Podcast Episode - Protecting Your Money During The Pandemic

Emergency Fund, ETFs, Health, Mutual Funds, Saving Money

March 15, 2020

Listen to Podcast Episode:

In today’s podcast, Suze reviews why, with the Coronavirus affecting people’s jobs, it’s so important to make sure you save your money, especially if you may find yourself out of work.

Podcast Transcript:

Suze Orman here and you are listening to the Women and Money podcast on March 15, 2020, and what a week it was. Now, before I talked to all of you about the economy and the stock market and my thoughts about that, here's what I really want to say at this point in time. This is so much greater than the stock market, it's not even funny. And I know all of you are worried about the markets and they're going down and down, up a little then down and then up, and that's where all of you are focusing your attention right now. But I have to tell you, I don't think that's where you should be focusing your attention. I think there are a lot of other things going on right now, maybe for the first time in your life that we really need to address. First of all, this downward movement in the market was not caused by the economy. The economy, unemployment, and everything were really, really strong. What caused this to happen was a health scare, not a financial scare, and there is a very big difference between the two. And the reason that that's important for you to understand is that the true scare now that is being brought about because of health situations that are going on out there with the virus, we need to look at your own personal economy and how everything that's going on in the world right now is going to affect you. Because again, it's bigger than your 401ks, your stock portfolios going up and down. The main question is this. Are you prepared, financially speaking, with how you are going to pay your everyday bills? If you happen to be one of the many, many, many millions out there who may not be getting a paycheck, who may be out of work, who may not know where they're going to get their next dollar from and you haven't listened to me. You didn't create an eight-month emergency fund. You thought everything would always be OK and you're not prepared for this right now, and whether the markets go up or down, that's not your main concern right now. I'm getting emails for instance from my driver, now, obviously, you know, I go places and I have a driver and he writes to me. He says, Suze, please read this email that I've just gotten from my employer and tell me what I should do. And I read the email and it says, essentially this, we're so sorry, but because of the virus, we will not be having car service right now. Do not expect to work for two or three months. We do not have the money to pay you, therefore, if you decide to do something else, you should, and all of these things. And he says, how am I going to make it that long? What am I going to do? And I'm thinking to myself, well, I told you, I've told you forever, you need to put all the tip money I give you aside so that what? You can have money to pay your bills if you ever get sick and you can't drive. Now, what's happened is he's not sick, but the world is getting sick and he can't drive.So, what are you all going to do? And I understand very well that the President signed, you know, a National Emergency Bill. And now there will be $50 billion more available and that each state is signing the state of emergency and all of those things. But until all of that comes down to you, how are you going to do that? How are you going to be OK? So, you have to be proactive here. If you're in a situation where, really, you don't have the money to pay your mortgage, and I know that many mortgage companies now are going to work with you and do things like that, but I need you to be proactive. I need you to call your mortgage company and say, what can you do for me? Can you postpone my mortgage payment for two months, for three months, and not penalize me, not hurt my credit score? Can you call your landlord if you're renting if you don't have the money to pay it, can you just say, can you work with me here? I'm not going to have an income for the next month or two, or three, so I don't have the money to pay rent and I don't have the money, and I know you want me to pay your money cause maybe you need this money, but can we do a split here? Can we do something so that I can just stay here? Call your utility companies, your car payment companies, your credit card companies. You need to be proactive because all of them, most likely right now, are willing to work with you. And maybe they can't work with everybody, but maybe they'll work with the first ones that call. So again, you have to be seriously proactive. And when I sit here for all these years and I've said to you, you've got to create an eight-month emergency fund, and you write me back or you call me or whatever and you say to me, but Suze, I've worked so hard for my money. I work so hard, I need a little enjoyment, I don't want to put money away, it's OK, blah, blah, blah. Well, that's why when times like this happen you