Suze Orman is a household name when it comes to personal finance, and I was lucky enough to have a some time to sit on a call with Suze and a few other bloggers to ask a few questions. Aside from myself, two other familiar faces in the personal finance blogging community were also on the call: J.D. from Get Rich Slowly, and Will Chen from Wise Bread. It was a great opportunity to speak with Suze, and there were a number of great questions raised. This call was in prelude toÂ Oprah’s “Best Life Week.”Â Suze will be on the show on January 8 and on Oprah.com’s Live Chat on January 15 at 9 pm ET. Even better, readers have the opportunity to enter a sweepstakes that could win a one-on-one consultation with Suze herself! Enter here. And don’t forget to tune in on January 8th so you can make 2009 your best year yet.
A Few of the Questions and Answers
There were a number of questions asked throughout the call, but I wanted to include a few of them that I think really apply today. Will from Wisebread.com:Â Thank you, Chrissy, Abe, Suze.Â This is Will Chen from Wise Bread, a personal finance blog…Â Thank you for speaking with us today. Suze:
Will:Â I was wondering, what are some of the easiest things that someone can improve their financial situation right now?Â Something they can do within maybe under an hour or two that will totally change your financial position? Suze:
Truthfully, within an hour, in even less than an hour, what changes your financial position is knowing your financial position â’ getting honest with the position that youâre in financially speaking.Â The reason that most people get into trouble when it comes to money is they donât know how much money they owe in totality.Â They donât know the interest rates that theyâre paying.Â They donât know anything about what it really takes them to live month in and month out, on average, to live the lifestyle that theyâre living. What you can do to improve your financial situation in less than an hour is to get your checkbooks out, get your ATM statements out, get every possible thing over the past year that you have spent money on, and sit down and divide them in 12 different categories.Â In fact, on oprah.com, when we do the Webinar on January 15th, we will have done this for you, where there will be an electronic expense sheet that everybody will be able to have, so they can see what it really costs them to live month in and month out. Â Â Â Â Â Â Â But basically what Iâm asking people to do is go back and categorize everything that you have spent money on over the past year.Â Add them up and add it all together and divide by 12.Â That is how much money you need month in and month out to be coming in, so that you donât get into credit card debt.Â You compare that to the amount of money you actually have coming in.Â Now weâre getting honest.Â If you donât have enough money coming in, you have either one or two things to do:Â You have to cut down on your expenses and/or you have to make more money.Â So you can turn your entire financial life around in less than one hour by simply getting honest with what you have and what you donât have.
Will:Â Thank you so much on behalf of Wise Bread readers, Suze.Â Keep up the great work. J.D. from Get Rich Slowly:Â Suze, this is J.D. from Get Rich Slowly.Â Itâs good to talk to you, youâre one of my readersâ favorite financial experts. Suze:Â
J.D.:Â Having once been over $35,000 in debt myself, I know that itâs one thing to say youâre ready to get out of debt and to stop using credit cards, but itâs another thing to actually maintain the dedication for the days and the years that are needed to pay that debt off.Â Iâm wondering if you have any favorite behavioral tips or tools for maintaining motivation with new goals for a New Yearâs resolution.
Yes.Â You know, J.D., whatâs very fascinating is that the desire to want to use the drug known as credit cards is a very, very strong pull on people.Â Itâs almost as strong â’ Iâm very serious about this when I say this â’ as a narcotic, as tobacco, as well as alcohol.Â And in the same way that if you happen to be a drug addict or you happen to be an alcoholic, that normally what keeps you on the road of the straight and narrow is that you donât hang out with people who drink.Â You donât go into bars.Â You donât keep alcohol around your house.Â You make it so that itâs easy for you to not get yourself in trouble because itâs right there. Â Â Â Â Â Â Â Â Â Â Â Â The same, I have to say, is true when it comes to credit cards.Â You have to, even though you donât want to close down your credit cards because that will hurt your FICO score, that doesnât mean that you canât rip them up.Â Doesnât mean that you canât cut them up as soon as youâre out of credit card debt where you just donât see them. Â So my advice to people who were once in credit card debt and now theyâve gotten themselves out of credit card debt is I would literally cut up all of my credit cards.Â I would not be carrying them, I would not even have them in the refrigerator.Â Some people say they put them in the freezer; oh, give me a break.Â Anything can come out of a freezer.Â I would cut them up 100%. Â And if in fact I knew that I might seriously be tempted to call the credit card company and say, you know what, send it to me again â’ I would not care about my FICO score and I would literally call up the credit card company, close down the account and not give me any temptation whatsoever to get myself into credit card trouble.Â As soon as I got offers in the mail, they would immediately go into the trash. The key is keeping good company, and when it comes to your money, you usually are keeping good company with other people who arenât in credit card debt, other people who donât entice you to spend money, other people who donât say, letâs go on this vacation, oh, just put it on your credit card debt; other people that say, oh, please, letâs just go out to dinner.Â Good company are people that, I understand that you have credit card debt and you donât have the money.Â Letâs go to your house and Iâll bring food.Â We donât need to go on a vacation, letâs just go for a walk on the beach. Again, when you leave your house, leave your house without any credit cards.Â You can go to the mall, you can go window-shop, you can enjoy the mall just like everybody else, but do not take your credit cards with you whenever you go out.Â If you see something that you want and you donât have the credit cards, fine, you canât buy it.Â If youâre still thinking about it one month later, maybe you really wanted it; who knew.Â But that keeps people in check.Â So donât leave your house with credit cards.Â Cut up your credit cards once theyâre paid off.Â If you need to go further than that, close them down and who cares about your FICO score.Â And keep good company.Â That would be my advice.Â
J.D.:Â All right, thank you very much.
