Comments on CreditMattersBlog.com: Suze Orman Says That Emergency Planning Remains Jo...

Frank over at Bad Money Advice is out with a story...

2009-05-04T12:55:00.000-04:00

Frank over at Bad Money Advice is out with a story on Suze's recent column.

Suze’s Surprising Credit Card Controversy

http://badmoneyadvice.com/2009/05/suzes-surprising-credit-card-controversy.html

Also, the main problem with her advice is she over...

2009-05-03T22:48:00.000-04:00

Also, the main problem with her advice is she oversimplifies a number of things. That's why you have to judge her in relation to her audience.

Her background is not relevant, her advice can be ...

2009-05-03T22:45:00.000-04:00

Her background is not relevant, her advice can be evaluated on its merit.

I've documented much of the inappropriate and erro...

2009-05-03T21:19:00.000-04:00

I've documented much of the inappropriate and erroneous advice she has dispensed over the years...

http://www.erictyson.com/articles/20090127

I also researched her background and the more you know, the more you'll question her advice.

Drewbert, I like your plan. That way you are still...

2009-05-03T12:09:00.000-04:00

Drewbert, I like your plan. That way you are still chipping away at the balance of the highest-rate card.

It's rather simple actually. If you're snowballing...

2009-05-03T12:02:00.000-04:00

It's rather simple actually. If you're snowballing (which is what she was originally advising), cut the size of your original snowball down and instead put that money in a savings account.

If you have 6 cards with balances. You pay the minimums on all but one card and $500 over minimum on the highest interest card, pay the minimum instead and take $450 and put it into a savings account

I think I know what my problem is. I cringe at the...

2009-05-03T11:37:00.000-04:00

I think I know what my problem is. I cringe at the thought of paying so much interest each month (if I am just paying the minimum).

But you do have to get an emergency fund at some point.

Saving money is a mindset. And while Suze is not ...

2009-05-03T11:04:00.000-04:00

Saving money is a mindset. And while Suze is not my favorite financial advisor, she makes a point. Everyone has to start somewhere. My advice to clients has always been to add their name to the monthly list of required bills to pay. It does not matter if its $10 or $50, it puts one in the habit of saving for a rainy day. I'm old.... and I remember the Christmas Club books where you went into

Anon, no doubt. I was not in that frame of mind wh...

2009-05-02T22:46:00.000-04:00

Anon, no doubt. I was not in that frame of mind when I wrote my blog entry. But now that I have heard from a people -- both here and in my email -- I understand where she's coming from.

I figured that most people wouldn't have much left over each month so it would take forever to build up an EF. If you're throwing quite a bit at the highest-rate card, then the EF will probably get

CM, can't really say I follow Orman, but ever sinc...

2009-05-02T22:40:00.000-04:00

CM, can't really say I follow Orman, but ever since I watched one of her shows on PBS, especially after the Q&A session at the end, I kind of understood who her audience are. As diversified as your readers here may be, I doubt many would fall into her category, so it's not too surprising you and a lot readers here are confused by her advice. Given I am not in that boat either (strict

Shop Free, I appreciate the comment. As you can te...

2009-05-02T21:55:00.000-04:00

Shop Free, I appreciate the comment. As you can tell, I'm a bit out of touch with Suze. Haven't followed her words over the years. But I do appreciate my readers who do know her philosophy.

Thanks.

Hi CM...I didn't read all the comments but I read ...

2009-05-02T20:48:00.000-04:00

Hi CM...I didn't read all the comments but I read most of them.
What I gathered from SUZE, as I've also read her past advice is this is really for people on the snowball method. In which you're working on paying off your cards by paying the minimums on all cards except the one with the highest interest, on that card you're paying as much extra as you can on, when that card is paid off you

CDP, I might be reading too much between the lines...

2009-05-02T14:59:00.000-04:00

CDP, I might be reading too much between the lines. (I do that too much!) But I do see that my readers have some good comments about this subject, so my post was not a waste.

