Finance expert Suze Orman Photos by Arnold Almacen
When best-selling author Suze Orman said yes to the invitation of Bank of the Philippines Islands to visit the country and speak about “financial wellness,” an advocacy of the bank and, incidentally, also Orman’s, the money guru waived her usual fees.
The BPI officials said Orman also vetoed their offer to sell her books at the speaking venue, the NBC Tent in Taguig. The event was attended by over a thousand bank clients on Saturday, Feb. 25.
Orman has never been to the country until now, but she has a soft spot for Filipinos. Back home in the United States, four Filipinos are trusted household staff. “There are no greater workers than Filipinos,” she says. Believing in the Filipino skill, she specifically chose a call center in the Philippines to handle communications for her newly launched prepaid cash card in the US.
Her visit was facilitated by philanthropist Doris Magsaysay Ho, a longtime friend of Orman’s spouse and manager, Kathy Travis, who lived in Hong Kong from 1980 to 2000, and was a frequent visitor of the country.
A youthful-looking 61, Orman was born in Chicago, Illinois. She studied social work and worked as a waitress before landing a job as a financial advisor at Merrill Lynch. She started her own firm in 1987.
Her lively and spunky manner of giving straight, no-nonsense financial advice has made Orman’s eponymous show on CNBC one of the channel’s highest rated for the last 10 years. A two-time Emmy winner, she also has a new program on Oprah Winfrey’s network. Orman is the author nine books, all of which are bestsellers.
Having Filipinos in her employ, Orman is only too familiar with Filipinos’ idiosyncrasies.
“What’s unique to the Philippines is this built-in culture that one person could take care of a lot of people, a built-in culture that if you leave the Philippines and you go abroad to make money, it’s absolutely your obligation to send home that money whether you can afford to or not,” she says.
Orman points out what she thinks Filipinos need to work on, especially those who depend on family members working abroad, in order to achieve what she foresees to be a “dramatic growth and greatness” in the country’s economy.
She explains why it’s vital for Filipino parents to teach their children early about financial responsibility, and why sometimes withholding money from a loved one is actually helping them.
She also tackles in length that one thing many consider as the evil of modern times: the credit card—how not fall into its traps, and how to get out of it when you do.
Orman also reveals plans to help Filipinos, beginning in small villages, just as she and Travis did in South Africa where they married.
Do you still give out free financial advice?
Suze Orman (SO): Always.
What do people usually ask you?
SO: It depends. If it’s a mother, she asks, “Suze, how do I save up for my child’s future?” It doesn’t matter which country I’m in, especially if it’s a single mother, the first thing she asks me is about her child.
I reckon you also get asked strange questions.
SO: Yes. The strangest ones are, “Can I afford $6,000 to build a sun room for my pet iguana?” “Can I afford $6,000 to go to Ireland to go to elf school?”
Do you tell them off?
SO: No! One time it was “Can I afford $100,000 to clone my dog that is going to die, so that I can have a dog just like the dog that I have?”
Do you find that people’s financial issues are universal?
SO: Yes. Money is a universal language; it doesn’t matter if it’s pesos, rand, euros or dollars. People’s emotional fears of money are universal everywhere.
What mistakes do people commonly make with regards to money?
SO: People make the mistake of thinking that they don’t have what it takes to learn about their money, that they don’t have what it takes to get money, to have money. They make the mistake of trusting others more than they trust themselves. It’s probably the biggest mistake they make.
What do you advice people?
SO: You can’t just tell people to do something. You have to move them to take action.
So there’s no one formula?
SO: No. There never will be. Sometimes it’s just one line that they hear that will wake them up. They literally have to be wakened up from this deep financial sleep that they’re in because they think it just happens without them, and it doesn’t. But once they wake up, oh they stay awake!
Let’s talk about plastic. A lot of people regard it as evil. What’s the right attitude to owning a credit card?
SO: If you have a credit card and you purchase something with it, and when the bill comes in at the end of the month, if you can’t pay off that bill in full, 100 percent, you’re already in credit card trouble. If you find yourself doing that just once, say you spend P1,000 and all you can afford to pay is P100, and you’re paying interest on P900, you’re in credit card trouble already. If you find yourself doing that once, you should cut up that credit card, you shouldn’t have it again. You should pay cash from that moment on.
