Suze Orman's 10 Money Tips For The 20 Something
Suze Orman's 10 Money Tips For The 20 Something
By StyleCaster | Financially Fit – Wed, Dec 1, 2010
Take Suze Orman's advice and put away the tiny violins - the future really isn't that bleak!
OK as a 23-year-old, who only graduated from college a mere year and a half ago, I know a thing or two about how hard it can be to enter the dreaded "real world." Our parents may think they're able to commiserate - we've all heard the "honey, we've all been there" speech before - but our generation is in a very unique situation. Starting a career in what people are calling 'the worst economy since The Great Depression' is no small task. It's even been projected that we're going to be the first generation not to earn more than our parents over our lifetime.
But before you go crying about your unfortunate luck, Suze Orman has some great (albeit stern) tips for us twenty-somethings. I may have felt like crying after my conversation with the tough money guru (she scared me sh*tless), but I came away with some great financial advice. Luckily for you, I'm going to share the wealth (so to speak).
Below in Suze Orman's own words, tips for the derelict kids our age to not fall into financial ruin:
Suze's Tip # 1: Make those that you're dependent on for a paycheck, dependent on you!
The first thing you have to realize is that even though it's a horrific time for people your age [20-somethings], this is a time that many of you can use to your advantage. You come in before the boss, stay after he is gone, come in on Saturdays - make them dependent on you and you will grow! You have to get people's attention and establish yourself!
Suze's Tip # 2: You have to make sure your bills are almost nil.
It's not the time for you to go out and rent your own apartment; it's the time you suck it up and live with four or five other people. I know someone who started out with a job at Kenneth Cole for $28K a year and lived with four other people in a tiny apartment. She just turned 30 - she's now making high in the six figures and just got a quarter million dollar bonus. Do you know how? She sucked it up and made sacrifices in her twenties. If you say you can't, you never will. Get off your pity pot because you won't get anywhere by crying. If that means moving back in with your parents, do it! I had to live in my van - so you can't complain!
Suze's Tip # 3: Only Losers Eat Out Every Meal!
I fly private and I bring my lunch! No one works harder than me, and I never eat out! Working hard is not an excuse! Make your food and bring it to work with you. If you want to be a loser forever and continue to waste money, then fine by me. Stop giving yourself excuses. You'll never enjoy life if you continue to waste money.
When I first became a stock broker, all the other stock brokers would go out to fancy lunches everyday. On the other hand, I went to taco bell, had two tacos and a diet coke and it cost me $2 a day. That's how I got to go out and still be OK.
Suze's Tip # 4 : You don't need to spend a fortune on designer clothes.
Honest to God, the amount of money they [young people] waste on designer clothes is the worst habit I've seen! Having to have the Jimmy Choos or $700 purse is ridiculous. Do you think anyone even cares?
Suze's Tip # 5: Clubbing is a huge waste of money.
The amount of money spent on clubbing is absolutely amazing! Go to each other's houses and have a great time in your home. You can buy a bottle of vodka for what it costs for one drink at a club. I mean $90 in one night? That's the amount of money needed to fund your Roth IRA every month.
Suze's Tip # 6: It's not about being so specific with how you divide up your salary.
It's hard to divide your salary into set percentages these days - salaries are just so low right now. If all you're making is $1000 per month, it's almost impossible to divide up, but all of you know when you're spending too much! It's not about being so specific, but if your rent is taking up 80% of your spending, then you're in big trouble.
The first thing you should do with your money is spend every extra dollar you have to get out of credit card debt, saving an 8-month emergency fund.
Suze's Tip # 7 : It's not about cutting everything out; it's about cutting a little bit off of everything.
Don't try to give up all your favorite things at once. If you go cold turkey, you will explode. Just cut down! You can indulge, but indulging doesn't mean every day. I mean come on! Do you really have to have Starbucks every day? Can you go clubbing twice a month instead of every weekend? Pick the things you really love to do and just do them twice a month.
