Why Suze Orman is wrong -- again

(reprint from Liz Pullium Weston)
I, having retired as a Personal Financial Planner with the leading Financial Planning firm in the USA, agree with Liz. I have a handful of clients that I continue to provide bill payment/debt management services, and I follow this advice.

"Pay just the minimum on your credit cards? For most people, this advice from media personality Orman is simply a bad idea.
[Related content: debt, debt reduction, credit cards, spending, Liz Pulliam Weston]
By Liz Pulliam Weston
MSN Money
Credit card debt is a cancer that eats away at your finances, costing you a fortune in finance charges and leaving you vulnerable to issuers that can raise your rates or lower your credit limits at will.
So why is Suze Orman telling you to stop paying down this debt?
Orman, the author of multiple personal-finance best-sellers and host of a popular CNBC show, last month advised her fans who don't have "fully funded" emergency accounts to start paying only the minimums on their credit card debts and instead route any extra money into savings.
The bold directive makes for a great sound bite. I just wish it were good advice.
What else Suze Orman gets wrong
Right now, paying just your minimums is exactly the kind of behavior that will attract unwanted attention from the credit card issuers Orman is warning you about.
Yes, there's a credit shortage Now, Orman is absolutely right that the credit climate has dramatically changed in the past year.
Until recently, paying down your revolving accounts -- credit cards and lines of credit -- was considered a win-win: You saved on interest, and you freed up credit that could be used again in an emergency."

But these days, lenders are cutting off access to credit just when people are likely to need it most. Bankers are freezing or lowering limits on credit cards and home equity lines of credit or closing accounts altogether. One banking analyst has predicted that card issuers will cut total limits by more than half in the coming months.
Talk back: What do you think of Orman's advice?
Meanwhile, few families have enough savings to get through even a short stretch of unemployment. Hence Orman's advice to hoard cash. She's not the only one encouraging that strategy. Debt expert Steve Rhode, the founder of GetOutOfDebt.org, recently echoed her advice. And Wall Street Journal columnist Brett Arends went even further. He recently suggested borrowing against credit cards and using the cash to boost your emergency fund, writing that for those who don' t have sufficient savings, "some of the normal rules no longer apply."
Why this strategy can backfire There are plenty of problems with these kinds of bridge-burning approaches, however. They assume the worst will happen, when it probably won't.
Meanwhile, you're paying significant costs.
It can take years for many families to accumulate the eight-month stash of cash that Orman advises people to have for emergencies. If you abandon your debt repayment plans until you have that much saved up, you could:
Pay unnecessary interest.
Risk damage to your credit scores.
Make yourself even more vulnerable to lenders' whims.

The biggest problem with paying only the minimum these days is that it brands you as a high-risk customer, much like someone who maxes out his or her cards. Lenders, desperate to reduce their risks, are more likely to yank back credit lines or raise rates on any customer they consider at higher risk of default.
If that happens, there can be a domino effect. Lower credit limits can hurt your credit scores, because any balance you have looms larger in the scoring formulas. Lower scores can lead other lenders to consider you high-risk, increasing the chances they'll change your rates and terms or make future credit harder to get.
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And now, more than ever, you should protect your credit scores. People with mediocre or poor scores are missing out on some of the best interest rates on loans since the 1950s, and they pay more for insurance as well, because most insurers use credit information to determine premiums.
Good scores, by contrast, get you better deals on loans as well as the power to fight back against rate increases and lower limits.

When Orman is right There are circumstances where paying the minimum or, preferably, just a bit more, is the best of bad options. That's true if:
You've been or are about to be laid off. In general, you want to hoard cash when you lose your job. You should cut expenses, look for other sources of income and delay debt repayment plans until you're back on your feet.
You're on the financial brink. If you're living paycheck to paycheck, you have no savings and a layoff would send you over the edge, then paying minimums may be appropriate. Look for expenses you can cut and funnel the extra cash into savings. If you're in really deep, consider talking to a bankruptcy attorney and read "15 steps if bankruptcy is inevitable."
Your accounts have already been frozen. If you won't be freeing up additional credit by paying down your debt, putting that cash into savings might be the better option, especially if it's relatively low-rate debt.

