In case you missed it Suze Orman was on the Oprah show yesterday trying to give people tips on how to have a better financial management plan in 2009.
She gave a few tips that we PF bloggers talk about all the time such as having a plan to pay off your credit card debt. Suze noted that in today’s economy the best way to get rid of credit card debt was to pay the higher interest card first. She gave the following scenario:
line up credit cards in order of highest interest first
pay the minimum on all cards
find extra money to pay to the highest interest card first
when that card is paid off move to the next highest interest card
We call this the snowball method and many personal finance bloggers swear by it. This method really works and it helps you to pay less interest in the long run.
One thing Suze said that I thought was interesting was that you should not have a savings account until all the credit card debt was fully paid off. Generally it is a good idea to start building an emergency fund or at least have some kind of savings but Suze thinks that today’s economy is more geared towards getting the cards paid off.
Suze Orman told a couple that they should not have placed their emergency fund in the stock market. Now while you would think this is common sense…since an emergency fund needs to be easily accessed in case of EMERGENCY …it seems a lot of people had been doing that. Their emergency funds were now worth MUCH less than when they were started and these people have lost money because of the fluctuations in the stock market.
I was able to follow along with most of what Suze was saying because I had already learned it from reading other personal finance blogs. It seems we are on the right track here with this personal finance blogging and I want to thank everyone who has influenced me and contributed to me continuing this blog.
I think Suze needs to speak to some of US!!!!!!!
The main thing she wanted everyone to do was to agree to an action plan for the year. This was a list of three things that everyone should do in order to make 2009 better than 2008 in terms of financial well being.
do not spend money for one day
do not use credit cards for one week
do not eat at restaurants for one month
Now if those are the only three things we need to do I am in good shape or bad shape depending on how you look it it. I can say I am in good shape because I have already been doing those three things, especially since I cut down my WalMart trips to twice a week.
I am in bad shape because I have already been doing those three things so I am not going to see any change in my finances like the people who were not already on the plan.
What do you plan to take from Suze’s show to implement in your financial life this year?
I caught that show (yes, I’m a guy and I *occasionally* watch Oprah) and she had some great tips. She was also warning those with credit card debt. We’re nearly done ourselves but we knew that paying it down would be insurance for our future and seeing how things devolved so quickly we’re glad we did it when we did. Well, it’s a new year and hopefully this new administration will lead to change so we can get out of this mess.
Jerry
listen -the show is bul, the book is bul, ye she wrote the book, now she wants us all to buy it, xa,
ye so she will make money on us
its funny
rules rules rules, xa xa xa
all she is talking about, we all know that
let her talk about – how and where people can find the jobs
how a single parent with 3 children with rent 1400, plus bills, plus food, with salary 1200
how can you save for anything?
help people how to survive
not advertise your books
Don’t worry Jerry. I’m also a man, but watch oprah too if the topic is good. For this year, I want to start buying house and start playing forex.
invest money’s last blog post..Leverage the two headed sword
I happen to be watching during the “do not for” one day, one week and one month segment. My spouse and I were trying to decide if unplanned occasional fast food (1-2 times a week while shopping or doing errands) counts as a restaurant. We decided no and that only casual dining and above would count.
What do you think? I could be persuaded that I’m too lenient in my defintion 🙂
Super Saver’s last blog post..$6 – $8 Trillion in Investment Losses for 2008
@ Super Saver…naughty, naughty!!!! Fast food places are classified as restaurants (casual dining) so you are still breaking Suze’s rule. 🙂
Even worse (go kneel in the corner!) is that your fast food purchases are 1. unplanned and 2. while you are running errands or shopping. Those are the two worst times to get fast food because you end up making worse choices and eating more than if you had decided to go eat at a fast food place in general.
If you are trying to tweak this to fit then make it a part of your grocery budget and list the amount. Then you can only go out on a certain preplanned day and spend a certain amount because the money is accounted for. Work on that for a while and then you can completely cut it out. 🙂
@LuLu Gal,
Thanks for the clarification. Boy, you’re tough 🙂
Since we usually get a couple of items for the drive through dollar menu, I think of fast food stops more like a vending machine or a snack from the convenience store, instead of a restaurant. However, I do agree it will cost more than bringing the food from home.
Super Saver’s last blog post..Inverse (Short) ETF Portfolio Update – 1/10/09
Not spending money for one day, or using a CC card for a month, and not eating out for a month are great short term goals. I think many of us have a hard time sticking to long-term planning. Can we stay away from that temptation to buy something when we are feeling stressed or unhappy. Suze has great tips and it’s all about consistency.
