**Managing Debt: A Priority**

For those who have a 4% interest rate on their home loan and can afford to pay more than the monthly mortgage payment, it's essential to consider whether paying off the principal early is worth it. If you have a 4% mortgage on a home that you know you're going to stay in for the rest of your life, and you're in your mid-40s or later, your number one priority should be having your mortgage paid off by the time you retire. This is because your mortgage payment will be the highest expense that you have in your later years, and it's all principal, not tax deductible.

On the other hand, when you are younger, you don't know if you're going to keep the house or not. In this case, it would be wiser to focus on getting rid of any high-interest debt, such as credit card debt, before tackling your mortgage. Credit card debt is typically unsecured and can be discharged in bankruptcy, making it easier to get out of debt quickly. Student loan debt, while still a significant expense, is also worth addressing first. If you have a high-interest rate on your student loans, say 6.8% or higher, it's crucial to tackle those debts before focusing on your mortgage.

**The Importance of Prioritizing Debt**

Credit card debt is usually the first debt that people want to get rid of because it has such high interest rates. If you're not careful, credit card debt can snowball quickly and become impossible to pay off. Student loan debt is another type of debt that's worth addressing early on. While it may seem like a small amount compared to other debts, student loans have a way of piling up over time, and the interest rates are often much higher than those on mortgages or other types of loans.

One study found that parents who both work tend to spend significantly more money on their children than single parents. This is because having two incomes means that there's more disposable income available for spending on things like food, clothing, and toys. However, this can also mean that one parent may not have enough time or energy to devote to their child.

**The Value of Listening**

A snarky comment from a reader was met with a response from the host, who pointed out that while personal finance advice may seem common sense to some people, it's often presented in a dry and boring way. The host believes that they bring a unique approach to financial planning, one that is both engaging and effective. They argue that their ability to express complex ideas in an accessible way sets them apart from other financial advisors.

The host also took the opportunity to defend themselves against criticism, suggesting that it's unlikely anyone has ever had an entirely original idea when it comes to personal finance. Instead, they offer a fresh perspective on timeless topics like debt management and retirement planning.

"WEBVTTKind: captionsLanguage: enif you don't know our guest Susie Orman then you probably haven't turned on the TV read a newspaper bought a book in the last decade um she's got her own show on CNBC uh she's on every newspaper on every radio station on every TV show you can turn on and how many books have you written now 10 10 bestsellers so um New York Times New York Times Yes which is the important list um so she took a few minutes to sit down with us at the consumerist and Consumer Reports so uh to answer some of your questions some of our questions so let's have at it one of the criticisms of you or questions at least is that they some of them think that your um your savings ethic is a little Draconian that you know you that you they seem to say that you're that you'd rather people um give up luxuries even if they can afford them uh in in favor of saving now what do you have to say to to that I I would say if they think that's Draconian to be able to have a safety net at a time when they need one because everything is absolutely uncertain when it comes to the United States of America it can be any idiot out there who bought a home and then now one out of two you know four of you are underwater in that home you many of you haven't worked in two years so yeah you could go out and you could buy everything while you're making money and you could assume that you don't need a safety net but if God forbid you lose your job if God forbid you get sick if God forbid reality hits you up smacks upside your head you're going to wish and pray and hope that you have listened to me so you don't have to listen to me go out there and spend all the money that you want go out there you go out there and spend every penny you want but you better pray wish and hope that 100% of everything you do never goes wrong because when something goes wrong that's when the safety net is there now if people listen to me in 2006 and 2007 it would have gotten them through 2008 20 9 and 2010 what is one key piece of advice for people that are that have no safety net anymore either didn't have it to begin with OR have even through their safety net is there one or two key things that you can tell them now here's what you need to understand if you're working and you don't have enough money to pay your bills while you have a paycheck coming in how are you going to pay for those exact same bills later on in life when you no longer have a paycheck coming in the only way you're going to be able to do that is through retirement accounts and savings so the time to start saving and cutting back is while you are making money so I don't care whether it's $50 a month $25 a month $10 a month $10 is more than nothing $100 is more than $10 so if you can't do it all at once which I know you can't you have