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Suze Orman’s 20 Insights on Why People Are Stuck in the Poverty Trap

Suze Orman’s 20 Insights on Why People Are Stuck in the Poverty Trap

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If her talk show, Suze Orman pulls no punches. She’s all about calling out bad money choices, urging people to take control of their financial destinies and ditch those pesky spending habits that derail progress (keeping people stuck in a loop of barely getting by). While her advice can be blunt, she aims to empower folks to build wealth and protect their financial futures.

It’s important to note that Suze Orman sometimes gets flak for being too harsh or being removed from the real struggles of everyday people. She’s not shaming people but highlighting how certain expenses can sabotage big goals like homeownership or a comfortable retirement. While some may need tough love, it’s crucial to remember that personal finance is nuanced, and not everyone is in the same financial boat.

Buckle up and get ready to rethink your spending. Let’s explore those “wants” that might be holding you back from the financial security Suze Orman champions.

1. Lattes and Daily Coffee Shop Runs

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Orman’s stance on those fancy lattes is legendary! She famously declared, “If you waste money on coffee, you will be poor forever.” Her point: those little daily indulgences add up to serious cash over time.

B brewing coffee at home saves considerable cash instead of shelling out $5 each day (that’s $150 a month!). Think of it as your “latte retirement fund” – money invested over decades can make a big difference.

2. Dining Out Excessively

Couple on Candle Light Dinner at Fancy Restaurant
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While restaurant meals are enjoyable, Orman warns against making them a habit. Eating out costs significantly more than cooking at home, especially when you factor in tips and drinks.

She encourages making dining out a special treat, not the norm. Brown-bag those lunches, explore budget-friendly meal planning and enjoy cozy dinners in. This simple shift can free up significant funds.

3. Bottled Water Obsession

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Orman believes paying for bottled water when tap water is readily available is a pure waste of money. Especially when you consider the environmental impact of plastic bottles.

Invest in a reusable water bottle and fill it throughout the day. Not only will you save loads, but you’ll also reduce your environmental footprint—a win-win in her book!

4. Lottery Tickets and Gambling

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Orman calls the lottery a “tax on the poor” and firmly believes gambling your hard-earned cash on the infinitesimal chance of winning big is unwise.

Instead of throwing money away on luck, Orman champions “The Can I Afford It?” mindset. Ask this question before spending on non-essentials, and invest any “fun money” for the potential of actual long-term growth.

5. New Cars and “Keeping Up With The Joneses”

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Flashy new cars lose value instantly. Orman advocates buying used and focusing on reliability over image. She’s not shy about critiquing the desire to show off to others with your spending.

While the smell of a new car is nice, the steep depreciation is not. Older models can be just as good for transportation. Shift your focus away from trying to impress others with stuff and towards building real wealth for your own future.

6. Unused Memberships and Subscriptions

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Gym memberships you never use, streaming services you rarely watch, and magazine subscriptions auto-renewing year after year…. Suze Orman would have you ax these immediately!

These sneaky recurring charges add up. Regularly audit your subscriptions and memberships. Cancel what you don’t truly use – you might find extra cash you didn’t even know you had. Reevaluate if you’re truly getting your money’s worth.

7. ATM Fees

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These pesky charges are often avoidable, says Orman. Every time you need cash, those few dollars add up over the year and eat into your hard-earned money.

Switch to a bank with a wide ATM network, or plan your cash withdrawals. A bit of foresight can keep those extra dollars in your pocket where they belong. Small savings matter in the long run!

8. Extended Warranties

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Orman generally believes extended warranties on appliances or electronics are bad investments. Often, the item breaks outside the warranty period anyway, or the warranty has so many exclusions it becomes useless.

Save that money! If something breaks, a repair might still cost less than the warranty. Consider self-insuring – set aside the equivalent in a savings account dedicated to unexpected repairs.

9. Credit Card Interest

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In Orman’s words, carrying high-interest credit card debt is like “financial quicksand.” She advocates tackling debt aggressively, starting with the highest interest cards first.

Minimum payments keep you trapped. Focus on paying significantly more – even an extra $20 a month can make a huge dent over time as interest charges shrink. See if you can negotiate lower interest rates, too!

10. “Just In Case” Shopping

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Hitting up sales and buying things you might need “someday” is a habit Orman critiques. That cute dress on clearance or that extra toolset often end up unused, cluttering your home and wasting money.

Before swiping your card, Orman urges the “24-hour rule.” Wait a day before buying non-essentials. If you still truly want it, go for it. Impulse purchases? Usually not worth it in the long run.

