Money expert Suze Orman says we should blame the banks for this financial meltdown. "I refuse to believe that it started with [regular people]," she says. "It was the banks and their greed and their deceit of them wanting to make money and giving loans to people when they should have said, 'I'm so sorry,' like they did years ago. … But instead they said, 'Here you go, little one, take a mortgage.'"
To survive this financial crisis, Suze says we need to stay calm—do not panic by withdrawing your life savings or selling your 401(k) plan. "Don't make mistakes, people," she says. "Just stay calm and understand, as Ali said, 'We're going to get through this.' But only if you make the right decisions for you. You cannot control what others are doing out there, but you most certainly can control your own actions."
To take action, Suze says there are five things you should do right now to make sure you are protected. First, make sure your savings are safe—and that doesn't mean under your mattress. She says to keep your money in banks, money market accounts and money market deposit accounts that are FDIC insured.
Even if your bank goes under, Suze says your money is safe if it is in an FDIC-insured bank. "It will take you two days and you'll have your money back," she says. To find out if your bank or account is FDIC insured, go to MyFDICInsurance.gov.
If your money is in a credit union, Suze says to make sure it is NCUA insured. "They happen to insure 98 percent of all the credit unions out there," she says. If your credit union falls in the two percent that is not NCUA insured, Suze recommends moving your money to a credit union that is.
Government-backed treasury bills, bonds or notes and treasury money market accounts are also safe options. "They are safe as safe can be," Suze says.
The second thing Suze recommends is the same advice she has been giving for years—pay down your credit card debt. "It is possible and probable that many of the credit card companies out there are going to be shrinking, shrinking, shrinking your credit limits, and that hurts your credit score—so please start paying down your credit cards."
Along with paying down your debt, Suze stresses the importance of paying your bills on time. "If you are late on a credit card payment, that hurts your credit score," she says. "If it hurts your credit score, which is known as your FICO score, everybody who [you have] credit with will know it. Your interest rates will go up, and they will most certainly slam you right out of your credit."
Suze's third step is to get health and term life insurance. If you already have health insurance—great! But Suze says to make sure you don't cancel your policy to save a few bucks. "Do you understand that the number one reason for bankruptcy in the United States today is bankruptcy over medical bills? Don't ruin your life forever because you think you can go without health insurance," she says.
For your life insurance policy, Suze says term life insurance—which is good for a specific period of time—is the way to go. "You are to stay away from whole life, universal and variable life insurance, do you hear me?" she says.
Suze says her last point is probably the most important on her list—stop spending more than you can afford. "The goal here is very simple. Wouldn't you rather live a life where you feel free, easy, you don't have to worry? Where you value who you are more than what you have? Where you value the quality of your life?" she says.
"If you can just now only spend money on things that are necessities rather than things that are desires or things that are wants, all of us, we have a lot of time in our lives to do that again—now is not the time. Now, I'm asking you to value who you are. To define who you are by just your personality, by your actions—more than what you have."