Suze Orman's Action Plan (4 page)

Repayment

Consolidation

8
Action Plan: Protecting Your Family and Yourself

Job-loss strategies

Hope for the best, prepare for the worst

Health insurance

Life insurance

9
Action Plan: Kids and Money

Teach good habits

Talk openly

Budgeting lessons

Credit education

10
The Right Way

E
xhale. The eye of the financial hurricane has passed. The storm that hit in the summer of 2008 and continued to batter the global economy and your personal finances through 2009 is slowly—ever so slowly—receding. The worst is over. You survived. We survived.

Now comes the really hard work: rebuilding. IRAs, 401(k)s and 529 college savings plans must be rebuilt in the wake of the devastating bear market.

Budgets have to be put in place that account for the new world order in which the penalties for having credit card debt and no emergency savings are unthinkable. You know as well as I do: You must find a way to get rid of the debt and build your savings.

Your approach to homeownership must be rebuilt
to reflect this simple truth: A home is not a liquid investment that will always rise in value. It is shelter, first and foremost. It can also be a terrific asset, but only if you approach it with clear-eyed expectations.

Most important, your sense of security must be rebuilt. There’s the not so small issue of our collective national bill for what has happened; the current $1.4 trillion federal deficit is expected to rise to $9 trillion by 2019. But on a more personal note you are grappling with the realization that your pre-crash way of life is over. What worked—or more correctly, what you thought worked—is gone, leaving you without your bearings in these new times.

Now that we have weathered the worst of the storm, you’re onto the next challenge: Where do we go from here?

When I wrote the original
Action Plan
for 2009, it was with a laser focus on getting you through the crisis as it was unfolding. My goal was to give you the tools to find your footing in a world where the ground was shifting—and shifting violently—beneath you. As the year progressed and I heard from so many of you—in person, via Twitter, and through my CNBC show—I realized that you were hungry for more than crisis-management
strategies. You have moved on to future management. You want to know the right actions to take in order to build lasting security.

You have been shaken to your core. Whether it is because of fear, regret, or remorse, living through the tumult of the financial meltdown has given you newfound purpose. You want to be in control, you want to get it right. No more fly-by-the-seat-of-your-pants, enjoy-the-ride-while-it-lasts mentality. No more trusting that things will work out, that someone else—your financial advisor, the regulators in Washington—have your back. You understand what is at stake. You are personally accountable and responsible for building and sustaining financial security. You just need a new game plan to transform your resolve into reality.

Because so much has changed in the world and in your worldview, I decided to publish a new
Action Plan
. I think of it as
Action Plan
v. 2.0: The Long-Term View. I have updated the information and advice to take into account changes that have occurred since the fall of 2008, such as new pro-consumer credit card legislation and the Treasury Department’s broad Making Home Affordable initiative designed to keep more Americans from losing their homes. Each chapter now begins with a fresh introduction focused on “New Rules for
New Times.” During the heat of the crisis my advice was to show you how to keep your money safe and secure. That’s still in play, of course, but now it’s time to move forward with strategies that will build security for you this year, next year, and beyond. That requires an understanding of what works now—and what doesn’t—in every aspect of your financial life, from credit management to retirement planning to saving for a child’s college education.