“You have to do your own growing no matter how tall your grandfather was. ”
Though Suze Orman proclaims her whole life "fabulous," her early years bore little resemblance to the world she inhabits now. In Berkeley, Calif., when she was in her 20s, she slept in her Ford Econoline van for two months while working for a tree service. Then she spent six years as a waitress, earning about $400 a month. After that, she borrowed money with the hope of starting her own restaurant, but she quickly lost every cent of the loan by investing it in stock options.
At that point, it would have been hard to predict the career that has followed: a stint as a Merrill Lynch account executive; a vice presidential slot at Prudential Bache Securities; the launch of her own financial-planning firm; and then a rapid rise to become probably America's best-known financial adviser-the "Money Lady," as her fans call her.
She hosts the top-rated Suze Orman Show on CNBC-TV and Sirius XM satellite radio; appears frequently on CNN and The Oprah Winfrey Show; and has starred in six top-rated PBS specials that have won her two Emmy awards. She has written seven consecutive New York Times best-selling books, including The Road to Wealth, Women & Money and, most recently, Suze Orman's 2009 Action Plan. (About a million copies of this latest volume are in print, and more than two million have been downloaded, according to her publisher.) In 2007, Business Week named her the top female motivational speaker in the U.S. and, last year, Time selected her as one of the world's 100 most influential people.
When we recently watched her tape her TV show and interviewed her at CNBC's New Jersey studios, the reasons for her appeal were on full display. Though she had begun taping at 6:30 a.m. and had been at it for four hours by the time we met her, she smiled almost constantly, exuded energy and self-confidence and colorfully expressed strong opinions about every issue we raised, from health insurance to fractional jet ownership shares.
You may not agree with all of those opinions (and we invite those who don't to address comments to email@example.com), but whatever you think of Orman's views, give her this much: She speaks from the heart, is almost exactly the same on and off camera and never pauses after hearing a question to concoct a reply that would bolster her image. She just tells you what she thinks-and in no uncertain terms.
You've said your greatest pleasure is flying privately.
It most certainly is. On a business level, time is money. Everybody made a big deal about the car executives flying private to Washington, but give me a break. We're in the middle of a meltdown. Every second matters. Millions of jobs are on the line. Could they have gone on one private plane? Maybe. But the fact that they drove [on their second trip] was the most ridiculous waste of time and money I ever heard of.
What does flying privately do for you?
It's efficiency, first; health, second; pleasure, third. When you take a commercial flight, it's either late, been postponed or whatever. Years ago I had the luxury to say, "All right, I missed a plane." I can't afford that anymore. I have to fly in, fly out, be in another place the next day. The only way to do that is on a private plane.
Also, the chances are very great [on an airliner] that some kid's gonna sneeze on me and then I get sick. I cannot afford to be down one day. If I am, it's millions
of dollars on some level somewhere.
And after 9/11, things changed. I cannot afford to not have the makeup and the things that it takes as a woman to be presentable the next day, and half those things you can't take as a carryon now. And I checked my bags too many times and didn't have a suitcase when I arrived. So then what do I do?
Do you remember when you first flew privately?
You betcha-Dec. 4, 1996. It was on Sy Newhouse's [chartered] plane. At the time, he owned Random House, which was putting out my book, Nine Steps to Financial Freedom. I got a call saying, "Would you like to fly on Mr. Newhouse's plane with him?" I was beside myself.
Are you using charter exclusively now?
Only when I'm doing business. I fly Jet Blue from La Guardia to Fort Lauderdale. And when I fly cross-country, I fly Virgin America. I fly on Fridays because it saves me $350.
When you charter, I understand it's always the same model.
A Hawker 400XP, because I can control my heat from my seat. All the other planes, you have to say, "Excuse me, can you raise it? Can you lower it?" It drives me nuts.
I heard you were thinking of moving up to full ownership.
