Confessions of a Personal Finance Guru

Suze Orman set off quite a stir a few months ago in a New York Times interview. Although some folks were all atwitter to find out she was gay, what really had people in the personal finance world talking was the fact that the most successful personal finance writer in the country had the bulk of her $25 million portfolio in conservative municipal bonds, with only about $1 million invested in the stock market.

My buddy Chuck Jaffe, a MarketWatch columnist and not exactly a Suze fan, had a particularly good time that little factoid. Chuck has often criticized Suze's advice as too conservative, and her lack of personal exposure to the stock market confirmed his suspicions that she was out of touch with the needs of everyday people. “In short,” he thundered, “the person being trusted as everyone's financial adviser has a portfolio that few people could live with.”

I think Suze should be allowed to invest any way she wants to, but the whole kerfluffle points up an irony of personal finance columnizing: the more successful we pundits are, the less our lives resemble those of the majority of our readers.

I was thinking about that when J.D. asked if I'd be willing to write a little exposé for his site on how well I follow my own advice.

“I always wonder just how personal finance gurus lead their lives,” J.D. wrote in an email. “Do they really follow the advice they give? Are they frugal? Do they put their money in index funds? Do they drive older cars? I think this is a question many people have. I also think it's one reason they read Get Rich Slowly: I quite clearly do follow my own advice, or try to.”

So do I — mostly. At J.D.'s request, I'm pulling back the curtain a bit to show you where I walk my talk, and where I'm full of (well-meaning) hot air.

In case you're not familiar with my work: I'm the most-read personal finance columnist on the Web. I write a twice-weekly column for MSN Money and a nationally syndicated newspaper column. I'm also the author of three books about finance:

You can find out more about me, if you want, at asklizweston.com. But in answer to J.D.'s questions:

Am I frugal? Congenitally. Most of the time.

I grew up in a middle-class family with a dad who worked as an electric journeyman at the local power plant and a stay-at-home mom who had the Depression-era baby's classic aversion to debt. We had a garden, we canned, we rinsed and reused baggies. My mom went back to work to help pay my college tuition, while I worked two to four part-time jobs each semester to make ends meet. I graduated without student loan or credit card debt.

I've never been much of a shopper, and was taught to pay credit card balances in full every month. (I have carried credit card debt a couple of times in my life — for cash flow reasons, not because we couldn't pay the whole bill.) Since my early 20s, when I started working as a daily newspaper reporter, I've saved 15% to 20% — and sometimes more — of my income. Most of it goes into retirement funds and the majority of those are invested in stock mutual funds.

But a lot of the things I used to do to save money I now do mostly to save the environment: things like turning off lights, using a programmable thermostat, walking or biking instead of driving the car.

And now that I travel a lot, I've developed an appreciation for luxuries that would have been unthinkable in my salad days: things like membership to an airline lounge and occasionally paying for a first-class ticket, when I can't qualify for an upgrade with frequent flyer miles. Flying coach these days reminds me way too much of riding the Greyhound bus during college, and I'm lucky enough to be able to afford an alternative.

Do I put my money in index funds? Yes. Mostly.

I'm a confirmed believer that people who think they're going to beat the market probably are deluding themselves. I know I would be; I'm way too busy to monitor individual stocks or actively-managed mutual funds.

But a recent review of our portfolio showed that while most of our money is in broad-market index funds, we're still hanging on to a few actively-managed funds I bought before I'd become firmly convinced of the futilely of trying to predict market-beaters. Like the cobbler's children with no shoes, my portfolio's overdue for a clean-up and rebalancing. Thanks, J.D., for goading me into it.

Do I drive an older car? Oh, boy. Do I.

I'm the proud driver of a 1993 SUV with—ta-da—250,000 miles on it. I inherited it from my husband, who upgraded to a later-model Volvo. (The man actually cares what he drives, unlike me.) I'd eventually like to replace it with a more fuel-efficient car, but at this point I drive so few miles that it doesn't make sense to replace it. Besides that, I'm oddly curious to see how long the old beast will hold out.