to do something and the best thing you can do even more now than accumulate money is to pay down your debt stop spending money you don't have to impress people you don't even know or like so if you can get rid of your debt then your expenses go down if your expenses go down you have more money that you can save so the key if you don't have money to save you start with getting your debt to go down so stop buying and start paying off your debt now I get that they're not going to like that they want to cons you want to look cool you want to be able to do these things but I'm telling you that's what you need to do if you want to live a life oh a number of our readers did say that that what they did for themselves and it's along those lines they were automatically having stuff put into into savings accounts and then they were saying well okay I can live on that $100 less a week so here's the law of money the more you make the more you spend the less you think you make the less you spend so it's not that I want you to make less money I just want you to think you make less so if you automatically have them take $200 a month and put it in a credit union or wherever it is then you will see that your spending will actually decrease accordingly so you'll have savings and you won't even feel deprived the other thing about spending less don't cut out everything don't go on a budget where you like you know like a diet you cut out all these calories and then you can't stand it and then you go out and you have an Uno's pizza and this and that before you know it you've gained all the weight back rather than going to the movies four times a month go three rather than getting your haircut six you know six times a year just cut back a little on every category and you won't even know that you've cut back at all some readers want to know can you put too much into your 401k is is it a wise thing to there were people talking about oh no I wanted to buy a house I have money saved but it's all in 401K so I can't I'm not going to go take it out of the 401K to make a down payment so therefore now I can't buy the house until I start a whole new Savings Program here is the map let me map it out for you number one priority get yourself out of credit card debt number two priority then create an eight-month emergency fund after you have an eight-month emergency fund or as well as creating an eight-month emergency fund do a Roth IRA a Roth IRA you can take money out of a Roth at any time you want without taxes or penalties if we're talking about the money that you originally put in if you have a 401k plan at work or a Roth 401k plan NW work that matches your contribution then then you should no matter be before all of these you should actually sign up for that because that's free money but only up to the point of the match now when you have a family when you have a spouse or children um does that emergency plan does the formula for that emergency plan change does it get do you have to think longer term in terms of months or more in terms of an amount here's what you really have to think of when you have children do you have a will do you have a trust and how much life insurance do you have and who is the beneficiary of your life insurance policy number one every single one of you I don't care how old you are and how little you may think you have you need not only a will but you need a living revocable trust as well an advanced directive and durable power of attorney for healthcare you need those in place immediately besides that term insurance is the only type of insurance that you should be looking for if you're looking at life insurance unless you have an estate tax planning program you know problem so term insurance is the way to go if if you're in your 20s or 30s you can get a million doll policy 20-year level term for like 20 some OD dollars a month you have to remember however that children cannot inherit money if they're a minor so do not go leaving your minor children as the beneficiaries to these life insurance policies the latest numbers that came out the other week other week showed uh that more people are using their credit cards now than they were a few months ago um and a lot of people have stopped using their debit cards uh a out of against the banks with these fees or also because um the rewards debit card rewards have all gone out the window in recent months um while this is good for those people who are responsible at paying author credit cards does it worry you that we're going to see an increase in the number of people who who are delinquent in credit cards yeah listen credit cards period worry me credit cards were never really meant for people to go out and buy things and then pay little by little by little until you can own it I am here oh I am Draconian now we're going to see somebody who's really old fashion I think you buy something you have the money to buy it or you really need to think twice about buying it now obviously a car a home maybe a dishwasher or a washing machine or whatever it is that you need all right maybe you have to finance those okay maybe on a credit card or whatever it is but most of the things that people put on credit cards today that get them in oh clothes oh eating out oh let's go on this vacation oh let's do are things that you don't need their wants and they are paying for those wants at a high interest rate for the rest of their lives so I would like to see it that credit card usage really was you know backed way up here I'd like to see it that there were rewards for people who paid off their balance in full every month those people got more