I was when I traveled more. But I'm flying privately only 100 hours a year now, if that. You have to fly over 150 hours for owning to make sense-which, by the way, Mr. Newhouse told me way back when. I said, "You're worth $9 billion. Why do you charter?" He said, "It will never make sense for me to own my own plane. It's just easier to charter."
What about fractional shares or jet cards?
I think they're rip-offs. First of all, you tie up a quarter-million dollars or whatever for the luxury of having the plane whenever you need it, at supposedly a reduced per-hour cost. Oh, give me a break: They charge you round-trips even if you're going one way. I would not own a fractional share if my life depended on it.
Let's talk about investing. I've heard you advocate dollar-cost averaging, but I've also heard you suggest selling after small declines and buying on the rise. That sounds as if you're telling people to try to time the market.
Here's the thing: I can say dollar-cost average until I'm blue in the face, but unless they're forced to dollar-cost average via a 401k, how many people do it? And since they don't, I have to give them another guideline. If you buy something that goes down 8 percent and you are not going to dollar-cost average for 10 years or more, you need to get out.
When you talk to callers on your show, it often sounds as if you're blaming them for managing their money irresponsibly, which obviously some people do. But in most cases where people have really serious money problems, aren't the factors involved beyond their control-like a major illness, a spouse's death or a job loss?
It is true that the number-one cause of bankruptcy in the U.S. is medical bills that aren't paid but that is because people didn't have medical insurance. It is also true that people made the choice not to have medical insurance because something else might be more important. Maybe it is also true that people decided it would be better to pay $300 a month to keep their credit cards open rather than to take that money and have health insurance. So they created the situation they are in. A lot of people have chosen to get rid of their health insurance to pay their credit card debt so they can continue to charge things they don't need.
A lot of what you say suggests that you think people have emotional roadblocks to wealth. For example, you called one of your books The Courage To Be Rich. But isn't it true that if you're in a low-paid profession, such as teaching, or you don't have much education and work in a grocery store, you won't get rich no matter what your attitude or how responsible you are with money?
You're never going to be rich in the way you're defining rich. But will they live a rich life, meaning they don't have to worry about not being able to retire one day and not being able to live the life that they want? They most certainly will. That's because people who make less spend less. They actually have more disposable income than people who are making a serious sum of money and feel they have to show everybody how much they have.
But if you make $25,000, you can't afford $12,000 a year for health insurance.
No, but it's possible you work for a grocery store that gives you health insurance. Anything is possible. And if you make $25,000 a year, in many states you qualify for programs where you can insure your kids for nothing. And it's possible there are other programs out there that could insure you and your spouse for $100 or $200 a month.
In your New York Times Magazine interview in 2007, the shocker to me was that you had only 4 percent of your money in stocks and the rest in general obligation municipal bonds.
I begged everybody to do what I was doing. On my bond portfolio, I am up 20 percent since last year.
In this very unusual time, it looks like a brilliant move, but...
It was a brilliant move back then when I was locking in high interest rates and I knew this was going to happen. In August 2004, I said, "Don't be surprised if in 2008 you see the S&P back at 700 and the Dow at 7000."
You've written that people who grow up without much money and later earn a comfortable living sometimes spend too much to make up for what they didn't have as children. Do you think that applies to you?
I live very frugally. One would look at my real estate holdings and think, "She's very flamboyant." However, my largest home is 2,200 square feet and there's method to my madness in every place I've purchased. When the economy is down, you want to own real estate that people will buy no matter what. The Plaza Hotel [in New York, where Orman owns an apartment] is a place where people will buy no matter what.
On average, our readers have a net worth approaching $18 million and annual income over $1 million. What financial mistakes do you see among people in that demographic group?
It can be summed up in one word: [Bernie] Madoff. Or two words: financial advisers. Or three words: not taking responsibility.
How do you think so many sophisticated people got sucked in by Madoff?
