MBA Dad and I are finance geeks so for the past decade we have spent countless Saturday nights watching Chicago’s own Suze Orman. Between moving, keeping up with MBA Son and MBA Toddler, managing two houses, and now, moving again, the business of life has taken over for the past several months so last Saturday night we were saddened to find out the last Suze Orman Show is coming up this Saturday 9PM ET/8 PM CT on CNBC. As regular fans, we were able to guess her 5 “forever nevers” on her segment about things never to do when it comes to your money.
Our favorite segment that has been added in recent years is the “Can I Afford It” segment in which a caller wants to buy, say a new car. Suze then reviews the caller’s financials such as monthly income and expenses, total debt, savings and retirement account balances and determines if he or she is approved or denied to make the purchase. Generally, the segment goes a little something like this: “So, what do ya wanna buy? Well Suze I want to spend $40K on a brand new BMW X3, it’s my dream car. Oooh, I don’t like new cars, you are better off used but okay, show me the money. Well, my take home is $8K, monthly expenses are $7K, I have $120K in student loan debt and $20K in savings….You are so DENIED girlfriend! You need at least 8 months in a emergency fund and you don’t have that. Next!” We have watched many callers approved over the years as well. There is also a “Can I Afford It, Jr.” segment for children younger than 16 which is simply adorable. I was hoping for the show to last a few more years so my kids could call in.
I do appreciate Suze’s analytic framework for financial decisions but what I admire more is how she takes away the fear factor when it comes to managing money and empowers her audience to make sound decisions with facts, not emotions. This past weekend’s episode provided a perfect example. A single mother dependent on child support was being kept awake at night by the financial burden imposed on her by the two houses she owns: the first was her grandparent’s home where she was raised and the second was a dream home turned nightmare by the loss of value thanks to the recession. Suze came up with a plan that is going to give this woman financial freedom. In short, the advice was to start renting an apartment, sell both houses even though one looks like it’s going to be a short sale, and invest the after tax proceeds from the profitable sale in municipal bonds, the monthly income from which will be roughly equivalent to the child support payment so she doesn’t have to worry about skipped payments. Brilliant.
Suze is about my mother’s age but she has taught me far more about personal finance than my mother ever has. It’s not my mother’s fault, it’s just that she never had any money to manage. She had several jobs while I was growing up and I can’t recall a single one offering her participation in a 401(k) plan. Even if it did, as hard as she worked, sadly she never had any extra to put away each pay period. The summer after 5th grade the bank foreclosed on our house so money was definitely scarce. Ironically when I graduated college with a degree in Economics and landed my first job in banking which did offer a 401(k) plan with matching, while I knew my debits and credits front and back and could tell you how to dig through a company’s footnotes to calculate its effective tax rate, here I was at 21 years old and had no clue how much to save, let alone how to allocate those savings among stock, bonds and cash. All my finance courses in graduate school were corporate finance classes, so for my own Personal Finance 101, my professor was Suze Orman, and class met every Saturday night at 9.
I have read there will be a new Suze Orman show coming in the near future, Suze Orman’s Money Wars but with a focus on family money feuds, to me, it just won’t be the same as The Suze Orman Show, which I will greatly miss. Thank you girlfriend!
In case you were wondering, Suze’s 5 “forever nevers” were, never buy whole, universal, or variable life insurance, never buy a variable annuity inside a retirement account, never take a 401(k) loan, never cosign a loan, and never ever go into default, deferment or forbearance on student loans.
Who has taught you the most about managing your own money?
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