The other day I was flipping through the channels and happened across the Suze Orman show where she takes calls from people (many of whom seem to be perilously and blissfully unaware of their impending financial doom) who are hoping to get a loan for this or that strange high priced knick knack that they are convinced will increase their quality of life. Suze then breaks it down for them, asking them questions about their income and savings, etc., and then tells them whether she would approve or deny them the loan. Many of these people seem to have little contact with what you or I would call "reality."
Here's a hypothetical, condensed (though not exaggerated by any means) example of a typical interaction between Suze and loan seeker:
Suze: Hello caller, what do want a loan for?
Caller: Hi Suze! I really, really want a life size replica of the Kool-Aid man from those commercials. It would go great in my living room as a conversation piece.
Suze: How much does it cost?
Caller: $15,000. It's a collector's item and there are only two in the world. But I need it!
Suze: So, tell me about your income.
Caller: Well, I'm currently unemployed, living with my parents, but I have $600 in savings and--
Suze: Denied!
So anyway, on the show the other night, a man called up saying he wanted to purchase a seaplane for $165,000. He sailed through Suze's interrogation of his financial situation (though he is really not affluent by any means) and she approved his request for the loan.
Here's what Suze did not take into consideration, and here's why she should have denied his loan: The cost of the plane itself is only the beginning and it is soon eclipsed by other stratospheric expenses such as insurance, fuel, and aircraft maintenance. If Suze knew about these things, she would have, I have no doubt, taken them into account.
It is a rare day indeed when I find myself in disgreement with a money whiz like Orman, so I thought this event was worth posting about.
Hello world!
5 years ago
