for have enough money to make it even possible, but it's worthless for people struggling to meet necessary expenses.
In defense of some gratification not delayed...just how many years do I need to delay having some gratification in my life?...
He paid about $40K for me, and I was the cheap one. My sister ran him around $100K, and that was just for undergrad. Her med school cost another $50-60K. My brother came along and he cost my dad around $60K for undergrad and another $60K for law school.
Look at it this way. You know the $311K in interest I'd have to pay the credit card companies if I didn't enter the debt management program?
My dad coughed that up to pay for the education of his children.
It can be done. My dad came here with $1000 in his pocket and a trunk. And he managed to get himself an education and the skills needed to raise three kids and send them to college.
Tony - Thank you! THAT'S the kind of advice I want to hear. Tell people about credit counseling, hit them with the reality of the credit card interest rates, show them creative ways to "find" money that can be saved without being missed. People need financial advice for how to make it now, not when things are better, or what they should have done but didn't. Maybe you can be the financial adviser for the rest of us? Thanks for being such a good sport and posting some practical advice.
If you want advice, you may want to listen to Dave Ramsey. You know, he was wealthy and then went bankrupt and struggled back to where he is now. I don't like his politics, but his financial advice is sound.
And like Ramsey, I'd say this. You don't know what you're spending on until you track it. You can do this in many ways. You can buy something like Quicken, which will help you track your expenses. Or you can just use a little notebook, and write down all of your spending.
Do this for a month. Then ask yourself -- what am I spending money on that I don't need to? What am I willing to give up in order to get in better financial shape?
Let's say that you eat a pizza every week and you get it delivered. It's not extravagant. It's certainly understandable.
But it will run you $15-20 to get one of those delivered.
Instead of doing that, why not stop at the local Safeway or grocery store on your way back from work and pick up one of the ready to bake pizzas for $7? You just saved $8 on your pizza, or over 50 percent. And if you do that once a week, that's an extra $416 you save over the course of a year which you can use to pay down debt or put into savings.
Guess what we just did the two little tips I mentioned?
We just managed to find you over $1,000 to use to pay down debt or to save.
Is this going to turn you into Warren Buffett? Absolutely not.
But it will help you build up your savings and it will help you pay down your debt.
Monte
I'm sure many are never in the position to get ahead by 8 months. But you must realize that many are and do not. You should be angry at them and not Suzy because she is talking got them; not you.
And they are presenting to the world that they are in the same dire straits as you when they are not. They say the mortgage is too much of a burden for them but it isn't if they hadn't taken on the 2 expensive vehicles after buying the house. But now Obama does not distinguish between you and them, So you get help to make the basics. They get help and keep the cars and bullshit.
I wonder if I will get help. I got laid off. I have an $875 payment. With only unemployment I will hardly make the payment. But, I have the cash to pay the mortgage in full in the bank. Will they notice that fact and reject me or will they reduce my interest rate.
This is what is wrong with the simplistic test of 31% of income.
The test needs to look at the total household situation to see who deserves help based on actual income and the necessity of the other expenditures. The people Suzie and I are describing will become the abusers of this system while you are the legitimate users of the system.
I understand your frustration, I really do.
My point is simply this, if you want financial stability, enough to weather rough times it's possible but it requires a level of work and sacrifice that cut deep. I'm talking about second and third jobs - sharing your home with borders - living without a car - living with extended family- sleeping in 3 sweaters so you don't need to turn on the heat- having your kids help you clean the dentist's office every weekend for a few months to offset the cost of the bill (my teeth are gorgeous - thanks dad!)...
These are things most people would rather avoid, but for people like me they were basic, practical ways to get ahead. It's possible, it's hard - and a tremendous number of people do this every day.
i think there is a need to not be so black and white. Credit cards are not necessarily evil if you are careful. I have had the same Chase card for 20 years and my interest rate on it is 5.44 percent. NOT 15 or 30 percent. I am responsible with it and pay it down or off. In fact, I have been building up frequent flier miles on it for years, and am now able to fly myself and my daughter to Paris, round trip, to celebrate her 16th birthday in two weeks. We are staying with a good friend so the trip is almost free! In a recession, we are going to Paris. And I have very little money. So. Sometimes things work.
Also, re your other work. Diet and exercise CAN work. Honest.:)
Love.
I appreciate this kind of practical, smart advice. I will check out your blog. Thanks again.
P. S. Thank you, too, for sharing your own credit nightmare as an example. It's inspiring and helpful.
latethink - I've seen the Slate article, and might possibly have linked to it here (I know I considered it but I had so many examples from which to choose.)
Monte - Thank you, my friend! Your support means the world.
