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Suze Orman's 5 Smart Money Moves If you want to survive, and possibly thrive, during this recession, you need a plan--one that will put you in control if you lose your job or your salary is slashed.
Suze Orman appeared on the "Oprah" show and told Oprah Winfrey that in this environment of job loss and housing foreclosures, it's easy to let fear take over. "There's only one person that's going to save you right now, and that's yourself," Orman told Oprah's audience. "You have got to get on what I'm calling the 'save yourself movement.' Each and every one of you has to have your own personal financial stimulus action plan." Here is Orman's five-step recession survival plan: Step 1: Live on Half
Starting immediately, save half your income. If you live in a two-income household, bank one paycheck. If there is just one income, put 50 percent in savings. "If all of a sudden you find yourself without a job--or your partner finds themselves without a job--you are now going to have your income cut by 50 percent almost immediately," Orman warns. By doing it now, you not only learn how to live on less, but also save a significant sum of money. Step 2: Stash Your Cash
Cash is king. As credit card companies make it more difficult to use their cards by reducing credit limits and raising interest rates, you need to break your dependency on plastic. Before this recession, Orman advised people who were laid off and given severance pay to use it to pay off or pay down their credit card debt, but now she says to keep the cash. "If all you currently have is a very small emergency fund and you have unpaid credit card debt, ...you are only to pay the minimum amount due on your credit cards," she told Oprah. "Stash the cash till you have at least an eight-month emergency fund." Meanwhile, don't use the cards. Pay for everything in cash. Step 3: Make the Stimulus Package Work for You
The economic stimulus plan passed by Congress is not only creating jobs for millions of Americans, but also helping those who have been laid off. If you've lost your job and qualify for COBRA health coverage, the federal government will subsidize your premium. For nine months, you pay just 35 percent of the monthly premium; however, after nine months, you must pay the full 100 percent of the premium. This coverage is available to anyone who was laid off between September 1, 2008 and December 31, 2009 as long as your company provides COBRA. If you're a first-time homebuyer purchasing a house in 2009, you qualify for an $8,000 tax credit as long as you meet the income requirement of no more than $75,000 in adjusted gross income for singles and $150,000 in adjusted gross income for married couples who file jointly. That means if you owe $10,000 on your taxes, you'll only pay $2,000. Step 4: Make Your Home Affordable
If your mortgage payments are just too much for you to handle, turn to the two-part Homeowner Affordability and Stability Plan. The first part of the plan, the Home Affordable Modification program, helps families who are dangerously close to foreclosure so they can keep their homes and reduce their monthly payments. The second part of the plan, the Home Affordable Refinance program is for people who are not in danger of losing their homes but want to refinance to lower their mortgage payments. If you qualify, you can refinance even if your home has lost value. To qualify, your mortgage must be backed by Fannie Mae or Freddie Mac. To see if you qualify for either of these programs, go to this Web site: MakingHomeAffordable.gov Step 5: Look at What You Have, Not What You Had
Make this your new mantra: Thou shalt not covet what thou once had. Be grateful for what you have now and try not to look back on the life and wealth you have lost. "If you continuously look in the rearview mirror while you're going forward, you're going to get in an accident," warns Orman. "And the victim of that accident is going to be you. Don't compare. You'll feel stronger, you'll have more energy and you'll be able to turn this around." Be grateful; today is a blessing. "When you are grateful--when you can see what you have--you unlock blessings to flow in your life," she told Oprah.--From the Editors at Netscape
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