The Passive Dad’s last blog post..Buy A Foreclosure For Under $1,000. A Little Sweat Equity Needed
I agree with you Passive, short term saving tips does come in handy the show did bring to light the basics savings methods such as less use of CC but overall the motto should be ” DISCIPLINE”.
Hi LuLuGal…and Ms. Orman…
Here’s a thought…Rather than skipping the occasional night out at your favorite dining establishment (the one that employs your neighbors and your neighbors’ children, donates to all of your assorted local philanthropic causes, and contributes mightily to the local tax base) why not refrain from buying financial planning books by shortsighted authors who were caught blindsided by this recent financial meltdown along with all of the other so-called experts? Use the money for a well-deserved margarita and make a toast to a better future, post “W”.
Mike Blide…Hard working restaurant owner, Truckee, CA
Hi Mike,
Not sure what you are getting at..BUT I did not BUY any book that Suze is selling. She has a link for a FREE download and that is how I viewed her book.
I do eat ‘occasionally’ at restaurants…eg birthdays and special occasions. I think she was referring to people who eat out EVERY day. As you can see by my posts I was already NOT eating out every day…so that is why I said Suze’s advice does not apply to me.
While I thank you for your comment, I do not appreciate being attacked for my views. In the future please read more before you try to comment on what I am doing.
As someone who has spent his enitre 26 year working life in the Hospitality Industry, does this financial “expert” really understand the impact that something like that would have on the restuarant insustry, which is already stuggling as it is? Not only the restaurants, but all of the purveyors that support those restaurants would be negatively affected as well. You may save a couple of bucks a month, but you would be potentially crippling businesses and hundreds of thousands of potential jobs would be impacted, as the hospitality industry is one of the largest industries in the USA. Terrible advice by Suze Ormand, and shame on Oprah for allowing her to even mention something like that on national television.
Time to eat out!
Dave is absolutely right. Yes, I am a restaurant owner with an obvious bias, but please read this anyway. I know there are some people who simply can’t afford to eat out (people who work in restaurants for instance) but this “don’t eat out” advice is often followed by relatively wealthy people too. Every where I turn, I see some self-proclaimed financial guru telling people, that in these tough economic times, they should stop eating out. This “penny-wise and pound-foolish advice” (as my English mum would say) is pure rubbish! First, one must bear in mind, that this advice is often coming from the same geniuses that tried to sell us toxic assets and failed to predict the biggest stock market crash in a lifetime. Our current economic crisis gives us an opportunity to rethink our economic priorities. It is a chance to support the local economy, support local jobs and local products. It is a chance to redirect our spending towards healthy and environmentally-friendly services rather than spending it on “stuff” such as cars, electronics, large houses, furniture and other waste-creating products.
I live in a relatively affluent community, so the numbers in the following example may not be broadly applicable but the principle still holds. Let’s look at the typically affluent family of my community who can actually choose where to make cuts (I am well aware that the less affluent have no such choices). Suppose this wealthy family chooses a smaller, fuel efficient car – they could save $20,000 on the purchase price, $1000/year on fuel, and another $400 on insurance. Let’s suppose they also choose to buy a $400,000 home rather than a $600,000 home, this gives them another $200,000 to play with. Suppose they shop around for a mortgage that is 1/2% less, saving another $2000/year. Let’s suppose they also choose to buy no new furniture, fancy clothes, electronics or foreign vacations. In total, these affluent consumers could have an extra $300,000 of disposable income to spend over a 10 year period. These spending cuts would have little effect on the local economy and yet imagine what could be done with these savings!
The extra $30,000/yr of disposable income from such cuts, could provide consumers with an awful lot of fun; they could: go to every Arts presentation in the community, eat out at different restaurant every night of the week, buy exclusively local products, buy a gym membership, landscape their property, save for a rainy day, buy local art, take music lessons, enhance their family’s and pet’s health, donate to charity, get a fancy hairdo, etc. This type of spending would help the local economy, their friend’s businesses and the environment. It would also ensure that the most vulnerable people in times of economic crisis, the low-wage service workers, keep their jobs. Obviously this post is driven in part by naked self interest, but there is more to it than that. Suze Orman’s advice to 200 million people, to not eat in a restaurant for a month, hurts the vulnerable and solves nothing. There is really only one group within the service sector that deserves to lose their jobs – I would advise everyone to cut back on financial advisors.
Derrick