rewards versus get yourself and buy bye bye bye byy just for these rewards and now sure you think that you've got all these Wards and miles to go do something with at the same time you're paying 20 to 30% interest on your credit cards and it's like you know you could have bought these things a lot cheaper without the rewards be careful of rewards programs they get you to spend money you don't have and particularly at this time of year retail credit cards everywhere you go every store seems to offer their own credit card and they're pushing them this time of year I my understanding is those are even more pernicious those come automatically with very high interest rates those automatically come with very high interest rates and also be careful because every one of you besides a fight goat score which determines interest rates and things that you pay on things every one of us has what's called an insurance risk score that is calculated pretty much exactly how FICO scores are calculated if you go into a department store and they offer you one of these department store credit cards and you then go oh I can get 10% off of everything I'm going to buy today you normally go and buy everything you can to get that 10% now you have maxed out your credit card at the department store the charge card it's actually called that can affect your insurance risk score big time and what do you say to Advocates of a cash only existence I mean is that a possibility in this day and age no I think you know I'm a tremendous advocate of the debit cards I'm a tremendous advocate of prepaid debit cards if and only if the fees make sense there are too many of these prepaid debit cards that have very high fees they're not worth it whatsoever but you cannot walk around with large sums of money we don't live in a culture that you can do that anymore you can't order online cost effectively if you don't have some piece of plastic and what about people who have zero credit history people who don't have student loans have never had a credit card never had a car loan is something like a secured credit card um is that a good way to to startt is the way currently that you can get a FICO score but be very careful with secured credit cards because you give them $500 it's not like you go out and spend $500 that they take the $500 that you gave them and they apply it to your bill no if you just pay the minimum payment due they get to keep your money plus charge you an exorbitant interest rate now credit card rates are still extremely high but U loan interest rates are record lows right now um so some of our readers want to know if say like myself I have a 4% uh interest rate on my home loan um should I and others who could afford to pay more than the the monthly mortgage payment should we still be paying more or is that rate so low that it's it's to our advantage just to pay to pay the agreed upon mortgage rate for 30 years if you have a 4% mortgage on a home that you know you're going to stay in for the rest of your lives and you're in your mid 40s or later your number one priority then should have your mortgage paid off by the time you retire because your mortgage payment will be the highest expense that you have in your later years of that mortgage it's all principal it's not tax deductible so that should be your goal but when you are younger you don't know if you're going to keep the house or not then you would not pay off your mortgage ahead of time there I would rather see you at get rid of your student loan debt get rid of your credit card debt get rid of any personal debt that you have build your emergency funds build your retirement accounts and use compounding of time over here in terms of prioritizing debt credit card debt would usually go first because it's the highest the highest percentage rate not necessarily what what would be then student loan debt student loan debt because again remember credit card debt is unsecured debt if you really get into trouble you can clim bankruptcy on your unsecured debt student loan debt is debt that cannot be discharged in bankruptcy so there are many students out there that have a 6.8% interest rate on their staff for loans maybe they have a plus loan at 7.9 or 8.1 that's a high interest rate on debt that can never be discharged in bankruptcy so depending on what you have going for yourself I would actually be tackling my student loan debt first because that's the debt that can really cause you big problems if one parent can support the entire household sufficiently uh should both parents still work because there's there's there are number of studies that show par some parents end up spending significantly more uh on their children because both parents are working either on on a child care or just buying things for the kids because they feel bad because you know they're not always there yeah let me say this if one person can work and the parent at home whatever it is can afford to really stay at home home so the parent working means you can still fund your retirement accounts you're totally out of credit card debt you're putting money away for your emergency funds and things like that if that one parent can generate that and one parent has the ability to stay at home with the kids I think they absolutely should because nobody's going to love your kids up like you do however if you are getting into debt because you are staying at home if you're not saving for retirement because you are staying at home if you are seeing your savings dwindle because you are staying at home you're better off both working one reader um snarkily asked you know have you ever had an