Suze Orman: 3 things to do right now

Each year, we like to turn to Suze Orman for some financial dos and don'ts. This year, there's a little something for everyone:

All right, everybody - Listen up! Because I'm going to be giving you three pieces of advice that you should know for three stages of your life.

Let's start with students.

Here you are, you're about to go to school, and you need a scholarship to pay for your schooling.

Do you know that many scholarship companies now are going on Twitter, going on your Facebook. They're seeing what have you written, what have you shown about yourself? Because if any of that is risque or off-color, you just may be DENIED for a scholarship because of what is on social media.

So you have to be really careful.

Now, you're a little bit older, you've gotten married. Or you're older, and you've had a child, you're a single parent. And you decide to be responsible, so you get a term life insurance policy and leave your child as the beneficiary of that policy.

Don't you know that minors CANNOT inherit money? So if you die - especially single mommies out there - if you die and your kid is five months old, what are they gonna do with that money? It will go into a blocked account.

You should have the beneficiary be a living, revocable trust, where somebody is named, to take care of the money for your child.

And, last but not least: You own a home. You're getting close to retirement. You're 45 years of age or older. If you're going to stay in that home forever, what should you do? You want to catch up.

Pay down the mortgage of your home, so that by the time you retire it's PAID OFF. If you could do that, you're going to have more money, because you have less expenses.

Now, if you're NOT going to stay in that home forever, DO NOT - and I repeat, DO NOT - pay down the mortgage of that home.

All right, those are the three things that I want you to know. So what are you waiting for? You are to go down them all - right now.

[ani3010]

I don't think she's said enough. I got other much better advice but this spot too small.

[ludvig1-2009]

When you get a loan for the house you want to buy, make sure it's written in the contract that there is no pre-payment penalty. Have the lender point it out to you where it says that. We paid off 2 houses early, one is a rental and one is a residence. While the value of the 2 houses was once somewhere around $800,000 and today it's only around $400,000, I don't look at it like that. Instead of seeing the value of my houses in Dollars, I look at their value in terms of houses. You know, the value of the 2 houses is still 2 houses even after the real estate collapse.

[askagain]

Although much of Suze Orman's advice is sound, I question the part about not paying off your mortgage if you don't plan to stay in it forever. My second home was paid off in 18 years which gave me a large down payment for my third home. My third home was paid off in just six years. We have not had a mortgage payment for the last ten years. My wife and I can retire in two years and may move to be closer to our children and grand children. Chanes are, we will be able to sell our current home and have enough to buy our next home outright without a mortgage. In fact, our next home may be smaller and less expensive than our current home. Incidentally, our home is still worth at least $220,000 more than when we purchased it inspite of the economy and the housing bubble. From experience, my recommendation is to pay off your mortgage early. Just check with your mortgage company and make certain there are no penalties for paying off your mortgage early. Finally, by paing off our last morgage early, we saved $180,000 in interest. The math looks good to me.

[Jhihmoac]

Suze doesn't have to..If she ever goes broke, she'll just rob her parents' retirement nest egg...

[hypnotoad72]

"Now, if you're NOT going to stay in that home forever, DO NOT - and I repeat, DO NOT - pay down the mortgage of that home. "

In 'the new normal' of frequent moves, fewer jobs, jobs lasting 5 years max, continual wage drops by going into other fields, more work for less pay, training one's replacements... Forget mortgages altogether. It will NEVER get paid off, and trying to sell it in this market will be a money-losing proposition.

Gee, I just said better advice based on condition out here in reality. Where's my $500k salary, or do I have to put on some make-up first?

[hypnotoad72]

http://badmoneyadvice.com/2009/05/the-famous-suze-orman.html

Heck, just Google "Suze Orman bad Advice" - you'll find plenty.

[Bugsymoran]

I think she left us hanging, my wife and I both sat there ans said "why not?" Tell us Suze!

[hypnotoad72]

Stay tuned for her next chapter, only $24.95...

PT Barnum knew how to bring back viewers, and he also said "For ever crowd there is a silver lining"...

[Transatlantique]

One would have to live forever in order to live in a house "forever."

[hypnotoad72]

An increasingly improbable possibility.

She's out of touch with reality...

[Transatlantique]

She gives advice, but never will have to take most of it. It must be nice to be rich. Oh Suze, you are so lucky.

[netjunkie1]

She was a waitress in a now defunct restaurant.

[nas1972]

She wasn't always rich. She started out with next to nothing. Read her personal story. It's fascinating.

[clearsorry]

What about #3? Why is it better to not pay down the mortgage if you are not going to live in your house "forever".

[netjunkie1]

I know it had to do with insurance when my parents had a mortgage.

[jmgray16]

I think it's because of the mortgage interest deduction, but really it depends on how soon you think you'll be moving. Say you are going to be there 10 more years, the money you would save in interest by putting a couple extra hundred dollars a month would offset the tax break. But if you are only going to stay another year or two, you might be better off investing that money in something other than your house.