How many wealthy people have financial advisers who don't really care, aren't as smart as they say they are and invested your readers' money with Madoff? Do you think Steven Spielberg called up Bernie Madoff and said, "Here's my money"? Spielberg probably had an adviser who got him involved with Madoff. The financial advisers who did that to their clients should have their licenses stripped from them.
People with $18 million net worth and million-dollar incomes are just too busy to take care of the money themselves. They're trusting some financial adviser who's probably an idiot. That's why we say on The Suze Orman Show, "If you want to find the best financial adviser in the world, look in the mirror."
Let's talk about you. What was your childhood like?
But I understand there was a lot of financial struggle.
My father and mother didn't have money. My father had one failure after another. He got caught in a fire. He got emphysema. My mother was an Avon rep to help get the family through, along with being a legal secretary. But it was fabulous and I'll tell you why: because those hardships made me who I am and if every one of those things hadn't happened to me when I was younger, I would not be as fabulous as I am to this day.
Did you have any background in finance when Merrill Lynch hired you?
Are you nuts? I was a waitress and my degree was in social work. I believe the manager needed to fill his women's quota, so he hired me and told me that women belong barefoot and pregnant and I would be out of there in six months.
Why do you think you've been so successful?
Because I tell the truth. Because I will never do something for money if it isn't right for the people first.
What doesn't your audience know about you?
I think when people look at me, all they think is the "Money Lady." They might not know that my number-one priority is not money. It's people. They might not know that these boots are my same boots from seven years ago. My earrings are from 20 years ago. I really don't like to change things much at all. I love stability. And I like everything around me to be small, simple, clean. I am meticulous. In my houses, everything is exactly where it should be. I have no paperwork around. I do everything from one computer. I don't have any employees. I think people would be shocked to know that I do it all myself with K.T., my life partner.
What does money mean to you?
It means that not only do I have security for myself, but I can help people. It means that my mom at age 94 can have two full-time nurses, a trainer, a masseuse and a driver and can live a lifestyle that she can't even believe she's living. And that I never have to worry again and that K.T. never has to worry again.
What do you like to do when you're not working?
I love to watch CNBC and CNN. I'm not joking. My greatest joy in life is watching CNBC America, then at 6 p.m. I switch to CNN, then at 11 p.m. I switch to CNBC Asia. When I'm in South Africa, I'm watching CNBC Europe and CNN. I could do it 24 hours a day.
Not sports, travel, hobbies?
No. My greatest gift that I was given this year was my little satellite XM radio, so when I'm on the beach in Florida, I can listen to CNBC. I'm just fascinated with how it's become a worldwide economy. I love that.
Speaking of the economy, you told Larry King in March 2008 that you thought America had gotten through the worst of the economic downturn. You said, "We're closer to the end of the crisis than we were six months ago." In retrospect, what did you miss?
I missed that the financial institutions could be lying through their teeth as much as they were. I believed the CEOs when they went on CNBC and said, "We're fine. We don't need money. Everything is under control." I believed them. I thought far better of these executives who should all be in prison right now. How dare they have lied to the American public!
There are those who think the Obama stimulus plan is too big and those, like economist Paul Krugman, who think it's much too small. What's your view?
I think it's much too small. The commercial real estate debacle hasn't happened yet. We have prime mortgages that are now defaulting faster than subprime mortgages defaulted. It would not surprise me to see another stimulus package have to come out in September or October.
But you're hopeful about Obama?
Yes. I don't think anybody else could have done it and I think he will. Because he's young enough-and because he still plays basketball. What does that have to do with whatever? He's President of the United States and he's still playing basketball! This position needs somebody who thinks he can do anything and everything.
Well, George Bush rode a bicycle when he was President and he didn't stop the economy from sinking.
Yeah, well, don't get me started on George Bush.
Name: Suze Orman
Occupation: Best-selling author and TV personality
Education: University of Illinois
Transportation: Hawker 400XPs, chartered from Elkhart, Ind.-based Travel Management Company
Personal: Lives in New York City, San Francisco, Florida and South Africa with partner Kathy Travis (K.T.)