Suze Orman Money Matters

Logical - Wednesday, May 14, 2008, 4:46PM ET  Report Abuse

• Overall: 4/5

Good article. It is important for people to take deep breath before moving emergency cash to get better returns. When people make decisions based on fear, they end up geting into situations where they don't understand the risks and end up following the lemmings off the cliff time after time. No one wants a sub par return on their money, but chasing the higher returns usually hurts more people than it helps. Get in the habit of studying the past and understanding the cycles, then make your decisons based on what comes next in the cycle instead of what is currently happening. Most people jumped into the market at its high point because they saw others getting great returns and they arrived just in time to take the losses, then they saw people making a killing in Real Estate so they moved into that just in time to get slaughtered. Now they are taking what they have left and buying gold, silver and other commodities while they are at record HIGHS. The key is to buy low and sell high not to buy high and hope it goes higher. The real problem with most people is they are present thinking, not forward thinking. Then you have the "buy and hold" crowd who preach to the masses to hold on through the bloodbath because the market will come back and you will be better off. Great advice for your advisor who keeps getting paid for managing your money into oblivion. Why take the loss. Look forward. Buy things when they are low and sell when they are high then take your profits and buy something else that is low. The market, although lower, has a long way to go as does Real Estate before this current debacle is over. Bide your time and you will be grateful you did. Gold, silver, oil and other commodities could go higher but could fall sharply and eventually will. So what do I recommend? I recommend that you quit following the so called gurus and get your own financial education. Study the economic cycles in the past and what went up and down at each stage. Understand what current government policies have done in the past when idiots have tried to fix the system and end up making the problems much worse. Learn to rely on your instincts that you develop through learning and doing. Trust me. You will profit much more by learning to chart your own course than by following the lemmings off cliff after cliff.

isolator70 - Monday, May 12, 2008, 12:07AM ET  Report Abuse

• Overall: 2/5

Totally agree on the MSA junk being offered. I have a buddy who signed on to that because of the equity accellerator program where you send your paycheck in and use it like a checking account. Only problem is, life gets in the way and, as has been pointed out, you can save the same on a regular mortgage if you can do without that money. The lure is that you are earning money on your excess money until you need it. Think about it though, if your net pay is $6,000 after your mortgage payment, taxes etc. and you use that 6k during the month, your average balance is $3,000 at any given time. Even at a 7% mortgage, which is likely because these products are sold to people with poor credit scores, your "savings" are only $210 per year. Compare that to the cost of signing up for the program and consider that you can, if you save money like they claim, do the same thing through a conventional mortgage. I have done an similar type program at no sign-up cost with the interest rate tied to prime 0 and it worked great. However, these MSA's are marketed to people as if they will pay off their mortgage quicker, which they can, but most of the people targetted are more likely to utilize their access to the equity and only increase their interest expense. Unless you have good credit already, the MSA product will come at a higher rate than you can get a fixed rate mortgage at, or it will be tied to the highly variable prime rate. I disagree with Suze on the paying off your mortgage early as well. If you are at 6% or better, and are in a tax bracket where you deduct 1/3 or so, you can do better with tax free munis or even some utility stocks without totally exposing yourself to too much risk. As far as the claim that you shouldn't waste too much time quibbling over small returns on small money, just remember "If you watch out for the pennies, the dollars will take care of themselves". Good luck, think before you invest and stay away from the snake oil that is an "MSA" unless you are certain you can make it work for you.

Yahoo! Finance User - Sunday, May 11, 2008, 10:52PM ET  Report Abuse

• Overall: 2/5

The clown talking about the MSA should be banned, or be exposed what he is a mortgage broker trying to make a quick buck. Say what an MSA really is, a HELOC used to float all additional monthly income you have into paying off your house faster. Funny thing is you can pretty much achieve the same results by simply sending in additional money without shelling out $3500 in software which is effectively Quicken. Couple of other problems: 1) you lose your job heaven forbid, then all the sudden you could be stuck with a significant balance in your MSA (HELOC) at a much higher rate then your conventional mortgage. 2) You get your HELOC frozen like thousands of people around the country. Then you could be stuck with no extra money that you could have put away in more liquid assets and you have $3500 Quicken that is financed in your HELOC...oh sorry MSA at a higher rate than your conventional mortgage. Before you go preaching to the world about MSA talk about the benefits AND RISKS (something that the person trying to sell me this never did) and review other avenues of investments. I can promise you, if you took all this extra money you pump into paying off your mortgage in say 10-12 years in investments earning 7-8% you are sure to come out ahead rather than pumping it into your mortgage and then trying to play catch up after the fact. At the end of 30 years you would end up owning your house either way. At worst you would come out even in your retirement account, or @ 8% come out with a few hundred thousands extra in retirement savings…..and by the way under this scenario if you did need emergency money (and I’m not preaching taking penalized draws out of a 401K or IRA), but if you had to….you could.

Yahoo! Finance User - Sunday, May 11, 2008, 1:09AM ET  Report Abuse

• Overall: 2/5

I was with Suze until she started putting liquid assets into an illiquid asset like your home. The only reason to pay down your owed principal is to get out from under PMI. Go with TIPS or Munis, if a Dem goes into the WH you will see the nation heading for Jimmy Carter's interest rates again. CD's will be above 6% with in a year and 9% in another year. All the money locked up in your residence paying down the principal won't be available to use as interest rates zoom.

Yahoo! Finance User - Friday, May 9, 2008, 8:16AM ET  Report Abuse

• Overall: 1/5

I put money in RIO last year and I am up 160%. I guess I could have bought something Suzie suggests and only be up 3 percent. Wonderful advice Suzie. If you follow her advice you will be living in a cardboard box when you grow old.