Suze's Tip # 8: Start saving now!
The best thing you could do is to have a Roth IRA. You can withdraw any money you put into it at any time, without any taxes or penalties. That's where you should get money from, not your 401K or pension plans. You should be investing in individual stocks that pay a high dividend yield.
Suze's Tip # 9: Credit Card Debt isn't necessarily bad.
The thing is that credit card debt isn't bad,but if your interest rate is at 30% that's bad - actually horrific! A 1% to 2% interest rate is ok. If the debt is because you're trying to make your mark and make your way in the world, then I don't have a problem with that. If you have debt because of clubbing, excessive shopping and weekend trips to Tahoe, then you're an idiot - that's the debt that will do you in.
If you have a good FICO score, that's the most important thing. Most creditors determine whether they are going to lend to you based on your FICO score, not your credit score. You wont be able to rent, buy or do anything in life without a good FICO score.
Suze's Tip # 10: Credit Unions are better than banks.
You should open a card at a credit union and do a balance transfer from any existing credit cards. Go to creditcardconnection.org to find out if your card is a good one. Be on time with payments - you really have to make it a priority.
When it comes to financial advice, Suze Orman is the most recognized expert in the industry. Along with being a two-time Emmy Award winner and New York Time's Best Seller, Orman was also named one of Forbes 100 Most Powerful Women of 2010. To read more of Suze's tips, make sure to read her book, 'The Money Book for the Young, Broke & Fabulous' and check out her latest site, 'Money Minded Moms'.
Suze Orman's 10 Tips for a Fresh Financial Start
1. No Blame, No Shame
The foundation of a financial fresh start actually has nothing to do with money or specific financial dos and don'ts. The first, and most difficult, step is to absolve yourself and your spouse or partner of any guilt. So you need to make a promise to me. I need you to agree that the past is past, and we are going to focus on the future. Whatever mistakes you feel you have made with money, whatever moves you wish you had or hadn't made, are irrelevant. We are free to move forward only when we remove the emotional shackles of regret. This cleansing step is especially important for couples. You are in this together, so no finger-pointing or arguing about any past decisions. Do we have a deal? Deep breath, everyone. Exhale. Now you are ready to put your financial house in order.
2. Take a Snapshot of Your Finances
It's impossible to map out a route to your destination if you don't know where you're starting from. So let's take a "before" picture of your finances. You've heard me say this a million times, but I want you to open every single financial statement—bank, credit card, mortgage, 401(k), brokerage account—and take a look. Only when you have everything in front of you can you set priorities about what to do next. If you're vexed by your checking account (you swear you should have more money; you can never figure out why your checks bounce), start fresh by opening a new one. Leave enough in your existing account to cover any checks that haven't yet been processed, then transfer the rest to the new account and close the old one. Next, sign up for online banking. It should be free, and as long as you use your home computer, it's also safe. The advantage of online banking is that you can pay bills superfast, and your account is automatically credited or debited for each deposit and payment, making it easier to stay on track.
3. Adopt a Foolproof Credit Card Strategy
Make this the year you tackle that credit card debt once and for all. Doing so will make you and your family stronger and happier—forever. What happens to the stock market and the housing market is completely beyond your control. Credit card debt, however, is completely within your control. Every time you pay off a card with a 15 percent interest rate, you get a 15 percent return on your money.
See if you can qualify for a balance transfer card that offers a low or 0 percent introductory interest rate for the first six to 12 months. If you can get a good deal, move your high-rate debt to that new card. Do not use the card for any new charges, and push yourself hard to pay off the balance as soon as possible. If you don't qualify, no worries. Always pay the minimum due on each card, on time, every month. Whenever possible, send in some extra money on the card that charges the highest interest rate. Your goal is to get the costliest balance paid off first. When the first card is cleared, direct your payments to the card with the next highest interest rate. Keep doing this until you've zeroed out the balances on all your cards.
