Monday, February 16, 2009

Suze Orman, financial messiah?

Do you like Suze Orman? She's pleasant enough to watch and soothing to listen to, especially when we're stressed about money and need extra encouragement. You know, those "count to 10 and breath" moments when we glance at our bank account balances and our hearts sputter in our chests. Suze's calm, you-can-do-it prose often centers us again...but is the "bottle-blond former waitress and self-described '55-year-old virgin'" just a farce?

"Why the masses continue to invest their faith in Suze Orman in the wake of a financial meltdown she never saw coming is a more timely question," suggests James Scurlock, columnist for TheBigMoney.com (a favorite site of mine).

According to Scurlock, Suze has no patience for statistics and often sounds off stats that sound good, but have no real basis behind them. These include her love of "dollar cost averaging," (buying the same stock over and over again as it falls), which is a favorite investment method of hers, and that the stock market returns 11% per year ("I have a million dollars in the stock market, because if I lose a million dollars, I don't personally care," she once told the New York Times.)

One fallacy in particular -- that the reason we are in debt is due to our own psychological causes -- infuriates Scurlock, as a myriad of real studies have shown that personal bankruptcies are caused primarily by catastrophic events like divorce, job loss, and, above all he says, medical bills and that most of us are struggling with a gap between our income growth and the soaring cost of necessities like housing.

Who is struggling these days, according to Suze? "
People who grew up without much money and later earn a comfortable living sometimes spend too much to make up for what they didn't get as children. ... People who feel entitled to the good life, or are unconsciously copying a mother or father who lived beyond her or his means. ... If you feel the need to impress people with what you have rather than with who you are, you are at high risk for credit card abuse.
"This from a woman who spends $500,000 a year chartering private jets and who sells 'Cruise With Suze' packages on an Italian luxury liner. (She has also hawked for GM, claiming that leasing a luxury car — you know, the kind that people drive to impress others — is a terrific financial decision," says the article.

Suze, it seems, has been lying to us:
What we're supposed to love about Suze Orman is not her knowledge and certainly not her prescience, but her ability to turn circumstances to her advantage, the resilience of a waitress-turned-bank-vice-president who squandered a great gig only to make a fortune off of you and me by having the courage to be rich. Despite her obvious flaws, we admire Suze so much that millions of us will fork over more of our dwindling dollars for her new [$50] FICO kit because she now assures us that a high FICO score is the key to our financial future. True, her previous book promised us that we would never be a financial victim again. Not only that, but we would receive the life we deserved, which sounds suspiciously like one of those insidious credit card offers, but whatever.
"When was the last time an evangelist predicted anything correctly or the phone psychic told you something that you didn't already know? So what if we cannot retire because Suze has been telling us to buy stocks and trust the fat cats? Suze possesses the courage to be rich. The rest of us are suffering from a collective emotional roadblock," posits the story.

Ouch. There are many bitter truths to Scurlock's argument, especially because of this: What do any of us have to show for the years we've been following Suze? Aside from the fact that she has no real know-how in the finance world, she has created a mega-brand around her name and niche, and has used your disadvantages to her advantage. Suze has made millions of dollars feeding off our insecurities and is laughing all the way to the bank. All of a sudden, we feel violated. [TheBigMoney]

6 comments:

Money Minder said...

I lost a lot of respect for her when I learned that she is on FICOs payroll. They PAY her to talk incessantly about FICO scores, but she rarely discloses her relationship with them - which I think is a conflict of interest.

kay said...

I don't see nothing wrong with Suze promoting FICO. Because in most cases your FICO score plays a big part in everything. Everybody has endorsements or sponsers. This is nothing new. And because she is rich now, people want to comment on how she spends her money. People follow Dave Ramsey or Donald Trump's money advice and they both claimed bankruptcy. I think people should take advice from people that they feel can help their situation. FYI: She is the one of the only financial gurus that I know of that offered free downloads for two of her books.

Diana said...

This article is ridiculous. It's always unfair to post someone's quote out of context the way this article does. Suze Orman DOES realize that most bankruptcies occur due to medical problems. I watch her show--I've heard her say this. I think her financial advice is real and applicable to the economic conditions of today.

Fabulously Broke said...

I listen and read everything from everyone - Ramsey, Orman, Vaz-Oxlade, and I take it all with a grain of salt.

I don't care that she shells out for FICO, but I don't like that she doesn't say she's a rep for them. That's what I find deceitful, not that she talks about FICO specifically.

Sure, bad things happen, especially with the lack of medical insurance in the States (I'm from Canada, no worries here), but that's why they advocate savings to pay for those unfortunate circumstances.

It's only when bad things happen, that people reach deep down inside and realize they need a change.

You can follow anyone's advice, but no one should blame PF advisors or people clamouring for your ear for their bankruptcy or financial situations.

*shrug* There are also rare cases where people could not have foreseen that $100k medical bill, or whatever, and those are the people I really feel sorry for.

Everything is a business. Anyone who peddles PF basics is just selling to those who demand it.

Fabulously Broke said...

I should also mention that it's your money, and not Suze's.

She's free to do what she wants, and she has millions so she keeps it safe with it earning a low interest rate because she can.

She doesn't have to follow her own advice. She isn't the one in debt, without any savings.

We have to take more risk as average citizens because we DON'T have millions, and we need the stock market to help us get to those millions in 30, 40 years whereas Suze has 'em now.

In her position, I'd do pretty much the same thing - throw it into bonds and live off the interest, but I wouldn't be as extravagant as she.

Meg said...

Like FB, I listen to a lot of different people and take it all with a grain of salt. However, I would like to say something about the following:

"One fallacy in particular -- that the reason we are in debt is due to our own psychological causes -- infuriates Scurlock, as a myriad of real studies have shown that personal bankruptcies are caused primarily by catastrophic events like divorce, job loss, and, above all he says, medical bills and that most of us are struggling with a gap between our income growth and the soaring cost of necessities like housing."

I don't doubt that big catastrophes push people over the edge -- and sometimes bankruptcy really is unavoidable. However, even in cases of job loss, divorce, medical bills, etc., often bankruptcy could be avoided if people hadn't been living a spending spree and instead had been saving away for those unforeseen emergencies.

Some people live paycheck to paycheck because they're making minimum wage, but there are a lot of people living paycheck to paycheck and a disaster away from bankruptcy who absolutely shouldn't be!

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