Recession Reality Check
In terms of investments, Suze says people close to retirement may need to reconsider. "Many people now have seen their 401(k) either cut in half [or] down 40 percent," Suze says. "[People] may have to work a lot longer than they planned, may not have enough money to generate income to send their kids to school."
Homeowners will also feel a burden, Suze says. As people lose their jobs, fewer homeowners can afford to pay their mortgages and property taxes. "The less amount of people that are paying property taxes, the less your state has to pay the firemen, the police department," Suze says. "The more your property taxes go up, the less you can afford your mortgage."
With all of these economic puzzle pieces in play, Suze says she wouldn't be surprised if we switched to a cash economy—which means buying only what you can afford now. "Banks aren't going to want to give you money where they're afraid that you might not pay them back," Suze says. "I personally think that's a great thing."
So what can you do to protect yourself? "People, stop living the financial lies that you have been living," Suze says. "If you don't have the money to pay for something, can you just not buy it? Can you wait? Can we start looking at keeping our cars for 10 years rather than getting a new one every three?"