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Suze Orman's 'New American Dream'

Financial guru Suze Orman.

Tess Vigeland: Listen verrrry closely and you might recognize this voice.

Woman: Denied, are you nuts, you can not afford it. Carry money in a paper bag, I have to tell you, you are denied.

You may think it's Kristen Wiig from "Saturday Night Live," but no, it's the real deal. The diva of dollars herself, Suze Orman. She's just written another book called "The New American Dream." And she joins us now. Welcome to the show.

Suze Orman: I am happy to be here.

Vigeland: Your newest book is devoted to the subject of the American Dream and the fact that our concept of it has kind of had to change, because the American Dream as we know it just might be dead. What does the new one look like?

Orman: It looks like happiness, hope. It looks like you have a life, where you communicate with one another, because everything you're communicating with is the truth. You know, the old American Dream was based on bigger, better, more. More house, more car, toys, all of these things. And that would've been an OK dream if we had the money to have paid of those things, Tess. So it's actually good that the old American Dream is dead, because it was a dream that was based on financial lies. The new American Dream, there is no debt, you live below your means, within your needs. You get pleasure out of savings, as much as you do in spending.

Vigeland: Wow. That's a lot of change.

Orman: Yes.

Vigeland: It sounds a lot like maybe we're just going back to a more realistic American Dream of 20, 30 years ago.

Orman: I wish it could be that easy. You know, way back then, when you retired, you had a pension. Today, health insurance is going to be tremendously expensive; Social Security is being postponed and postponed, in terms of when you can actually collect it. You're not going to leave a job with a pension, because they don't even offer pension plans anymore.

The new American Dream actually is knowing how long you need to work in order to pay your bills. For most of you, it really will be till you're 67 years of age.

Vigeland: What do you think of that development in our financial lives that so much of it is left to us now. You mentioned we don't have a pension system anymore, we have to now manage our own 401(k) retirement plans. And we have to understand investments to be able to do that. Is this a good development or a bad one?

Orman: Well, we get into trouble, because we think everything's going to be OK, somebody's going to take care of us. We now live in a world where everyone us has to be responsible for the money that we're making.

Vigeland: Even though you're saying we're living in a new reality, you take to task this concept of a new frugality coming out of the Great Recession. What's your issue with that phrase?

Orman: Well, it's that we're not really having to be frugal. We should just really live our lives where we take as much pleasure in saving as we do in spending. You should be loving the fact that you're in control of your money versus your money is in control of you. The new American Dream is a dream where you stand in your truth, where if you have to say to your kids "I love you so much, but I don't have any money in retirement, I don't have an emergency fund. I can't even barely pay my mortgage. I can't afford to pay for you to go to school." And the kids are starting to understand that they can deal with this, because they know what to do then. If they're going to go to school, they need to take out a student loan, they need to know how much of a student loan they can take out. It's not about just being frugal; it's about being honest.

Vigeland: But when you talk about taking pleasure in saving, that really is a change of mindset. And behavioral economists have done studies that show literally pieces of our brain light up when we're spending, when we think about spending.

Orman: Yes.

Vigeland: So there's something in us that's wired to be much more excited about spending than we are about saving. How do we change that?

Orman: By simply changing. You know, I've always said, "If you want to change, just change." Recently, I just did a piece...

Vigeland: You make it sound so easy!

Orman: Well, you know what, I have to tell you, it is. I love saving money more than spending any day. I rather eat at home than eat out at a restaurant, because it makes absolutely no sense to spend that kind of money. Now, I have a lot of money. I'm a very wealthy woman, and I work for every penny of that. So I know what it took. I make choices where my money goes further. So I don't spend money just because I have the money to spend. Start having pleasure in saving money, equal to that to spending money. Can you do it? You absolutely can.

Vigeland: There was a lot of talk that more and more people were going to do that coming out of the Great Recession. But of course, we're already getting reports of increased credit card use, things like subprime lending for cars. Do you really think that we as a society can change our habits permanently to become better savers than we are spenders?

Orman: I do. I do with every ounce of my being, if we start talking about this conversation. Seven years ago, I met somebody from Washington D.C. outside of the NBC Experience store with him mama here in New York City, where I'm coming to you from. And I started talking to this little boy about saving and putting his money actually in a savings account and what would happen. And they actually just showed this piece, the other day, on "Nightline." They then brought him back. He's now 17 years of age. His mother, who is a single mother did exactly what I said, and they now have enough money for Diante, is his name, to go to be the first one in the family ever to go to college. He will tell you he gets more pleasure out of savings than spending. But how did that happen? We started him when we were seven. So yeah, I never think that it is too late to learn this message. But I will say this: The sooner you begin it, the better off you will be.

Vigeland: Suze Orman, thank you so much for being with us today.

Orman: Thanks for having me Tess.

Vigeland: You can find an excerpt from Suze's book at the Big Book. We had quite an extensive conversation with Ms. Orman and we'll bring you more of it in a few weeks.

