Suze Orman is a financial powerhouse. After rising from humble beginnings, she took a potentially life ruining financial set back and turned it into the career of a lifetime. With a popular show, a call-in program, and six books under her belt, Suze Orman has established herself as an authority on all things green and gold. Her latest book, Women and Money, tackles the specific struggles that women have with managing money and growing wealth. The book opens:
I never thought I’d write a book about money just for women.
I never thought it was necessary. So then why am I doing just
that in my eighth book? And why now? Let me explain.
All my previous books were written with the belief that gender
is not a factor on any level in mastering the nuts and bolts of
smart financial management.Women can invest, save, and handle
debt just as well and skillfully as any man. I still believe that—
why would anyone think differently?
So imagine my surprise when I learned that some of the
people closest to me in my life were in the dark about their own
finances. Clueless. Or, in some cases, willfully resisting doing what
they knew needed to be done. I’m talking about smart, competent,
accomplished women who present a face to the world that
is pure confidence and capability. […]
Upon further investigation, I learned that so many women in
my life—friends, acquaintances, readers, people from my TV audience—
all had this stumbling block in common: an “unknown
factor” that prevented them from doing the right thing with their
money. Maybe it was fear of the unknown for some; maybe for
others it was a little streak of rebellion for holding it together in
every other part of their lives; or maybe it was just that they felt
that things had gotten so far out of hand, they were embarrassed
to ask for help and reveal just how much they didn’t know.
Women have been thrust into an entirely new relationship
with money that is profoundly different from anything we have.
Suze is right–many of our relationships with money are dysfunctional and going nowhere. So, when Clutch finally got in touch with Suze Orman, we made sure to ask her the burning questions that would be on our minds right now in order to take steps to fix this damaged relationship. We asked about everything from fixing wrecked finances to buying a home in a major city to budgeting on a freelance income. The information is below–make sure you use it wisely.
Q: What do you think are the most damaging messages that women receive about money?
Suze: That money is for everybody else’s enjoyment but their own. The message is one that is passed not only by words, but it is also passed biologically. A woman has the ability to give birth. A woman has the ability to feed that which she has given birth to. So it is a woman’s nature to nurture. Because of that, it is her natural instinct to give, give, give, give, give. What a woman doesn’t know how to do very well is to take. She doesn’t know how to take her own power to control her destiny.
To this day on my show–and we’re going on seven years, we get tens of thousands of emails–I have never once had a man write into the Suze Orman show and say “I have cosigned a loan for my son/my daughter/my girlfriend to buy a car/to buy a house/to get a credit card/to get a student loan.” Never once has a man said that. Woman, after woman, after woman calls into my show and says:
“Suze, I cosigned a loan for my boyfriend to buy a car. Now he’s gone and I’m stuck with the bill.”
“Suze, I cosigned a loan for my niece so she could go to school, she hasn’t been paying it and she’s not going to pay me back.”
So the message that has been infiltrated down through our genes, through our words, through our actions, is that what a woman is to do with her money is to help others with it. The message that a man gets is the purpose of money is for him to take care of himself and then his family. And it is the exact opposite with a woman.
And I’ve never gotten an email from a man saying, “I’m making $100-200,000 a year and I’m embarrassed because my friends are only making $30,000. What can I do?” A man who is only making a $100,000 a year is embarrassed when his friends are making $200,000 a year and he is not making more. A woman, on the other hand, is embarrassed if she is making $100,000, all her friends are making $30,000, she’s inherited a million dollars and I get an email asking, “How do I hide my money?”
You understand the tremendous difference?
And where does that difference come from?
Is a woman intelligent enough to invest? Of course she is. Is a woman intelligent enough to understand the stock market? Oh give me a break. In my opinion, a woman has more intelligence in her little pinkie than most men have in both their hands. But that’s not the point. The point is a woman will not give to herself as much as she gives of herself?
Women have been programmed to give more and not less.
Q: What do you think is the most important thing for young women in their 20s and 30s to know to secure their financial future?
Suze: Time is the most important ingredient in your financial future recipe. Every second that you spend at a younger age not being involved with your money, not taking the power to control your destiny, not making the most you can out of the money you have, you are not wasting $10,000 or $20,000, you are wasting hundreds of thousands of dollars.
