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Financial advice guru Suze Orman appeared on Oprah on Wednesday to offer a five-step solution for people to combat strapped wallets, record layoffs and unemployment during the greatest recession since the Great Depression early in the 20th Century.
Orman, who offers financial advice on her CNBC show on Saturday nights, normally preaches to get rid of credit card debt as soon as possible and never make the minimum monthly payment, but she said the recession has caused her to change her stance. Now, she recommends making only the minimum payment on credit cards and pouring money into a savings account with enough to cover eight months of expenses.
Suze also gave the following tips:
-Live on one spouse’s income or half of your income and stash the other half in a savings account to create an eight-month reserve in case you get laid off because unemployment pays no more than 50% of your lost income for 26 weeks, and in rare cases, 46 weeks.
- Make the government’s stimulus package work for you by taking advantage of the $8,000 tax credit for first-time homebuyers if you make no more than $75,000 annually for singles and $150,000 per year as a couple and by enrolling in COBRA within 60 days of losing your job. Because COBRA premiums are much higher than when an individual is employed, the government will pay 65% of the premium for the first 9 months of the 18-month COBRA term.
- Make your home more affordable by visiting www.makinghomeaffordable.gov to see if you qualify to modify or refinance your mortgage for a lower monthly payment.
- Don’t be ashamed of applying for unemployment because it was funded by you and your employer and be thankful for the extra $100 that has been added to everyone’s unemployment check.
But no matter what your financial situation is, Suze recommends that you appreciate what you have (a mate, place to live) rather than sulk about what you lost (large income, retirement investments).
Oprah, who is a billionaire, urged viewers to listen to Suze because “she saw this coming” two years ago, and if you heed her advice, you’ll be better off financially than you were before.

By Teneshia LaFaye

I recently wrote a book with my teenage son to put high school students and college students on the right financial track. In our book, What My Mom Taught Me About Money, teens and young adults learn about checking accounts, credit scores, credit cards, cash advances, investing and more. Preview or buy What My Mom Taught Me About Money here.

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Naturally, money is tight in this deep recession, but some of us still want to be financially responsible and are wondering what is the best approach to saving money and managing credit card debt and student loans.
So financial advice expert Suze Orman offered solutions during her recent appearance on The Today Show. Of course, if you watch Orman’s weekly show on CNBC, you already know she thinks everybody should save eight months worth of living expenses, which is easier said than done when you have limited money and loads of credit card debt and student loans.
During her Today Show appearance, Orman responded to four questions:
1) Should you build an 8-month savings reserve or pay off credit card debt?
2) Should you contribute to your job’s 401K or pay off your credit cards?
3) Should you focus on paying off student loans or credit card debt?
4) Should you focus on retirement savings or savings for your children’s college?
These are all tricky questions for Orman because she always says never carry credit card debt, pay off student loans and of course, build that eight-month reserve. So how does she choose which is the most important? By tackling them two at a time.
Orman said it’s more important to save eight months worth of expenses in this tough economy than to pay off credit cards. She suggested to only make the minimum credit card payment until you have that reserve and then work toward paying off all credit card debt. She said you should only contribute to your job’s 401K if your employer makes a matching contribution, and if your employer does not contribute, you should focus on paying off your credit card debt rather than invest in your 401K. She also said student loans and credit card debt are equally important and should be paid off after securing that eight-month reserve. And finally, she said it is more important to save for your retirement than for your kids’ college fund. She said the kids can always get student loans to pay for college.
And a couple days later, Orman had an email read aloud on her Suze Orman Show that asked if you should take a vacation if you’re only halfway toward an eight-month reserve. Orman’s advice is to hold off on vacation until you have the eight-month reserve because you should be prepared in case you become unemployed in this deep recession.

By Teneshia LaFaye
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