GI Jane Finances

August 1, 2010

Cautionary tale: Suze Orman

Filed under: Uncategorized — Tags: , , — gijanefinances @ 4:34 pm

Suze Orman had on her 25 Jul show a retired Navy pilot named Jeff.  Orman’s books and shows did help me in the past, so I still watch her. But I am having mixed feelings about her get-well plan for Jeff.  He retired from the military in 2008–the height of the recession.  Jeff became a contractor and the gig dried up.  He now has: $281k mortgage, $53K credit card debt, $37k in student loans and $10k in other loans.  His pension is $2700 a month.  He would like to know if he should sell his pension for $130k?  My quick answer is h#ll no!  The pension is worth millions of dollars.  He should check out the calculator to see how crazy an idea it is.  Jeff is on unemployment, paying child support and $700 out-of-pocket on his mortgage.  Suze tells him not to sell his pension and declare bankruptcy.

In this case, I think Dave Ramsey’s teachings would have been better suited for him.  I think he would have told him to default on his credit cards, put the house on the market and reduce the asking price to sell it.  He has more of an income crisis and declaring bankruptcy will not solve that.  Suze is more into touchy feely stuff rather than roll up your sleeves and attack the situation.  She opened up with a segment about her garage attendant not remembering to have the car ready…very out of touch (it pains me to type that:).

If Jeff did not retire with $90k in credit card and student loan debt, he would not feel as overwhelmed.  I was stressed out selling my $150,000 house with several thousand in student loans…and sold it while living overseas in 2008 by listening to Dave Ramsey.  Suze used to advocate keeping your student loans as long as possible because it was “good debt.”  Now she has swung in the opposite direction telling people to keep 6-8 month emergency fund and stopping another caller, Dennis, into  immediately retiring.  His family was diametrically different from Jeff.  They had about $700,000 and a $4k month pension.  Their expenses would be $3k after they sold their rental and pay off the primary mortgage.  Since I do not know what the $3k in expenses were…maybe property taxes on a $500,000 house?  I think if the family moved into a more modest house, they could retire.  Stanley Kramer’s book, Stop acting rich, spoke to how having a high overhead–like a $500,000 house, prevented people from successfully living below their means.  It is a good book about how status symbols are like a hedonistic poverty trap.  I like the idea of keeping your overhead low–like monthly expenses, so you do not need a huge income to feed it forever.

GI Jane



  1. Thank you very much for sharing this. Please keep up the good work.

    Comment by the Success Ladder — August 7, 2010 @ 9:27 pm

    • Thanks much!

      Comment by gijanefinances — August 8, 2010 @ 8:07 pm

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