In the Philippines it’s pretty easy to get a credit card. If you’re 20, just out of college, and someone offers you a credit card in the mall, it’s pretty easy to fall into the trap.
SO: The country needs to start looking into why it’s allowed to push credit cards to people. Credit card dealers are equally as bad as drug dealers. But it’s legal for them to come out in public and say, “Here, little boy, little girl, here’s a credit card for you. Go and buy things you can’t afford.” I think if the Philippines could just learn from the mistakes of the United States, and the second somebody is late on a payment, and the second somebody goes over their credit limit, their credit card should be frozen. No other credit card should be given that person, and they should help that person not get into further credit card trouble. There should be a system set up that says, immediately, when someone is acting irresponsibly with their credit card, help them. Don’t help them by giving them another credit card so they can take money from this credit card to pay off that other credit card. Help them! “That’s it! You don’t get to charge anymore. You pay off that credit and it’s over for now.”
It’s not so easy to give up plastics altogether as there are establishments that require credit cards. Say, buying online or checking into a hotel.
SO: If you have debit cards here, why not open an account, get a card attached to that account? It’s a far better way to do things.
You just introduced a debit card in the US…
SO: It’s a prepaid card, very different from a debit card. In the US, if you have bounced, two or three checks, you’re in what’s called the check system. If you’re in the check system and you have been irresponsible, you can’t open a bank account. You can’t open an account at a credit union. But people need plastic in order to operate, whether ordering online, to do this or that. They can’t walk around with cash because nobody’s really taking cash that much. A prepaid card is a card that you’re automatically approved for regardless of your credit history. It’s really for the poor people, those who don’t have money, who don’t qualify for a bank account… It’s for a specific group of people called the un-banked and under-banked in the US.
Filipino parents have a tendency to coddle their children. Children live with their parents even after college, and it’s unusual for Filipino parents to demand rent or living expenses from their child even when s/he already has a job. What would you tell these parents?
SO: Parents need to understand that even if they ask the children for living expenses, it doesn’t mean that they have to take that money and do something with it. They could take that money and save it for their children, so that when their children move out, the parents could give that money to the children to help them make a downpayment for a home. But I do think it’s important that children learn the responsibility of what it takes to pay for something, what it takes to eat. You start to train them so that when they do leave the house, they understand that, “Oh it’s gonna cost me money to buy food, it’s gonna cost me to have water and electricity,” the realities in life. You’re helping them rather than making the situation as just taking care of them. If you charge them and show them that this is their part of the bill… They graduated school, they’re making money, and they should pay for that. If you want to and you can afford to, why not save it for them and when they move out, you now have a lump sum of money that you can give them that they themselves created, so that they can see how that works.
Parents are quick to bail out their children when they get into money troubles.
SO: It’s not unique to the Philippines. Most parents will do anything to bail out their children. What’s unique to the Philippines is this built-in culture that one person could take care of a lot of people, a built-in culture that if you leave the Philippines and you go abroad to make money, it’s absolutely your obligation to send home that money whether you can afford to or not. And there’s nothing wrong with that. But sometimes when you send things to people… You know I have a saying, “When is helping hurting, and when is hurting helping?” Sometimes when you give and you give, people never have the ability to rise up and see what they can do on their own. In a very strange way it keeps people down. It keeps them thinking that they can’t do something unless someone sends them money. If something happens to that person, say, they lose their job, that one person has now affected the lives of four, five people that they’ve been sending money home to. And they don’t even have money saved because they sent all that money home. Now they’re all suffering. They don’t have to send all the money home! Over time, there’s nothing wrong with that. I think there’s a better way to do it than how it is being done. But I understand that it’s a cultural event, that it’s an obligatory event. I’m just not sure that helping people who can take care of themselves is really helping the country, the family, and the people.
How young should a child learn financial responsibility?