I've also learned a lot about money over the years by making mistakes. I bought “retirement property” when I was in my 20s (anybody want 14 acres in Alaska, 80 miles from the nearest road?). After years of railing about the insanity of the dot-com boom, I sunk $2,000 into a tech fund in — get this — March 2000, about a week before the bubble started to burst. And the last time we bought a house, I forgot (yes, forgot) about closing costs, and had to sell off some investments at the last minute to cover closing costs. (Fortunately, the stock market cooperated with me for once — you're not supposed to keep short-term money, like down payments and closing costs, in stock or stock mutual fund investments lest they take a dive right when you need the money.)

But yeah, overall I've followed my own advice. I've avoided toxic debt including credit card debt; put a pile away for retirement; and invested a ton of money over the years in fun and experiences. I've traveled around the world, earned my pilot's license, threw some great parties, took two sabbaticals to care for my dying mother, and am in the process of raising a wonderful daughter (who may turn out to be our more expensive experience yet, but is soooo worth it). I firmly believe that managing money well helps you live life well, and that's the message I hope to communicate to readers — regardless of where they happen to be on the road to financial health.

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JerichoHill
JerichoHill
12 years ago

Liz,

Thanks for sharing a personal and human take on a financial expert’s own lifestyle. I can’t call you a guru because you have way more credibility than that term deserves.

I hope folks take away that yes, even the experts are not perfect, and we’re all human, and its okay to drive a 1993 auto.

Its tough to change those managed mutual funds isn’t it? I’m working to help my fiancee change hers but its a slow process.

Bob
Bob
12 years ago

Thanks, Liz, for the first hand peek into your finances. It’s nice of you to give us some insight into how you got to where you are.

Dylan
Dylan
12 years ago

Liz,

Thanks for letting us peek into your closet. It helps to know that we don’t have to be perfect to do things right.

The Suze Orman thing was not surprising. I’m not a fan and tend to think of her as a marketing/branding guru rather than a personal finance one.

brad
brad
12 years ago

I think the point about Suze Orman was that her financial situation puts her in a different place than most of the people she gives advice to. If I had $25 million, I’d put it into conservative investments too. Losing a few thousand bucks when the market takes a dive is not the same as losing a few million. Yes, being rich means you can afford to take more gambles with your investments, but you can also afford to be more conservative if you want to. As for cars, I am a big fan of keeping them as long as… Read more »

Michael
Michael
12 years ago

From a financial planning perspective, I once received and now often share this advice:

“By far the best car to get is the one you already own.”

And while these words were from a district sales manager of an auto company, he was first , of course, a friend.

MillionDollarJourney.com
MillionDollarJourney.com
12 years ago

Liz, great to see you contributing to the blog world! Awesome post.

FT

April D
April D
12 years ago

I’m slowly turning my fiance onto used cars. In his defense, he bought his truck new, and it’s been paid off for two years now, so he holds onto vehicles until they give out. But, I bought my vehicle when it was 1.5 years used, and my car payment surprises people when they ask and find out it’s so low, and it was fairly new. It’s one of the financial decisions that I’m the proudest of. Later, I read about how people buy new cars, which they usually finance and pay interest on, yet the second they drive it away,… Read more »

Jason
Jason
12 years ago

Brad, you beat me to it. Suze Orman has no reason to take higher-risk investments at this point. I’m sure she’ll take the safe returns on her $25 mil and be happy with it.

Laura
Laura
12 years ago

Thank you Liz! I do read your column in MSN Money and it is always valuable. Best wishes with your sweet baby girl! Regarding Suze Orman…in her first book she talks about knowing what level of risk you are personally OK with taking. She says your money is just a tool and you should use it when and where you want to. Ms. Orman’s investments are just a reflection of what she wants to do, and how risky she feels in this overinflated market. Now is not the time to buy. What we should really look at is how often… Read more »

Covert7
Covert7
12 years ago

Thanks for a cool article Liz! Much appreciated! 🙂

Moneymonk
Moneymonk
12 years ago

Way to go Liz, you are frugal but you still like little luxuries! sounds like myself.

If you are doing the right things with your money in the first place, you can surely afford a little luxury every now and then!

Liz Pulliam Weston
Liz Pulliam Weston
12 years ago

Thanks for the kind feedback, everybody.

