Part 2: My Financial Affection for Suze Orman

Suze Orman

Don't Buy It: "Renting is a waste of money."

We are talking about using bad advice Suze Orman recently talked about this in “O Magazine.”

Suze said concerning this bad advice, “Buying a home can of course be a wise investment, especially considering today's record-low mortgage rates. But that doesn't mean choosing home ownership over renting is right for everyone. In some regions of the country, the cost of owning may still be higher than that of renting (to account for total ownership expenses, including property tax and maintenance, my rule of thumb is to add about 30 percent to the base mortgage amount). And while home values may be stabilizing in many parts of the United States, that doesn't mean they're suddenly going to start rising at a fast and furious pace. Over the next five to seven years, you still might not see a home's value appreciate the roughly 8 to 10 percent it would need to simply to cover the costs of relocating (which at the very least include the real estate agent's typical 6 percent commission, as well as movers' fees).”

My opinion, Suze is correct. The major reason in my opinion that home prices have gone up from 1945 to 2008 was because of the baby boom after World War II. GIs coming home had to have some place to live. These children that the GIs made had to go someplace to live. Now that the baby boomers are old and the GIs are dying out, homes are becoming available and home prices are falling. This is one reason why so many people are caught up in “upside down mortgages.” As people age, they do not feel like cutting grass, maintaining a home, or doing the everyday things in a home that they did when they use the home to raise children. This is when an apartment maybe best for the widower or the divorcee.

Are you going to buy the farm?

Suze’s idea: “Do the math carefully before you consider buying. Ask yourself: Do you have any inkling that you'll want to move in the next five to seven years, whether for a job, a fresh start, or a new experience? If so, purchasing a home is not a smart choice. Keep renting until you can commit to settling down for longer, and tune out everyone who says you're throwing away money.”