SO: From Day One. Money, in my opinion, should be something that people talk about freely. That children should understand that it takes money to pay for electricity, that it’s lucky that Mommy and Daddy can go to work. Let’s say Mommy and Daddy both work, and Monday morning comes and Mommy says, “I hate that I have to leave you. I love you so much. I hate it but I have to go to work to make money.” You just taught your kid to hate work and to hate money. What you should say is that, “I’m so lucky that I get to go to work and I’m able to make money so I can help support the family. I’m gonna miss you but I’m so lucky that I get to go to work.”
Most Filipinos don’t get their first job until after they finish college, unlike in the US when you’re practically on your own by the time you turn 18. For Americans, you have to fend for yourself at an earlier age. That’s not the case here.
SO: That’s not the case now, but I think now, in the next few years, the Philippines is about to go through a dramatic change. It’s about to see dramatic growth and greatness, and a sense of independence, financial recognition that the Philippines has never seen before. I think the stock market will grow, real estate will grow, and more and more people will own condos. It will start to be a thriving economy in a whole different way than you’ve experienced in the past. It’s gonna be interesting.
What specific things can individuals do to contribute to what you’re saying?
SO: Individuals just have to understand that they have what it takes to get involved with their money. Even if you don’t know how to invest there’s nothing wrong with saving it. There’s nothing wrong with having a bank account and getting as much pleasure in saving as you do spending. There’s nothing wrong with never having a car. There’s nothing wrong that if you have a car, it’s a tiny car and it’s used and it’s 10 years old. Who cares? They’re gonna have to understand, do they buy things or do they save money?
When you come to some money, do you save it or pay off your debt?
SO: You pay off your debt. Debt here is very expensive. Debt could be 25, 35 percent [interest] or even higher. Your savings rate in terms of the interest rate that they’re going to pay you is not as high as the interest of your debt. If you have P5,000 in a bank account and it earns 2 percent, what sense does it make to make 2 percent with your money sitting in a bank account, when you owe P5,000 in credit card debt at 25 percent interest? You’re losing 23 percent interest.
Do you encourage entrepreneurship in people who have no experience running a business?
SO: People are more creative and wiser than they think. Sometimes you have a dream besides just working for somebody. You can try it little by little, but don’t go borrowing all that money if you’ve never done it before. Do it very small, start small and if you’re making money then grow into it. Don’t go full blown if you don’t know what you’re doing.
Do you find that women are better at handling money?
SO: It’s not that they’re better at handling money. Men are really good at things that they do, they’re very capable. It’s just that women take over. Women like to do it all. Women are very creative and capable. They raise children, they can do anything. But I wouldn’t say they’re better at [handling money].
But mothers typically indulge their children, and give the money they have to their children, or buy things for their children. Is that a good thing?
SO: It’s not a good thing because if they keep giving it and they don’t have a retirement plan for themselves, they don’t have their homes paid off, they don’t have enough money somewhere that when they need it it’s there… When they get old it’s expected that the kids will take care of them. What if the kids can’t? What happens if the kids don’t have the money? The kids will feel horrible, that Mommy and Daddy spent all these money on them, and now they’re suffering and the kids can’t help. It will hurt them deeply.
You’re married now (to her longtime partner and manager Kathy “KT” Travis). You said in an interview that you worried about your partner, in the case that something happens to you?
SO: In the US there’s estate tax. If you’re a legally married heterosexual, what can happen is that if I have $10 billion and I left it to my husband, he would get $10 billion estate tax free. No taxes whatsoever. If it’s not a heterosexual relationship, what happens is, I can only leave, let’s say it’s $1 million estate tax free to somebody. Anything over that, they’re gonna lose 50 percent of that to estate taxes.
That’s not the case with you anymore?
SO: It still is because they don’t recognize [my marriage] in the US. [Filipinos in same-sex relationships] there’s nothing they can do about it. It’s very sad. Hopefully one day in the US that will change. That hasn’t changed currently and it’s a travesty. It’s not fair.
Did you get married in the US?
SO: In South Africa, where it’s legally recognized…
Because it’s not recognized in all US states.
SO: And on a federal level it’s not recognized at all, so it doesn’t matter. Each state can do whatever they wanna do but on a federal estate tax level, it’s not recognized at all. Very sad.
Tell me more about your advocacy of financial wellness. You spoke to over a thousand clients of the Bank of the Philippine Islands today. You did it for free.
