Suze Orman: Money Class. Create A New American Dream

Suze OrmanSep 20, 2011 – In this PBS Special, Suze Orman, best selling author and financial expert, says just a few years ago the economy was doing great, the stock market was skyrocketing, real estate was off the charts.  Now, a few years later  unemployment is sky high and property values have plummeted.  She says everything she thought was good financial advice then, no longer holds true today. We all have to go back to class, The Money Class, to learn what we need to do today to create what she is calling the New American Dream.

The Old American Dream is dead!  Suze says 15 Million people are out of work.  Millions and millions of us who purchased a home, didn’t do anything wrong. We put our 20% down, we had the money to be able to afford the mortgage, we should have purchased a home.  But now that home if we purchased it for maybe $200,000, if we’re lucky, is only worth maybe $100,000.  Our salaries are not increasing. In some cases they may actually be decreasing or maybe we haven’t gotten a pay raise and for how long?  But our expenses are going down. The price of gas and everything around us is going up. Suze explained that the concept of New American Dream came to her when a group of people all agreed that they could not wait to get rid of their homes and become renters! Since when is the American Dream to rent rather than own your own home!

Suze says it’s a very sad realization but the Old American Dream, is where you work, and no matter what, the dream is to get a bigger house, bigger car, better school, more jewelry, more electronics, more toys, more this, more that. It’s Dead! It Gone! It’s gone for all of us and she hopes it never comes back!

Suze says it was not a realistic dream because it was not based on true values and true integrity. We are not more because we have a big house, expensive car and wear fancy clothes. But America said more, more, more and we bought into it.

The New American Dream, is a dream hope.  One where we have more piece of mind, more faith in ourselves. Bringing back more time into the family, bringing back values into the family and valuing what we have versus what everybody else thinks we should have.

Suze says the way we start is to “Stand in the Truth”.  Our truth is what is real for us at this moment in time.  If we have credit card debt and somebody says to us “that’s go out and eat” or “let’s go on vacation”, and we say “okay” knowing that we are going to put it on our credit card and when the bill comes in, all we are going to do is pay the minimum due on that bill. We are not standing in the truth.  We have to stand in the truth of what is true right here, right now, at the time when you are about to make a decision to do something.  Six months, 10 months from now, we want to be able to say “I’m glad I did that” not “I wish I hadn’t”.

Suze says for the New American Dream we have got to want to take control of our finances. No more letting our spouse take care of it. We need to make a vow to our partner such as “from this day forward I will spend an hour with you every day doing our finances!”

Live below your means but within your needs!
That is what Suze says we need to do to save for The New American Dream.

If we can afford a 2000 square foot home, buy the 1500 square foot home. If our car is 5 years old but running great but we want a brand new car, don’t buy it! Keep what you have. Suze says if we continuously spend within our means, we will spend all the money that we have.  But if we continuously live below our means but within our needs our lives will turn around. We will find the money for our 8 months emergency fund. We will find the money for the 20% down payment on a home. We will find the money to pay off our credit card debt.

How The New American Dream effects our kids. Suze Orman says children are growing up today when it is going to be harder for them to go to college and harder for them to get jobs. It will be harder for them to do just about everything because the debt that the United States has incurred is not just falling on us but falling on the future of our children. So we have got to build them to be strong so that they can handle anything that comes their way. By us constantly saying to them Yes, Yes, Yes when we should be saying No only weakens them in their fabric, in their character, in their integrity and their ability to rise to the occasion no matter what happens.

So the Money Class says Allowances are Out! Teach our children that they are not entitled to money. Money is to be earned!  Give the kids what Suze calls Work Pay! They don’t work, They don’t get paid!

Suze suggests this strategy:

Because we gave birth to them,  kids are entitled to love, food, shelter and clothing. But since kids live in the house and are part of the family they give back by doing the little chores around the house that we want them to do. Maybe they need to make their beds, and pick up their toys, etc.

If they want money, there are extra chores that we assign to them. Put up a chart of chores. Let’s say, if they do these chores they get $3. Then there are chores worth $4, and maybe some worth $5 and so on.

The only way they can get money is to do these chores but they cannot skip to the $5 chores because that is not the way it works in real life, in the work force, of which they will one day be a member. They should learn that they have to start from the bottom and work their way up. They have to learn how to become efficient and what it takes to get a pay raise. You don’t just start at the top.  What we are teaching our kids is if they work better and work more they will make more money. It is essential that we as parents give them that understanding.

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