Let me tell you why:
You are 25 years of age. You put a hundred dollars a month into a Roth IRA. You do that for 40 years with normal market returns over those 40 years. You will have one million dollars by the time you are sixty-five. You wait until you are 35. You think, “What’s the difference? Why should I start when I am 25?” A hundred dollars a month is $1200 a year, is $12,000 over those ten years. I can take that hundred dollars, I can go to the bars, I can buy another this or that. What difference does that $12,000 dollars make?
If you start at 35 rather than 25, putting a $100 dollars a month away into that Roth IRA with normal market returns, you would have only $300,000 at the age of sixty-five rather than a million. Those ten years cost you $700,000 dollars and that is just at $100 dollars a month.
Women, ages 25-35, need to be putting away money little by little for their future. That is number one.
Number two: You need to say no out of love rather than yes out of fear.
You need to love yourself so much that when a boyfriend or a sister or a girlfriend–anybody–comes to them and says, “Will you cosign a loan for me?” you have to say no. You must say, “I love myself so much that I have to say no to you.” Versus, “Yes, I’ll cosign for you,” because they are afraid that their friend, their boyfriend, whatever won’t love them.
A woman needs to get involved with her money early, should always say no out of love instead of yes out of fear, and it is very important for a woman to never talk herself into trusting anyone. That is number three.
You have incredible judgment, ladies. You are born with divine knowledge within you. And when you doubt yourself, and when you doubt that you know better than somebody else, you are making one of the biggest mistakes in your life.
Q: As we are heading into a recession, what would you recommend is the best way to cut costs and maintain financial stability?
Suze: You start by doing little things. The main thing that you start with is your FICO score. That three digit number that determines the interest rates you pay on everything. So when you’re younger, you obviously have debt. So the question becomes how can you have the most intelligent debt out there? You have the most intelligent debt when you have the lowest possible interest rate. You can’t get a low interest rate if you have a low FICO score. So your first move is to make sure you have the highest possible FICO score you can. FICO scores run from 300 to 850. Your goal is to have a FICO score of 760 or above. The higher your FICO score, the lower your interest rates.
But FICO scores just don’t determine your interest rates. Your FICO scores also determine if a landlord will rent to you, if an employer will hire you, it is starting to determine if a hospital will take you in, and it also influences your car insurance premiums. So, if you really want to start getting involved with your money, you should make sure that you have the highest FICO score possible. You have a high FICO score when your debt load is low, you’re never late on your bills, you don’t go over your credit limit and you’re not opening new credit cards every week. That starts to establish a great FICO score for yourself. That’s the first thing that you should do.
Next, you’re going to obviously be making money. Hopefully, if you’re working for an employer that has a 401K plan that happens to match your contribution, you put in a dollar and they give you fifty cents. That’s an automatic fifty percent return on your money. You cannot afford to pass that up. So no matter how much debt you have, no matter how little money you have, you should sign up for that today. That’s only up to the point of the match.
Next, you should all have what I call a Save Yourself account. This is an account where you have at least eight months of an emergency fund, so if anything were to happen, you have a cushion so that you can always save yourself. It is also called a Save Yourself account so that if you are in a relationship that you don’t want to be in, you get to leave. You can save yourself. You can stay in a relationship because you want to be in one, rather than you have to be in one.
Q: I have noticed that there is not much quality financial advice to be found in mainstream women’s magazines. Most of the usable financial information is contained in targeted magazines like Money or Kiplingers, or in women’s business magazines like Pink. If a woman is not entrepreneurial and not starting her own business, where should she go for financial advice that is at her level?
Suze: Very honestly, if I were her, I would be reading my column in Oprah Magazine every single month. You don’t have to buy it – just go to some magazine store, open it up and read it. It will take you ten minutes. You should be reading me on Yahoo! Personal Finance. That doesn’t cost you anything. If you want, you can watch the Suze Orman show every Saturday night.