SO: I did that because I have people who work in my home, who drive me, who cook for me, and they’re all from the Philippines. Every single one of them. For years now I’ve watched them work hard, send their money home, I’ve watched them not know what to do and live for others, Now they’re getting older. They started when they were in their 20s, 30s, now they’re in their 50s and 60s. What’s sad is that they used to wanna come home all the time, they used to wanna go home to Cebu… They would come home every May, they would take a month off each year, for 10-15 years, to come home. Last year one of them didn’t wanna go home anymore. So I asked why. And she said, “Because when I go home, all they want is money. And I’m getting older, Suze, and I don’t know how much longer I’ll be able to work.” Because it’s hard work, they go up and down on the stairs, they go on their knees… And there was something very sad to me about that. She wanted to start saving the money for herself when she got older. And that had a profound effect on me. I can’t quite explain it. This is a woman who didn’t see her child from the age of 5 until the age of 15, because she couldn’t go home until she got her green card, and it took 10 years. She cared enough for her family to not see her child for 10 years! And now she voluntarily doesn’t wanna go home. Seeing this on the people who work for me—because these people are the closest people to you—they see you as you really are, when you get out of bed in the morning, when you’re fighting, they see everything about you. So on some level, they’ve had my heart. That [prepaid] card that I made, the call center is here. I’ll visit them on Monday. And I wanted it in the Philippines not because it’s cheaper. I wanted it to be here because I know that I could train those people to be stronger. I’m personally training so they’ll answer questions even if they don’t know the answer. I’m trying to teach them to say, “I don’t know. I’ll get back to you.” I’m trying to teach them that it’s all right to be strong and to be firm, to be assertive. You bring that with a heart and the desire to serve, which is in your nature. There are no greater workers than Filipinos. There’s something about them. So when KT goes to hire, she specifically says, “I want to hire Filipinos.”
How many Filipinos are in your staff?
KT: Right now, four. I prefer a couple because the husband can drive. And Filipinos have a magic finger with plants and gardening.
SO: And cooking!
KT: They have magic fingers working with plants and taking care of flowers. I have a house in San Francisco and I said, “Nelly, do whatever you want because I’m never home.” I gave her money to buy [seeds to plant] and I came home and she had everything for cooking [in the garden]!
Where do you live?
SO: Our main residence is in Florida, but we have homes in New York, San Francisco and South Africa.
So you’re familiar with this weather?
SO: (Laughs) Yes, it’s hot.
What do you spend your money on?
SO: I don’t enjoy spending money anymore. KT and I were in Hong Kong for three days before we came here. We went into every shop possible because we were panicked. We couldn’t figure out one thing we wanted. We looked at each other and (grimaces), “Nah! We don’t need that. We don’t even want it.” I used to always wanna buy watches, and “Nah!” KT said, “You don’t even wanna buy a watch?” No. I’m just not interested in those things anymore.
So what are you gonna do with all your money?
SO: I don’t know. (Turns to Travis) What are we gonna do with our money? (Laughter)
KT: Help the Philippines! (Applause and cheers) Maybe start a Suze Orman school. Maybe a scholarship. For Doris (Ho’s) birthday she built a village here and Suze and I helped in financing the school in the village. So we said, when the school is finished we’ll start a Suze Orman scholarship.
SO: I wanna work closely with Doris to see… I have this vision for the Philippines. Rather than all these people sending money home to their families, what if we can have each village have a fund and all the people send money home to the fund, and have all these A-listers adopt a village? For every dollar that’s in the fund, they give two.
So they match it dollar for dollar?
SO: Yes. The money goes into a fund to help the entire village versus just a few who have family working overseas. Then the people in the village aren’t just dependent on their family overseas, so that the family overseas can keep some money for themselves. It’s supplemented by all these people who have wealth. So each village has this system, and they have advisers who can invest the money, and who could tell them how to grow it for the village. The village gets to prosper and everybody gets picked up because everyone is a part of it versus just a few. Don’t you love that idea? I’d like to see if that idea could work here. That’s my new thing. I think that can happen, rather than these rich people just giving money and it’s charity. They’re matching one to one, even two or three to one! I think it could work! And I think the rich people would like to do that. They want to see their names on things.