Suze Orman is the kind of person that you would want to a neighbor. She is warm and friendly. She makes friends fast and she is not bad looking. Besides, she knows about how to make a dollar in investments. But do we agree when it comes to financial advice?
Let’s look at what Suze said in her article in “O Magazine; 5 Pieces of Financial Advice to Avoid at All Costs” and what my opinion is on the subject.
Suze Orman said, “Bad financial information doesn't come only from scammers; even our loved ones can unwittingly steer us wrong. That's why knowing what not to do with your money is often your biggest asset. In general, there are two little words that should set off every body's suspicion meter: Trust me. Anyone who gives you this line—whether a financial adviser or your significant other—is disrespecting you. You should never entrust a money decision entirely to someone else. I know, I know: Sometimes you'd rather pass the buck. But remember, we're talking about your security, your future, your peace of mind. It's one thing to hire an investment adviser to help you choose funds for your IRA, or to cheer lead a spouse as he or she sets up a 529 plan to help pay your child's college tuition. It's quite another to tune out completely.”
“Find an hour or so a month to peruse a personal finance Web site or a magazine like Money or Kiplinger's, which will keep you up-to-date on the basics. The blog at Mint.com is also a great resource, with posts on everything from choosing a mortgage to spotting medical bill errors. By educating yourself in these simple ways, you'll sidestep all sorts of traps.”
I could not have side it better myself. The Holy Bible says that people are destroyed by lack of education. God must have been talking about people who fail to educate themselves in life’s activities such as personal finance.
Don't Buy It: "Your child's college degree is a great investment."
Suze Orman said, “A blanket statement like this is missing a crucial qualifier: An affordable college degree is a great investment. The unemployment rate for Americans 25 years of age and older is a lot lower for college graduates than for those with only a high school diploma (3.9 versus 8.1 percent). But that doesn't mean you should tell your kids to set their sights on any school—regardless of whether it will leave you with a crushing amount of debt. All too often, parents fail to strategies when it comes to paying for education and end up getting off the track to retiring comfortably. Ironically, this does kids a major disservice: If you lack sufficient retirement savings down the line, your children are the ones who'll bear the burden of supporting you.”
As I told you many times before, the objective of a college education is to make a good living. It is not for sending your children off to a 4 year party. I disagree with the parents who send their children off to a high priced college just because their children want to go to that school. My oldest daughter has an Associate, Bachelors, and an MBA. She is in debt to the tune of $30,000. She makes $135,000. She can pay this debt off easily.
I used a college savings program starting at her birth for the first 2 degrees. I had my children go to a 2 year community College first then transfer to a 4 year college. This cut cost significantly. Others with her educational back ground are in debt to the tune of over $125,000. The children and their parents can never pay off that debt and at the same time maintain a comfortable living.
Suze Orman said, “Think in terms of long-run affordability. (This goes for you and your child, since I firmly believe kids must borrow for school before parents dip into their savings or take out a loan.) Mark Kantrowitz, publisher of FinAid.org, says students should limit their total borrowing to an amount no greater than what they can reasonably expect to earn in their first year of full-time work; borrow more, and the odds of running into payback problems and default soar. Check out typical starting salaries at Salary.com; even if your child doesn't have a specific career in mind yet, it's a great exercise for families to do together, to start getting grounded in post college reality.”
When it comes to financing options, remember that federal Perkins and Stafford loans offer the best deals; private loans are risky and can end up being far too expensive. The maximum Stafford loan amount a dependent student can borrow for all undergrad years is $31,000. Parents who want to chip in should first figure out if they can afford to do so by using the T. Rowe Price Retirement Income Calculator and then look into federal PLUS loans. Finally, your child should apply to at least one public institution; if money is extremely tight, there's also the option of attending two years of community college (whose credits are usually transferable) and finishing at a four-year school.
In my opinion, you will find in most cases, a two year community college degree is a good value when trying to get a four year degree.
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