Suze Orman Gave Bad Advice

I love Suze Orman. I think her show is lots of fun to watch. She’s smart, engaging, and who doesn’t love her ‘Can I Afford It?’ segment? I just saw an ad for the Halloween episode, and I remember watching last year’s ‘financial ghosts’ episode one year ago.

The being said, I was watching her most recent show and she told a couple in their late 20s not to spend $400 a month on going out and $500 a month on saving for a vacation. Instead, she told them that $400 a month would turn into $1.3 million by the time they retired and if they had saved that money for the past 6 years instead of spent, they would have an additional $1 million by retirement age.

Way to make them feel bad, Suze, without actually solving the problem.

What annoys me is that instead of saying how much they should save, she attacked their spending.

You know my take: After you make sure you’re saving enough, spend whatever you want on whatever makes you happy.

Suze could have empowered this couple to set goals for themselves, but the only goal she had them set was not to go out until they were able to eliminate credit card debt by $2,000.

These people will resent the new plan (or Suze!) because they’re being forced to cut back on the things they enjoy.

They probably are spending too much on these things. That’s why they have $10,000 in credit card debt. But telling them to stop having fun altogether is just plain wrong.

A better idea would have been to have them set goals to pay off the credit card debt while setting reasonable limits for how much they should spend on activities they enjoy. But once they get it under control and once they are able to save that $400 a month that she suggests (or however ever much they should be saving for retirement), they should be free to do whatever they want with their money.

These people make over $125,000 per year, so there should be enough to pay the bills, invest in their long-term savings, and still have some extra so that they can enjoy themselves, too.

After all, what’s the point of working hard for your money if you’re not allowed to spend it?

Right now these people are slaves to their debt. Under Suze’s plan, they’ll be slaves to their savings.

21 Responses to Suze Orman Gave Bad Advice

  1. Evan says:

    And that is the reason I hate Suze. She isn’t usually wrong, but you can’t possibly be providing financial advice with a 45 second phone call. You don’t know the person, you don’t know how they live, etc.

    Anyone can get on the phone and say “Girlfriend [and Jebus when she says Girlfriend in that condescending 'you are an idiot' voice I want stab myself with the nearest sharp object] stop spending money” but is it going to solve anything? Maybe yes, Maybe no but I’d love some recaps on her show from ALL the people she gave advice to

    • Daniel says:

      @Evan, I know they do a lot of background, she has a LOT of information about them. In this 11 minute clip, she seems to know what they’re all about, but it just seemed like she not only wasn’t solving anything in the long-term, but their short-term lives would suffer significantly.

  2. The Saved Quarter says:

    I’ve liked the show “Til Debt Do Us Part” because Gail Vaz-Oxlade gives a small but present entertainment fund. Cutting off entertainment cold turkey is like going from binge eating to an ultra-regimented diet. It might work for a few days, but a bad day will hit and you’ll eat everything in site. Instead, finding low-cost alternatives for entertainment but still including it in your life, like finding low-calorie alternatives or smaller portions in your diet, are more likely to have the desired results.

  3. Ira says:

    Great post! You should be the one with the Cable Tv show

  4. Aw man, I love my Suze!

    I thought it was a good way to get that couple to buckle down and get past the first $2,000 of paying off their credit card bill. It seemed to me like that guy was not serious at all about paying down the debt, so I thought in this case, her saying to not spend a dime for entertainment until $2,000 is paid off (and ofcourse that will come more quickly because they aren’t going out).

    Having said that, life without entertainment is not a good way to go, and it can lead to a strong backlash (and possibly an awry marriage). So I thought it should be a short-term goal, have them really dig their heals in, and then after the initial $2,000 they could have some fun.

    Still…Suze could have left them with a budget as well, like Gail Vaz-Oxlade (ahhhh another woman after my own heart). I agree with Penny from The Saved Quarter that Gail does an excellent job with incorporating all of life–moreso than I do sometimes.

    Well…that’s just my two cents. Good article!

  5. IT sounds like a lot, $125,000 a year, but that’s just two people making $62,500 a year each, so perhaps not!

    When you’re younger, the dollar is worth more and it’s harder to save, so perhaps best to just have a grand old time, but of course avoid getting into debt!

    • Daniel says:

      @Financial Samurai, It should definitely be “enough” to enjoy themselves, too! They should be able to pay off $2,000 in no time, and then what? Balance is key and for them, it seems like it’s all or nothing, especially with Suze’s plan. Everything in moderation!

    • Lizzy says:

      @Financial Samurai,

      I agree with Daniel. The couple makes 3 times as much as we do. They should have no problem living debt free, saving for retirement and still enjoy life. They could live on one paycheck and still make $22,000 more a year then we are right now.

