Suze Orman
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"The theme has been for a long time, Get out of credit-card debt, know your FICO score, pay our homes off, don't use anything other than a fixed-rate mortgage, real estate has hit its top." She paused and thought for a moment. "Although ... I really thought a real estate investment was the best investment you could make over time," she said, the closest she comes to acknowledging a mistake. Orman owns five homes, although she's not sure she'll make a profit on the last one she bought--a luxury apartment in New York City's Plaza Hotel, which she purchased for $3.6 million in December 2007, at the peak of the market. (At least she paid for it in cash.) (See pictures of modernist houses.)
An online diatribe by James Scurlock that recently appeared on the website the Big Money accused Orman of giving bad advice. The piece generated a flurry of attention, mostly among Orman defenders, who accused the author of twisting the facts. Orman said she was unperturbed. "When somebody is that off base and obviously so self-serving, I don't even let it bother me, because any intelligent person who reads it knows that he is doing it for the sensation of doing it," she said.
That wasn't the first time a reporter has taken shots at her, but she has her way of dealing with it when it happens. "Obviously, when I want to, I do investigations into the people to find out, What does their economic situation look like?" she said. "One person who did this in the past--he has such severe debt, owns a home that was, like, $100,000, fights with his wife all the time, drives a junker of a car, doesn't have a pot to pee in. It just validated the fact that when people are so vindictive and they're really trying to slam you, it's because they're so desperate--they're trying to do anything to get noticed. I just feel sorry for them," she said. "I'm proud that I make money, that I work hard, that I've created what I've created. But I can tell you this: I haven't hurt one person getting here." (See 25 people to blame for the financial crisis.)
After her CNBC taping finished, Orman swept across the parking lot toward a waiting Town Car. Her longtime driver, Jean Germain, a strapping gentleman from Haiti, came rushing over to take a garment bag from her hands. In lieu of a bonus, last year Orman opened a retirement account for him and made the maximum contribution of $5,000. The cash is sitting in a money-market fund until she decides that the market has bottomed out. She plans to dollar-cost-average into exchange-traded funds and a few individual stocks, as she suggests doing in her books. (Read "Lay Off, Suze Orman!")
As for her own money, she said she has about $25 million, almost all of which is invested in municipal bonds; she has $885,000 in the stock market (it was closer to $1.3 million before the recent plunge). She's been criticized for not having more in stocks given that that's where she tells others to put their long-term cash, but she said her focus was on security for herself in case her business suddenly dried up and she had to retire. If the market keeps dropping, which she expects, she plans to invest more: "It wouldn't surprise me if in the next year or two, I have close to $2 or $3 million in the market," she said. She values her five homes at $15 million: the San Francisco town house; a two-bedroom beach condo near Fort Lauderdale, Fla.; a house in South Africa; and two apartments in Manhattan. Orman believes that people who don't have money shouldn't buy things--they should fund their IRAs instead--while those who have a lot of it should spread it around. Her biggest indulgence is the $300,000 to $500,000 she spends each year flying on private planes. She's also eaten out every night since November to support the restaurant industry. (See the top 10 food trends of 2008.)
As her car inched across the Hudson River, Orman explained how much she admires President Obama. She likes the $787 billion stimulus package, although the size of the debt the government is taking on "scares me to death." When asked whether people suggest that she run for President someday, Orman said, "All the time." In fact, just a few months ago, former Treasury Secretary Robert Rubin invited her to lunch.
"I said, 'Sir, I really don't have time. I'm sorry,'" Orman recounted. She sounded a little wistful. "I was telling somebody that, and they said, 'Suze, you don't say no to lunch with Robert Rubin!'" she continued. "I said, 'I'm sorry, but I don't have time. That isn't the direction I'm going.'"