The irony is that when you have Suze’s net worth, you can afford to be pretty conservative. The rest of us need to keep our money working for us in the markets if we want to retire.

Personally, I don’t try to time the market and I don’t think it’s a good strategy for most individual investors, either. I’m much more a fan of figuring out a target asset allocation, rebalancing to that allocation once a year, and getting on with life.

Pinyo
Pinyo
12 years ago

“the more successful we pundits are, the less our lives resemble those of the majority of our readers.”

Amen to that. Experts and gurus sometimes give advice that’s not practical for people who are less fortunate (or just starting out).

Andrea >> Become a Consultant
Andrea >> Become a Consultant
12 years ago

Suze Orman is in her late 50s. You don’t want a lot tied up in the stock market at that point. And some municipal bonds — even the AAA-rated ones — pay 4.7%. Perhaps Suze bought many of them when interest rates were higher. Moreover, I don’t think she has $25M tied up in muni bonds. She said she has a liquid net worth of $25M. I’m willing to bet that a significant portion of her wealth is tied up in her company, her partner’s production company and various related firms. Her business is in and of itself a big… Read more »

mobajwa
mobajwa
12 years ago

Great article.. keep up the good work 🙂

Angie
Angie
12 years ago

Whoa, a celebrity among us! I’m another fan who’s delighted to find you posting here on GRS, Liz. I was especially happy to see you advocating for credit unions recently over on MSN. I’ve been a member of a CU for probably 15 years and love them. Recently we opened an account at BofA, figuring that the convenience of a branch two blocks from home might come in handy. I was frankly appalled at the policies, fees, and sales pitches (trying to get me to open a credit card account as “overdraft protection”? No way!) After a few months I… Read more »

Dough Roller
Dough Roller
12 years ago

I´ve never been a fan of Suze Orman, mainly because I don´t care for her shtick. That said, I can understand why she has most of her $25 million portfolio invested in relatively save vehicles–she doesn´t need the return that the added risk MAY produce. I have about 82% of my portfolio invested in the stock market, but if I had $25 million to invest, the percentage of it in the stock market would be much lower.

Craig
Craig
12 years ago

I think Suze Orman is aware that money is a very emotional thing for many people, and that a lot of us tend to do the wrong thing when money is concerned, like bailing out of the market when stock prices drop and rushing in as they rise. I think a lot of people would be better off with more conservative investments, especially those who freak out during market fluctuations. Rather than telling the hoi polloi what they should do if they always behaved rationally, she advises them based on how they really tend to behave once they’re in the… Read more »

One Frugal Girl
One Frugal Girl
12 years ago

Thanks for this down-to-earth post. I am a long time reader of Liz’s work and this was a great personal post.

Cee Elle
Cee Elle
12 years ago

Thanks for the post. Liz, I have been reading your column every Sunday in the LA Times for years, and my Mom and I used to talk about your articles. We both learned a lot. Sometimes you were hard on people who got themselves into debt and my Mom and I would debate whether the people deserved it (made for great debate). So excited that you posted here and inspired by your tales of frugality.

chessiq>>life lessons from chess
chessiq>>life lessons from chess
12 years ago

It is always nice to see influential people reveal who they are, how they live their life in relation to the advice they give. For example, I may give advice on how to improve at chess (not that I am that influential!), and I don’t always follow it. I felt very bad until I realized that you don’t have to live all that you preach to share your knowledge on what works.
Brad, (comment#4), 370,000 miles on a Honda Civic Wagon, huh?! Awesome! Hope my 1999 chevy malibu makes it that long. I just put 170K on it.

InvestEveryMonth.com
InvestEveryMonth.com
12 years ago

Nice to hear that a financial writer trusts mutual fund managers instead of picking her own stocks.

I think financial gurus encourage people to pick their own stocks and invest in the market instead of safe bonds because they always want more money going into the market to increase the returns of their own portfolio.

lackadaisi
lackadaisi
12 years ago

Great post, in general. But, I am disturbed by the inclusion of the factoid about Suze Orman’s sexuality in a blurb critizicing her. Given the tenor of the rest of the discussion of her, it seems that this was added just as some sort of support for disagreement with her. A bit unnecessary, in my opinon.