4. Try Harder to Save
When I suggest that people send in more money to pay off credit card balances or increase the amount they save each month for retirement, I hear the same sad story: "Oh, Suze, I would if I could, but I can't because there's no extra money left at the end of the month." I beg to differ. There's no money left because you haven't evaluated your spending habits. You need to dig deep and be willing to change those habits; to set goals and use those goals as the motivation for lifestyle changes that will allow you to save and invest. Take a clear-eyed look at your credit card statements for the past six months. Can you really tell me that there isn't at least $50 or $100 showing up that you could easily do without? I didn't think so. I call this "hidden money," and here's how you can find it.
I challenge you to reduce every one of your monthly utility bills by 10 percent. Change your calling plan or get rid of the landline account unless you absolutely need it. I bet you can seriously trim your utilities by spending one afternoon increasing your home's energy efficiency: Attach a draft-blocking guard to the bottom of any external doors; add caulk or weatherproofing material around drafty windows; put low-flow aerators on your shower heads and faucets; and replace burned-out bulbs with compact fluorescent energy savers (they're pricier than conventional bulbs but last much longer, saving you money over the long term).
Cars are another great place to save. Plan on driving yours for at least seven to ten years (regular tune-ups will help keep it running longer). Consider buying a used or certified pre-owned car rather than a brand new one. If you get a three-year loan, you have plenty of life left in your car, and money that once went to car payments is freed up for other financial needs. And please, avoid leasing. Since you don't own the car, you never have a time when you are driving your car free and clear. Also, raising your deductible or designating one car to be used for low-mileage driving (under 15,000 miles a year) can reduce your insurance premiums by 15 percent or more.
5. Separate Savings from Investments
Now we're ready to move on to how you put your money to work for you and your family. There is a vitally important difference between money you need to save and money you need to invest, yet it's a distinction many people don't grasp. Money you know you need or want to spend in the next few years is savings. Money you keep handy for an emergency belongs in savings. Money you hope to use soon for a down payment on a house belongs in savings. And all savings belong in a low-risk bank savings account or money market account. The goal is to keep your money safe so that when you go to use it, it will be there.
Money you won't need to use for at least seven years is money for investing. The goal here is to have your account grow over time to help you finance a distant goal, such as building a retirement fund. Since your goal is in the future, money for investing belongs in stocks. As I'll explain later, the potential inflation-beating returns that only stocks can deliver make them the right choice for a successful long-term investment strategy.
6. Know Your Credit Score
The big takeaway from the meltdown of 2008 is that banks are going to be a lot less eager to lend money to you. You will need a sparkling financial personality: a FICO score above 700, solid verifiable income, a manageable amount of existing debt—to get good offers for credit cards, auto loans, mortgages and refinancings. And you can expect lenders to continue to tighten the screws on your existing credit lines; all the credit they loved to give you before 2008 now makes them nervous. Get your credit score by going to MyFico.com. If your score is below 700, two of the best ways to improve it are to pay your bills on time and push yourself to reduce your credit card balances.
7. Evaluate Your Retirement Plan
If your 401(k) and Roth IRA lost value in 2008, that's a good sign. It means you were invested in stocks, and that's exactly where you should be invested—assuming your retirement is at least a decade away. Only stocks offer the chance of high returns that outpace the annual 3 to 4 percent inflation rate. In your 20s and 30s, aim to keep 80 percent in stocks and just 20 percent in bonds; you have time to ride out stock swings. As you age, slowly ramp up the percentage in bonds; in your 50s and 60s, consider keeping 40 percent or more in bonds to help buoy your portfolio when stocks are slumping. The biggest mistake you can make is to stop investing in your retirement accounts or to shift money from stocks into "safe" money market accounts.
Instead of worrying that your account is down, remember that your money buys more shares of your retirement funds. The more shares you own now, the more you will make when the market recovers. Buy and hold is the way to go.
