Suze Orman’s 2009 Action Plan

by Millionaire Mommy Next Door on January 8, 2009

in Book Review,Debt Reduction,How To Guide

Suze Orman outlined her 2009 Action Plan today on the Oprah Show. For the next week, you can download her new book for free or order a print copy of Suze Orman’s 2009 Action Planat Amazon for $9.99.

Here are the notes I took from the show today:

Tell the truth. Take an honest look at your financial situation and discuss it openly with your spouse or life partner. How much do you owe? How much do you have in your savings account?

Pay off credit card debt BEFORE creating a savings account. List your credit card accounts in order of interest rate. Pay extra on the account with the highest rate first, while paying minimum payments on the rest. After the highest rate card is paid off, get to work on the next highest. And so on until you no longer have credit card debt.

Improve your FICO score. The higher the number the better (850 is the highest). In today’s economic climate, under 700 is considered low. Did you know that potential landlords and employers also use your FICO score to determine how responsible you are? Yep, so do insurance agencies. Those with a high FICO number score big when it comes to loan rates, jobs and insurance premiums.

Ways to improve your FICO score:

1) Pay more than the minimum payment on each credit card.
2) Pay on time. (This constitutes 35% of your score.)
3) Never go over your credit limit. If you do, they raise your interest rates.
4) Don’t close your credit card accounts. This hurts your score. Why? Because 30% of your FICO score consists of your debt to credit ratio.

Separate WANTS from NEEDS.
If you have debt or no savings, ELIMINATE THE WANTS!

Save 8 months of expenses in an emergency savings account. Decide how much you can save each month and add 20% as a stretch goal. Search for the highest savings account interest rates from FIDC-insured banks.

Investing:

1) Don’t panic when the market goes down.
2) Keep investing in your 401k or IRA.
3) Money you need in the next 5 years DOESN’T BELONG IN THE STOCK MARKET. If you need your money in 5 years or less, take it out of the stock market.

Suze’s pledge idea:

1) Don’t spend money for 1 day.
2) Don’t use your credit card for 1 week.
3) Don’t eat out at at restaurant for 1 month.
(The first two pledges are easy ones for me, but not the third!)

{ 10 comments… read them below or add one }

morrison January 8, 2009 at 6:47 pm

Like minds think alike! Love Suze Orman. She is indeed, the one financial adviser Americans can trust. I downloaded her free book and alerted all my friends.

Thanks for the post.

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Cathy January 9, 2009 at 6:07 am

Just downloaded the book. I think it’s great and empowering for all of us to grow up and be responsible about our money. I’m not always.

To this day, I take exception to one strategy. I know that paying off your credit card bills BEFORE saving makes sense financially, but I found it psychologically empowering to see savings grow. I think people should take something and put towards saving, even if they still havecredit card debt.

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Velvet Jones January 9, 2009 at 7:47 am

Like Cathy, I’m leary of not growing any kind of savings before paying off your debt. I believe in this climate, you have to save some kind of savings. I think Dave Ramsey’s idea of getting $1,000 in the bank first, THEN putting everything towards credit card debt is a better idea. But hey, one size does not fit all. You have to look at your situation and see what works. I had a chance to thumb through her book last night and it was pretty solid information.

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Studenomics January 9, 2009 at 10:29 am

It’s amazing how quickly this book spread through out the PF blogs on the web. It sounds like a good read and I am going to try reading it soon.

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Bridget January 9, 2009 at 6:37 pm

I’m with Cathy and Velvet Jones; pay yourself first! Once you’ve figured out real needs versus wants, you can pay down debt and save for the future at the same time.

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Karissa January 10, 2009 at 9:14 am

I agree that the $1000 emergency fund is empowering and useful. I had close to no savings last year when I had to put $500 worth of repairs into my old vehicle. Putting the charge onto my VISA was not only psychologically damaging but it also undid a few months worth of payments. Now that I have my EF set up I feel a lot more secure about the “bad things” that come up from time to time.

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HIB January 12, 2009 at 8:47 am

I think $1000 for an emergency fund is a great start. Maybe we have more bills, but if I were laid off from my job, $1000 wouldn’t last very long. I think once you have $1000 as an emergency fund, you should do a combo of padding your savings and paying down debt. I’m all about not having debt, but $1000 isn’t going to do much for me if I lose my job.
My 2 cents!
-HIB

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Trendy Indy January 12, 2009 at 4:51 pm

I agree with all of Suze’s Action Plan to eliminate debt but I would definetely start saing at the same time. I started my paying down plan by first opening a Savings account and channeling 100 dollars every month.Though I paid 10 times as much to the CC’s at the same time. Its equally important that we don’t go back digging into CC’s if we meet with some kind of emergency.

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Moneymonk January 14, 2009 at 6:05 pm

I’m like you I can do two ideas that Suze recommend easily. But I love to eat out, not a big cooker

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Zena January 27, 2009 at 6:02 pm

I’m a HUGE Suze Orman fan. I’ve met her a couple times. She’s the one who explains personal finance in such a way that it captivated me. My financial planner just wasn’t hitting the mark. I’m so BUMMED OUT I didn’t know about her free download. Does anyone know if it’s available elsewhere as a free download?

Also – My husband and I have been COMPLETELY DEBT-FREE for 3.5 years now. We made a plan and committed to it and paid off our 30-yr mortgage in 12 years. We did this while still putting money into savings, Roth IRAs, 401k, 403b and building an emergency fund. We are middle-income earners and live a life of “need vs. want”. We don’t feel like we sacrifice anything and certainly have some toys. We’re also HUGE into travel and find many ways to travel frugally.

My point I’m making is that people can do this. You really can. You simply have to commit to it and change the way you live. IT IS INCREDIBLY SATISFYING KNOWING ALL DEBT IS PAID OFF. I can’t explain how fully how great it feels. Since paying off the mortgage, we continued to save and when we needed a different car, we purchased a 2-3 year old model and paid for it in cash. Cash is king and goes a long ways in negotiating prices down.

Best of luck to all of you. It is possible to feel quite rich when you are living debt-free.

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