Suze Orman ticks me off (range, house, accept, investment)

[Avalon08]

Had you bought below your means, like common sense (and some financial pundits) advises, you wouldn't have a problem with that 30 year mortgage.

You're missing the point. The experts in the '80's advised to take out the maximum mortgage that you could afford to pay, and don't pay it down early. I suppose the theory being that you could deduct the mortgage interest, and make more on your cash elsewhere. Hence, I was always of the mindset that paying off your house early was not a wise use of your money.

Generalizations ahead: If you have to rely on so-called experts to tell you how to run your financial life, you have problems. If you are incapable of filtering through the literature and making your own decisions based on your specific situation, you have problems.

Skaternum, I would say most average Joe's are not lucky/intelligent enough to be financial gurus like yourself. So yes, many of us do have problems making investment decisions and do rely on experts or advisors who can help us figure out how to invest the 401k, or when to take Social Security, or whether it would be better to buy or rent. These are decisions that are only made a few times in one's lifetime and can affect someone's life savings. Wading through financial prospectuses may be easy for you, but is very confusing to many. Belittling people who need help is rather mean-spirited.

My point was not that people bought or lived beyond their means, it was that the fundamental concept keeps changing (buy v. rent v. large mortage v. pay off early, etc.)...but yet these are decisions that, once made, can't be reversed as easily as the experts change their advice. I AM at the point where I just go with my gut now. I feel I'm the only one I can trust.

[ambient]

Originally Posted by Avalon08

The advice should have been all along to just pay off your house as soon as possible.

Actually, the advice should have been all along to only buy a house you can afford. People making $40K a year with no money for a down payment should not have been getting loans for $400K houses.

[mathjak107]

suzie caters to a particular audience . she is geared to those that either dont have a clue or are on the verge of financial suicide. her shows are usually directed to those heavily in debt or financial failures.

she paints with very broad brushes giving advice that while not always correct will keep most of her audiance from hurting themselves.

an example is how she talks about 401k loans being taxed 2x. they are not taxed 2x only the interest you pay is taxed 2x but if that keeps someones hands off their retirement money then suzie did her job.

risk vs rewards are always changing with the economic picture so yes she has to keep changing what she recommends

buying long term treasury bonds when rates are higher and things look like we may be slowing down can be a very low risk nice reward investment. those same bonds today with rates so low and inflation looming on the horizon are a very high risk low return scenerio,

same investment but 2 different sets of advice at 2 different times.

at one time owning a home was the best way for her audiance to win the game. not that its a good investment but for her audiance these folks will never have the discipline to rent and be trusted to invest in other assets instead so at least the residual value of the house is a consolation prize.

today the rents in most areas are so low in relation to buying that her audiance may spare themselves lots of grief by renting .

im not a susie advice lover but you have to remember who her books and show target.

[skaternum]

Originally Posted by Avalon08

You're missing the point. The experts in the '80's advised to take out the maximum mortgage that you could afford to pay, and don't pay it down early. I suppose the theory being that you could deduct the mortgage interest, and make more on your cash elsewhere. Hence, I was always of the mindset that paying off your house early was not a wise use of your money.

And many of us who were coming of "financial age" in the 80s knew deep down in our guts that this was not a good long term strategy.

I would say most average Joe's are not lucky/intelligent enough to be financial gurus like yourself.

Don't put words in my mouth. I never said I was a financial guru.

So yes, many of us do have problems making investment decisions and do rely on experts or advisors who can help us figure out how to invest the 401k, or when to take Social Security, or whether it would be better to buy or rent. These are decisions that are only made a few times in one's lifetime and can affect someone's life savings. Wading through financial prospectuses may be easy for you, but is very confusing to many. Belittling people who need help is rather mean-spirited.

If you have enough money to worry about, you should be smart enough to read, watch, learn, and then figure things out for yourself. Based on your previous posts, you sound like the sort of person who followed whatever advice a self-proclaimed expert laid on you. Most of the folks who did this are now in deep financial doody. I'm just saying that every person on this planet is responsible for his/her own decisions. I'm tired of hearing people shift responsibility for their poor financial decisions on "experts."

My point was not that people bought or lived beyond their means, it was that the fundamental concept keeps changing (buy v. rent v. large mortage v. pay off early, etc.)...

I would argue that the fundamental concepts have remained the same. The things you're talking about are mere financial trends.

I AM at the point where I just go with my gut now. I feel I'm the only one I can trust.

