Suze Orman on Oprah

[crisi]

Exactly. The advice she is giving is great for those who can realistically bank that kind of money. If we lived on half of our income we would be doing it in a cardboard box. There is no way we could pay for mortgage(even if we downsized) power, water, gas and food. Much less keep DD in clothes and shoes. It simply not possible for most lower middle class families to do what she is suggesting and it irritates me that she makes people feel bad b/c they don't have the income to live by her rules. She has money. lots and lots of money. She probably doesn't remeber at this point what it's like not to have assistants, personal trainers, personal chefs, and the ability to jet off at a moments notice anywhere you want to go. It is really easy to suggest that people cut till it hurts when you don't rquire that of yourself.

I don't think you are giving people of modest income enough credit. I'm no fan of Dave Ramsey, but one thing that my time on the budget board has taught me is that his methods can be applied by people of modest means (or not modest means) to pay off incredible amounts of debt and create enough savings to establish financial security.

Budget Boarders are continually impressing me with their debt paydown on small incomes. And their savings. We've seen people do it on this board over and over again. And it is inspirational.

 

[princessmom29]

I don't think you are giving people of modest income enough credit. I'm no fan of Dave Ramsey, but one thing that my time on the budget board has taught me is that his methods can be applied by people of modest means (or not modest means) to pay off incredible amounts of debt and create enough savings to establish financial security.

Budget Boarders are continually impressing me with their debt paydown on small incomes. And their savings. We've seen people do it on this board over and over again. And it is inspirational.

I consider myself of modest means soI am speaking form the place where I am. It is NOT POSSIBLE to save have of our combimed income and still feed and clothe my child, no matter what I cut out. I have a savings that I contribute to every month, but I CANNOT put half my income in there and still survive. I do not doubt that people of modest income can save and have an emergency fund, but I know that I cannot live on half the way she preaches to do. It is simply ont possible.

 

[princessmom29]

I think Suze Orman probably does know what it is like to cut back until it hurts. If you really listen to her or read some of her books, she was once in a ton of credit card debt. For awhile, she even lived in her car/van. I believe she does know what it is like to go without. I do follow Suze Orman quite closely. I watch her show every week and have read several of her books.

With that being said, I do not have a 8-12 month emergency fund (it is more like 2-3 months), we are building it gradually while paying down our other debt. DH and I are young professionals with tons of student loans, we each have a car loan because our prior vehicles stopped running, we have some credit card debt due to living expenses while we were taking the bar and finding employment because you have no EF when you are in school for most of your life.

With all the financial gurus on t.v. and with books, alot of time you have to really listen to their advice and do what works for you. No, I'm not going to just get an 8-10 month EF out of thin air. It will have to be built up gradually. All my cc debt isn't going to be paid off next month, we are doing that gradually as well. We also go out to eat about twice a month and have a certain amount set aside for entertainment (not at lot but something). Why work 60-80 hours a week if you can't at least have a little fun?

I know her story, but I siad I don't think she really remembers what it is like. I trhink she has gotten out of touch with what it is like to struggle to make ends meet b/c she has soooom much now. It is great that you are donig what works for you, and we do something pretty similar. My point I guess was that most of us in lower middle class American cannot possibly just start putting half of our income into savings all at once. It is just not a realistic expectation.

 

[disneystacy]

From what I took away from the show is that Suzy was trying to explain that if you get laid off tomorrow your income will be cut in half (2 income family) so try to cut the fat and try to live on 1/2 now because you may be forced to in the near future. Part of the problem is people are still living above their means at all income levels.

 

[Disneefun]

Whenever a guru says something like "live on half your income" I look at it as a challenge, not a gospel truth. Maybe you (generic "you" not a specific poster) can't live on half your income, but can you live on half of half? (if that makes sense, lol).

I think a lot of people have some room to cut and change their savings habits. Maybe not all at once and maybe not dramatically, but I just look at these gurus as encouraging people to do what they can and to try a different way of thinking. Whether they "know what it's like" or not isn't the point. They are giving you something to strive for. Maybe you can't live on half your income as she suggests, but she's getting you to think, isn't she? She and other gurus are getting people to think about living differently permanently or at least thinking about what would happen in a worst case scenario. She's getting you to ask yourself what do you really need and what is optional? What could you cut if you had no other choice? Living on half is the "ideal" but just because you can't achieve that doesn't mean the advice is worthless. Living on less, any less, during economic bad times and good is a worthy goal to protect yourself if bad things happen. And the worst that can come out of striving for that is that you save more than you currently do. And that certainly wouldn't be a tragedy.

 

[Kathi OD]

From what I took away from the show is that Suzy was trying to explain that if you get laid off tomorrow your income will be cut in half (2 income family) so try to cut the fat and try to live on 1/2 now because you may be forced to in the near future. Part of the problem is people are still living above their means at all income levels.