11. Neglecting Your Savings

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Not prioritizing saving, even small amounts, is a missed opportunity in Suze Orman’s book! She strongly advocates having a healthy emergency fund and saving regularly for big goals—a down payment, retirement, or your dream vacation.

Aim to automate your savings – out of sight, out of mind! Even $20 a week grows over time. Orman believes in the power of compound interest; those small savings add up in a big way down the line.

12. Overpaying for Cable and Cellphone Plans

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Orman believes it’s smart to regularly re-evaluate these services. With plans constantly changing, you might be able to lower your monthly costs by switching providers or negotiating a better deal.

Do your research! Compare plans, and don’t be afraid to call your provider and ask for a better rate, citing competitor offers. Many companies would rather offer a discount than lose you as a customer.

13. Impulse Buys at the Grocery Store

Woamn with a son in a grocery store, Checking out at the reception and People standing in line behind them
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Wandering the aisles without a list leads to overspending, warns Orman. Those tempting end-of-aisle displays and extra snacks that magically end up in your cart add up and derail your food budget.

A well-crafted shopping list is your defense against impulse buys. Plan meals for the week and stick to necessities. And never, ever grocery shop while hungry – it’s a recipe for spending disaster!

14. Pricey Manicures and Pedicures

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A little pampering now and then is fine, but Orman cautions against making weekly salon trips a habit. Those costs quickly put a dent in your wallet over time.

Embrace DIY nail care or check out local beauty schools for more affordable services. Orman emphasizes that you can look great without breaking the bank! Save professional salon visits for truly special occasions.

15. Buying Into Trends

Woman's closet with high heel shoes, stacked, folded clothes on shelves and part of robes hanging. Depicting closet organization, time to donate clothes, fashion lifestyle, consumerism.
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Fashion trends come and go, but Suze Orman preaches a classic, timeless wardrobe. Investing in quality pieces you’ll wear for years is smarter than chasing every fad, only to end up with a closet of unworn items.

Focus on versatile pieces that can mix and match easily. Build a capsule wardrobe with items that flatter you and work across seasons. Shop second-hand for those unique, quality garments without the hefty price tag.

16. Bank Fees

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Orman believes many bank fees can be avoided. Overdraft charges and monthly account fees – these nibble away at your balance. Choosing the right bank matters.

Look for banks with no-fee options or explore online banks with far lower overhead, often meaning fewer fees passed on to you. Read the fine print carefully and be aware of potential fees to avoid surprises.

17. Oversized Homes

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A bigger house equals bigger expenses—think higher mortgage payments, more to heat and cool, and the urge to fill all that extra space with stuff! Orman criticizes the desire for a “McMansion” when a smaller, more affordable option exists.

Focus on living within your means. A comfortable, cozy home that doesn’t break the bank allows greater freedom to reach other financial goals. Don’t let “house envy” drain your resources.

18. Timeshares

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Orman strongly critiques timeshares, citing high upfront costs, hefty ongoing maintenance fees, and the difficulty of reselling them.

While the promise of guaranteed vacations sounds appealing, the reality is often far different. Research alternative vacation options like home-exchange networks or renting from individuals, which offer more flexibility.

19. Overspending on Gifts

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Orman urges thoughtful gift-giving instead of lavish spending to impress others, especially during holidays when budgets can get strained.

Focus on experiences over material goods. Homemade gifts or the gift of time and help are often far more meaningful. Agree to spending caps with friends and family to reduce pressure and keep the focus on what truly matters.

20. Not Being Financially Prepared

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Suze Orman often says, “People first, then money, then things.” One of her key concerns is being unprepared for life’s curveballs – a medical expense, job loss, or unforeseen event.

Emergency funds and proper insurance are crucial. Don’t get lulled into a false sense of security, ignoring the “what if” scenarios. Orman stresses that financial preparedness allows you to weather life’s storms instead of being derailed by them.

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Let’s dive into the wisdom of Warren Buffett – one of the world’s most successful investors! While famous for his billionaire status, Buffett maintains surprisingly frugal habits. This makes him uniquely qualified to spot where people often unknowingly fritter away their hard-earned cash.

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We’ve all daydreamed about hitting the jackpot and living like the 1%. But here’s the thing: True wealth is about a lot more than fancy cars and designer labels. It’s about rock-solid security and the freedom to call the shots in your life – something no lottery ticket can guarantee.

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The average American household carries over $103,000 in debt, including mortgages, credit cards, and car loans. While there are various factors that contribute to this staggering number, there are also certain culturally acceptable habits that have played a major role in leaving America drowning in debt.

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