MoneyChangesThings
MoneyChangesThings
12 years ago

I’m glad to read that you’re selectively frugal – sometimes those habits outlive their purpose, if a person denies him or herself pleasures they could well afford. It’s important to use money for the kind of experiences you describe – and remember those are investments in a life well-lived. Thanks for the reminder. (And thanks for plugging resource conservation!)

Martin Perrien
Martin Perrien
12 years ago

I find it a bit distasteful to even mention Suze Orman’s sexual orientation. That is her personal business. Regarding what she invests in, how could you conclude that she does not walk what she preaches? Responsibility, low risk, and wealth sure over wealth possibly are the foundations of everything she says and teaches. She is already wealthy, she would be a fool to risk her wealth she has already accumulated. Likewise taking advice from your peers that are in the same row boat is similarly pointless. Why would you listen to your neighbor who is in your same shoes? I… Read more »

Tyler
Tyler
12 years ago

I’m glad she mentioned Suze was gay because this will only turn more people off to her and I’m happy about that. Go Dave Ramsey! Suze is not my cup of tea.

Sid
Sid
12 years ago

Actually, I *am* interested in some land in Alaska! “Where” and “how much” are the first questions that pop to mind…

Jeff
Jeff
12 years ago

Suze came out of the closet on her own accord, so mentioning it in the article was perfectly appropriate. It’s not going to be very long before we don’t regard homosexuality as scandalous any more — but in order to get to that point, people like Suze have to let their lifestyles be known, and broadcasting the information further doesn’t really hurt. lackadaisi: Note that in the original article, Mr. Jaffe intentionally sidestepped the “gay planner = bad planner” issue by quoting the founder of Pride Planner group, who was critical of Suze. I, for one, think Suze is at… Read more »

A.J. - IAmFacingMillions.com
A.J. - IAmFacingMillions.com
12 years ago

Her personal life choices and preferences are completely irrelevant. I found her portfolio to be the most revealing. I have never been a big fan and don’t necessarily think her advice is the best, but her advice is far better than no advice at all. I think her portfolio is more conservative than it needs to be, but in her case it is large enough and meets her needs. I suppose if you had $50,000,000 and you chose to keep it locked in vaults instead of gaining interest under the premise that you have more than you’ll ever need, you’d… Read more »

arun
arun
12 years ago

Similarly , many companies take contra view…see for example , in this crash in equities , Bnp Paribas is picking many stocks cheap.. France’s biggest bank BNP Paribas, which has triggered a sharp plunge in the Indian and other global equity markets in the past two days, on Friday purchased shares worth Rs 20.46 crore in a single company here in India. BNP Paribas Arbitrage, a foreign fund promoted by the French banking giant, acquired 1.65 lakh equity shares in Northgate Technologies at Rs 1,240 per share in a bulk deal at the Bombay Stock Exchange. The BSE sensex have… Read more »

mysticaltyger
mysticaltyger
12 years ago

Thanks again, for another great column from Liz Pulliam Weston…my favorite columnist. As for Suze…Who cares if she’s gay? I don’t get the vibe that Liz does and Suze admitted it in an interview. As for Orman’s portfolio…as others have said…when you have $25 million, you can be ultra conservative if you want. After all, 3% of $25 million is 750K a year…Somehow I think I could live on that 🙂 I bet Suze can too, especially considering she’s got lots of additional income rolling in from her books & TV.

Yancy Caruthers
Yancy Caruthers
12 years ago

I have long been a fan of Ms. Weston – I always thought she had a bit of credibility. Just as taking self-defense classes from a 300-lb Sumo wrestler doesn’t work too well, neither does taking advice from someone like Orman who is worth 100x what I am. Even though it sounds like she had a good financial upbringing and a decent start, Ms. Weston readily admits that she has learned quite a lot by doing things incorrectly as well. The best lessons are those you learn at some expense – the cheap ones just don’t seem to stick. Respectfully,… Read more »

Myself
Myself
11 years ago

I for one wouldn’t blame Suze for putting the money into conservative investments.
Heck, if she has $25,000,000 and is only receiving and taking out 1%, she’ll be getting $20,833/month (or $250,000/yr) without ever touching the principle.
I wish I could have such problems. 🙂

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