The Business of Life

Now Is No Time to Pile Up Debt

“Bad debt is sacrificing your future day needs for present day desires.” - Suze Orman

Suze Orman is one of the most popular and respected personal financial advisors in America today and her show on CNBC is watched by more people on a weekly basis than any other of its kind. Orman grew up in Chicago as the child of working-class Russian immigrant parents and after losing money due to bad investments in the stock market, decided to become an account executive with Merrill Lynch. Years later, she rose to become a Vice President with Prudential Bache and ultimately found her voice as a writer and TV personality. Orman later served as director of her own financial planning firm, resigning when her writing career took off. She has written six best-selling books, including The Road to Wealth and Women and Money: Owning The Power To Control Your Destiny and is a highly sought after speaker on the lecture circuit.

She writes a regular column for Oprah Winfrey’s magazine and over 1 million people downloaded her latest book when it was offered free for 33 hours on Winfrey’s web site. Suze Orman is a two-time winner of the Daytime Emmy Awards, the most successful fund-raiser in the history of public television, and in 2008 was selected by Time Magazine as one of the most influential people in the world.

It would be easy to interpret Orman’s quote as simply that of a financial advisor with a fairly conservative approach to the market. In fact, she has frequently been criticized for being too simplistic. For me though, I think the quote is more complex and especially relevant to our most important relationships. I know I piled up a lot of bad debt when I let my immediate desires outweigh the long-term health of my relationships with those closest to me. I promised to be home right after work only to accept an invitation for “a few drinks”, usually not calling home to communicate and frequently arriving way too late and not in any condition for dinner with my family. Everyone suffered and unkept promises turned into a decided lack of trust in what I said I would do. It was particularly hard on my children. Morning golf rounds turned into late afternoon arrivals home because it was too important to continue rehashing the day with my buddies. Even something as simple as sharing the excess family money only after my needs had been taken of, created more cracks in relationships that were most dear. I nearly lost any long-term value because of my focus on short-term gratification.

About a half-dozen years ago, the light bulb finally went on. I needed to adjust my perspective and place it squarely behind the relationships with family and very close friends. Today, I might be accused of being a homebody or, maybe worse, boring but I’d rather make an investment that slowly but surely appreciates than continually seek the quick hit. Having that perspective means that I’m in favor of taking a long-term approach in my most personal relationships, revealing more of myself and helping others instead of being the quick-witted prankster or shallow conversationalist. While I don’t think many of my friends consider me boring, I do know they consider me patient and supportive. To me, the security of knowing that my daughter actively seeks my advice, my teenage sons enjoy spending time together even when it doesn’t involve me spending money or my wife says “I love you” in the middle of a Saturday afternoon in our kitchen is worth so much more than the best joke I ever heard in a bar. Knowing that my friends feel good about confiding some tough stuff about their lives is so much more invigorating than discussing the latest starlet’s sexcapades over too many beers.

Suze Orman’s quote may be simplistic investment advice but it’s right on the money when it is applied to our most important interpersonal relationships. Bad debt is simply that… bad debt. It happens when we can’t apply a sense of perspective to the present situation. Many analysts believe that lack of perspective created the present housing and foreclosure crisis. I believe, for me at least, that a far more damaging home foreclosure crisis would occur under my roof if I lose the perspective that it makes no sense to pile up bad debts chasing after momentary satisfaction. I’m in this for long-term appreciation and I hope you are too.

Labels: bad debt, CNBC, financial analyst, Merrill Lynch, Suze Orman, The Road to Wealth, Time Magazine, Women and Money: Owning the Power to Control Your Destiny

posted by Tom Hagerty @ 1:13 PM