Thursday, April 02, 2009
Oprah invites Suze Orman back for revised advice on recession; it may surprise everyone!
Today, Oprah invited back Suze Orman to give updated financial advice. The show was called “Recession Rescue with Suze Orman”, link here.
Her idea of “economic stimulus” is to cut personal expenses to the bone.
The show started with a couple where both husband and wife lost their jobs and both kids had medical expenses. Suze said that the couple had not cut expenses to the bone quickly enough. Cut out everything unnecessary, like cable and eating out. She even asked everyone who was still working to live on one income, and single people to live on half their income. What economic stimulus!
After denying that she would issue any more "Suze Smackdowns", she also gave updated advice on credit cards. She said, pay only the minimum until you have a 6-12 month supply of cash. Why? It’s a vicious cycle. Banks are pulling cards once paid up, leaving people without cash no way to get money at all, which can lead to homelessness for entire families. Suze considered the behavior of banks quite alarming, but understandable because credit card debit is unsecured.
She also explained how unemployment works, and how it is extended in many states. You can collect severance and unemployment at the same time, she said; don’t let your employer (who may have a perverse incentive to avoid unemployment insurance premiums increased) tell you otherwise. But you have to be laid off to collect unemployment, and then be actively looking for work. It’s the parameters of what work you will accept that becomes controversial. If you were an I.T. person working for an insurance company, should you be expected to go out and sell insurance on commission only?
She also gave some advice on COBRA health coverage, and there is now a program to reduce a worker’s responsibility for premiums.
I did wonder about this advice from people not facing these problems now. But Orman, now 57, has picked herself off the floor before in life.