Suze Orman: You Have to Save Yourself

(CBS)  Okay, so what about YOUR Money? What should YOU be doing right now? Financial Advisor Suze Orman all but wrote the book on money matters. Here are her two cents' worth:

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Hi everybody. You know, last time I talked to you, right around now, the stock market? Well, it was in the tank. The economy was just starting to come back, and then all of a sudden - what happened? The stock market started to go up 65%, everything started to seem like it was OK.

But here is what I want you to understand.

We are now standing on land that in my opinion has financial faults going all the way through it. And if we have any financial tremors whatsoever, we will find ourselves, in my opinion, right back to where we were in 2008.

So you have got to make sure that you are not dependent on anybody else's financial plan for you.

The economy cannot save you. The administration cannot save you. You have got to save yourself.

And you have got to make sure that your financial foundations don't have any cracks in them whatsoever.

So, what do you need to know to make sure you are standing on solid ground?

Well, the first thing you need to understand is that most of you probably have debt on credit cards. Many of those credit cards are charging you 30% interest, charging fees, doing all these kinds of things, especially if they are with major banks.

What I want all of you to do is go to creditcardconnection.org and find a good credit union near you. Anybody can join a credit union, where you get a credit union credit card.

Do you know by law federally-charted credit unions cannot charge you more than 18% interest rate? Get yourself a credit card at a credit card union.

Next, a lot of you have 401(k) plans where you work.

Now listen to me. You should be investing in your 401(k) plan, but only up to the point where your employer matches your contribution. After the point of your employer's match (or if your employer does not match), if you qualify for it, every single one of you should have a Roth IRA. A Roth IRA is simply a retirement account where you invest in it with money you have already paid taxes on.

You want to do that because currently we are in the lowest income tax brackets of our lifetime. Later on you may be in the highest tax brackets of our lifetime to meet with the deficits that we have. So why not invest right now, pay the taxes, so that you can take out the money later, tax-free?

If you don't qualify for the Roth, get a traditional IRA, make it non-deductible, and then convert to a Roth.

Do those things and you will be on happy financial footing.

Now, you stay safe.

[TheBobRiversShow]

Suze Orman will be a guest today, March 25th 2010, on The Bob Rivers Show at 7:20am PT. Tune in to 102.5 KZOk Seattle or log on to www.bobrivers.com for the live streaming video.

[rockcutr]

Suzi O is a beancounter...not the best person to be listening to on financial advice. She never gives real information. It is all propaganda bent upon serving the world bank and the out of control taxiation without representation policy of the republicans. She is correct in saying save yourselves. This being the only advice of value coming from SO. Everything in the money business is a gamble. Always has been. There is no "intrest" from banks to pay depositers for the use of their money. When on the other hand, we get raped by the ccard companys. If ya want to be independent, loose all cards, debit and credit. Use only the actual cash you have. Throw away your tv. It is filling your heads with garbage. Drive slower, walk further, grow your own food because, hybred seed is dead food. Micki Deeez isn't the only culpret in the obisity of amerika.
A new thing to worry about. A small hand held device has been developed that can scan the card in your wallet from 10 feet away. New and inventive ways to steal your money. Kinda funny as all of the money issues will be moot when the dollar fails.

[Sistawahm]

Great discussion!

At the beginning of the new year I began to seriously ponder my next financial move. WAMU, my previous bank, no longer exists and I was unwillingly dropped to another institution.

Now, I'm not a heavy bank switcher or credit card junkie so this article was helpful in the fact that it suggests joining a local credit union - something I've been seriously researching lately.

Wise decision too, especially with the movement to "Move Your Money" going on because these big banks really think they can do whatever they want to us and get away with it!

This article hit so close to home I had to discuss it in a blog post today. Once you're done here, feel free to join the conversation over at our blog!

[farhawk]

Regarding 401(k) plan & investing up to where your employer matches your contribution. After that... if you qualify for it, every single one of you should have a Roth IRA. Suze forgot to mention the following:

First, if you make over 120K you cannot contribute to a Roth IRA for 2010. If you make between 105K and 120K you can contribute an adjusted amount. You can convert existing IRA money to a Roth in 2010, but you have to pay the tax on all you convert. Also, you can only contribute a max. of 6K to a Roth IRA in 2010, where you can contribute a max. of
16.5K+ to a 401K.

[askagain]

Americans like to be entertained and Suze Orman does just that. She is one of the few entertainers who offer financial advice. Americans have a short attention span, generally do not read much, and avoid doing research on even the simplest matters. Further, many Americans shun advice. I have been buying tax free municipal bonds for years. They are simple to purchase, require no real maintenance, and provide guaranteed tax free interest for the duration of the bond, usually 10,20,0r 30 years. They can be bought and sold on a daily basis and commissions are very low. I have told perhaps 100 people about them. To my knowledge, not one person that I know has either investigated or purchased tax free municipal bonds. In my case, the bulk of my retirement income will be tax free thanks to tax free municipal bonds. Incidentally, these bonds pay between 4 1/2 and 5 1/2 percent tax free interest each year. Unfortunately, many Americans refuse to learn about finance and investing. That is why someone like Suze Orman is needed.

[flonightingale1]

She listed another website in addition to the one in the story above. The other website was to be able to idenitfy a list of local institutions scoring a B or better if you were interested in moving away from a large bank. They didn't list that website in the story above. Can someone supply that website?

[morgands1]

You are referring to another "Sunday Morning" story on the "Move Your Money" initiative. Details are here:

http://www.cbsnews.com/stories/2010/02/28/sunday/main6253064.shtml

The web site is moveyourmoney.info

[dbannist]

Actually, the tax benefit of Roth IRA's are far superior to 401k's or IRA's if you make below a certain threshold of income. For a married family with two children that owes no taxes on an income of 40,000 a year (lots of deductions, children, charity, health, etc.) you will pay no taxes on the money you put into the Roth IRA when you put it in, and then pay no taxes when you take it out. With a non-Roth IRA you will probably pay taxes when you take it out, especially if you are a diligent saver. This is not true for higher income earners but for those who make less than 50k they will probably find a Roth IRA to be a superior alternative to the 401k. Of course, if the company gives a match there is no excuse for not contributing the max to get the company match.

[pnut134]

Good basic article that a lot of people should pay attention to, especially about the current tax situation which is at historic lows.

[armyoftwelve]

Despite her popularity, I really don't get why this woman is so popular. Maybe it's because she is like a financial-topic Oprah Win-
frey??

Credit unions are good places to get credit cards, among other things, but if your credit stinks they might limit how much you can borrow.

It is better to not carry any balance at all on a credit card--no matter what kind of institution is giving it to you. Use the credit card to give you an extra month or three weeks to pay an expense off.

Having a card with a cash-back option is a good thing too.

The advantage of maxing out your 401(K) is that you are enjoying the biggest tax-benefit NOW and having it automatically deducted from your paycheck before taxes is a great way to start saving NOW.

Why is is so important to start saving NOW? To build up your capital and give your money time to compound. Giving your money time to compound is the best way to plan for retirement. Worrying about higher tax rates in the future is irrational because NO ONE can predict the future--including Suze Ormon!!!