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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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