Depending on who makes what, the income could drop less than 1/2 or more than 1/2. I don't know of very many couples where both the husband and wife make the same amount of money. Usually one makes more than the other, and in some cases it's a lot more. So following that logic you really should be trying to live on whatever the smaller income is.

 

[MEM]

Depending on who makes what, the income could drop less than 1/2 or more than 1/2. I don't know of very many couples where both the husband and wife make the same amount of money. Usually one makes more than the other, and in some cases it's a lot more. So following that logic you really should be trying to live on whatever the smaller income is.

I skimmed the Oprah website but it seems Suze is referring to single income as well as dual income families. We are a single income family, with a paid-off home and auto, but there is no way in heck that my family could live on half of my salary.

 

[Kit'smommy]

This is one area where the journey starts with a single step. If all you can save is $10 per paycheck, then you will at least have that $10 if you need it. I think a lot of people have at least some things they can cut back on, if they take an objective look at their spending. If you can save 50% to build up a substantial cushion, great. If not, save what you can. At least it is a start, no matter how small.

I disagree with a lot of what DR and SO recommend. I disagree having a strong knowledge of finanace and discipline to come up with a plan and follow it on my own. However, I believe they both have some great advice for people who want to make changes to their financial lives and don't know where to start. While I don't think either's plans are perfect at least they are a step in the right direction.

 

[Pigeon]

Oh no, the "class warfare" warning shot!

Recognizing that financial realities are different for people making 30K/yr are different than those making 300K is hardly "class warfare."

If you choose to upscale your lifestyle accordingly when you make the higher amount, that's your choice, but a big fancy house is a want, not a need. If you choose to hire people to cut your lawn, clean your house, etc., again, that's not exactly a genuine need. So yes, it is easier to live on $150K/year and save half than it is to live on $15K. You might have to give up some of the keeping up with the Joneses that generally goes with the higher incomes, but that's much easier than trying to cut your bare bones food budget in half at the lower income levels.

 

[tinker&belle]

I consider myself of modest means soI am speaking form the place where I am. It is NOT POSSIBLE to save have of our combimed income and still feed and clothe my child, no matter what I cut out. I have a savings that I contribute to every month, but I CANNOT put half my income in there and still survive. I do not doubt that people of modest income can save and have an emergency fund, but I know that I cannot live on half the way she preaches to do. It is simply ont possible.

I don't think her advice works for people in a situation where they already have modest means. I think she was talking to more upper middle class. Did you notice all of the people on there had over 6000 in living expenses a month? Unless they have high mortgages I'm sure that includes many luxury purchases (the lady who was laid off still got manicures!)

We decreased our income by about 1/3 when I quit my job to stay home. I still work a few mornings a week at my daughter's nursery school so that helps. I think we could still cut more (we budget a small amount to eat out once or twice a month, my husband still gets about 80 a month for lunches through the week, and I have a little money to do things or grab lunch with my DD through the week) besides that, the only thing left to cut would be cable or the amount we are debt snowballing from selling DH's car and buying a cheap car. Can we cut our expenses in half? No, because we already have been cutting. But if this had been two years ago when I was working and before DD we could have easily.

I think Dave Ramsey's method might work better for people of modest means than a general "half". We have been using it since January and we are excited about where it is taking us.

 

[PatriciaH]

Double post!

 

[PatriciaH]

We had $20k in the bank (not including other investments) when we moved from MA (4 and 1/2 yrs ago) and we never made more than $70k a year. We have no kids either though. We had zero debt as well. Thanks to our move to Florida we are now in debt and have about a months savings left. Great......

 

[princessmom29]

Whenever a guru says something like "live on half your income" I look at it as a challenge, not a gospel truth. Maybe you (generic "you" not a specific poster) can't live on half your income, but can you live on half of half? (if that makes sense, lol).

I think a lot of people have some room to cut and change their savings habits. Maybe not all at once and maybe not dramatically, but I just look at these gurus as encouraging people to do what they can and to try a different way of thinking. Whether they "know what it's like" or not isn't the point. They are giving you something to strive for. Maybe you can't live on half your income as she suggests, but she's getting you to think, isn't she? She and other gurus are getting people to think about living differently permanently or at least thinking about what would happen in a worst case scenario. She's getting you to ask yourself what do you really need and what is optional? What could you cut if you had no other choice? Living on half is the "ideal" but just because you can't achieve that doesn't mean the advice is worthless. Living on less, any less, during economic bad times and good is a worthy goal to protect yourself if bad things happen. And the worst that can come out of striving for that is that you save more than you currently do. And that certainly wouldn't be a tragedy.

The show did not come over to me this way at all. It was like she was preaching at people to do exactly as she said and did not even consider another way.

I don't think her advice works for people in a situation where they already have modest means. I think she was talking to more upper middle class. Did you notice all of the people on there had over 6000 in living expenses a month? Unless they have high mortgages I'm sure that includes many luxury purchases (the lady who was laid off still got manicures!)