8. Diversify Your Assests
Try to reduce any company stock you own in your 401(k) to less than 10 percent of your total retirement assets. Just ask employees of Enron, Bear Stearns, Merrill Lynch and Washington Mutual how smart it was to make big bets on their own stock. Mutual funds and exchange-traded funds (ETFs) are ideal for retirement savings because they own dozens of stocks in their portfolios.
If you're flummoxed by all the investing options in your 401(k), look for a "target retirement" or "life cycle" fund. Then pick the specific portfolio that dovetails with your expected retirement age and you're all set; you will be invested in a mix of stock and bond funds appropriate for your age. You can also invest your Roth IRA in these types of funds; Fidelity, T. Rowe Price, and Vanguard all offer these one-and-done options.
9. Don't Obsess Over Your Home's Value
If you own a house and can afford the mortgage, consider yourself lucky. Try to love your home for what it is: a haven for you and your family, not a path to riches. Unless you bought at the height of the market in a super-popular region that has gone Ice Age–cold, you're going to be fine. And even if you did buy at the peak, if you plan on staying put for five to 10 years, the real estate market will recover with time. But let's be clear: A home is not an investment that will fund your retirement or vacations. The 10 or 20 percent annual gains during the housing boom were temporary insanity. Buy a house you can really afford, and over time it will rise in value. But its main value is as a home. Period.
If you got caught buying into the housing bubble and are now in mortgage trouble, talk to the lender about your options. Don't raid your retirement accounts to keep up with the payments. What happens when the retirement accounts run dry? You still won't be able to cover the mortgage, and you will have lost all your future security.
Here's some perspective: The 2008 market slide is the tenth bear market (commonly accepted as a decline of at least 20 percent) since 1950. If you'd put your money in stocks in 1950 and stayed invested through the ups and downs, your average annual return through 2007 would have been more than 10 percent. That's not to say you can count on an average of 10 percent over the next 50 or so years (7 to 8 percent is probably more realistic), but it illustrates how keeping focused on the long term pays off.
10. Protect Your Family—and Your Nest Egg
If there is anyone dependent on your income—parents, children, relatives—you need life insurance. For the vast majority of us, term life insurance is all we need, because it protects you for the "term" of the policy (from five to 30 years) and is incredibly inexpensive. As always, it's important to buy a policy from a firm with a strong financial rating, but even if an insurance company runs into trouble, your state insurance department has funds set aside to help protect you. I also want you to get your estate papers in order. You should have a living revocable trust (this document spells out how your assets should be distributed) with an incapacity clause, as well as a will. Also, have an "advance medical directive" in place that tells your doctors the type of care you want if you become unable to speak for yourself.
Finally, every family should have an emergency savings account that can cover at least eight months of living expenses. And I also want every woman to have her own personal savings account that could support her for at least three months, because you never know. The best place for your savings is an FDIC-insured bank (or a credit union backed by the National Credit Union Share Insurance Fund). If you keep less than $100,000 at an FDIC bank, no matter what happens to the bank, the Federal Deposit Insurance Corporation (part of the U.S. government) will make sure you get every penny back. Online banks that are FDIC insured are just as safe as the bank downtown. (Please note: The emergency federal legislation passed last October increased the FDIC insurance limit to $250,000 through December 2009. But to be extra safe, keep no more than $100,000 in any single bank.)
Feel better? Follow these steps and no matter what the future brings, you will be in control of your financial destiny. And there's nothing more valuable.
Suze Orman's latest book is The Money Class: How to Stand in Your Truth and Create the Future You Deserve (Spiegel & Grau).
From the January 2009 issue of O, The Oprah Magazine
Suze Orman: Advisor or Pitchman?
by Scott Bilker
Scott Bilker Scott Bilker is the founder of DebtSmart.com and author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. Receive the 5-Year Loan Spreadsheet when you subscribe to his email newsletter.
Suze Orman Advisor or Pitchman
Financial counselor Suze Orman just came out with her own prepaid debit card called the Approved Card.
