Suze Orman Says “Show Me the Money”

Financial expert Suze Orman makes a living giving advice. Her book “The Money Book for the Young, Fabulous & Broke” is a go-to book on how not to mess up your life, and how to fix it if you already have. I suggest you read it. It’s cheaper on Kindle. Suze would appreciate you saving a few bucks. Maybe you can buy a couple copies and share them, or one of you, an enterprising one, would like to rent it to others. Her surprising view on budgets is interesting. Don’t restrict, change a few things and head toward success.

Watch a few segments of her “Can I Afford It?” segment to see if you are on track to retire. Here, Josh wants to look cool and buy a Tesla. Is it a good call?

Let’s put this in terms you can relate to–not many Teslas in our parking lot. There’s a phone in every pocket, though.One kid said, “Miss, I’m going to be out Friday. I have to get my iPhone.” Hmmm….

The iPhone6 is a big consumer deal. People are camping out. Is an iPhone6 really necessary? Is an iPhone necessary at all? What about team Droid here?

In order to make this purchase, first consider needs vs wants. Do you need a phone at all? It’s a big expense. There’s an opportunity cost to your phone–it’s not only the cost of the bill, it’s the cost of the other things you could do or buy with that cash. You could invest. You could save for college. You could blow it on Pop Tarts and Monsters. Who knows. Give it some thought.

So, Suze Orman would say deal with your needs first, put an 8 month emergency buffer together, fund your company’s retirement plan for you, your 401K (you don’t have this yet) up to the percentage your company matches, then fund your Roth IRA up to the $5K allowed each year by law.

Ramit Sethi, of the I Will Teach You to Be Rich camp would say something similar but argue you can spend lavishly on things you really love and value, but don’t waste money on stupid things. And yes, fund those retirement accounts.

Analyze the smartphone purchase now:

Critical questions: 

  • Is it a need or a want? Some of you made the case that you use it as a laptop, and tech’s certainly going that way. If you are using it for work, internships, or school productivity, what’s the lowest cost option that will still be productive?
  • Are you falling victim to brand loyalty even if the data looks like you should be making another consumer decision?
  • Is the opportunity cost of having a top of the line phone preventing you from getting to other, more important, savings goals?
  • What will you do when you’re no longer freeloading off your parents? How will you pay this bill?
  • Consider price, features, and durability and give an honest reflection as to whether your communications budget is serving you well.
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