don't have to freak out. So, when things are good and everything's going up and unemployment is low and everything is how it should be, that is the exact time that you should be putting away as much money as possible and stop thinking about I want a pool, I want this, I want that. Well, how are you going to get it? Well, I have to finance it, I don't have the money. All those things, when you create new things in your life, they cost you more, it's not just that, as somebody wrote to me a little bit ago, you know, I want $60k. I'm going to take out a home equity line of credit of $60k so I can put in a pool. All right, but when you put in a pool, it's not just putting in a pool. It's the maintenance on the pool, it's when the pool heater breaks, it's when this happens, when all these things, everything like that increases your monthly expenses. And if you really don't have an eight-month emergency fund, if you really don't have money that you want in your life, if you're just starting over, then you've got to really make decisions. Are you and your financial security more important than these luxuries that you think you so deserve in your life, such as a new car every three years, such as, a bigger place to live? The goal of money and I'll say it until I'm absolutely blue in the face, is for you to be secure, not for you to buy all these things that cost you more money. So you have to be really careful here because again, as I started this podcast, this is not a financial crisis or didn't start that way. It was a health crisis that is going to turn into a financial crisis. Now, I don't know how long this is going to take to solve, and it scares me, I have to tell you the truth. And I've been through many, many, ups and downs and ups and downs in the market all the way, going back to 1980. And I've never felt this particular way because this thing is out of control at this moment in time. And it doesn't seem like anybody knows how to solve it. And if their solution is, the only way to solve it is to isolate everybody and to go into quarantine and to, you know, keep your social distance and not be able to go to work and do these things and work from home. Well, that's OK for many people, but a lot of you, in order to get a paycheck, you're a waitress, a waiter, you have to go to work. You have to get your tips, you have to be in the service industry. And if the restaurant closes down, what are you going to do? And like I said, the Uber drivers, and the taxi drivers, and my own driver, and everybody that's in the service industry, they've closed everything down. So you can't work from home when you are in the service industry, the hotels, the bellman, everything. And my heart is breaking over this for all of you because I know you haven't saved your tips. I know when people give you tips, you don't put it in the bank, you go out and you spend it. And now, we're going to be in a situation where even though I know we have been in record unemployment being really low, don't be surprised if you start seeing unemployment go up, and up, and up, and that really, the United States of America goes into recession if we already aren't in recession. Now, why should recession matter to you? It matters to you because when something recedes, when it pulls back, everybody stops spending money. Jobs don't come back. You know, what is so sad to me, when 2008 happened, so many people lost their jobs. In fact, my driver used to have a $200k a year job back in 2007, and now he's a driver and he's still a driver. And now we're having another recession, possibly, and now he can't even be a driver. So even though I know it feels like we recovered from the 2008 recession, although in my opinion, it was kind of like a depression. But, even though we recovered from it, so to speak, many of you never, ever have. So this is the time in our lives when we really need to help one another out. Because the other thing that I know is happening here is finally, finally, the government thinks this is real. Although I have to tell you, I don't even know what to say about it. How could we not have been prepared? We knew about this in December. How could we not have been prepared simply because it would make politics look bad, elections look bad? I don't know the reason, but you always hear me say people first, then money, then things. Maybe I need to say people first, then elections, then things. But this really now is at the point where here we are and we have this crisis. And if everything does start to recede, you know, I don't know how we come out of this very, very quickly. So again, a recession doesn't just hurt us for a little bit, it can hurt us for a long time. And it can just not only affect the stock market, but it can also affect your jobs, and it can affect real estate, and it can affect everything around us for a long period of time, whether that's two years, three years or whatever. Now, a lot of people are saying this is going to come and go very quickly, and I do hope they are correct. But you know what I always say to you, I always say to you, plan for the worst but hope for the best. Hope for the