original idea and as other readers then point out to that to that person of so much of of personal finance it it is common sense isn't it it's it is it it is like weight loss or or things like that where you know there's all sorts of tricks and people want to teach you all sorts of of other lessons but it seems to be the same things repeated over and over again people just aren't aren't listening here's what I would say to that snarky little reader I'm G slap him upside his head as well female right could have female but I doubt it right is that um how well are they doing financially speaking really maybe I don't have original ideas but what I do have is an original way of how to express what people need to learn I have a way of saying something that people understand so they've been hearing this over and over again for years but they've been hearing it from people in pinstriped suits and that are doing this and that talk about it in this language that's very dry and boring and could put you to sleep in 3 seconds there is nothing about me that is boring everything about me is exciting and vibrant and alive and I say it the way I dress the way I look the way I express myself that's original so boyfriend you are so denied I can't even tell you go get an original thought like anybody has an original thought today I don't think so I think that's a perfect way to end this thank you so much for coming all right pleasure bye byeif you don't know our guest Susie Orman then you probably haven't turned on the TV read a newspaper bought a book in the last decade um she's got her own show on CNBC uh she's on every newspaper on every radio station on every TV show you can turn on and how many books have you written now 10 10 bestsellers so um New York Times New York Times Yes which is the important list um so she took a few minutes to sit down with us at the consumerist and Consumer Reports so uh to answer some of your questions some of our questions so let's have at it one of the criticisms of you or questions at least is that they some of them think that your um your savings ethic is a little Draconian that you know you that you they seem to say that you're that you'd rather people um give up luxuries even if they can afford them uh in in favor of saving now what do you have to say to to that I I would say if they think that's Draconian to be able to have a safety net at a time when they need one because everything is absolutely uncertain when it comes to the United States of America it can be any idiot out there who bought a home and then now one out of two you know four of you are underwater in that home you many of you haven't worked in two years so yeah you could go out and you could buy everything while you're making money and you could assume that you don't need a safety net but if God forbid you lose your job if God forbid you get sick if God forbid reality hits you up smacks upside your head you're going to wish and pray and hope that you have listened to me so you don't have to listen to me go out there and spend all the money that you want go out there you go out there and spend every penny you want but you better pray wish and hope that 100% of everything you do never goes wrong because when something goes wrong that's when the safety net is there now if people listen to me in 2006 and 2007 it would have gotten them through 2008 20 9 and 2010 what is one key piece of advice for people that are that have no safety net anymore either didn't have it to begin with OR have even through their safety net is there one or two key things that you can tell them now here's what you need to understand if you're working and you don't have enough money to pay your bills while you have a paycheck coming in how are you going to pay for those exact same bills later on in life when you no longer have a paycheck coming in the only way you're going to be able to do that is through retirement accounts and savings so the time to start saving and cutting back is while you are making money so I don't care whether it's $50 a month $25 a month $10 a month $10 is more than nothing $100 is more than $10 so if you can't do it all at once which I know you can't you have to do something and the best thing you can do even more now than accumulate money is to pay down your debt stop spending money you don't have to impress people you don't even know or like so if you can get rid of your debt then your expenses go down if your expenses go down you have more money that you can save so the key if you don't have money to save you start with getting your debt to go down so stop buying and start paying off your debt now I get that they're not going to like that they want to cons you want to look cool you want to be able to do these things but I'm telling you that's what you need to do if you want to live a life oh a number of our readers did say that that what they did for themselves and it's along those lines they were automatically having stuff put into into savings accounts and then they were saying well okay I can live on that $100 less a week so here's the law of money the more you make the more you spend the less you think you make the less you spend so it's not that I want you to make less money I just want you to think you make less so if you automatically have them take $200 a month and put it in a credit union or wherever it is then you will see that your spending will actually decrease accordingly so you'll have savings and you won't even feel deprived the other thing about spending less don't cut out everything don't go on a budget where you like you know like a diet you cut out all these