Plan to Take Action in 2009

I literally rang in the new (trading) year on January 2nd, presiding over the opening bell at the New York Stock Exchange. This was something I always wanted to do, It was an honor and a day I will never forget. What was so interesting to me however was this pervasive sense, or should I say wish, that just because we turned the calendar over to a new year, everything was going to be fine.

While I so wish that were true I have to say I just don't think it is going to be that easy. So many of you are acting that just because the Standard and Poor's 500 stock index lost 37% and the Dow shed nearly 32% last year that that somehow means we can't or won't see more losses in '09. As if there's some sort of rule against consecutive bad years. What is so important for you to understand is that there is no magic market wand you or I can wave to make this all go away. And I am so sorry to say that I think it is foolish to think that a massive stimulus package will be an insta-cure. I can only pray it will help, but recovery is not going to be quick and there are no easy solutions. So I think it is wiser to be realistic and to keep in mind that it is going to take years, my friends, to make this all right. Yes I said years -- in fact I think it will be till 2015 before everyone feels hopeful about their portfolio again. But that is okay -- for the years come quickly and sooner than later we will be there. Can you believe that we are already in 2009?

The first week of trading has pretty much summed up what I think we can expect for much of the year; The Dow opened at 8,772 on January second, rallied to 9032 on January 3rd and then hit a slew of bad economic news on the 7th that shaved the index back to 8,770, about where it started the year. I think it would be wise for you to get used to that seesaw; and if by chance at the end of the year we aren't lower than we are today then we should feel lucky.

Now all that said, I am actually quite hopeful that 2009 can be a prosperous year for millions of Americans. Working from the premise that a lot of us need to be shocked into taking action I think 2008 was plenty shocking. Scary actually. Right? That's why I rushed to get my 2009 Action Plan book out this week -- (you can download an e-version for free at Oprah.com through January 15th) -- Here's a quick run through the must-dos for 2009:

• If you have ten years or longer (preferably longer) till you need your money I would keep dollar cost averaging into high yielding safe dividend paying ETF's or stocks. If you are looking for income you might want to investigate General Obligation Municipal Bonds, they are a good buy right now. Just do your homework before buying and diversify.
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• Get serious about an emergency savings account. As in an account at an FDIC insured bank or credit union. HELOCS are not a safe savings crutch in 2009 as banks are pulling lines, not extending them. If the recession persists, so too will the rise in unemployment. The only way to survive that is to have savings set aside in the event you become a downsizing statistic.

• Look into refinancing your home if you are going to stay in your home for at least another five years and you have an interest rate that is above 6.5% The rate on a 30-year fixed rate loan is 5.2%; even better if you can afford the payments is the 4.9% rate for a 15-year mortgage.

So here is the bottom line -- 2009 is a year to take many actions -- but it is not the year that will totally make all your financial troubles go away. With the right planning, the right moves, and the right attitude and information, we will survive and over time we once again will be a nation that thrives. Remember when it comes to your money there is only one thing that really matters and it is this: People First, Then Money, Then Things. Be kind to yourself and stay safe and debt free.

Comments

[earnandsave]

I remember watching the opening bell on the first day of trading. Trading is a speculative activity, involving risk with the hope of reward. And here was perhaps the most famous personal finance expert/author - someone who counsels about money management, the virtues of saving, the importance of managing debt, and taking risks only when you have evaluated them, understand them and can do so depending on your age and stage in life - doing the honors. It was a very interesting note to start the year. And to me it signaled that this should be the year of financial literacy, and greater risk/reward determination,and ultimately responsibility.

[kstuff]

The next irrelevent number? Your FICO score. What's the purpose of a rating, if there's no credit to be had...

[orangepetal]

I love Suze Ormon and I am not an ecconomist but I would think now is a good time to look at property for people who chose not to buy when prices were high and who have some ecconomic security.. There are some great deals. Suze Ormon is so cautious and does not seem to like credit. I think sometimes in life you have to take risks (small ones), and even if you do fail (you might not) at least you will know you tried.

[harriscrl3]

If anyone still thinks that the stimulus package will be an instant cure well I dont know what to say at this point. I dont like when people start out with these kinds of statement that make it seem like people are not very bright. Geez give them the benefit of the doubt that they know things are not going to turn around instantly. Stop insulting people. They know this didnt happen over and night and they know it cant be fixed overnight. If your target audeince is women its even more insulting since if anyone is smart enough to know this is going to take time it will likely be women.