best and you've got to now dig deep. So we all need to help one another here in whatever way we can. So, if you're a landlord and your tenants are affected by this, can you just give them a break? If you're running a business and you've been making a lot of money, can you go into your pockets and help your employees out by continuing to pay them? Can we just do something to help one another? Because I don't know that really we can count on anybody other than ourselves. You know, I have a friend, Mary, who I was in college with. And Mary just wrote me and she's telling me, she's a nurse, and she's telling me how in the little complex that she's living in, she's creating this, like, triage unit to help all the older people there because they don't have anybody. So, if they get sick or whatever, she's going to try to get whatever medicine she can. And a group of other nurses right in that unit so that they can take care of everybody because she said to me, she knows that probably they're not going to be able to have room at the hospital to take care of all these people. So, we have to know how to take care of ourselves. I know I'm not sounding very optimistic, but I am being realistic and really, when you think about it, I've always been realistic with you. I've always been save this, don't spend that, buy your needs, forget your wants. I've been telling you that now for over 35 years because things happen. And I also have another saying that in life the easiest thing to do is to forget, and the hardest thing is to remember. And we tend to forget how hard it was in 2007 and 2008 and the beginning of 2009. We forget, we forget what happened with real estate. We forget the amount of money that could have been lost in the stock market if you sold out. And we forget how the stock market also came back. This entire week, almost every single show from NBC to MSNBC to CNN has been calling me saying, Suze, you have to come on air and you have to tell everybody what you think and what should we do and whatever. But I haven't wanted to because I needed time to really think about, how did I feel about the stock market? How did I feel about the things that I want you to do? And sometimes, you need perspective, and what is kind of funny is that the older I get, the more I've learned, you know what, Suze Orman, you don't have to do something about anything right away anymore.So, I watched the markets. I watched on Monday how the market went down 2014 points, and I was thinking to myself, oh, good, good, it went down. Now, if people just start to dollar cost average today in the market, if they happen to buy the index today, even if they happen to buy XLE, which I know the oil companies were totally obliterated, they were obliterated on Monday. But, I thought they were going to be obliterated on Monday. And I'm very aware that last Sunday I gave you some things that you possibly could do where it can start to dollar cost average every single month. And I said to you, teeny, teeny, little teeny amounts like $100, $200, not more than you know, a few hundred dollars, $500 at most. In fact, somebody wrote to me and said, we put $500 into the XLE and I wrote back and I was like, really? I told you teeny amounts of money and they said to me, well, I have $1 million, so $500 is teeny. I don't care if you have $10 million when I say teeny, I really mean teeny at this point in time. And, you know, a lot of you bought in and you told me that, OK, they were at 33, Suze, I bought it at 33, I felt so good about it. I bought at 35, I'm right there, Suze. And everybody was feeling so good about it because they thought that it was going to be at the bottom, and then Tuesday comes and now the market is up 1167 points and people are feeling all right, not so bad, maybe good. Then Wednesday we're down 1464 points, Thursday we're down 2352 points. Now XLE, and again, XLE is an oil ETF. And the reason that oil is down as far as it is, is because Saudi Arabia and Russia are fighting with each other over it, and they want sanctions lifted. They want what? It's a whole story, but eventually, it has to end. And I don't know if this is a correct call, if it's a good call, a bad call, could be the worst call I've ever made in my life, I will tell you that right now. But, I have learned that sometimes when everybody is saying don't do it, don't do it, don't do it, that is the time to do it. So here we are then, and now, it's down at like 29. And now those of you who bought at 35 or whatever are writing me and going, oh my God, Suze, it's down. I go, I know, I know, I told you it will probably go down and you want things to go down when you dollar cost average in. That's what you want to see happen, but that's not how your mind works. And then, Friday comes and here we are up 1985 points and now XLE, was it about 32? So, now you don't feel so bad. If you are looking at the ups and downs of the stock market every single day and what your stocks are doing every single day, you really are looking at this the wrong way. Like the other day when everything was happening, I went fishing because there's nothing I can do about it