Does anyone else disagree with much of Suze Orman's advice?

[GeoffD]

Originally Posted by treevernal

I really can't argue with her advice about having an 8-month emergency fund; that makes so much sense. She says that before you can buy a home you need; 8-month emergency fund, 20% down, and close to zero debt (she may make an exception for student loans but I am unsure). In any case, I would actually add to that list and say you also need to be actively putting away 15% for retirement and also be well-established with your career, not just a "job" so that if you become unemployed you have a solid skill set upon which to find new employment.

Just my opinion. These are all the things I'm currently working on and it takes time and dedication!

Short of paying cash for a house, that's about as financially conservative as I've ever seen. I think the amount of risk you take depends on the relative stability of your job/demand for your job skills. If you're union public sector with some seniority or in the health care sector, you can take much more risk than someone with a feast or famine job like commission-based sales.

The older I get, the more financially conservative I get. My current house was 50% down and left me with a 2 year emergency fund and no other debt. I zeroed out that mortgage in 5 years. When I was in my late-20's, I was on the upward side of my career with plenty of demand for my job skills. I could take more risk because I could find a job pretty much immediately. As I broke 50, that changed. Replacing my job now is far less certain. The risk of some health event is higher. I'm forced to contingency plan for the "what if I can never work again" doomsday scenario.

[lottamoxie]

Working through the "worst case scenario" is, IMO, a good thing to do so that you know what bases you have covered and what you don't.

I waited to purchase a house in my current town until I knew I had enough to be able to live there for a couple years if my job went away. I also selected a house I thought would resell fairly quickly (less than 6 months) if I had to sell.

Socking away enough in emergency funds AND planning ahead for later years is the best gift one can give themselves...having options if/when life throws a curve ball is always a good thing.

[ncole1]

Originally Posted by Malloric

There's madness to the method.

Very simple way of thinking it. If you agree that you'd rather have more debt at a higher interest rate, then follow Dave Ramsey's advise. If you'd rather have less debt at a lower interest rate, pay the highest interest rate first. I know which I'd rather have as I'm not irrational. Irrationality is a requirement to prefer to have five items of debt with more total debt at a higher average interest rate than having six items of debt with less total debt at a lower average interest rate.

Well, we already know (or suspect) they're irrational when they've borrowed at 18% to buy their kids flashy toys...

[madbach]

Some of her advice is good, I've watched her show and generally her advice is sound. reverse mortgages are generally a ripoff, there are only certain specialized situations where they are good. You are better off selling your house and buying a smaller one if you don't want to be a slave to rent. Or rent your house out.


As far as timeshares, they are a ripoff also. All of them. But they are difficult to sell so in some cases you are better off holding them and just hoping for the best.


She is conservative with saving, an 8 month emergency fund is generally not necessary, though it doesn't hurt. You should have that much in assets you can tap (ie home equity, stocks & bonds/mutual funds) just in case.


Her advice on CC debt is spot on IMO and the same you will hear from most other advisors. CC debt is the root of most peoples financial ruin.