Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Suze Ormond
Old 05-12-2014, 12:46 PM   #1
gone traveling
 
Join Date: May 2014
Posts: 153
Suze Ormond

Suze Ormond, on Today Show, NBC, 05/12/14, two minute Q&A.

A young couple, the wife asks, what to do: "Should they fund college fund for their 1yo, or should they fund 401k or pay off student debt? "

SO, "Pay off student debt because sd is not dischargeable in a bankruptcy."

IMO: SO continually plays' on female insecurity on debt and ignore the tax advantages of qualified tax programs, investment, and cash flow. ,
__________________

__________________
LongPrime is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-12-2014, 03:20 PM   #2
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,817
I'm not sure it's female insecurity. My husband was much more anxious to pay down the mortgage. (I got on board, but he's the one that started/pushed the idea.) His best friend since grade school is the most debt averse person I know. Also male. I think in their case it's growing up in families with one income, lots of kids (DH is one of 6, his bestie is one of 12). and seeing families have to stretch the dollar till it screamed in pain. Both grew up very frugal and debt averse.

SO has lots of flaws, no contest there. But I'm not sure about her singling out females, specifically.
__________________

__________________
rodi is offline   Reply With Quote
Old 05-12-2014, 06:43 PM   #3
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 1,829
Speaking of TV personalities, I was listening to a Dave Ramsey podcast today where he told a listener they could spend 8% per year from their portfolio because that is how much a portfolio averages per year. He's said this on numerous occasions. That makes me laugh about as much as when he makes a blanket statement that nobody should have a credit card, no matter what. He won't even take credit cards on his own web site just to prove his point. As if everyone is just as irresponsible as he was when he was young.

It just demonstrates that TV personalities giving sound bites of advice must be taken with a grain of salt.
__________________
Ready is online now   Reply With Quote
Old 05-12-2014, 07:35 PM   #4
gone traveling
 
Join Date: May 2014
Posts: 153
DS has student debt (stafford/direct and assumed the PLUS) of ~$55k. Should he pay off student loan, maximize 401k, or fund for future child college fund? Just entered the 28% tax bracket. ?
__________________
LongPrime is offline   Reply With Quote
Old 05-12-2014, 07:46 PM   #5
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 1,829
Quote:
Originally Posted by LongPrime View Post
DS has student debt (stafford/direct and assumed the PLUS) of ~$55k. Should he pay off student loan, maximize 401k, or fund for future child college fund? Just entered the 28% tax bracket. ?
Hey - were you the caller on TV that spoke with Suze? This question sounds familiar.

The reason people get frustrated with sound bite responses is that they don't take the time to analyze your entire financial situation before attempting to give out advice. The reality is, there is no one answer that is correct here. Without knowing a lot more details on your DS's finances, it would just be a random answer.

If the student loan is a relatively high interest rate, that favors paying it off first. If your DS is very young, and believes that funding his child's education is more important than his own retirement, he may favor the college fund.

Or, he may just find that spreading his extra cash across all three is the simplest way to go.
__________________
Ready is online now   Reply With Quote
Old 05-12-2014, 07:51 PM   #6
Recycles dryer sheets
ducky911's Avatar
 
Join Date: May 2010
Posts: 397
I too would pay off debt first before saving for future college or retirement.
__________________
You've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?
I hate (despise) loads and fees
Retired July '11 investments 55/45 in very low cost index and mutual funds, balance once a year at best.
ducky911 is offline   Reply With Quote
Old 05-12-2014, 09:47 PM   #7
Recycles dryer sheets
 
Join Date: Oct 2013
Posts: 65
For, let's say, 95% of families, paying off all debts (sans mortgage) before investing in anything else is a good plan. People that prioritize personal finance idealize how things work out long term. "If I don't pay off my mortgage at 4.5% and get an 6% in the stock market, then I come out $43,000 ahead over 30 years". Most families don't plan like that and don't have the income security to make long term risks worth taking in my opinion.

Those 95% would be much better served by LBYM, investing in a target retirement fund to max the work 401k contribution, and paying off debt like crazy after building an emergency fund. Wait, that was actually my approach when I still had any debt! Once I found myself without debt, then I had to get smarter about investing and I suspect that's true for lots of current SO and Dave fans.

I think folks on boards like this find SO and Dave to be doing a disservice to families and I don't pay any attention to them myself, but I think it's spot on for most people and this is why they're so popular. I think they do a good thing overall and if people want to go beyond, then there's boards like this.
__________________
FIGuy is offline   Reply With Quote
Old 05-12-2014, 11:19 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,284
There was no info on if there were matching funds in the 401(k).... if there were, no question that it would be #1...


