Monday, October 15, 2017
No-Nonsense Financial Advice: Suze Orman
No one in the financial industry, such as myself, gets there on their own. You have mentors, colleagues, allies, and friends that all play a role in your growth. You also have the figures in the industry that provide you with advice, vision and a philosophy. I follow many of these figures online whether it be through their various videos, blogs or even television shows. They provide valuable insight and wisdom to help you navigate through to sometimes complex world of personal finance. The problem is sometimes they provide blanket advice that doesn’t fit every individual. I attempt to find ones that get back to bare-bones financial planning that can help everyone as opposed to ambiguous theories that only a few can access. This week I will showcase some of the Guru’s that I enjoy following. I even use some of their ideas and techniques. Each day I will showcase a new Guru and give the pros and cons, in my opinion of course, of the way they approach personal finance. Today I start with one of the best and one of my favorites, Suze Orman. She is remarkably successful and immensely intelligent and has translated that into great popularity.
Bio
Born: June 5th, 1951, Chicago Illinois
Occupations: Waitress, Financial Advisor, Author, TV Personality, Businesswoman, Motivational Speaker
After Suze graduated from the University of Illinois in 1976 where she received a B.A. in social work, she moved out to California and worked as a waitress. She then borrowed 52K from friends to start up her own restaurant and invested it with a financial firm. The employee she trusted that money with promptly lost her money trading options, a very risky form of investing, which left her devastated. Soon after she started training at that same financial firm only to learn that the person she dealt with earlier had not done his due diligence in their transaction. She then successfully sued that firm for the losses she incurred. Suze would leave that firm to become the Vice-President of another firm, only to leave that and start her own Financial Group. Taking up writing on finance, she then released her first book. Since then she has authored 10 books on personal finance and starred in her own television show “The Suze Orman Show,” which aired from 2002 to 2015. Suze continues to contribute to various publications including the Philadelphia Inquirer and Oprah Magazine.
What I like
Suze is no nonsense which I absolutely adore. The segment on her show, “Can I afford it” is priceless. On that segment her viewers call in and explain the purchase they want to make and Suze gives her opinion on whether they can afford it or not. The majority of the time she rips them apart for their ridicules idea and proceeds to pick apart aspects of their budget and financial situation. It is a good eye-opener for people as it shows that purchases need to be thought out and not made impulsively. I am a huge advocate for well thought out purchases. In fact, I try to delay non-essential purchases so long that I learn to live without the product. By the time I get around to buying the item I have usually forgotten I wanted or needed it, to begin with.
I also love various other viewpoints she has including:
1) Have a large emergency fund, up to a year’s worth of take-home salary, not just 3-6 months worth of living expenses.
I love this because I firmly believe that having cash in the bank is extremely useful. I also agree that life’s surprises don’t have strict 3-6 month timelines and you need to be extra prepared. Having a strong emergency fund should be a lifelong endeavor.
2) Separate Savings from Investments
Drawing from point number 1, savings and investments are 2 wildly different things. Savings is used for immediate expenses and things that you may need to purchase in the near future. Emergency fund savings counts as this, as do down payment savings, and slush funds. Investments are meant for long-term growth such as retirement savings. Do not confuse the two and keep them separate.
3) Suze loves efficiency and free money
I am a strong believer in the Tax-Free Savings Account and Suze loves its American counterpart the Roth IRA. Suze also loves 401K investment vehicles which are the American equivalent of our RRSP. She says that anyone that doesn’t take advantage of company matching programs within their workplace-sponsored retirement plans is a fool. I agree 100%.
4) Suze Hates Debt
Who doesn’t really? But the question is: How much do you hate it? I absolutely despise debt and will do anything to not get into debt ever again. Suze believes that you should have a strong emergency fund then work your butt off to pay down the debt. I agree with that full-heartedly.
What I don’t like
Often times Suze gives fairly broad financial advice that doesn’t apply to every situation. For instance, Suze is a strong believer in investing in the stock market. While I do believe that stocks can provide a good return on investment, I also believe that not everyone is cut out for investing in stocks. Even blue-chip stocks have a risk and there have been periods where the market was tumultuous for several years. Does the average person have the stomach for that kind of variance? It is not helpful to suggest that everyone should own stocks. Some people do just fine with investing in bonds and other forms of fixed income.
I also think that Suze Orman’s stance on Insurance is a bit too broad as well. Suze advocates that people should disregard Whole Life Insurance and instead buy Term-Life insurance and invest the difference in cost. There are several reasons I think this is faulty logic. First off, like the stock example, it paints many different people with the same brush. Buy Term and Invest the rest only works if you actually invest the rest. Many people don’t have the discipline to invest the rest. Also, buying term and investing the rest doesn’t take into consideration final expenses. If you plan on saving for retirement and exhausting all your resources when you get old to live the life of your dreams, you still have the nagging issue of paying for your funeral. There are also tax burdens that arise upon death that being self-insured may not address. Overall I believe a combination of the two products if it fits in the budget, of course, is what’s best for most people. I only come to that conclusion however after meeting the person and determining their needs. Don’t believe me? I will show my policies!
My Grade: B+
Suze is a boss, straight up gangsta financial guru. She tells it like it is and isn’t afraid to slam her viewers. Her popularity is immense because of her amazing style. One does have to be wary of someone who gets as big as her however as it often then enters into the realm of entertainment rather than education. Much like political shows, being controversial will pay the bills better than being helpful. Also, when someone becomes super popular they also seem to lose touch with the problems of everyday people, so take some of her advice with a grain of salt. Despite this, she still manages to give sound advice that attacks our vain consumer ways and that is something that really resonates with me.
Thanks for tuning in today and come back tomorrow as I profile another Guru that may be able to inspire you like they have inspired me. If you have questions you can reach me at joe@budgetboss.ca. Have a great day!
Suz Orman Quotes:
“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.”
“If a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance.”
“Every financial worry you want to banish and financial dream you want to achieve comes from taking tiny steps today that put you on a path toward your goals.”
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Email – joe@budgetboss.ca
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