What I Learned on “The Suze Orman Show” – 8/16

by Karen on August 17, 2008

  • Don’t cash in your retirement account to pay off unsecured credit card debt. Period.
  • If you have credit card accounts open that you never use, closing them will hurt your FICO score. To maximize the benefit to your FICO score, use the credit card periodically to pay a bill or charge a necessary purchase, and then pay it off immediately before any interest accrues.
  • Treasury bills, bonds, and notes are the only investments guaranteed by the U.S. government. Therefore, they’re the only investments that can be guaranteed. If a financial advisor tells you that something other than treasury bills, bonds, and notes is guaranteed to be safe or have a certain return, he’s lying to you.
  • Real Estate Investment Trust (REIT): A real estate company that offers common shares to the public that are sold like stock.
  • If you and your spouse file separate tax returns, you cannot be held liable for any tax mistakes or tax debts accrued by your spouse. As long as you file separately, the IRS views you as separate from your spouse.
  • Suze thinks right hard rings are kind of stupid.
  • Don’t call into the show and ask if you can afford stupid, frivolous things if you’re in debt and you don’t have any money in savings and retirement. Seriously, it annoys the people watching, too.
  • If you have money invested with a brokerage firm and the firm goes under like Bear Stearns, your money is protected by Securities Investor Protection Corporation (SIPC) Insurance that covers $500,000 per account and $100,000 in cash against losses due to the failure of the brokerage firm. I was a little confused on this one, but it sounds a lot like FDIC Insurance for brokerage firms. Many firms have additional insurance. Make sure your brokerage firm is protected by SIPC insurance. I’ll be sure to learn more about this before we start making investments!
  • Chapter 7 bankruptcy is complete liquidation of all of your debt. Chapter 13 bankruptcy is a court-aided repayment plan for people with $336,900 or less in unsecured debt and under $1,010,650 in secured debt. You make payments over the course of several years to eliminate your debt. Chapter 11 is the same as Chapter 13, except people with more than $336,900 in debt qualify. I’ve always wondered what the difference is … I can’t imagine having that much debt. Yikes. Really puts my student loan debt into perspective.

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