Bingo! Sorry it took you so many headaches to get here, but this is a universal truth. You just proved my point. YOU are the one who has to live with the consequences, so YOU need to learn all you can and then make your own decisions.

[le roi]

Originally Posted by Avalon08

Her latest advice is "rent, don't buy". Real estate is not a good investment, she says. That's great....after people went out and bought homes based on earlier advice that renting was throwing money away. I recall a real estate advice column in the 80's where we were told to mortgage as much as possible rather than tying up cash in a down payment. Definitely don't pay off the house, that would be silly. In the 2000's, we were told to "get in any way you can", with respected financial institutions offering and approving zero-down mortgages. The average Joe trying to live the American dream believes these must be OK, else why would the bank approve them? Now that the damage is done and we've all bought real estate, we're told don't buy real estate -- not a good investment. So I guess I should've just continued to rent rather than buy a house last year like I did...now I feel like I made a bad decision.

The advice should have been all along to just pay off your house as soon as possible. It just ticks me off that people like me assume that people like Suze Orman and other financial "experts" are giving sound advice for now as well as the long haul. Their advice changes like the wind, while we're still dealing with the 30-year mortgage we got based on their advice 10 or 20 years ago.

i am sorry about your experience.

i find that it is critical to always understand both sides of an issue, especially major life decisions like homeownership.

[slackjaw]

I don't agree with lots of what Dave Ramsey says either, but like Suze it is probably a message with more good than harm for mass audience financial advice. As others have mentioned there are far too many factors that go into the equation of buying versus renting and paying off mortgage versus investing to be able to make a simple proclamation that one is better than the other.

We used to rent, are currently homeowners, and will likely go back to renting in a few years. Different stages of life, goals, and financial situations make different solutions work for us.

[le roi]

Originally Posted by Avalon08

You're missing the point. The experts in the '80's advised to take out the maximum mortgage that you could afford to pay, and don't pay it down early. I suppose the theory being that you could deduct the mortgage interest, and make more on your cash elsewhere. Hence, I was always of the mindset that paying off your house early was not a wise use of your money.

it is not so much about the mortgage interest deduction, as it is about the value of the dollar over time.

say you borrowed $40,000 to buy a ranch house in 1985. $40,000 in 1985 dollars is worth more than $40,000 in 1990 dollars, which is worth more than $40,000 in 1995 dollars, which is worth more than $40,000 in 2000 dollars... et cetera. Your income was expected to go up, housing prices were expected to go up, but the amount you borrowed stays static. So borrowers were smart to pay off only the bare minimum, because father time would take care of the rest.

It became a self-sustaining cycle, for a while. People would borrow. When they borrow, they helped put new dollars into the economy which drives down the dollar's value, which debtors loved. Borrowing also boosted housing prices, which home owners loved. So being a homeowner and a debtor was just peachy, for a long time, as long as the dollar was going down in value, and housing prices kept going up.

The problem is, politicians ultimately control this cycle. They got greedy between 2000 and 2007, went overboard with debt. This killed the goose that laid the golden egg. Now the system is operating in reverse -- which is deflation, and they can't easily stop it. Prices are going down, and so are wages and incomes. They can't figure out how to make these things go up again, and they can't devalue the dollar without causing unintended consequences (oil prices spiking, and strangling consumer spending, causing more deflation).

The problem you're referring to, regarding the "Experts", is that very few of them had the fortitude to go against the status quo that is making all these bankers millionaires and billionaires, that is causing many American's housing values to double and triple. "The Herd" basically ran straight off the cliff, into the canyon below.

[bradykp]

renting vs buying changes depending on how expensive it is to rent vs how expensive it is to buy. suze orman typically doesn't recommend buying to younger crowds because they are more moble than older crowds. things change, and it's different for different groups of people.

if you're working for the rest of your life at a manufacturing plant in poughkepsie NY, buying is ok, because you're not going anywhere (unless the company goes under).

but for many young professionals who know they will be changing jobs 4-5 years, buying might not be a good idea.

there's no answer for everyone.

[Java378]

Suzie Orman is like a broken clock. She is sometimes right. But, most of her advice is probably based on personal biases of the top of her head. Once she said, "A messy house = messy finances?" Hmmm.

Yet, my messy house isn't foreclosed like so many across the country and I'm not homeless.

[texdav]

I see no sense in that at all. Its a basic saying about how attentive a perosn is ;nothing else.The same is poften said of messy house;messy life. Like most sasyinfs it more often the case than not from what I have seen.