Thanks for all of the comments (everyone).

I think you're working way too hard at reading bet...

2009-05-02T14:57:00.000-04:00

I think you're working way too hard at reading between the lines. Orman is just saying that short-term liquidity could be more important, right now, than the long-term bottom line. Yes that would make sense as preparation for default, but it also would make sense as preparation for a short period of unemployment, or other short-term crisis.

Imagine a person who has substantial CC

I am doing, and will continue doing the opposite o...

2009-05-02T12:07:00.000-04:00

I am doing, and will continue doing the opposite of the Suzi advice. I had to (in part) live on credit cards for a year and a half. Almost 16k in cc debt plus what's left of the mortgage and student loan. The interest on just the cards a couple of months ago was over $180.

I'm paying min+ on all cards and working on the highest interest ones. This last week I paid off the two highest

And all of those conference call transcripts I rea...

2009-05-02T10:11:00.000-04:00

And all of those conference call transcripts I read, too. All of the card issuers expect higher unemployment until the end of the year -- at least. With unemployment comes higher charge-off rates.

The exploding unemployment map from an earlier sto...

2009-05-02T10:09:00.000-04:00

The exploding unemployment map from an earlier story of yours comes to mind.

Thanks for helping me out, guys. I couldn't imagin...

2009-05-02T10:03:00.000-04:00

Thanks for helping me out, guys. I couldn't imagine being in that predicament so I couldn't get my arms around the advice. But if you assume that these people -- a lot of them -- are going to default anyhow, Suze's advice makes sense.

Yes. That's the underlying ominous tone I get fro...

2009-05-02T10:01:00.000-04:00

Yes. That's the underlying ominous tone I get from this piece.

Clutch, that's exactly what she's doing. Previousl...

2009-05-02T09:53:00.000-04:00

Clutch, that's exactly what she's doing. Previously, she said to pay minimums on all cards -- EXCEPT the highest-rate card.

Now she is saying to pay the minimum on ALL cards. That's where the advice changed (according to her column).

My quibble stems from her other comments in the column. She made it seem as though all of these people were strapped. That's why they

CM, right, I get that. But I think she is just mo...

2009-05-02T09:48:00.000-04:00

CM, right, I get that. But I think she is just modifying her earlier advise of reducing payments of all but your highest interest rate card to the minimum due to reducing your payments to ALL of your cards. She is making her plan even more aggressive.

In a way she is telling people to do what the banks are doing; forgo future profit in favor of money in hand NOW. To me this sounds

Anon, right above Clutch, I agree with you. I thin...

2009-05-02T09:33:00.000-04:00

Anon, right above Clutch, I agree with you. I think that's exactly what she is saying. Take that payment and apply it to the emergency fund instead.

My ONLY quibble with the advice is that I assume that these people don't have much to send to the emergency fund in the first place. It sounds as though these folks have already cut expenses, and stopped spending on "wants." There just

Clutch, this comes directly from her column: "My ...

2009-05-02T09:28:00.000-04:00

Clutch, this comes directly from her column:

"My strategy for years has been that if you are in credit card debt you are to pay the minimum due each month on every card, and then pay extra on the card with the highest interest rate."

Thus, she says that her advice has been to pay the minimum on every card -- except the one that has the highest interest rate. That card is

Maybe I read things wrong, but I didn't get that s...

2009-05-02T08:10:00.000-04:00

Maybe I read things wrong, but I didn't get that she was talking to people who had already reduced their payments to the minimum due. I got that she was addressing people who had no (or little EF), had already reduced their expenses but were still paying more than minimum.

If that is the case then I think what she is doing is preparing people for default. I don't think she is

Most of the posts here look at things from a finan...

2009-05-02T02:34:00.000-04:00

Most of the posts here look at things from a financially savy point of view. I don't really follow Suze either, but I don't think you are her target audience. Here is my take on Suze's comments:

I think that she is saying that you need to get your house in order. If you carry a balance, but are paying $100.00 extra - you should now put that money away in case you need it for