My mom has given me a few of her books. I haven't read them. My budget is tight. I'm such a no frills person that I can't cut anything out. The only things I buy for just me is my underwear and I'm not willing to give that stuff up.
Your post has actually spurned a huge conversation between me and my husband. Thanks for that. He needed something to talk about now that football season is done.
Marcelle - Thank goodness for the chocolate, huh?
sueinaz - It sounds like the best gift that your father has given you has been to be a great role model. Please don't think that I am minimizing hard work; I'm not. I currently work two jobs and have been looking for a third, but work in my area has all dried up. Still, I understand that these times call for thinking outside of the box. I wonder if my dentist needs someone to clean his office? Thanks again for your comments.
Lisa - Probably, some of us are better at managing finances than others, or perhaps some of us didn't start out level, at zero, but much lower, thanks to lack of support from our parents (I remember having to pay off a substantial amount of my mother's debt when I was 20. I had to work a 2nd job to do so, but that's another story) or other circumstances. Truthfully, if I can weather this financial storm, I'm sure that I will do things differently (follow the good advice presented here) in order to be able to ride out the next one in greater security. Thanks for your support, girlfriend!
8 months worth of bill expenses saved!!??!
That actually makes me laugh out loud!
As to paying off the credit cards.... yeah about that. Well I had to put all my utilities on credit cards last August. Then in September, I could only pay $20 to each, and wasn't able to catch payments up until November. I still haven't been able to pay off the cards because I foolishly insist on eating one meal a day. Lots of times my 'meal' is cheese and crackers or shredded wheat. I LOVE shredded wheat. Lucky me.
Maryann - I think there are going to be many of us growing gardens. Instead of calling them "victory gardens," we can call them "getting by gardens." I grow one every year but sadly, I'm not very good at it. My tomatoes end up small and my cucumbers always seem to get one disease or another. Thank you so much for stopping by and for the VERY nice compliments. You've made my day!
Some of my recent favorites were to basically make your manicures and eyebrow waxings last longer by applying your own nail polish in between manicures and tweezing your own eyebrows. Really, it just makes you want to weep.
Just struggling to keep my health insurance that has huge increases every six months and a big deductible. Can't affort a doctor visit because I'm spending my money on insurance premiums (you know, just in case of something really big). Dentist? Ha. I know, I'll cut back on the weekly massage and facial.
Good job, Ms. L.
thanks for this heads up and i wish you only the best.
paula
I also married well. My husband is the king of frugality, and I feel accountable to stay within a budget. I was never particularly well off. I am a high school teacher. I did the debt management as a single woman.
If she and the Mighty Oprah care so much about the little people, let them open their freakin obscenely bulging pockets and pay off a few mortgages or credit card bills for the restofus.
Okay, gotta stop, got a coughing fit there. GREAT post!
Bob - How nice of you to notice! This one has been tough to keep up with but I'm trying. I appreciate your kindness.
Paula - Oh yes - two different worlds! I wish you the best, too.
yekdeli - It sounds like the credit counseling helped you, too. This is the sort of information that people need to hear about. It can provide quick relief in many cases. Thank you for taking time to read and comment. It's a pleasure to meet you.
My opinion is closest to Lisa Solod Warren's above. I admire and even kinda like Suze, but like Rachael Ray, she has taken a good idea/enterprise and gone WAYYYY over the top.
I do like her People First, Money Second, Things third/last approach and believe her early books had sound advice for alot of us who were financial-phobes.
Having said that, she does right now seem like a bright-yellow-jacket shouting inanities futilely and shrillingly in the wilderness.
Sully - You certainly sound like someone who knows what you're talking about. I guess Suze wants us all to tuck away all of our money (all 8 months' worth of living expenses) in a bank account earning 1 or 2% interest. Of course, even that would imply that we had money left over to tuck away. Thanks very much for your comments.
I used to feel hopeless when it was just 6 months you were supposed to have saved! :-) Glad to know I'm not alone in my feeling.
I've never been good with money. It's not been a life priority and I've made some awful mistakes! I'm working on changing--a bit here and a bit there.
A tip for those of you worried about car maintenance and repair:
Check out high schools and vocational schools with Auto Shop!
I have my tune-ups and some other work done at the local high school (where I'd once taught). I pay with a gift certificate from a local auto-parts store but I never pay what I'd pay at a mechanics and the students are well supervised. I'm helping them and helping myself.
Maybe she should walk in the shoes of an average American worker whose annual salary is $39,795. Wonder what she would say then? Good post and like your witty humor, as usual. Good luck to you!