It is a MasterCard that you can use in retail stores to make purchases, but only up to the amount you have deposited onto the card. It is promoted as an easier, smarter way to be debt-free. Upfront she touts that it costs “only $3 a month if you use it how I tell you to.”
The card’s homepage goes on to tout nine benefits of the card including “free Transunion credit score, reports, and monitoring”, “safer than cash”, and “teach your teens financial responsibility.”
A closer look at the fee structure reveals some costly provisions besides the $3 monthly maintenance fee.
CARD PURCHASE FEE — $3
ATM WITHDRAWAL FEE — $2 (if you do not have direct deposit)
OVER-THE-COUNTER CASH WITHDRAWAL — $2
While these fees are less than other competing prepaid cards, this whole genre of card is set up to cost you money rather than save you money.
Making a deposit via direct deposit or transferring money from your checking account electronically to the car is free. (But would someone really put their entire paycheck or social security check onto a prepaid card every month? And if you already have a checking account, might not a regular debit card or ATM card be offered by your bank for free?
Conspicuously missing from their fee list is the cost to deposit money onto your card at an ATM or in person at a store.
Apparently you can only add money at locations that support either Moneygram or Western Union payments. The cost, they say, is typically $3.00 – $4.95. Whatta deal.
Here is another surprise.
If you only read the headlines about the free TransUnion credit score, report and credit monitoring benefit, you may miss the fact that the service is only free for the first year. After that, if you want to keep it, it is $143.40 a year.
Lastly, Suze proudly proclaims:
As she admits in smaller print, debit card purchase information is not part of anyone’s credit report and does not affect your credit score. She merely has a desire to see whether providing card use and purchase behavior to Trans Union will be considered in the future as a predictor of creditworthiness. Put another way, Suze has put a clever spin on the fact that she is sharing your purchase history with an outside company.
