Once you’ve built up that emergency fund, make sure you’re getting your other financial ducks in a row.
Ready to stop worrying about money?
What to Do if You’re Struggling, According to Suze Orman
When it comes to the state of our finances, the pandemic has not affected us all equally.
“Everybody should live absolutely below their means but within their needs,” Orman said. “They should not be spending what they can afford. They should be spending less than what they can afford to spend. You should be saving money and saving money, because the truth of the matter is you can never be too rich.”
Personal finance expert Suze Orman describes it as creating a situation of haves and have-nots. Some people have actually prospered over the past year with lowered spending and the bonus of stimulus money. Others are barely keeping their heads above water after becoming unemployed and depleting their savings.
Orman suggested taking advantage of federal student loan forbearance and just paying the minimum on other debt payments.
If you’re a homeowner with equity built up, consider taking out a home equity line of credit (or HELOC) — even if you don’t need to use it right away. Tapping money from a HELOC is better than taking money from a retirement account, Orman said.
“I do not want to see you take this money and pay down credit card debt with it,” she said. “I do not want to see you take this money and pay off something that you owe, whatever it might be.”
What to Do if You’re Thriving, According to Suze Orman
No matter if you’re struggling or have benefited financially during the pandemic, being conscious about how you spend your money is important. While we may be closer to the end of this pandemic than we were a year ago, there’s still a good deal of uncertainty on the horizon.
If the pandemic has put you in a situation where you’re struggling financially, Orman said your focus should be on holding tight to whatever money you can get. If you get stimulus money or unemployment checks, use that cash to meet your immediate needs and save any extra.
Besides having a steady job, Orman recommended having a 12-month emergency fund. Forget the common advice of having three to six months of expenses saved up. All that’s happened over the past year shows us we need to have a vast safety net.
Orman shared her thoughts on what both groups should do to ride out the pandemic during a virtual event hosted by Visionary Women on Feb. 3. Visionary Women is a Los Angeles-based women empowerment nonprofit. Get the Penny Hoarder Daily
You might have to seek out assistance to cover your basic needs but don’t let that bring you down.
“I don’t care if your FICO score goes down,” she said. “I care that you have the ability to feed yourself and your children.”
Suze Orman’s Pandemic Advice for Everyone
If for some reason, things go south and you end up needing to file for bankruptcy, the money in your 401(k) will be safe.
“It makes absolutely no sense to withdraw money from a 401(k),” Orman said. “Do you know that your retirement accounts are not affected in bankruptcy?”
Nicole Dow is a senior writer at The Penny Hoarder. <!–
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TV personality Suze Orman speaks at the Women’s Conference Tuesday, Oct. 26, 2010, in Long Beach, Calif. Matt Sayles/AP Photo