And do I think that if you don’t know a lot about money, that the place you should come to learn about money is from me? You betcha! I don’t think anybody cares about you as much as I do. So you should read my books. Don’t buy them, go to the library and take them out. But you should take advantage of every single thing that I have dedicated these past thirty years to creating to make your life easier for you, in an honest way, so that nobody ever takes advantage of you again.
Q: Let’s talk about the Save Yourself plan from the latest book.
Suze: I designed the plan so that women just needed to give me just one day per month. That’s because women are busy and they don’t have a lot of time. So I thought very carefully about this. What could I put down in a very simplistic format where women would have the ability to actually implement what I am asking them to do, where it did not take away a lot of time from those things that they need to do. The reason that I set up the Save Yourself account – and you should tell ALL women to go to www.saveyourself.com and then enter the code 701.
Clutch: Oh, one minute – wasn’t the deadline on March 31st, 2008?
Suze: I am pretty sure we can get TD Ameritrade to extend that deadline by a few months. Tell everyone to keep doing it because I have the feeling we are going to extend the deadline. They should just try it because if they try it, they find they will get in, and they will be fine.
So, if you think about what is happening with the interest rates – what the Feds just lowered yesterday to 2.25%- the interest you will get on your savings and money market accounts will drop. What is important right now is not the interest rates. The most important thing now is the $100 benefit. The way the account works is that you put in $50 dollars a month for twelve months. And if you put in that fifty dollars a month, $600 total, at the end of the year, Ameritrade will give you $100 dollars. You could put more in if you want, but that’s all it’s asking you to do. FDIC insured. No fees, no charges, if you can’t continue with it, you can stop. At the end of twelve months, if you managed to put in fifty dollars every month, you can do anything you want with your money, no strings attached. If you put $50 a month away, and receive a $100 dollar benefit at the end of the year, you have made about a 20% return on your money.
Q: You can even roll it into an investment account?
Suze: You are already in an investment account at Ameritrade. It is a money market deposit account within a brokerage account.
Q: We all wish we would have started in a good place with money. But let’s say you have already made mistakes with your money, and you are already supporting a family or in heavy debt. What should someone in that situation do in a time of hardship?
Suze: You can build a financial base little by little. You can only do what you can do. When you are really, really burdened with a lot of pressure from parents, from everything, just take one step at a time. Just know that if you save what you can, if you don’t spend what you don’t have, if you have the lowest interest rates, and you take advantage of the little things, you can start building your foundation. Let’s say you have a life insurance premium or a health insurance premium or a car insurance premium. Most of you pay that premium monthly. If it were possible for you to pay it out in one lump sum, you would save eight percent. When you pay it out monthly, you aren’t paying less. If you actually added up what you are paying out for the twelve months, you would find that you are paying more than the lump sum. That is because they charge you interest to carry the balance.
Clutch: But none of you spend time to figure that out.
Suze: None of you spend the time to figure out if you just paid more than the minimum on your credit cards, you would save a lot more money. If you just pay the minimum every single month, it would take you thirty or forty years to get rid of that debt. But if you paid $200 every month on that debt, you would be out of debt in three or four years. Maybe five years. There are little things you need to understand about how to make more out of less money.
Q: Can you recommend money strategies for young women who are freelancing, self-employed, or trying to launch a side business?
Suze: These types of endeavors put you in a position where it is difficult to save money and puts you in a position where you don’t have a 401K or health insurance.
Here’s the thing women: when you start a business, you think that just because you are working, and you are bringing in money, that you are making money. The key question is are you bringing in money and making enough money so that not only can you pay all your bills but you can also play yourself enough so that you can put money in a retirement account. Ask yourself, is this a viable business strategy? It’s not enough for you to work and go into credit card debt to fund your business.
You are working to make money.
So if in fact you are working, you are self employed, you are about to start a business, you need to know, bottom line, are you making money or are you not?
You have got to compare your profits against your losses. Your expenses against your income. You better have enough money when it is all said and done to make your retirement account, to have a save yourself account and to be able to do those things.