We decreased our income by about 1/3 when I quit my job to stay home. I still work a few mornings a week at my daughter's nursery school so that helps. I think we could still cut more (we budget a small amount to eat out once or twice a month, my husband still gets about 80 a month for lunches through the week, and I have a little money to do things or grab lunch with my DD through the week) besides that, the only thing left to cut would be cable or the amount we are debt snowballing from selling DH's car and buying a cheap car. Can we cut our expenses in half? No, because we already have been cutting. But if this had been two years ago when I was working and before DD we could have easily.

I think Dave Ramsey's method might work better for people of modest means than a general "half". We have been using it since January and we are excited about where it is taking us.

This is exactly what I mean. Real families in real situations can rarely just cut their expenses in half. I couldn't pay 6000 a mont in living expenses with ALL of our income much less half!

 

[chigirl]

Recognizing that financial realities are different for people making 30K/yr are different than those making 300K is hardly "class warfare."

If you choose to upscale your lifestyle accordingly when you make the higher amount, that's your choice, but a big fancy house is a want, not a need. If you choose to hire people to cut your lawn, clean your house, etc., again, that's not exactly a genuine need. So yes, it is easier to live on $150K/year and save half than it is to live on $15K. You might have to give up some of the keeping up with the Joneses that generally goes with the higher incomes, but that's much easier than trying to cut your bare bones food budget in half at the lower income levels.

I really disagree that "people in higher incomes" want to keep up with the Joneses...it is people in ALL income brackets. I have employees working at my store who qualify for the earned income credit and they get $3000 back on their income tax returns and instead of putting it into savings to lift themselves out of bad situations, many of them buy big screen plasmas or nex furniture sets for their apartments. That is an example...people in the upper brackets who have genuine money (no debt, etc..) are like that because they lived below their means.

The best thing Suze ever said was "People get into debt spending money on things they don't need to impress people they don't know or like"...I see it happen all the time and that entitlement and arrogance is what got us into the mess we Americans are in now...people making $60k a year getting qualified to buy a $400k house. We are ALL paying for the greed of the people who gave the loans and the stupidity and greed of the people who took them. It is going to be a long, long time before America gets back on track from this mess.

 

[Karlzmom]

I agree with you to a point Karlzmom. However, a lot of people in higher income brackets increase their spending because they want to have and do certain things not because their needs actually exceed those of people who make less.

.

True, but part of the question is defining "need." Obviously, basic survival is one set of needs....all persons require food, shelter of some basic sort, etc.

Sadly, the farther up the corporate ladder one goes, the expectations of others start to apply pressure, don't let anyone kid you that you can buy your suit at JCPenny or KMart and remain on the fast track. Sadly, there are people who will judge a worker's competence on whether or not they have the "right" shoes, or if their hair is expensively styled. Add in the networking lunches and suddenly you are spending well above a basic "need", but it is necessary all the same to advance or even keep your position. Most people looking to hire a person for a profession expect that a successful person would have the trappings of success-if they look like they are just making it, then its assumed they aren't very good at what they do or they'd be making more....very snap judgment, but very, very real. Hey, I like that....an affluent worker's "needs" may not be any larger, but their "necessities" are! I make more than my parents did combined and still can't quite figure out how they did it....

 

[crisi]

I consider myself of modest means soI am speaking form the place where I am. It is NOT POSSIBLE to save have of our combimed income and still feed and clothe my child, no matter what I cut out. I have a savings that I contribute to every month, but I CANNOT put half my income in there and still survive. I do not doubt that people of modest income can save and have an emergency fund, but I know that I cannot live on half the way she preaches to do. It is simply ont possible.

I think I'm talking more about the $20 grand than the half your income - although I wonder what people do when they loose a job if they can't live off half their income. I guess that's what tent cities are about.

 

[crisi]

Recognizing that financial realities are different for people making 30K/yr are different than those making 300K is hardly "class warfare."

If you choose to upscale your lifestyle accordingly when you make the higher amount, that's your choice, but a big fancy house is a want, not a need. If you choose to hire people to cut your lawn, clean your house, etc., again, that's not exactly a genuine need. So yes, it is easier to live on $150K/year and save half than it is to live on $15K. You might have to give up some of the keeping up with the Joneses that generally goes with the higher incomes, but that's much easier than trying to cut your bare bones food budget in half at the lower income levels.

As a reality check - it takes more than $150k a year to afford that sort of lifestyle and still be financially secure in many parts of the county (including here - the Twin Cities). We have a household income in excess of that (and two kids) and I couldn't have someone clean my house, cut my lawn, have two nice cars, a really nice house, go on vacation every year, etc. and not be living beyond my means. That amount of money lets you live in a nice house in the burbs without the granite countertops or whirlpool tub in the master bath, drive a car similar to a VW Passat and another car that is cheaper - but both new (or drive 'fancier' used cars). I spend my time looking at my apparently more affluent neighbors and wondering where the money comes from for the BMWs and half a million dollar houses.

I know - because I used to live on $18k a year - that $150k a year sounds like you'd be living the high life. But somehow it doesn't work that way.