Suze Orman's Recession Rescue Plan

If you are one of those who follow Oprah's daily TV show, you might have caught Oprah's favorite financial guru, Suze Orman expounding on her Five-Step Recession Rescue Plan. Her five-step plan is simple but requires a fair measure of discipline:

1. Learn to live on half what you're used to and save the other half.


2. Stash your cash, especially since credit card companies are becoming less generous.


3. Make the Federal Stimulus Package work for you.


4. Make your home affordable.


5. Look at what you have and not what you had.

In other words, Suze is saying the things I have practiced all my life: be frugal. Save. Plan for unforeseen circumstances, e.g., losing one's job or getting a pay cut.

Suze advocates a 8-month emergency fund. I am planning for 12 months. She says, "no credit card usage, everybody, Pay for things in cash." As I explained in an earlier blog, I use credit card to leverage a monthly interest float and get rewards points. But Suze has a point: if you aren't disciplined enough to budget with a credit card and keep track of your daily credit card expenses, you are better off using cold, hard cash.