Prepaid cards have become popular as moneymakers for issuers particularly since they fall through the cracks of federal reform legislation that covers conventional credit and debit cards. If you must have a prepaid card for some reason, a better choice is the virtually fee-free American Express prepaid card. There is no monthly maintenance fee. In fact the only stated fee is $2 for ATM withdrawals after your first free one each month. Depositing money at a retail location incurs the same approximately $4.95 charge as does the Approved Card.
- See more at: http://www.debtsmart.com/2012/08/07/suze-orman-advisor-or-pitchman/#sthash.jf74Zy5Y.dpuf
星期六晚上，住在美國波士頓的蜜雪兒，在看完ＣＮＢＣ頻道的「蘇西歐曼秀」（Suze Orman's Show）節目以後，立即將皮夾內所有的信用卡剪掉，並將電腦中儲存的線上商店網址一一刪除。
在美國《時代雜誌》全球百大影響力人物當中，她是惟一入選的個人理財專家，大概也是最潑辣剽悍的一位了。今年五月，《時代雜誌》將蘇西歐曼選為二○○九年百大影響力人物，事實上，這位「潑婦」已經連續兩年獲得這項頭銜。而不久之前，《時代雜誌》還特別給了蘇西歐曼一個響亮的稱號：「風暴中的女王」（Queen of the Crisis）。
尤其是在準備美國政府規定金融人員必備的從業執照考試時，讓她有了意外的發現。其中讀到一條必須「了解客戶」（Know Your Customers）的規定，也就是說，理專不可在客戶無法負擔的情況下，將客戶的資金做投機性或是風險性的投資。這時，蘇西歐曼才知道，之前讓她慘賠的那位理專，完全違反了這項規定，而這是可以告發、可以求償的。
「我當時想，假使這件事是發生在我的父母親、或是其他年長者身上，那該怎麼辦？他們年紀太大，已經沒有時間再賺回這些錢了！」正因為這些想法浮現在蘇西歐曼的腦中，讓她決定要做人們的金錢守護者（protector of people's money），這樣的自我期許，一方面讓她快速累積投資理財專業知識，另一方面，卻也讓她忠實保留者「永遠從客戶需求開始思考」的初衷，並且對於充斥著金錢謊言的金融市場，總是敢於揭露真相。
在美國《時代》雜志全球百大影響力人物當中，她是惟一入選的個人理財專家，並被賦予“危機女王”(Queen of the Crisis)的稱號。
這是發生在美國CNBC著名節目“The Suze Orman Show”的尋常一幕。形形色色的美國人把他們五花八門的消費夢想和Suze分享，有人想購置人工草坪、有人想擁有Gucci手袋、有的則夢想收藏油畫，更甚至有的是只要100多美元的周末出游，他們都會問Suze的看法。Suze總是問：“告訴我你打算怎麼支付？”有的回答用信用卡，有的說用存款，有的準備給房子再做一次按揭。Suze一般按照具體的財務狀況以及當事人的工作經歷和歲數，斬釘截鐵地給出判斷，“你通過了！享受去吧！”“你被拒絕了！趕緊存錢吧！”
在深受金融海嘯打擊的美國，越來越多的人重新陷入投資問題的困惑中，媒體上充滿了各種投資理財小建議，告誡人們如何在困難時期勒緊腰帶度過難關。而金融危機使得CNBC已經開辦了8年的“The Suze Orman Show”節目異常火爆，人們不得不頻繁求助於蘇西•歐曼。
在“The Suze Orman Show”節目中，美國全國各地的人給她打電話。大部分來求助的人不僅存款少，而且還欠著至少幾千美元的信用卡債務，但他們還是有這樣那樣的購買慾望。
進入美林3個月，在準備美國政府規定金融人員必備的從業執照考試時，蘇西讀到了一條 “了解客戶”(Know Your Customers)的規定，也就是說，理財顧問不能在客戶無法負擔的情況下，將客戶的資金做投機性或是風險性投資。這時，蘇西•歐曼才知道，之前讓她慘賠的那位經紀人，完全違反了這項規定，而這是可以告發、可以求償的，於是，她決定對美林提起訴訟。經過調查，美林支持了她的看法，並彌補了她賬戶裡的虧損。
在美國，Suze Orman大受歡迎，聲望甚至超過很多明星。在遙遠的中國，人們觀看Suze Orman節目的途徑依然很單一，但這並不妨礙大批中國“Fans”的追隨。展恆理財的閆振傑便是其中一位，“我家裏安裝衛星電視後收看的第一個節目就是‘The Suze Orman Show’，這讓我大開眼界：原來理財節目可以這麼做！”身為理財公司的老總，他一直在考慮的是，面對中國龐大的理財市場，如何轉變傳統理財節目的做法，改說教為互動，讓更多的人對理財感興趣，無疑，Suze給了他啟發。
如何切分誘人的蛋糕？各路人馬摩拳擦掌。“中國理財市場尚處於培育期，各媒體、節目還處在群雄混戰的階段，與國外的理財節目相比，我們還是偏說教、偏宏觀多一些，這也是難以激起投資者興趣的一個原因。”閆振傑一直試圖改變當前理財節目中專家、學者們正襟危坐談論國內外宏觀形勢的模式，這也是他對Suze及其節目倍加推崇的重要原因，他希望能借鑒Suze的運作方式，為中國的投資者提供形式多樣、實用便捷的理財建議。現在，他正在跟電視台進行合作，嘗試按照這樣的方式來運作理財節目，“推出我們中國自己的Suze Orman以及Suze Orman Show。”
蘇西˙歐曼女士以美林證券的投資顧問一值展開其理財顧問的生涯，後來曾任保德信公司的投資副總裁。除了是合格的財務規劃師外，並領有投資顧問的執照，目 前領導他們自己的財務規劃公司。歐曼曾應邀參加PBS得特別節目「財務自由時間」，還有「今日」、「歐普拉脫口秀」、「NBC夜線新聞」、「視 野」，CNNCNBC的節目。目前也為《自我》雜誌撰寫專欄。