Suze Orman's financial advice to Mommas
I really hate to start out anything by saying, “These are really tough economic times we’re in.” That’s like saying Bruce Springsteen plays leads vocals for the E Street Band. Duh. Now let’s just hear a rousing rendition of Born in the USA and move on please.
But because we are living in the times That Shall Not Be Named, there is a need to be extra vigilant with our personal finances. Enter Oprah's financial guru, Suze Orman.
In a recent interview, Orman talked specifically about women -- mothers -- taking control and empowering themselves financially. She says that as mothers, one of our many jobs is to serve as responsible examples financially to our children. “There is nothing wrong with making money,” and we must teach them to take care of themselves by first taking care of ourselves.
Is now the time to start your own business? Maybe, Orman says. “If it’s a service of needs versus wants,” it may be viable now. She advises to do your research, and make sure that you have the funds to not only start the company, but keep it going.
But don’t use up all of your savings as initial capital, she warns. Nor loans on 401(k)’s, home equity, or severance packages if you don’t already have an eight-month cushion of savings in the bank. Instead, she says, to try to get a small business loan or government subsidized funding if available.
The biggest start-up mistakes women make are underestimating the ongoing costs of business and paying everyone but themselves. Be sure to determine if you need additional liability insurance as well. What can you do now? After you get your eight-month cushion, pay off the IRS and any outstanding student loans. These are two dangerous debts because the government can legally seize your assets at any time, and most student loans compound and can’t be absolved even through bankruptcy. Orman still thinks 529 plans are the best way to save for college.
She doesn’t see this unsteady market calming completely until 2015. She estimates that there will be some rebounds and slides in the interim because “the economy is like a football field, and the players are on financial steroids.” Once those steroids wear off or the players (like banks and corporations) become injured again, we’ll be right back where we started.
So she says to play “Risk” by planning for the worst while things are still okay. Don’t underestimate your power to control your spending and savings, and she’s offering some tools to get there.
In addition to a “Save Yourself” no-fee, high-return account which she offers on her Web site, she is also offering another powerful tool that all women (and men and families) should have. You can download for free the legal documents you need for a “Will and Trust Kit” that is valid in all 50 states. She estimates it is about a $2,500 value, but could be priceless toward protecting your family’s financial future. Just go to her Web site and click the "Will & Trust Kit" link in the blue bar on the left-hand side of the home page. Click the orange "Gift Code" button and enter "Moms Rule" into the gift code field. This gift code will be valid until noon on April 25.
But the most important lesson of the day? “Remember, you are a powerful woman because of who you are rather than what you have.”
-- Tracey Henry, Suburban Diva