Suze Orman: Never Do These 3 Things With Your Finances
Financial advisor Suze Orman knows firsthand that there are a lot of things you should do when it comes to managing your money. But what about the money moves you should never, ever make under any circumstances?
In an interview with CBS Sunday Morning, Orman shared her recommendations for the top three things you should never do to your personal finances.
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Do Not Co-Sign a Loan
Many people won't think twice about acting as a loan co-signer, with one such example being parents who co-sign their child's student loans. Before you agree to be a co-signer, though, Orman wants you to really think about what it means. She stressed that it indicates the financial institution is not going to give this person a loan because they don't qualify for one.
"When you co-sign a loan, it is your loan. You are personally responsible for it," cautioned Orman.
Orman said that this personal responsibility also extends to any payments made, or not made, to the loan's principal balance. If the borrower does not make payments, the co-signer will not know about it and this inactivity will negatively impact the co-signer's credit score.
Never Take a Loan From Your 401(k)
Over the last couple of years, headlines have been made about Americans who tapped into their 401(k) plans early. In 2023, The Wall Street Journal reported a story about people making emergency withdrawals from their 401(k) accounts to cover expenses related to natural disasters.
As tempting, or seemingly necessary, as it may be to withdraw from a 401(k) due to hardship, Orman does not recommend withdrawing any funds from this account -- regardless of the circumstances.
"Your 401(k)s are protected against bankruptcy," said Orman. "If you're in so much debt that you have to take a loan from a 401(k) that means you're close to bankruptcy. You may end up having to claim bankruptcy and your money would have been protected in a 401(k)."
Do Not Take Out Student Loans
Student loans, according to Orman, are the most dangerous loans currently available. She said one of the reasons why they are so dangerous is because it is debt that cannot be discharged in bankruptcy.
Because of this, Orman said it's a borrower's number one priority -- if you have student debt -- to never miss a single student loan payment.
Bonus: Orman's Overarching Pro Money Tip
Orman's final piece of advice for what should never do with your money is simple enough for anyone to follow.
"Just don't do anything that you don't understand. That will keep you out of trouble."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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