Suze Orman’s 10 Tips for a Fresh Financial Start

by Minority Fortune

suze-ormanWe were on Oprah’s site recently because it’s always full of useful information on all aspects of life. Low and behold, we stumbled across ten useful tips for a fresh financial start by Suze Orman, a financial management expert. We looked them over and decided to post them over here written in our own way. It’s good stuff, and if you’re going to be wealthy, all ten of these things must be mastered.

1.   No Blaming. Be Guilt Free. You can never move forward in your life if you stay stuck in actions of the past. Accept it, and then dump it. End the guilt so that you can take control of your future. Couples should adhere to this as well and avoid blame. Since when has complaining ever gotten anyone anywhere?
2.    Look at your finances: You have to know what you’re working with. What skilled poker player plays the game without looking at their hand? Take a look at all your financial accounts, from credit cards to bills to checking/savings to investment accounts. Suze Orman suggests you open a new checking account if combing through the existing one is too much to bear.
3.    Conquer your Credit Cards: It’s a tough job, but someone’s gotta do it. Furthermore, credit card usage is something that you can control. Keeping large balances on them is an invitation for staying broke. We love how Suze states that “every time you pay off a card with a 15 percent interest rate, you get a 15 percent return on your money”. Keep that in mind and get to work. Conquer those with the highest interest rates and work your way down.
4.    Dump the “I Have No Money to Save” Excuses: Instead of focusing on all the ways you can’t do something, find a way. You’re allowing others to sap all your money dry.  Is cable TV a necessity? Are sodas necessary? Using green technology to reduce your utility bills? Taking several trips a month to the salon? Look around in your life. Otherwise, you’re being a slave to your own money.
5.    Investing: You should have money set aside specifically for the purpose of investing. Suze says that this should be “money you won’t need to use for at least seven years”. Your savings account is NOT an investment. Your savings should be reserved for emergency fund and immediate spending purposes only.
6.    Know Your Credit Score: You better understand what your credit score is because it is your biggest asset. Whether you like it or not, your credit score is used to judge you. Depending on what it says, it can be your enemy or your friend. Annualcreditreport and myfico.com are your friend.
7.    Consider Your Retirement Plan: Unless you’re in your forties, you should have 80% of your investment in savings and 20% stowed away in bonds. Stocks are a best way to hedge inflation. Get your 401K and Roth IRA on!
8.    Diversify: Diversity is definitely the way to go with investments. You never want to be locked in to the volatility of one company, even if you think it’s promising. Stocks have come and gone over the market history. Reputable mutual and ETFs (exchange-traded funds) are good choices for beginner investors.
9.    A Home is Not an Investment: Real estate can be profitable. Purchasing a home for yourself is not. If the sub-prime market hasn’t taught you that, you need to learn it. The housing bubble has caused the market value on homes to drop faster than a ship anchor. If you’re buying a home, buy it because you can afford it. Look at it for it is- a home. No real estate guru got rich off their own home. They became an expert in all areas of real estate and bought properties for commercial uses.
10.    Keep Your Household in Order: If you have dependents (children, relatives, parents, etc.) you need to get them life insurance and get a trust. We don’t want to be the next James Brown, do we?

Term life insurance is all we need, because it protects you for the “term” of the policy (from five to 30 years) and is incredibly inexpensive. As always, it’s important to buy a policy from a firm with a strong financial rating, but even if an insurance company runs into trouble, your state insurance department has funds set aside to help protect you. I also want you to get your estate papers in order. You should have a living revocable trust (this document spells out how your assets should be distributed) with an incapacity clause, as well as a will. Also, have an “advance medical directive” in place that tells your doctors the type of care you want if you become unable to speak for yourself.

Also, keep an emergency savings that could cover eight months of living expenses. We like that Suze suggests women to keep their OWN emergency savings with three months of living expenses additionally.

*Thank you Suze Orman, and thank you Oprah for the financial advice!

*Image courtesy of Soul Food 101.

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