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The recent billion-dollar bankruptcies are going to make things more difficult for the average person, Suze says. For example, Suze says securing credit may be nearly impossible. "The chances of you being able to really get a mortgage, a car loan, even student loans for your children, may be far more difficult than you have any idea," she says. "If you currently have credit cards that you're not using that have open lines of credit on it, probably you will see them close down."

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?"
FROM: Recession-Proof Your Family with Suze Orman
Published on September 25, 2008
Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.


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