Planning on giving my latest ebook -The Top 7 Tax Saving Tips
away FREE to my loyal newsletter subscribers before year end. 
Sign up here http:// www.wholeheartedway.com/ to get your copy plus more goodies
to put cash in your pocket in the New Year!
Just 17 more days left to save money on taxes-
do some of these easy tax saving tips for cash in your pocket in new year
(Note: I personally have done 3 of these and expect an extra $1,000 in my tax refund in April -WOO-HOO!)
http://www.amazon.com/dp/B006KJI1B0
-Fern Alix LaRocca CFP EA
My beef with Suze Orman started years ago when a young couple came to me for help in getting their financial life together and building wealth. They had been following my blog for years and saving money. They were two married professionals ready to buy a home and start a family. Both were very intelligent and motivated. They had actually saved quite a bit of money and wanted to go over what they thought they could afford and what type of loan would be appropriate. Well we never really got that far. In fact, the meeting was very short and I felt sad for them after our call.
You see they had been watching Suze Orman on television and were convinced by her that the best place to put their money to grow for their down payment was in tax deferred retirement plans.
Now I am a big fan of these plans (401k, 403b, SEP, etc.). The combination of tax deferral on the contributions in addition to tax deferral on the accrued earnings is a powerful punch to building wealth. But I have always made it a point to say that these are for long term funds. Note the wording- “retirement plans”. That is a keyword that means long term, and by long term I mean 10 years or longer.
Anyway, the 20% down payment that they had saved was mostly in tax deferred retirement plans which couldn’t be touched without severe penalties. But, the couple said, Suze said we could take money out for our down payment anytime. Well, Suze Orman is kind of right. You can take money out of a 401K for a down payment for qualified first time home buyers.
She didn’t say that there is a $10,000 limit on how much you can withdraw. You will also need to pay tax on that withdrawal. So if each spouse withdraws $10,000 each that is $20,000. For a 20% down payment, that means they could qualify for a $100,000 home. I don’t know where Suze lives, but I live and this couple lives in California where the average home price is $500,000. That is far short of their goals.
The couple was stunned that this detail had not been disclosed. It would take them a lot more years to save up for the $100,000 that they would need in liquid savings to put down on a home now. The family planning was put on hold and there was a chill in the air as we discussed savings strategies.
Financial journalists and television financial advisors aren’t the best source of financial advice. If you need to know quickly how a Roth IRA works, or how much you can contribute to a 4013b, then this is a great source of information. But when you need advice on your particular situation, you need to work with a licensed, practicing fee-only Financial Advisor (shameless self promotion here). Your financial future depends on making the right decisions. Don’t trust this to media people and bloggers. You wouldn’t go to a doctor who didn’t review your medical history first before prescribing pills. So why would you listen to a television program and take advice from someone who doesn’t know and understand your personal situation? It’s just plain crazy.
I know it’s tempting since we all want a quick fix to all of our problems. But the financial decisions that you make now will affect whether you can retire or not in the future or work part-time when your child is born or provide financial help to a son that is going to a private college. Like a patient who refuses to take all of their antibiotics and then has to suffer from infection once again, you can make the decision not to add financial stress to your life by making the right decisions now to build wealth. Life is short and you can’t go back and do it again.