If your situation isn't so dire, however, a more balanced approach might be the best course. That means:
Staying the course. Continue paying down credit card debt, but look for extra expenses to cut to pad your emergency fund as well.
Opening an escape hatch. If all your credit cards are with the same issuer, consider getting a card or two from different issuers so all your credit isn't in the hands of one lender.
Monitoring your accounts. Many lenders are trimming credit lines with little notice, so checking your credit limits at least once a month is good practice.
Pushing back. Card issuers are hoping you accept their changes without a fuss, but if you have good credit scores (FICOs of 720 or above), you have some leverage and should be able to get them to rescind their decisions or take your business elsewhere. Read "Thaw out your frozen credit" for details." (Liz Pullium Weston)

As a husband and financial leader of our family this is mirrors the practice followed by us - a household that includes our elder daughter (age 31) and one of our 3 sons (age 28). My wife is age 57 and I am age 60.

Why do we have 1 mouth, but 2 ears?

Some time ago a scribe wrote the words "God has given us one mouth and two ears; so we should listen twice as much as we speak. James 1:19-20 tells us "So then, my beloved brethren, let every man be swift to hear, slow to speak, slow to wrath; for the wrath of man does not produce the righteousness of God."

I wonder how we can help others when we are motoring along, mouth in high gear "sharing" our own wisdom? How often do we think we lead when we are busy opening our mouth? Proverbs 18:21 says "The tongue has the power of life and death, and those who love it will eat its fruit." Abraham Lincoln once said "It is better to keep one's mouth shut and be thought a fool than to open it and resolve all doubt."

Listening to what others express, gives you perspective. Listening to what others feel, gives you insight. Listening to others concepts, gives you oversight. Listing to the hopes of others, gives you compassion. Listening leads us to follow. To follow the expressed and unexpressed needs of others to understanding them. Listening gives us the ability to receive the full meaning of what is said, not just hear the words spoken. Fulfilling the needs of those who surround you, gives you leadership.

God wants us to be leaders. How can we lead if we cannot follow?

Philippians 2:1-8Message 1-4 If you've gotten anything at all out of following Christ, if his love has made any difference in your life, if being in a community of the Spirit means anything to you, if you have a heart, if you care— then do me a favor: Agree with each other, love each other, be deep-spirited friends. Don't push your way to the front; don't sweet-talk your way to the top. Put yourself aside, and help others get ahead. Don't be obsessed with getting your own advantage. Forget yourselves long enough to lend a helping hand. 5-8 Think of yourselves the way Christ Jesus thought of himself. He had equal status with God but didn't think so much of himself that he had to cling to the advantages of that status no matter what. Not at all. When the time came, he set aside the privileges of deity and took on the status of a slave, became human! Having become human, he stayed human. It was an incredibly humbling process. He didn't claim special privileges. Instead, he lived a selfless, obedient life and then died a selfless, obedient death—and the worst kind of death at that—a crucifixion. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡

NKJV 1 Therefore if there is any consolation in Christ, if any comfort of love, if any fellowship of the Spirit, if any affection and mercy, 2 fulfill my joy by being like-minded, having the same love, being of one accord, of one mind. 3 Let nothing be done through selfish ambition or conceit, but in lowliness of mind let each esteem others better than himself. 4 Let each of you look out not only for his own interests, but also for the interests of others. 5 Let this mind be in you which was also in Christ Jesus, 6 who, being in the form of God, did not consider it robbery to be equal with God, 7 but made Himself of no reputation, taking the form of a bondservant, and coming in the likeness of men. 8 And being found in appearance as a man, He humbled Himself and became obedient to the point of death, even the death of the cross. <†> <†> <†> <†> <†> <†> <†> <†> <†> <†> <†> <†>

Ephesians 5:25-29 - Husbands, love your wives, just as Christ loved the church and gave himself up for her to make her holy, cleansing her by the washing with water through the word, and to present her to himself as a radiant church, without stain or wrinkle or any other blemish, but holy and blameless. In this same way, husbands ought to love their wives as their own bodies. He who loves his wife loves himself. After all, no one ever hated his own body, but he feeds and cares for it, just as Christ does the church... (NIV) <†> <†> "That you may retain your self-respect, it is better to displease the people by doing what you know is right, than to temporarily please them by doing what you know is wrong." ~ William J. H. Boetcker <†> <†> "Surrender as much of yourself as you understand to as much of God as you understand." <†> <†>

Heavenly Father, We pray today for the mercy and love You give us. Open our hearts and minds to You. Give us the grace to accept your mercy. As we live each day, give us the personal courage to listen to the concerns of others and help them find the solutions to which they are entitled as Your children and our brothers and sisters. Amen.

by Ron Sires, member of the Billy/Delworth First Baptist Church Tuesday Night Home Group