Suze Orman on AC360

Last night Suze Orman was talking to Anderson Cooper on CNN.  Everyone has a different opinion on her.  Some people like her and some don't.  I'm more in the middle, but that could be said about any financial personality out there.  

But last night she made some very good points that I believe a lot of people forget.  Before I get started on them I just want everyone to know they can find the transcript for the show here.  You have to scroll down some--about halfway down the page to find the section with her, then Ari Velshi talks for a little bit and back to her again.

Here are some points:

• "If you need the money in one year to retire, to generate income for you, and it's all in growth stocks, yes, you betcha. You come out of the stock market right now." and "But, if you don't need the money for 10, 15, 20 years, and you're in good, quality stocks, stocks that aren't going to go away, then of course you stay here."  

Let's face it most of us are in it for the long haul.  You're 401K is there for the future and over time they end up growing.  The media reports make it sound like it is so bad that you're going to lose everything!  The big thing is to keep on contributing, don't put everything into one basket, and if it really makes you nervous--don't look at your account too often right now.  It can get really depressing if you do.  Be patient!  In my case, I try not to look at it because I know it's going down, but I have another 27 years until I really need it!

• "Look at your own lives. Look at what you have got going on. There's only one thing, Anderson, you have control over in this life. And that is your own personal finance, as what you do with the money you have, what you do with the money that you don't have.  Look at your own lives. Look at what you have got going on. There's only one thing, Anderson, you have control over in this life. And that is your own personal finance, as what you do with the money you have, what you do with the money that you don't have. And that's where you have to focus right now" 

Again I have to agree here.  How can the average person control what is going on outside of their own finances?  The average person cannot!  So the only thing anyone can do is take care of your own finances to make sure you can survive in a time like this.  You cannot worry about others (examples: government spending, stock market, bank closures and bankruptcies, etc) when you don't have your own finances in order.  Make sure your money is safe in FDIC insured accounts, pay off or down high interest credit cards and loans, have an emergency fund, know where your money is going and/or figure out where it should be going.

So how are you dealing with the current financial situation?  Do you watch it constantly and panic/get depressed?  Or are you patiently waiting for it to be over because you know you're in it for the long haul?  

I admit it can get pretty depressing always hearing about decreasing home values, decreasing home sales, increasing foreclosures, increasing bankruptcies, businesses going under or being bought out, stock market crashes, increasing gas and grocery prices, etc.  But the media also isn't talking about people that are making it in these "hard times", who were smart enough to not get themselves into a bind by paying off debt, not panicking, not buying more house than they could afford, etc.  I know that some really fell into trouble because of others or emergency situations, but we also have to be responsible for our own personal finances at some point.

No Go on Gas

Gas prices are not going down.  

My bubble has totally burst.  *sigh* 

My husband put gas in his truck yesterday evening and it was up to $4.059!  He used to put $55 worth of gas in every two days and now it's up to $70!

We are just fine, but I cannot imagine how people that are worse off than we are or who literally live paycheck to paycheck manage it.  

And when gas goes up so does food.  Again we are fine.  We appear to live paycheck to paycheck, but I make tons of additional payments on several debts each month that I don't have to pay.  

If we end up feeling squeezed, then the extra payments will be the first to go.  It will amount to over $400 extra every month, if needed.  My debt won't go down as much, but we'll be able to live.  And with kids that's important.

We are able to do this because we live below our means, but at the same time we don't sacrifice a whole lot either.  

• We were told we could afford a larger house with a larger mortgage, but instead we bought in another area where the houses were bigger and the prices the same as the home we had sold.  Our mortgage was larger than the previous one, but we didn't go overboard plus we got a low fixed rate VA loan.  However, compared to others our house may be considered small for a family of 4 with two growing boys.  For us it works and we did upgrade from a 1600 sq. ft., 3-bedroom home to a home that has 4 bedrooms and just under 1900 sq. ft.  Plus we moved out of the city to a more suburban town with a better school system.
  
• When a couple of years later we were looking into a heloc, we were told we could get almost double what we did.  We purposely capped ourselves to ensure we wouldn't be in debt any more than we were comfortable with.
• When we were told more than several times by our credit union that we could have a much higher credit card limit, we told them, "no, we want a lower credit limit of $X,XXX amount" because it was all we wanted.
• We keep vehicles until they are falling apart and only have a payment (if any) on one at a time.
• We don't touch our retirement funds at any time!
• When our pay goes up, we increase the retirement funds and put extra towards the debt.
• With bonuses, we take some to splurge with and the rest goes to savings and debt.

I hate seeing people taking what others say at face value.  "Look at this!  Great!  You can afford a home at $XXX,XXX."  And then they go out and buy one at that amount without really looking at their finances to see what they could really afford with incidentals like gas and food going up, or home insurance rates and property taxes.  And I bet there are not a lot of people who consider what would happen if they lost their jobs like many are now.  *shakes head*  I feel for them, but I wonder how many could be prevented in losing their homes or having to move closer to work just because of poor financial planning.