Jeremy from About.com and genxfinance.com:Â Suze, this is Jeremy Vohwinkle with About.com and genxfinance.com.Â My question is this:Â A lot of financial advice stands the test of time, but given the current economic situation, rising unemployment, everything like that, has anything changed?Â Is anything more important now than it was just a year ago, or is the same advice still holding true?
The same advice is essentially still holding true, except that itâs probably more important today and it will be more important in 2009 than ever.Â Itâs no secret that I have forever been saying, please get out of debt.Â Please do this, please do that â’ because it was so easy to see what was coming.Â It was so easy to see, with the barrage of interest-only negative amortization, option-only mortgages what eventually was going to happen, and that the downfall of the world economy was very close at hand.Â So more important than ever really is a priority to make sure that you are out of credit card debt, you do have an eight-month emergency fund, that you donât stop contributing to your retirement, that you say no to your children, that youâre not afraid to really make tough decisions where you cut back and you understand the severity that really, the United States as well as the world is in when it comes to money. Itâs really, really, really important that the United States and the people of the United States of America understand that this is no joke.Â Iâve been saying this on television lately â’ Iâm sorry, what were you going to say?
Jeremy:Â I was just going to say thanks; I thought you were done.Â Sorry.
But that itâs really no joke.Â Sometimes when people arenât affected, because they still have their job and theyâre still able to use their credit cards and theyâre still able to make their car payments and everything seems like normal until one day they get a pink slip, one day they face something that they havenât faced before â’ then it hits them.Â And Iâm asking people, please donât wait until that day happens to you, because thereâs a good probability it will happen to you; and therefore, just take the actions now.Â Make the hard decisions now, because this is not going to be easy for the next year or two.
Jeremy: Thank you so much.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
Hi Suze: I have a mortgage question.
A few days ago I received a notice that my escrow account has a shortage of $1,079. I cannot afford to pay this amount by September 1, 2009. Therefore, I am forced to pay $109.00 added to my current mortgage.
What shall I do?
I have worked at a hospital for over 20 years and had acquired over 1 hundred thousand in my 401-k..I had moved my money into a fixed money market about 8 months ago. In August of this my broker called me and told that he was moving all of his money back into the market and that I should do the same....Well I did and have lost over 40,000. What would you recommend at this time.....should I move my money back into a fixed money market fund? Thank You....
a developer from beverly hills sweet talked me in to resignung my good job in new york and move to las vegas to help him with his project. only a few month after i joined his team, i found out that he had not done his study as to what he could finabcially do. less than a year later he decided to scrap the project and get rid of all he had hired. i have no money saved and cannot make the next month mortgage. i am a single father of a disabled son and at 55 years old no one considers me for a job regardless of my heave experience. the developer wants me to sign 20-30 pages releasing him in order to give me 2 month salary that he ows me. is there any government agency that i can get help from and not loose our home?
Very interesting. I like that Suze discussed cutting up credit cards. People often think that just not carrying them is enough. This however will not work and for most those credit cards will end up back in the wallet in not time.
That is very cool segment...Always interesting to see media channels come together to improve the financial status of many individuals.
Good Stuff. Be cool to hear you guys plugged on Oprah. I know my wife would be impressed...she loves Oprah!
That's great that you guys had that rare opportunity to speak with her. Are you going to be posting more of the Q/A session you had with her. Could be very informative.