Carol

[Riani]

You might know better, harriscrl3, but Suze is quite right to point this out. Many people seem to think the worst is over, it's going to get better now. I think Suze is nicely trying to tell people that it's going to get worse, possibly a lot worse, before it gets better. And if everybody was as economically savvy as you seem to think they are, we would not have been in this mess right now. As for making it seem that people are not very bright, well, what can I say? An awful lot of people thought John McCain and Sarah Palin would be a good idea.

[RobHughey]

And I was hoping that 2009 would be the year I move on from being Young, Broke and Fabulous...

[Oldbuck]

I don't believe that anyone has said that the stimulus package was a cure all but that it would help to keep the recession from being longer than necessary. I would like to know what your stance was on the economy 8 months ago like most of the TV financial commentators you were probably saying that the economy was strong. You people are good at writting books after the fact.

[harriscrl3]

Exactly, who is saying that its going to be the cure all? I have not heard anyone say that yet. Its hard to read the complete thing when its based on a false premise.

Carol

[jinjinpinti]

Actually, Suze was predicting the mortgage crisis before you even knew any of this was coming.

[julianne]

An honor? You must be a true-believer, white, professional class American. For the past 20 years, every time a middle class job was lost that stock market went up. Have have you ever driven through almost any town in the United States and seen the corporate nowhereland; the redundant, generic, dead-souled, globalist, low wage hell hole that is the American economy? Have you ever gleened the literacy and poverty statisitics in the United States in comparision to the 1950's and 1960's? The American financial sector is not just a failure but a real traitor to the economic and physical health and survival of the American people.

[jabailo]

The best minds in finance have been unable to figure out where to put their money...now suddenly "Government" is going to come up with a solution? The odds don't favor it, and their blunders of reinvesting billions in decaying Wall Street institutions should be guidance enough.

If they're worried about jobs, make it simple...use the billions to extend unemployment insurance to a couple of years until the marketplace rights itself and figures out what businesses are needed in the 21st century.

[littlepeople]

......until the marketplace rights itself and figures out what businesses are needed in the 21st century? You've got to be kidding. They got us into this mess in the first place. They all deserve to be nationalized!

[JohnBisceglia]

Some folks have NO IDEA how all of this reads to those of us making less than $6,000-8,000 a year.
I'm a welfare recipient now due to INEQUALITY, so I will enjoy watching everyone cope with the Federal Govern-Bank that has sprawled out of control the past 20 years. It's YOUR government now.

[sammy cole]

JohnBisceglia, if it's YOUR Government now meaning NOT YOURS, then why are you accepting your welfare checks? It is OUR Government, including yours JohnBisceglia....it's bizzare that you think you will ENJOY watching everyone cope, while you're at the very least...receiving welfare. Many who are down and out at this time....do not qualify for welfare.

[kkayralene]

I will try to post this once more because I feel strongly about it. There was a documentary about predatory lending practices on Showtime that included a credit card company that charged unfair, ridiculous interest rates. I believe their name was NTSB, and the documentary stated that Suzi Orman was financially affiliated with this outfit. In Ms. Orman's case, I wish that she would explain this affiliation--on the documentary they showed two hard working young people, so stressed about maintaining their almighty FICO score, that they ultimately killed themselves. I'm glad Ms. Orman got to ring the bell on Wall Street, but I'd like to see more transparency about the go-go Bush go out and buy anything era, and her and NTSB's role in this.

[dragger201]

I just love when someone who is part of the problem give advice to those who have to live with the problem.

[LiberalBuzz]

Fascinating post,....um and could you give us an update on all of your advice in the last couple of years?

[Wilburrr]

...about paying off your credit cards?

[YeahDonkey]

This message and it's messenger was brought to you by the credit card industry of America, FICO FICO FICO right Suze?

[Unrepentantliberal]

I love your work Suzie. You preach financial sanity and reality to a country that likes to live in a fantasy world. I'm glad I'm from the Midwest and didn't get all caught up in the more, more, more, bigger, bigger, bigger hoopla. We were always people who saved and lived sensibly within our means.

Turns out, that was the right way to go.

[sammy cole]

As long as you weren't saving it in the stock market or via MADOFF.

[vooter]

LOL...no mention of gold or silver--these "experts" are hilarious....