As soon as the announcement was made, of course, political pundits on both sides of the aisle were abuzz, as were journalists and money mavens. While many publicly hold that Bush's quick-fix tactic will truly be a shot in the arm for our sick economy, a few more level-headed folks are being bold enough to warn us to take a deep breath and be prudent with our newly gotten gains.
Suze Orman, one of ProsperNOW's greatest idols, is one such courageous and candid soul. On Thursday night [Jan. 24], the financial expert, New York Times best-selling author ["Women & Money: Owning the Power to Control Your Destiny"], speaker, Emmy award-winning TV show host [CNBC's "The Suze Orman Show"] and popular PBS fundraising partner [see PBS-produced "Women & Money" DVD] appeared via satellite on CNN's "Larry King Live." Right off the bat, King asked Orman, point-blank, "All right, $300 going out, if they [Congress and the Bush-led White House] approve this, to everybody. What do you make of that?"
"Well, here is what I really hope," Orman began. "Regardless of what they settle on, I hope when all of you -- when all of you get that check, I hope that you take that check and you save it. I hope you don't do what they're hoping you're going to do, which is go out and spend money on things that you don't even need. I hope that you really look at this as a gift they're giving to you, but that you keep it in case something goes wrong -- in case you can't make a car payment, in case you can't make a mortgage payment.
"Can you just all hold onto this money or pay off debt with it? But don't go out and spend it. That's what I hope they don't do. Of course, everybody else is hoping they do."
King followed up. "Why do they want you to spend it?" he asked.
"Because they are hoping that if they give you this money, you're going to go out and spend it," Orman replied. "If you go out and spend it, you will stimulate the economy. If you stimulate the economy by giving all the retailers and restaurants and all these people your money, that will help save the economy.
"As I've always said on your show, Larry, I don't really care about what's happening out there. I care about what's happening with your life. And the truth of the matter is, we don't need any more stuff. We don't need any more junk. What you do need is money in the bank account. You need to get out of credit-card debt.
"So I am hoping and I'm wishing and praying that when you get these rebate checks, everybody, that you really do what you should do with it -- and that's save it or pay off your debt. Anything else you shouldn't be doing."
Later during the show, when Larry opened up the phone lines, an unidentified woman from Indianapolis posed a question for Orman. "Hi, Suze, said the caller. "I am a 42-year-old woman and I'm already in serious debt. I don't have credit-card debt, but I have a lot of medical debt. I have a very low FICO score. I have a car loan with a 21 percent interest rate, and I'm scared to death. I don't know what to do, and I'm worried about the recession. I don't know how to get out of the hole I'm already in, let alone how to survive the recession."
'Yes," Orman empathized. "And are you in a situation where, in essence, you are making, you know, you owe more than what you're making?"
"Absolutely," said the caller. "Yes, absolutely."
"Listen, there comes a time where all of us have to look at our situations, and you have choices here," said Orman. "You either have to go out and get one, two, three more jobs than what you have, so that you can make these payments, because if you have a low FICO score -- which I'm so sorry to say you already said that you do have -- then creditors, especially in this credit environment, they are not going to lend to you at good interest rates.
"They're going to lend to you at 21, 25, 30 percent interest. So the only way to do this is to get your FICO score up there, so you can get lower interest rates. And the only way to do that is to pay down your debt. The only way to pay down your debt is to make more money.
"So you have -- it's just something you're going to have to do -- or, I'm sorry to say, you put yourself in the situation, if you qualify for it and you claim either Chapter 7 or Chapter 13 bankruptcy. That's reality today, and you might have to look at that."
How's that for a real shot in the arm? No sugar-coating here, folks. Just pure, common-sense financial advice from someone who actually knows what it's like to be broke, and to build a successful enterprise from the bottom up. BTW: Did you know that, many years ago, Orman actually waitressed and slept in her car before exercising the initiative to learn the financial ropes, become a successful advisor, and eventually become a financial guru/celebrity?
In case you missed King's interview with Orman, you have the chance to watch it tonight. The encore broadcast will air at 9 p.m. EST, and then again at 12 a.m. EST.
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