  6. Puke. I can’t stand Suze “The Oracle” of San Fran. Every time I watch her show it’s the same thing, someone has too much debt and spend themselves into oblivion. It’s fine for the audience she targets but it’s repetitive at best and most of it is common sense.

    In addition I think she’s too condescending on her guests. It’s like she’s their mother (or worse MIL). At least Dave Ramsey is more even tempered.

  7. Mark says:

    I think once they pay off the 10 grand in debt that they should save for the trip. You should enjoy some of the fruits of your hard work!

  8. Wise One says:

    $125,000 income is HUGE. Unless you’re an idiot with money. If they have any debt other than a mortgage they are idiots; exception for student loans allowed but those should be paid within a couple of years if you’re making that kind of money.

    Now is not a good time to be spending on things you don’t need. Times are going to get worse before they get better. Smart folk will use the opportunity to horde cash like it’s going out of style: get 2 years survival cash in the bank (FDIC insured), then start piling up gold and silver, and MAYBE putting 6% in an employer 401K just to get the company match, but no more. Remember the goobermint is likely to take over our retirement IRAs and 401Ks so don’t put all your money in those. Invest in some land, maybe rentals, etc.

    Time to look out for yourself. The goobermint isn’t going to do it – in fact they will attempt to get money from us every time we turn around.

  9. Wise One says:

    So Ross spent $2000 partying? He deserves a good whoopin’. That’s stupid.

  10. Jerry says:

    I really like Suze, too. Although, people do usually love or hate her. We all know we need to save as insurance for our retirement and future but we are living now, right? We should enjoy some of life so I totally agree with you that you need to find balance. Being beholden to either extreme will only lead to unhappiness.

  11. Count me in as a Suze fan (although like others, I don’t always agree with her).

    Entertainment is an important part of a budget to make it last long term. I’ve been able to find 1/2 price movie and theatre tickets with Groupon or other daily deal sites that really stretches the amount.

  12. Wise One says:

    $400 per month on “going out”? Many on this thread have stated that is reasonable. This is EXACTLY why we have Social Security – for people too stupid to save for their future. $100 per week for “going out”? That’s STOOPID!

  13. I have to agree with you. I have a love/hate relationship with Suze. She gets people to pay attention to their finances (which is a good thing) but can be a little extreme in how she makes her suggestions. I, also like to suggest people cut down on their spending rather than eliminate it all together. It’s more realistic and like @The Saved Quarter feel that people will only do it for a short amount of time before they start back spending. Also, what rate of return does Suze use for calculating their growth? Most of the financial planners I know are using 6% to 7% max.

  14. jejohn says:

    You(in general of all reading this) dont see whats going on. She makes money because those indebt people listening to her pay for her bland advice that she gives off. also about giving off is her sympathetic,simple, yet condescending(what she doesnt merit except through her gaining on the suckers) rhetoric imbued in her information. So how about you save time, money and thought by not listening to her as i(i have student loans and incurred credit debt) and some of us in debt as well.

  15. Business Reply Mail says:

    Life without entertainment isn’t a good idea but some people need to experience the blunt reality to fix what they have gotten into. When you go to a drug rehab center, they don’t give you progressively diminishing doses until you are finally cured from the addiction, instead the problem is attacked head on cutting your supply at once; the world seems to come to an end but you eventually come out of it.

  16. Lizzy says:

    I watched one of her episodes this morning and it really bugged me when she told a 66 year old man that he could spend $$ on something, but didn’t suggest that he take $4000 from his $45,000 liquid savings and pay off his car. Why doesn’t she tell people to get out of debt when it would be so easy and they have the funds available.

  17. Jim Dasher says:

    You stated that: “These people will resent the new plan (or Suze!) because they’re being forced to cut back on the things they enjoy.”

    I curious, who is “forcing” this couple to make these changes in their spending habits. It is their choice, period! Nobody elses.

    They can either accept, reject it or modify the advice to better suit their lifestyle, while still revising their current spending habits.

    This couple would not have asked the question, without already realizing there was something wrong with what they were currently doing.

    Also, you seem to think that they might “resent” Suze for here suggestions. Give me a break! If people are going to be that “thinned skinned” about an answer to their questions, then maybe they shouldn’t be asking the question. God forbid that anyone might get their toes stepped on for an answer they got, to a question they asked.

    Come on, it’s about time we all put on our big boy/girl pants and face up to a few reality checks, whether they come from someone like Suze Orman or any other financial adviser who has good advise and the credentials to back it up!

    • Carlos @ Financial Tales says:

      @Jim Dasher, I agree. And Suze definitely has the credentials to back it up. She can speak from experience as she had to file for bankruptcy earlier in life.