But, if it were me and I was in the 28% tax bracket.... I would be putting money aside for retirement...

By the time college came around for a child, the finances of the family would probably be a lot different and it might not be an issue paying from current earnings... having that retirement fund growing for those extra 18 years will (should) make a big difference...


Student loan debt is last... I do not think of (nor have I ever) BK as a solution to anything.... so getting rid of debt because it cannot be forgiven in BK means zip to me... not even a thought from one brain cell...
__________________
Texas Proud is offline   Reply With Quote
Old 05-13-2014, 04:52 PM   #9
Recycles dryer sheets
 
Join Date: Oct 2013
Posts: 65
Quote:
Originally Posted by Texas Proud View Post
Student loan debt is last... I do not think of (nor have I ever) BK as a solution to anything.... so getting rid of debt because it cannot be forgiven in BK means zip to me... not even a thought from one brain cell...
Interesting. I feel exactly the opposite. Bankruptcy is a legal option we have in this country that helps a lot of trapped people and while I've never felt the need to use it, I'm happy it's there. I didn't have much debt myself coming out of school, but I have friends with a decent mortgage worth of student loans. I will offer that student loan debts, particularly the variable interest variety, put one at higher risk of financial ruin. It would royally piss me off to have this push me over the edge and then still be there after going through bankruptcy. It's another form of risk in my book and should have some value placed on it. I decided it was worth about 2% interest (not having bankruptcy protection) back when I was deciding to pay it off. I'm happy I did as I lost money on every other investment back in those days. We humans are emotional beings and not having debts makes some folks function better. Others can be more logical about it I guess.
__________________
FIGuy is offline   Reply With Quote
Old 05-13-2014, 08:54 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,284
Quote:
Originally Posted by FIGuy View Post
Interesting. I feel exactly the opposite. Bankruptcy is a legal option we have in this country that helps a lot of trapped people and while I've never felt the need to use it, I'm happy it's there. I didn't have much debt myself coming out of school, but I have friends with a decent mortgage worth of student loans. I will offer that student loan debts, particularly the variable interest variety, put one at higher risk of financial ruin. It would royally piss me off to have this push me over the edge and then still be there after going through bankruptcy. It's another form of risk in my book and should have some value placed on it. I decided it was worth about 2% interest (not having bankruptcy protection) back when I was deciding to pay it off. I'm happy I did as I lost money on every other investment back in those days. We humans are emotional beings and not having debts makes some folks function better. Others can be more logical about it I guess.

I did not say that I did not believe in it..... just that I have never made any decision with it being part of my thinking process.... IOW, "I will buy this house that I can barely afford because if I cannot pay it off I can file for BK" never crosses my mind...


I did have some student debt and paid it off early.... but I also was putting 16% aside in savings...

As for BK.... I had a BIL have to go through it due to the S&L crisis back in the 80s... had his loan called and could not pay... took all his real estate except his house...
__________________
Texas Proud is offline   Reply With Quote
Old 05-13-2014, 09:21 PM   #11
Recycles dryer sheets
 
Join Date: Oct 2013
Posts: 65
Quote:
Originally Posted by Texas Proud View Post
I did not say that I did not believe in it..... just that I have never made any decision with it being part of my thinking process.... IOW, "I will buy this house that I can barely afford because if I cannot pay it off I can file for BK" never crosses my mind...


I did have some student debt and paid it off early.... but I also was putting 16% aside in savings...

As for BK.... I had a BIL have to go through it due to the S&L crisis back in the 80s... had his loan called and could not pay... took all his real estate except his house...
Hi Texas Proud, I'm not sure if my earlier post came across as a personal attack, but that wasn't my intent at all. I pretty much assume everyone on this site is going to be financially sophisticated.

I was thinking more about folks that aren't financially educated, which in the USA seems like most people. Picture "the cash store" here. I can't remember ever getting this education in the public school system for example. It also gets "responsible" people who get get sick, end up with huge medical bills, and without BK they would basically be modern day slaves to the banks.
__________________
FIGuy is offline   Reply With Quote
Old 05-13-2014, 09:41 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,284
Quote:
Originally Posted by FIGuy View Post
Hi Texas Proud, I'm not sure if my earlier post came across as a personal attack, but that wasn't my intent at all. I pretty much assume everyone on this site is going to be financially sophisticated.

