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CNN Live Saturday

Interview With Suze Orman

Aired March 08, 2003 - 14:18   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


FREDRICKA WHITFIELD, CNN ANCHOR: In war time or peace time, keeping up with one's personal economic well-being is always a challenge. It's made more difficult because of the current economic uncertainty. How can you move forward with confidence? Let's turn to personal finance guru Suze Orman. She has written a new book, "The Laws of Money: The Lessons of Life," and she joins us from Westchester, Pennsylvania. Good to see you, Suze.
SUZE ORMAN, AUTHOR: Thanks for having me, Fredricka.

WHITFIELD: All right, well, this certainly is a time when so many people are nervous about what do with their money. Do they hold on to it? Do they put it in the bank? Do they take the old-fashioned route, the depression era route, and stash some cash in their home, under their mattress? What's the right thing to do?

ORMAN: I have to tell you, and this may surprise you, you should absolutely be doing that. There is far more risk in this stock market than there is, in my opinion, a potential gain. So cash is king. When you don't know what to do, it is far better to do nothing than to do something you do not understand.

And who understands what's going on today with the economy? Who understands what's going on with the war? I have to tell you, absolutely nobody knows for sure what the outcome is going to be. Is this a long war, a short war? Are we even going to war? So therefore, until that is all determined and we see the effects it has on our own personal economy, there is nothing wrong with staying safe and sound for now.

WHITFIELD: So, Suze, how do you gauge how much money, how much cash do you need to have on hand?

ORMAN: You need at least -- did you see the job reports yesterday? Three hundred and eight thousand. And did you also see that it is now taking at least six months or longer to get a job once you lose yours? Therefore, I have been recommending for a long time now and will continue to do so, you need at least eight, eight months of an emergency fund that's in a money market fund, savings account to make sure you are safe and sound.

Now, you're going to say, I don't have any money. How do I do that? Get credit cards that have no credit balance on it, that you really -- they're just free and clear so if something happens you can charge and take a cash advance if you need to get by. WHITFIELD: All right. That emergency money, something to cover your mortgage, your rent, your car payment, et cetera. Let's talk about some of these five laws now in your new book. And this will perhaps help us try to figure out how do you have that eight months emergency cash. Truth creates money, lies destroy it. What do you mean?

ORMAN: Well, you know, we really need to understand, if you look at Enron, WorldCom, how a pile of lies, even though there was initial wealth there, brought down those corporations and everybody with it. We have to look at the truth of what's going on right now in our own personal financial lives. Do we spend more than we have? Are we buying homes that are larger than we should and could, even though we can afford it? Are we still doing that? Do we have credit card debt? Are we paying for new cars even though we don't need them? What is going on in your own personal economy that happens to be true? The truth for most people is, we have so much debt today, we don't know what to do about it.

WHITFIELD: You've got to be honest with yourself. Think not what you had, but what you have.

ORMAN: This one actually is the most important of all the laws. The reason why we are down 20, 30, 40, 50 percent and more in our retirement accounts isn't because we were victims of the stock market. The stock market went down, and we didn't know what to do about it. Nobody held us hostage and said, we had to keep on to those stocks that we have.

The reason we did is we kept looking at what we had, not at what we have. We keep judging the mutual funds and the stocks that we have in our portfolios by the fact that we paid $50 for it, it's now only worth $10. And we want to hold on to it and wait until it comes back to 50. I'm here to tell you, isn't going to happen. Look at what you have, make a decision. Would you buy what you have today? If you had that money in cash, would you buy that mutual fund, stock, real estate, whatever it is? If the answer to that is no, sell what you have. If the answer to that is yes, keep it.

WHITFIELD: And Suze, we're running out of time, so I'm going to consolidate the last three. Do what's right for you before you do what's right for the money. Invest in the known, not the unknown. And always remember, money has no power of its own, meaning it's up to you.

ORMAN: Yes, please just remember, money can't do anything without you. You are powerful. Remember, secure what you know you need. You need money to pay your mortgage, your car payment, your rent, all of that. And always do what's right for you before your money. Without you, money would not exist.

WHITFIELD: All right, Suze Orman, the book is "The Laws of Money: The Lessons of Life," thanks very much. Good to see you.

