Money Wars!

Suze Orman is back to readers’ questions about money woes!

Question 1: My husband spends a ton of money on gadgets. I’d like to spend money too, but I don’t. How do I approach him without nagging?

Suze says: Your husband may have an emotional need that he’s trying to fix by acquiring stuff. Here’s a lousy part of our consumer culture: It says we are our possessions, and if you have a problem, you can simply buy something to fix it (what our culture doesn’t say though, is that this approach doesn’t really work because it turns into a vicious cycle of continually buying things we don’t really need). Suze also looks at the questioner’s anger (another reason I like Suze!) because this woman has the same impulses to spend, so maybe there’s something emotional that she needs as well.

Ultimately, Suze says the best way to deal with your anger is to change your course. Don’t fixate on his spending–start your own savings account. You save, you’ll be happier (and maybe more financially stable), and maybe your husband will even join you. I think it’s the whole “stop focusing on him and start focusing on yourself” philosophy. Change yourself, and the bigger picture may turn rosier.

Question 2: I’ve gotten a job offer that pays a lot more, but the job itself is a little riskier. “How should I make my decision?”

Suze says: Well, Jill is going to talk first. It’s November 2000 (and presumably, the question is a bit older than that), so I’m guessing it’s a .com job. Tons of cash, but the thing made implode at any time. It’s an interesting question to which Suze says, “There’s an important distinction between a calculated risk and a reckless gamble.” This goes for investing (don’t put all your eggs in one basket), and it goes for your job too. This person may be getting a great opportunity that could really turn into something, or this person may get stuck at either a crappy job, or lose the job pretty quickly.

She does point out that when thinking about a job switch, you should think about how many people does your income have to support; do you have enough cash to see you through a few months in case the new job goes bust; what sorts of benefits and future payoffs are you giving up for the new job; are the new employers giving you a bunch of empty promises; and what does your gut say. It’s a lot to think about, but good advice.

Question 3: Do I need life insurance?

Suze says: OK, I’m going to talk again first because Suze actually says a product is bad. I have to quote her: “In my opinion, whole life [insurance] is, in most cases, one of the biggest rip-offs around.” Wow! Concrete advice that says, no, don’t get this product!

The actual answer is a bit longer than that quote, of course, and is mostly, “It depends.” You should look at what your family’s needs are, and if you weren’t there to bring in the money, would they be able to survive all right. If they could (i.e.–there’s plenty of savings), then you probably don’t need it. If things would be really tight/compromised, then life insurance might be for you.

She does explain life insurance a bit and even has a sidebar on figuring out how much life insurance you actually need (and can afford). You have to think about what you want the life insurance to do first (just cover expenses or provide income for a long time), and then you can figure out where to buy it.

Last question!  We go out to dinner with these friends, and they always spend way more than we do, then just want to split the check.  “This makes me feel resentful, but I’m afraid to speak up.  What should I do?”

Suze says:  Take a look at why you’re resentful.  Are we talking a couple of bucks because they got a more expensive dish, or do they order many courses while you can’t?  Are you angry because you can’t afford to eat out like your friends can?  Is the place you’re going to out of your range in the first place (and if so, don’t go there–if they’re that good of friends, you should be able to say either we can’t afford this restaurant, or suggest a place you can afford)?

Suze also mentions that it’s funny that the subject of money is so taboo–we’ll gladly talk about all sorts of personal information, but we clam up about money.  In this case, she advises that maybe if you admit a place is too expensive for you, it will show that you’re careful about your money, and you shouldn’t feel embarrassed about being careful with your money.

I do kind of want to know the full story on this question.  What’s the view from the other people’s side?  A few times every year, a couple of friends and I get together to celebrate each other’s birthdays.  The birthday girl chooses the restaurant, and it’s usually a fairly basic sit-down place.

However, the three of us have very different financial situations.  One has no children, and she and her husband both work at regular jobs.  I just gave up my job, which means for me I have to be a bit more careful about what I spend.  The third girl has three kids, and her husband has a decent job, but I’m guessing it’s not the best-paying job–we’re talking around the statistical median, I’d think.  She does a little work at home to  supplement things, but I know that going out is a luxury.  However, she’s also always been a big saver and shops on sale, with coupons, etc., so I don’t really know the situation.

The Boy and I have various sets of friends with whom we can just split the bill.  We go out often enough and the bill usually comes out even enough for us not to deal with.  It’ll even out in the end, and if someone orders way more expensively, we’ll adjust for that.

With these friends we do the who-owes-what add-up.  My friend with the kids will order cheaply pay exactly what she owes, plus a 15% tip.  I understand that she’s on a tight budget, but I usually end up paying a few bucks extra than what I’d normally owe because we do end up staying at our table 2-3 hours (even if they need the table), and the waitress does a lot of running for beverages for us.  I like to tip over 20% in these cases to make up a little bit for the lost tip.  So, Suze, if you’re reading this, how would you deal with this situation?  I don’t mean to make my friend feel bad about her money situation, but I also feel that my tip shows my gratitude for the service, and in cases like this, I think we should be extra-grateful for the good service.  How do I teach this to my friend?

[and hey, do I get bonus points for weaving this issue's theme into my question?]