I was thinking more about folks that aren't financially educated, which in the USA seems like most people. Picture "the cash store" here. I can't remember ever getting this education in the public school system for example. It also gets "responsible" people who get get sick, end up with huge medical bills, and without BK they would basically be modern day slaves to the banks.

Nope, it did not seem like an attack.... just stating your opinion, which I am sure is held by many...

As I said, I have had family go through it... his was a strange case that took about 10 years!!! I am not against it in the least... and I would use it if I ever needed to...


Agreed that there are a big majority of people in this country that just do not know how to handle money and it is something they need to look at...

BTW, I was against the changes they made a few years back making it harder to file....
__________________
Texas Proud is offline   Reply With Quote
Old 05-13-2014, 09:46 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 2,369
A year ago sometimes I'd watch Suze via streaming episodes at CNBC's site but now I see that site no longer offers them. Searching suggested new episodes may be available on iTunes, but I've tried that in the past with poor results. Are full, new episodes of Orman's show currently streamable from anywhere else?
__________________
GrayHare is online now   Reply With Quote
Capital in the 21st Century
Old 05-13-2014, 11:25 PM   #14
gone traveling
 
Join Date: May 2014
Posts: 153
Capital in the 21st Century

Have any one been tracking the thread: Capital in the Twenty-First Century by Thomas Pickety
__________________
LongPrime is offline   Reply With Quote
Old 05-13-2014, 11:29 PM   #15
Recycles dryer sheets
 
Join Date: May 2008
Location: DFW Metroplex
Posts: 112
Quote:
Originally Posted by GrayHare View Post
A year ago sometimes I'd watch Suze via streaming episodes at CNBC's site but now I see that site no longer offers them. Searching suggested new episodes may be available on iTunes, but I've tried that in the past with poor results. Are full, new episodes of Orman's show currently streamable from anywhere else?
CNBC - Watch Full Episodes | CNBC need to pick your cable company and log-in. Has a couple of recent episodes there with video.
__________________
Anon blogger - Since April 2012 I've been on a mission to rid myself of $45,159.35 of student loan debt. Down to $16,691 on 6/10/15. Plan to have loan paid off in 2016/7.
MBAVisionary is offline   Reply With Quote
Old 05-14-2014, 01:31 AM   #16
gone traveling
 
Join Date: May 2014
Posts: 153
Quote:
Originally Posted by LongPrime View Post
DS has student debt (stafford/direct and assumed the PLUS) of ~$55k. Should he pay off student loan, maximize 401k, or fund for future child college fund? Just entered the 28% tax bracket. ?
Hasn't anyone been following this thread? Capital in the Twenty-First Century by Thomas Pickety ?

No, I did not call the Today Show and asked this question. Suze Ormond, is costing a lot of people their future.

To answer my question above which is a mimick of the call-in question done on Today Show: Historically and except for the brief credit bubble, IMO, son should not pay off the student loans, which at graduation was just above $60k, 2006. His assets was UGMA $40k, tIRA/Roth $10K. Interest rate on federal guaranteed student loans 2.9% , weighted term of 22 years.

In 2006, you could get bank CD, 6 month at 3%. Why pay off the loans?
__________________
LongPrime is offline   Reply With Quote
Old 05-15-2014, 02:02 PM   #17
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 1,587
Maybe I oversimplify and like to use a generalization, but what about the old saying "pay yourself first". Being a young couple in the orig SO question, they should maximize the 401k/403b savings so it can grow and compound over time to benefit their retirement. Even better if they get a match from employer, that is an instant 50% (or whatever the match percentage is) return on your money. 50% return is way better than any 5% (for example) student loan debt interest rate. I would next pay off the student loans and finally kids college fund last. Maxing out the pre-tax savings will also enable to pay less in taxes so they can use that money to help pay the student debt or college fund.
__________________

__________________
After Monday & Tuesday even the calendar says, W-T-F...

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/16 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Suze Ormans portfolio Scrapr FIRE and Money 56 03-16-2007 12:02 PM
Suze is back on PBS! mickeyd FIRE and Money 1 03-05-2007 10:08 AM
Uh oh, I think Suze Orman got me into trouble cute fuzzy bunny Other topics 7 03-03-2007 07:01 PM
Suze's real "problem" mickeyd Other topics 4 02-25-2007 10:18 PM
Suze Orman opinions nnkrealtor FIRE and Money 133 01-09-2007 06:41 PM

 

 
All times are GMT -6. The time now is 04:53 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.