Suze Orman’s Top 25 Tips That Will Save You From Financial Disaster

September 27, 2024 DINARRECAPS8

Gabrielle Olya Thu, September 26, 2024 GOBankingRates

Suze Orman was working as a waitress and making $400 a month at 29 years old. She then decided to take a chance on a major career change and landed a job as a broker for Merrill Lynch.

Having been on both ends of the financial spectrum, Orman knows what it takes to make the leap from broke to wealthy, and is now one of the most respected voices in personal finance — as well as a New York Times bestselling author with more than 25 million books in circulation.

According to Celebrity Net Worth, she is worth some $75 million, indicating that she’s followed her own financial advice for saving, investing and preparing for retirement.

As any self-made millionaire will tell you, going from rags to riches takes hard work. It also calls for tons of tried-and-true personal finance strategies to maintain and build financial success. Here are 25 tips from Orman to steer clear of financial disaster.

Live Within Your Needs but Below Your Means

Living within your needs but below your means is the golden rule of the Suze Orman budget. Although food and shelter are needs, you might be spending too much on these essentials.

“How much you choose to spend on your basic needs is a squishy number dependent on the choices you make,” Orman wrote in a blog post. “For example, a mortgage lender may tell you that you will qualify for a $250,000 mortgage. But if you can find a great home that meets your family’s needs, and it costs $195,000 you will save a lot of money that can be used for other important goals. The $195,000 home fits your needs.”

Don’t Lease a Car — Buy Instead

“Leasing is a horrible financial move,” Orman wrote in a blog post. “It is the auto industry’s way to get you to buy a car you can’t really afford. (…) The big problem is that when you lease there’s the temptation to keep leasing forever.

“So every three years — the standard lease length — you turn in your car and lease another. That means you are signing on for never-ending monthly car payments.”

Orman explained that buying is better because once you pay off your loan, you have that extra monthly payment to build your emergency fund, contribute to a retirement account, save for a home down payment or meet another financial goal.

Stop Paying Extra for Minor Conveniences

The difference in the cost of paying for food delivery instead of cooking or hopping in an Uber instead of taking the bus might seem small, but the expense of always taking the convenient option will add up over time.

“It adds up big time,” Orman told CNBC. “Stop leasing cars, stop eating out, stop doing the (thing) that’s wasting your money and makes your life easier, because in the long run it’s going to make it harder.”

Cut Out Your Coffee Habit

“I wouldn’t buy a cup of coffee anywhere, ever — and I can afford it — because I would not insult myself by wasting money that way,” Orman told CNBC.

She believes that $3 spent daily on coffee is better off going into a retirement fund or used to meet other savings goals.

For example, if you spend $100 a month on coffee and put that money into an IRA instead, that would grow to about $1 million after 40 years given a 12% rate of return.

“You need to think about it as: You are peeing $1 million down the drain as you are drinking that coffee,” Orman said. “Do you really want to do that? No.”

Pay With Debit Instead of Credit Whenever Possible

“There is no more expensive form of bondage than spending more than you have and paying interest of 15% or more on your credit card,” Orman wrote in a blog post.

She recommends paying for everything with a prepaid debit card or a debit card that is tied to a checking account that does not have overdraft coverage.