I don't often watch "Oprah," but I turned it on today, and it's quite fascinating, even though it got me all riled up. This couple lives in California, and their spending (especially the wife's) is so out of control that they are on the verge of bankruptcy. Suze Orman was on to give them some rather harsh advice. Check out a partial transcript:
So how bad is Phil and Felice's situation really? Suze says she's spent hours poring over their financial records. "I've been doing this, as you know, for a long, long time. And I have never seen such disrespect for money as in this family here," she says. "I don't even think you have any idea how bad it is, and you don't."
Phil and Felice really have $135,000 in credit card debt. They also pay $1,700 a month for their three cars. Their two mortgages total $658,000. Because their mortgage is a negative amortized loan, Suze says that means their mortgage will increase by $20,000 every year. "There is no longer any equity in this home at all, and all you are paying is $1,800 a month on it and that is to adjust in a few months up to $3,300 a month," she says. They are also two weeks behind on their mortgage payment. "There is no money left in any bank accounts. All your credit limits are almost used up," Suze says. "And Felice is willing to say 'I am in trouble' because she can no longer get any cash advances to pay the bills."
So how bad is it on a scale of 1 to 10? "Maybe 1,000, and I don't say that lightly," Suze says. Suze says she catalogued the horrors of Felice and Phil's finances not to make them give up hope, but to make them understand just how important change is. "Nobody has a magic wand," she says. "All we have is the magic within our own souls to do that which we can do and deal with reality. You have now created a reality for yourself and your families that you are not going to be able to buy yourself out of."
First, Suze says Felice has to get a job immediately with an employer that will offer health insurance to her entire family. Suze suggests Starbucks®, because they offer health benefits to part-time workers.
Suze even has advice for Felice and Phil's friends and family. "If you see these two coming up anywhere, you are not to lend them money," she says. "Don't you [Felice] dare go to your parents and ask for help. This is not their problem. This is your problem. Stop asking others to save you. I want you to be a woman who can save yourself [italics mine]."
Wake up, America! Stop believing that the credit card companies are our friends. They feed like leeches off of our credit card debt, and the more you go into CC debt, the more their wallets are fattened. Yes, Ken and I have credit cards, but we use them prudently. I have two, and I pay them off in full every month. Since we've been married, Ken has been juggling and shuffling credit card debt from before we were married (and there was plenty, believe me), and we have worked together, as a team, to pay it down significantly. I believe that one of the biggest problems in our society is that everyone wants everything RIGHT NOW. It does not work that way, and we have to work for the things we want. That should be obvious, but apparently too many people just don't get it. You don't finish college and set yourself up in the cool digs you've always wanted--you start out in a modest place, you save your money, and you progress slowly.
And while I'm on a roll, let me say something else: Ken and I have worked hard for everything we've achieved. He got his Bachelor's in engineering and later got his Master's, I got my Bachelor's in Medical Technology (including a 12-month internship my senior year), we have both worked consistently since then, and we've both worked hard. There's not much that yanks my chain more than people who expect a handout without working for it, and all I can say is get your ass out there and get a job. That's how it works, folks. You work, you earn, you save, you spend, and in that order. It's that simple.