Without a Paddle - I hear you. I think some people are naturally better at managing money than others, but it doesn't mean that we're all idiots. Thanks for the tip about visiting a tech school for automotive repairs. I've been thinking about going to a dental school for my son's dental work, too.
Stellaa - Well, we've had plenty of good recommendations here for what to drink when you feel that way!
Screamin' Mama - You said it! When's the last time you bought something simply because you wanted it? Yeah, me neither. I appreciate you reading and commenting.
Beth - You changed your photo! Very nice. Thanks so much for the support. :)
Americain - Ha ha! I think that's what the credit card companies want us to believe.
Pamela - Yes! She should try living on that average wage of $39,795 BEFORE TAXES and see how easy it is put away 8 months of living expenses or pay off your mortgage. It's doubtful that anyone can even afford to buy a house if making $39,000 per year. It's much different for this segment of the population.
Thank you all so much for reading and taking time to leave comments. I appreciate it.
...and you don't need to respond to this comment ; )
I'm asking, where's the resilience ? Keep in mind that many of the kingpins out there are short these markets, profiting wildly as the rank and file longs among us point to TEOTWAWKI. Just lurk over to YHOO finance and run a comparison chart on DDM/DXD (double up/double down), simplisticly the 'long and short' of it and you'll see the yin and yang of it. If this is the bottom, bubbles have one thing in common.
Keep in mind that the deregulators have been voted out. President Obama has his steady hands on the helm and many of us can see eventual smooth sailing.
When the going gets tough ....
A lot of "woe is me."
I'm not living in the world of the extremely wealthy. I don't have a trust fund, nor do I have a yacht or a corporate jet or a penthouse in Manhattan.
Yet I do have savings, am paying down my debt, and am simply amazed at people who just say "I can't do it" and then throw out things like "oh, only the superwealthy can do it."
Bullcrap.
If my parents can raise three kids and put them through college without EVER running up their credit cards, then there is simply no excuse for anyone to not have some savings and no credit card debt.
But hey, it's your life. Keep on saying that only the ultrawealthy can save any money and keep from running up the credit cards and making excuses.
If that's what you keep on telling yourself, then you never will have savings and you will always be paying interest to the banks.
Tony - You would make a great coach; you don't tolerate any excuses! In defense of the people here, though, I think that all of us have been through an incredibly tough, frustrating, and mentally draining 8 years. While it can be possible for people to learn to manage money and thus get themselves out of trouble, it's not always easy to get our minds in the right place to do so. I think that many more people will feel like slaying this dragon again once all of the doom and gloom reports in the media begin to fade, confidence in both the market and in our government improves, and people finally see some positive change in their own lives (gainful employment, decreased costs, reduced taxes for the lower income levels, etc.)
I do hope that you've managed to read the comments from people who found your advice helpful. It's unfair to say that we've all simply given up.
I think you should look into the hybrid car rebate potential. If you can get favorable terms (equal to or less than the lease) AND the best of the rebates (some are only $2,500) you can get the tax credit system working for you.
Perhaps someone needs to give Suze and the networks a run for their money as an Orman-antidote, or maybe someone out there already does. I am on OS so sporatically that I don't know anyone's level of expertise to take on this challenge. I hope someone reads this and GOES FOR IT!
PS Don't let any upper to upper middle class S-N-O-B make you feel bad. That class robbed from the Amerian people for eight years in collusion with the past Amdinistration.
You read my article on the housing market -- if that is how President Obama thinks, there will be other remedies as well. Hang in!
PS Maybe it would be a good exercise to see just now much money it wouldf take to put you "right", again? Then, follow Umbrellakinesis' older posts to make it manifest. Of all people, Lisa, I know you can do it. You are one of the best hearted people I have met here -- you will survive and (I pray) thrive!
As you mentioned, there is certainly a need for a "common person's financial expert" to help the folks in the lower income brackets gain some footing. As Tony pointed out, there are small, managable steps that we can take but they're hard to see when we're so underwater. I hope that someone will see this as an opportunity 'cause Suze is definitely not talking to us.
Thank you for stopping by and leaving such lovely comments. :)
These is different times.... and before you go shoutin' "Bullcrap," if you are a financial advisor, you will want to look at each person's situation individually before you make assumptions....
Don't judge, until you know that person's situation.... And if you don't like what I say... I AM a financial advisor... I see this crap every day....
Gary - Thank you!
love love lvoe and gratitude for your humor and wisdom.
Great post.
Judging by your readership on this one, I think YOU'RE the gal who should have her own show. Or maybe you should do up a parody of Suzie Orman's books. I bet you could earn yourself some latte money.
Dwain - Thank you for finding this one, too. :)