About the author

Tess Vigeland is the host of Marketplace Money, where she takes a deep dive into why we do what we do with our money.
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A new survey by Bankrate shows that only 52% of Americans have more money in their emergency fund than they do in credit card debt. Another 23% have more debt than emergency fund savings, 19% have none of either, and the remaining 6% don't even know!

And we're 2 years away from the peak of the economic crisis! Getting out of debt and staying out of debt should be the priority if we're going to take control of our finances.
I very much agree with Suz about teaching kids from an early age about finances and Dave Ramsey has great financial education materials for kids of ALL ages. I highly recommend you invite Dave to your show next.

PS: Personally, the only debt I have ever had was a mortgage, and I'm planning on staying that way. I also have an investment property, an emergency fund of 8-months worth of expenses, a couple of retirement funds as well as an ESA for my 2-year-old daughter. I'm an immigrant, and I believe that has a lot to do with not getting into debt like a lot of Americans tend to do. It's a whole different mentality. I also read Dave Ramsey's books while I was in college here in the U.S., so that helped me learn what not to do when I get out into the work force. My fiance (who is a first generation American) and I are working to get on the same page as far as our finances and it's a huge challenge, since he's never been educated about money and debt.

it is interesting that all the talk is about middle class that makes less and less, going under pressure more and more and not even one word about how the wall street, bankers and the 400 family that control all the wealth in US. Is she blind that no matter how much we save and less and less spent, it is out of our control when the wall street make million dollors of bounces and make our lives harder. this is not about saving but more about as long as the system reward the top money people, there is no hope for te middle class.

Ms Orman is not quite right: when an hard-working parent is unable to afford something reasonable---say, a college education---they [sic] should both be honest about the fact with their child---rather than get into debt---but then explain why they can't: we as a nation have allowed ourselves to be persuaded that the interests of rich persons like Ms Orman and even richer, artificial, 'persons' are the same as ours, when they are more often than not counterpoised. Sorry to repeat an old refrain, but even after current austerity measures, the other industrialised Western nations will do far more to intelligently collectivise both the risks of the accidents to which all flesh is prone and the benefits necessary to anyone's prosperity.

But to do so would require that many of our richer citizens contribute more to the commonwealth that has sustained and preserved them in their wealth, even as it has assisted their getting it, since (pacem Ms Orman) no-one earns and safely keeps a fortune using only their own efforts...a Mr Benjamin Franklin wrote well on the subject long before anyone listening was born.

DO NOT SAVE YOU MONEY IN BANKS! BANKS WILL SEAL YOUR SAVINGS, CHARGE YOU FEES, AND RAISE YOUR TAXES TO PAY FOR THEIR 'INSURANCE'.

DO NOT SAVE (I.E. "INVEST" = RISK) IN STOCKS, OR DERIVATIVES OF STOCKS. THE STOCK MARKETS ARE ALL RIGGED CASINOS.

SUZE IS NUTS. THE BOTTOM 60% OF US CITIZENS MAKE LESS THAN $20K/YEAR. SAVE NOTHING, AND HAVE NO HEALTH-CARE.

SPEND. BUY GOOD FOOD, A GYM MEMBERSHIP, INVEST IN YOUR EDUCATION. GROW STRONG, BUY DURABLE GOODS THAT HAVE 20 YEAR+ WARRANTY. PRODUCE YOUR OWN ENERGY, FOOD, SHELTER, ALL BASIC NEEDS.

INVEST IN YOUR COMMUNITY, NOT CORPORATIONS.

How about bagging the advice from Suzy big bucks Orman and getting on with some reporting on how us working people are getting fleeced by the folks on wall street. You do your listeners a disservice by cheerleading for a book that offers no real solutions to people feeling the crunch of shrinking wages and increased cost of living rather than telling the story of the attack on working people in this country.

Looks like Suze finally caught a little Dave Ramsey fever. My American dream has never been bigger, better houses, cars, and toys. It's been about providing for my family and delaying pleasure for the necessities. I have a second car that I would like to drive, it's red and fast, but the money needed to get it back on the road takes away from other priorities. Dave Ramsey calls that being a man, instead of a whiny little boy. I'm sorry it took a recession for many other people to learn the difference between needs and wants.

I have a good start on retirement (not expecting Social Security to be around when I retire), a reasonable 15-year mortgage at a lowed fixed-rate, very little debt beyond my house, and college for my kids is likely taken care of do to some money my ex-wife's great aunt left for our sons' education. She wasn't a wealthy woman, but she saved up over the years. I have a suspicion that she might have lived through the Great Depression and knew some of the lessons that other people are learning now. That's what I call the American dream, not two cars with leases in a zero-down house with a plasma screen in every room.

I've never seen an electronic image of my brain when I'm saving, but my mother started me saving coins given to me my relatives when I was two (2), and saving money is one of very few things (eating dark chocolate) that always makes me smile. There's nothing "new" about this phenomenon. I'm with Suze all the way.

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