The other thing is that it is very easy to get into something and very hard to get out. So if you do plan to start businesses, women like to do something I like to call money pod. They like to pod with another. I have this idea, want to do it with me? Let’s do this, let’s do that. I mean, how many men have investment clubs that are popular? It is always women getting together. It’s important that if you do [join up], that you have strategies in case it doesn’t work out. How do you end the relationship? How gets what? Do you have key woman insurance, in case one of you goes down? Do you run this like a true business or do you run this like a friendship that makes money?
And you have to know when to go for it and you have to know when to call it quits.
Q: Despite the housing crisis that we are currently facing, many of us still want to purchase some kind of property. How can we plan for homeownership, specifically those of us who live in a major city with high home prices?
Suze: Your decision is going to have to be is it buying a home that you live in that matters to you, or is it getting involved in the real estate market period, so you own a home somewhere? In very high real estate areas, such as San Francisco or New York, even when the real estate is going down it still might cost you half a million to a million dollars for a very small place. Then the question becomes does it make sense to own real estate in high end cities even with the real estate demise? I would be here to say to you it most likely does not. But that does not mean that you cannot be a real estate owner. There is nothing wrong in some of these areas that have been hit and will be hit for a few more years to come. You can buy it, rent it out – if you have enough working capital, in case the person you are renting to can not afford to pay the mortgage – and you can afford to own real estate.
When real estate comes back, which will not happen for a number of years, if it did come back or if you were willing to buy a place, somewhere you may want to retire, you could have someone paying your mortgage. So twenty or thirty years from now, you could have a house that is fully paid for that you could move to.
Q: Is it better to buy a condo or co-op in a major city, or should you hold out for a single family home or townhouse?
Suze: It depends on what you can afford.
It is all about affordability.
However, buying a condo, you have to really understand the cost that comes with a condo. It’s not even about the affordability. You have to understand that the condo board runs that condo. Understanding that you have neighbors who you live next to who might make decisions about how you have to live that you will not like. Understanding that you might buy into a condo that has some amenities, and because the condo board wants to save money those amenities you bought into are gone. Let’s say there is a pool at your condo and they throw kid parties everyday in it. Or they decide no kids are allowed in it. Or the condo association fees are constantly going up. Or the building wasn’t built that great anyway so you are now having assessments of all kinds in order to make repairs.
There are tremendous costs within a co-op and/or a condo that you will not be subjected to in a very strange way in an individual residence. There are also emotional and psychological costs of a condo as well that you are not subjected to in a single family residence. For instance, I have two condos. One, I went to in Florida the other day. I walk out into my hallway and it was painted yellow. I was like “What the hell is this?” The condo board had decided that all the hallways had to be painted yellow, even though I had had mine custom painted by an exquisite paint company to match the color of my unit, which was a ten times better paint job than whatever they did. Did they ask me? Did they consult me and ask if that’s what I wanted? No! And they didn’t have to. And that’s how it is.
So be very careful – there is a tremendous difference between condos, co-ops, and single residency. It is more than what will you make the most money on. It’s what will you enjoy living in more?
Q: Last question: What do you say to the women who are still waiting for Prince Charming to come and rescue them from their financial problems?
Suze: Think Charlotte from Sex and the City – the kind of woman who won’t buy her own place because she feels like that’s giving up.
It’s simple – if you’re still waiting for Prince Charming, you’re the biggest fool I know. That’s what I have to say to you. Have you lost your mind? You’re waiting for Prince Charming and you’re then twenty five or thirty five and now you’ve met Prince Charming. And now Prince Charming is taking care of you. Maybe now you’re Princess Charming as well. And now you’re forty-five or fifty-five or sixty-five. And now, Prince Charming wants another thirty five year old. Or Prince Charming leaves, because you never took your power to control your own destiny. And when he leaves, he takes everything with him because Prince Charming was smart enough to get you to sign a prenuptial agreement. And now, you’ve lost it all. And now you, like the other thousands of women who write into the Suze Orman show are at 55, 60, 65 having to start all over because you waited for Prince Charming when you were twenty-five or thirty five years old.
You want to be that stupid? Fine.
But that is anything other than an intelligent woman.
Clutch: Luckily, those aren’t our readers here at Clutch.
Suze: Yes, very lucky indeed.
To learn more about Suze Orman please visit
(Photo Credit: Marc Royce)