calories and then you can't stand it and then you go out and you have an Uno's pizza and this and that before you know it you've gained all the weight back rather than going to the movies four times a month go three rather than getting your haircut six you know six times a year just cut back a little on every category and you won't even know that you've cut back at all some readers want to know can you put too much into your 401k is is it a wise thing to there were people talking about oh no I wanted to buy a house I have money saved but it's all in 401K so I can't I'm not going to go take it out of the 401K to make a down payment so therefore now I can't buy the house until I start a whole new Savings Program here is the map let me map it out for you number one priority get yourself out of credit card debt number two priority then create an eight-month emergency fund after you have an eight-month emergency fund or as well as creating an eight-month emergency fund do a Roth IRA a Roth IRA you can take money out of a Roth at any time you want without taxes or penalties if we're talking about the money that you originally put in if you have a 401k plan at work or a Roth 401k plan NW work that matches your contribution then then you should no matter be before all of these you should actually sign up for that because that's free money but only up to the point of the match now when you have a family when you have a spouse or children um does that emergency plan does the formula for that emergency plan change does it get do you have to think longer term in terms of months or more in terms of an amount here's what you really have to think of when you have children do you have a will do you have a trust and how much life insurance do you have and who is the beneficiary of your life insurance policy number one every single one of you I don't care how old you are and how little you may think you have you need not only a will but you need a living revocable trust as well an advanced directive and durable power of attorney for healthcare you need those in place immediately besides that term insurance is the only type of insurance that you should be looking for if you're looking at life insurance unless you have an estate tax planning program you know problem so term insurance is the way to go if if you're in your 20s or 30s you can get a million doll policy 20-year level term for like 20 some OD dollars a month you have to remember however that children cannot inherit money if they're a minor so do not go leaving your minor children as the beneficiaries to these life insurance policies the latest numbers that came out the other week other week showed uh that more people are using their credit cards now than they were a few months ago um and a lot of people have stopped using their debit cards uh a out of against the banks with these fees or also because um the rewards debit card rewards have all gone out the window in recent months um while this is good for those people who are responsible at paying author credit cards does it worry you that we're going to see an increase in the number of people who who are delinquent in credit cards yeah listen credit cards period worry me credit cards were never really meant for people to go out and buy things and then pay little by little by little until you can own it I am here oh I am Draconian now we're going to see somebody who's really old fashion I think you buy something you have the money to buy it or you really need to think twice about buying it now obviously a car a home maybe a dishwasher or a washing machine or whatever it is that you need all right maybe you have to finance those okay maybe on a credit card or whatever it is but most of the things that people put on credit cards today that get them in oh clothes oh eating out oh let's go on this vacation oh let's do are things that you don't need their wants and they are paying for those wants at a high interest rate for the rest of their lives so I would like to see it that credit card usage really was you know backed way up here I'd like to see it that there were rewards for people who paid off their balance in full every month those people got more rewards versus get yourself and buy bye bye bye byy just for these rewards and now sure you think that you've got all these Wards and miles to go do something with at the same time you're paying 20 to 30% interest on your credit cards and it's like you know you could have bought these things a lot cheaper without the rewards be careful of rewards programs they get you to spend money you don't have and particularly at this time of year retail credit cards everywhere you go every store seems to offer their own credit card and they're pushing them this time of year I my understanding is those are even more pernicious those come automatically with very high interest rates those automatically come with very high interest rates and also be careful because every one of you besides a fight goat score which determines interest rates and things that you pay on things every one of us has what's called an insurance risk score that is calculated pretty much exactly how FICO scores are calculated if you go into a department store and they offer you one of these department store credit cards and you then go oh I can get 10% off of everything I'm going to buy today you normally go and buy everything you can to get that 10% now you have maxed out your credit card at the department store the charge card it's actually called that can affect your insurance risk score big time and what do you say to Advocates of a cash only existence I mean is