ORMAN: Anytime.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com






Aired March 8, 2003 - 14:18   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: In war time or peace time, keeping up with one's personal economic well-being is always a challenge. It's made more difficult because of the current economic uncertainty. How can you move forward with confidence? Let's turn to personal finance guru Suze Orman. She has written a new book, "The Laws of Money: The Lessons of Life," and she joins us from Westchester, Pennsylvania. Good to see you, Suze.
SUZE ORMAN, AUTHOR: Thanks for having me, Fredricka.

WHITFIELD: All right, well, this certainly is a time when so many people are nervous about what do with their money. Do they hold on to it? Do they put it in the bank? Do they take the old-fashioned route, the depression era route, and stash some cash in their home, under their mattress? What's the right thing to do?

ORMAN: I have to tell you, and this may surprise you, you should absolutely be doing that. There is far more risk in this stock market than there is, in my opinion, a potential gain. So cash is king. When you don't know what to do, it is far better to do nothing than to do something you do not understand.

And who understands what's going on today with the economy? Who understands what's going on with the war? I have to tell you, absolutely nobody knows for sure what the outcome is going to be. Is this a long war, a short war? Are we even going to war? So therefore, until that is all determined and we see the effects it has on our own personal economy, there is nothing wrong with staying safe and sound for now.

WHITFIELD: So, Suze, how do you gauge how much money, how much cash do you need to have on hand?

ORMAN: You need at least -- did you see the job reports yesterday? Three hundred and eight thousand. And did you also see that it is now taking at least six months or longer to get a job once you lose yours? Therefore, I have been recommending for a long time now and will continue to do so, you need at least eight, eight months of an emergency fund that's in a money market fund, savings account to make sure you are safe and sound.

Now, you're going to say, I don't have any money. How do I do that? Get credit cards that have no credit balance on it, that you really -- they're just free and clear so if something happens you can charge and take a cash advance if you need to get by. WHITFIELD: All right. That emergency money, something to cover your mortgage, your rent, your car payment, et cetera. Let's talk about some of these five laws now in your new book. And this will perhaps help us try to figure out how do you have that eight months emergency cash. Truth creates money, lies destroy it. What do you mean?

ORMAN: Well, you know, we really need to understand, if you look at Enron, WorldCom, how a pile of lies, even though there was initial wealth there, brought down those corporations and everybody with it. We have to look at the truth of what's going on right now in our own personal financial lives. Do we spend more than we have? Are we buying homes that are larger than we should and could, even though we can afford it? Are we still doing that? Do we have credit card debt? Are we paying for new cars even though we don't need them? What is going on in your own personal economy that happens to be true? The truth for most people is, we have so much debt today, we don't know what to do about it.

WHITFIELD: You've got to be honest with yourself. Think not what you had, but what you have.

ORMAN: This one actually is the most important of all the laws. The reason why we are down 20, 30, 40, 50 percent and more in our retirement accounts isn't because we were victims of the stock market. The stock market went down, and we didn't know what to do about it. Nobody held us hostage and said, we had to keep on to those stocks that we have.

The reason we did is we kept looking at what we had, not at what we have. We keep judging the mutual funds and the stocks that we have in our portfolios by the fact that we paid $50 for it, it's now only worth $10. And we want to hold on to it and wait until it comes back to 50. I'm here to tell you, isn't going to happen. Look at what you have, make a decision. Would you buy what you have today? If you had that money in cash, would you buy that mutual fund, stock, real estate, whatever it is? If the answer to that is no, sell what you have. If the answer to that is yes, keep it.

WHITFIELD: And Suze, we're running out of time, so I'm going to consolidate the last three. Do what's right for you before you do what's right for the money. Invest in the known, not the unknown. And always remember, money has no power of its own, meaning it's up to you.

ORMAN: Yes, please just remember, money can't do anything without you. You are powerful. Remember, secure what you know you need. You need money to pay your mortgage, your car payment, your rent, all of that. And always do what's right for you before your money. Without you, money would not exist.

WHITFIELD: All right, Suze Orman, the book is "The Laws of Money: The Lessons of Life," thanks very much. Good to see you.

ORMAN: Anytime.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com