If you lack the cash to buy a car free and clear, you really need to hear me out on the two worst financing moves you can make. What I am about to tell you can save you hundreds, if not thousands of dollars. And trust me, this is exactly what car dealers and financing companies don’t want you to know:
A car loan longer than 36 months is a waste of money. I know, I know, there are all those great looking ads showing how “affordable” a payment will be with a 60 month or 72 month car loan. Don’t fall for it. For starters, we need to get on the same page: A car is the worst investment. Why? Because from the moment you drive it off the lot it loses value. You will never recoup what you paid for the car when you eventually sell it. Got it? Good.
So if you’re going to lose money on this deal, why would you agree to pay more interest on the loan? That’s exactly what you end up doing when you choose a longer repayment term.
The reason the car industry hawks five year (and longer) loans is because they want to entice you to buy a more expensive car. The longer the term, the lower your monthly payments. But what they don’t point out to you-and I do-is that because the payments go on for a longer time, you end up spending more over the life of the loan….for a crappy investment.
Suze Orman is a award winning certified financial planner and author of several books including 'The Road to Wealth'. She went from being a waitress at age 30, making $400 a month, to now having her own TV show and a net worth of $30 million dollars.
I am a big believer in home ownership, but only if it makes financial sense. If you answer yes to any of these questions you are better off renting:
Is there any chance you would want to move within five or so years? It costs a lot of money to sell a home, starting with the typical 6% commission you will owe your real estate agent. Then there are moving costs and transfer fees in some areas. Add it all up and I think it’s smart to expect you will use around 10% of the sale price just to cover all your sales-related expenses. The sooner you sell the less likely you will have built up enough equity to cover those costs.
Is your credit score below 740? A FICO credit score of at least 740 is going to put you in the position to land the best loan deal. Anything below that and I would recommend taking the time to get your score higher before you shop for a house. Qualifying for a mortgage that is just an eighth or a quarter point lower because of a solid credit score can save you tens of thousands of dollars in interest costs over the life of a loan.
Do you have less than eight months of living expenses set aside in an emergency fund? I know that’s a high bar. For a reason: your peace of mind. Until you have this safety cushion in place I don’t want you taking on any big financial obligations. And it gets no bigger than a mortgage.
Will you be making a down payment of less than 20%? Yes, I am well aware lenders will be happy to give you a mortgage with a down payment of as little as 3% or so. Don’t fall for it. When you make a low down payment you often will be hit with a higher interest rate. And any mortgage (other than a VA-backed loan) that is for more than 80% of the purchase price will require that you have private mortgage insurance. The bottom line is that low down payment mortgages end up costing you a lot. And most important, I think saving up for a down payment is an important step: it requires patience and resolve. And the ability to save! That’s just the sort of person who gets my approval to buy a home.
Suze Orman is a award winning certified financial planner and author of several books including 'The Road to Wealth'. She went from being a waitress at age 30, making $400 a month, to now having her own TV show and a net worth of $30 million dollars.
Suze Orman's news show yet to debut called “Money Wars” is described to be involving family disputes on money. It could be a cross between “Peoples Court” and sensible monetary savvy in which she will play the part of a mediator who as her guests, common people today, settle monetary disputes in between family members and friends.
Suze Orman is a award winning certified financial planner and author of several books including 'The Road to Wealth'. She went from being a waitress at age 30, making $400 a month, to now having her own TV show and a net worth of $30 million dollars.
Companies that regularly pay dividends tend to be stable firms with strong balance sheets and stock worth owning -- especially if they consistently sustain or increase the payouts. Be aware, though, that companies cut back or suspend stock dividends altogether if faced with real trouble, such as a major financial crisis. You could start by choosing low-cost, no-load mutual funds or exchange-traded funds that focus on the stocks of dividend-paying companies. The SPDR S&P Dividend ETF draws from S&P 1500 companies that have increased their dividend payouts for at least 20 years in a row. Both the Vanguard Dividend Appreciation ETF and the Schwab U.S. Dividend Equity ETF include the stocks of companies that have paid dividends for at least ten consecutive years; they charge slightly lower annual fees than the SPDR (0.10 percent or less, compared with 0.35 percent).
If you prefer not to open an account with a broker, you'll have to invest in a mutual fund rather than an ETF. Try the Vanguard Dividend Appreciation Index Fund, which charges a low 0.20 percent annual fee.
A well-diversified investment portfolio also includes international stocks and bonds, as well as some cash. I encourage you to learn about asset allocation and consider your options beyond U.S. companies. You can find free information on the websites of the brokers Fidelity, T. Rowe Price and Vanguard. If you decide to see a financial planner, avoid any potential conflicts of interest by selecting an adviser who charges a flat fee rather than a commission.
Suze Orman is a award winning certified financial planner and author of several books including 'The Road to Wealth'. She went from being a waitress at age 30, making $400 a month, to now having her own TV show and a net worth of $30 million dollars.
I've always advised staying away from store cards, which their insanely high interest rates. The retailer lures in with a 5 or 10 percent discount, which becomes worthless as soon as you're charged 25 percent interest on your unpaid balance.
If you have any balances, pay them immediately.
Suze Orman is a award winning certified financial planner and author of several books including 'The Road to Wealth'. She went from being a waitress at age 30, making $400 a month, to now having her own TV show and a net worth of $30 million dollars.
I’ve built a successful career around giving advice. And that very success has often made me a target of criticism. Not helpful, constructive criticism, but nasty feedback entirely disconnected from facts.
When I first encountered the blowback, I was angry and confused. Angry at how my work was being misrepresented and misconstrued. Confused by why the attacks grew in lockstep with my success.
Then I learned to be an elephant.
A wise teacher from India shared this insight: The elephant keeps walking as the dogs keep barking.
The sad fact is that we all have to navigate our way around the dogs in our career: external critics, competitors, horrible bosses, or colleagues who undermine. Based on my experience, I would advise you to prepare for the yapping to increase along with your success.
You can’t tame the barking dogs. But you have it within your power to completely tune them out. By being an elephant that keeps walking while the dogs are barking.
Channeling your inner elephant is a healthy exercise in being focused on who you are and what you believe in, rather than letting others do the defining. The only thing that matters is what you know to be true about your goals and intentions. Everything else is noise.
While the world would definitely be a better place without vindictive and misinformed dogs, I have learned to make peace with their existence. And used it to my advantage. Being an elephant has made me stronger and more resolute, and helped me become even more compassionate. It delights me to turn the dogs’ vitriol into my virtue.
Suze Orman is a award winning certified financial planner and author of several books including 'The Road to Wealth'. She went from being a waitress at age 30, making $400 a month, to now having her own TV show and a net worth of $30 million dollars.
I couldn't be more against the idea of co-signing a loan because when you do, you become the one responsible for that loan. Most of the time when you are asked to co-sign, it’s because the other person can’t qualify on their own. If they can’t qualify on their own, you’re going to get stuck.
Suze Orman is a award winning certified financial planner and author of several books including 'The Road to Wealth'. She went from being a waitress at age 30, making $400 a month, to now having her own TV show and a net worth of $30 million dollars.