that a possibility in this day and age no I think you know I'm a tremendous advocate of the debit cards I'm a tremendous advocate of prepaid debit cards if and only if the fees make sense there are too many of these prepaid debit cards that have very high fees they're not worth it whatsoever but you cannot walk around with large sums of money we don't live in a culture that you can do that anymore you can't order online cost effectively if you don't have some piece of plastic and what about people who have zero credit history people who don't have student loans have never had a credit card never had a car loan is something like a secured credit card um is that a good way to to startt is the way currently that you can get a FICO score but be very careful with secured credit cards because you give them $500 it's not like you go out and spend $500 that they take the $500 that you gave them and they apply it to your bill no if you just pay the minimum payment due they get to keep your money plus charge you an exorbitant interest rate now credit card rates are still extremely high but U loan interest rates are record lows right now um so some of our readers want to know if say like myself I have a 4% uh interest rate on my home loan um should I and others who could afford to pay more than the the monthly mortgage payment should we still be paying more or is that rate so low that it's it's to our advantage just to pay to pay the agreed upon mortgage rate for 30 years if you have a 4% mortgage on a home that you know you're going to stay in for the rest of your lives and you're in your mid 40s or later your number one priority then should have your mortgage paid off by the time you retire because your mortgage payment will be the highest expense that you have in your later years of that mortgage it's all principal it's not tax deductible so that should be your goal but when you are younger you don't know if you're going to keep the house or not then you would not pay off your mortgage ahead of time there I would rather see you at get rid of your student loan debt get rid of your credit card debt get rid of any personal debt that you have build your emergency funds build your retirement accounts and use compounding of time over here in terms of prioritizing debt credit card debt would usually go first because it's the highest the highest percentage rate not necessarily what what would be then student loan debt student loan debt because again remember credit card debt is unsecured debt if you really get into trouble you can clim bankruptcy on your unsecured debt student loan debt is debt that cannot be discharged in bankruptcy so there are many students out there that have a 6.8% interest rate on their staff for loans maybe they have a plus loan at 7.9 or 8.1 that's a high interest rate on debt that can never be discharged in bankruptcy so depending on what you have going for yourself I would actually be tackling my student loan debt first because that's the debt that can really cause you big problems if one parent can support the entire household sufficiently uh should both parents still work because there's there's there are number of studies that show par some parents end up spending significantly more uh on their children because both parents are working either on on a child care or just buying things for the kids because they feel bad because you know they're not always there yeah let me say this if one person can work and the parent at home whatever it is can afford to really stay at home home so the parent working means you can still fund your retirement accounts you're totally out of credit card debt you're putting money away for your emergency funds and things like that if that one parent can generate that and one parent has the ability to stay at home with the kids I think they absolutely should because nobody's going to love your kids up like you do however if you are getting into debt because you are staying at home if you're not saving for retirement because you are staying at home if you are seeing your savings dwindle because you are staying at home you're better off both working one reader um snarkily asked you know have you ever had an original idea and as other readers then point out to that to that person of so much of of personal finance it it is common sense isn't it it's it is it it is like weight loss or or things like that where you know there's all sorts of tricks and people want to teach you all sorts of of other lessons but it seems to be the same things repeated over and over again people just aren't aren't listening here's what I would say to that snarky little reader I'm G slap him upside his head as well female right could have female but I doubt it right is that um how well are they doing financially speaking really maybe I don't have original ideas but what I do have is an original way of how to express what people need to learn I have a way of saying something that people understand so they've been hearing this over and over again for years but they've been hearing it from people in pinstriped suits and that are doing this and that talk about it in this language that's very dry and boring and could put you to sleep in 3 seconds there is nothing about me that is boring everything about me is exciting and vibrant and alive and I say it the way I dress the way I look the way I express myself that's original so boyfriend you are so denied I can't even tell you go get an original thought like anybody has an original thought today I don't think so I think that's a perfect way to end this thank you so much for coming all right pleasure bye bye\n"