and watching it isn't going to help me decide how I really think, it will just make me panic more like it probably has made all of you. And you're looking at the stock market again on what's going on versus looking at what's happening in your own ups and downs of your own personal financial life. But let's go back to the stock market for a second here. What I want to say about the ups and downs of this market is that right now we're at about 23,185 on the Dow, and is it possible that it could recover? Sure. Is it probable that it will go down even more? Oh, you betcha it is. It could easily go another 5000 points down, it could easily go to 17,000 and there's no way for us to know, will it go up? And will it go down? Because at this point in time, everything is still based on politics and what's happening with the virus. What made the market go up on Friday was finally, President Trump declared a national emergency, which should have been done a month ago. What made it go down on Thursday and Wednesday is that nobody had faith that the government was doing anything that made sense. When he was talking about a payroll tax, are you kidding me, eliminating it? If you don't get a paycheck, you don't pay payroll tax, so it doesn't help anybody. So finally, they're doing a few things that will help us. And I know I'm rambling all over the place, but you can follow me, you're used to it. So number one, you have to be prepared personally to be OK financially speaking. Number two, you should expect these markets to go up and down. And in my opinion, depending on what happens with the health crisis, it will probably go down even further. You should also expect that once it hits a bottom, and I do not know when that is, it will return. The biggest mistake that everybody made in 2008 was they got out of the market and they never got back in. And then they lost 14% on average a year until right now. We have officially, just so, you know, ended that bull market run, we are now in a bear market, so things have changed. But you have to know that everything eventually, within a year, two, three, could even be sometime this year, who knows, will turn around. In re-capping, most of the people who sold out of this stock market, they sold out of not financial or economic reasons, they sold because they couldn't take the pain anymore of watching the markets go down. So this wasn't a decline because we're in a bad economy, although we may very well enter a bad economy here soon. It was a decline because people were afraid and fear caused them to act. They didn't want to feel pain anymore and now they're all feeling so good and so wise. The same way that they felt so wise in 2008 when the markets went down and then they didn't feel so wise over the next 10 years because they never got back in. So, if you know that you are invested in good quality stocks, if you are diversified and have at least 30 individual stocks, OK. If you don't own at least 30 individual stocks, 25 minimum, then you should be in exchange-traded funds that diversify your money for you. There are great dividend ETFs right now that are paying you very conservatively, like 2%, 2.5% that also will give you growth on your money when the markets come back. You might want to check out the Standard and Poor's 500 Aristocrats, symbol NOBL. There are so many, if you do invest in good quality stocks, dividend-paying stocks, and you know how to do that, then there are so many out there that are paying 4.5%, 5% right now because they've been crushed for no reason. Just because the market has gone down, they went down, they shouldn't have gone down, everything's good with them. But now, because nobody's working, their earnings will go down, but they're paying you 4.5%, 5% and they're out there and they're companies that raise their dividends every single year for like 25 years. You need to maybe work with somebody or figure out how you find them. So, it doesn't hurt you to look at things like that. And I'm looking at this coming Thursday's podcast questions and a lot of your saying, Suze, how do I know about which dividend-paying stocks? How do I know if it's a good dividend-paying stock? You have many questions that I'm looking at here, and I'll answer them on Thursday for you. So, you might want to tune into this coming Thursday's podcast, which would be March 19 I believe, and we'll see where we can go from there. But I'm asking you at this point now to stay calm if you have really at least 10 years or longer until you need this money. If you stay in, continue to dollar cost average, stay diversified, find good quality dividend-paying stocks and your main priority is to stay healthy. Wash your hands, you know, keep social distance from everybody, and just make sure because money isn't going to do you any good if you get sick, so you really have to put yourself first. And in that regard, I just want to say two things. Obviously, I've been talking about my book, The Ultimate Retirement Guide for 50+: Winning Strategies to Make Your Money Last a Lifetime. Again, it will be on the New York Times bestseller list, that's two weeks in a row. I'm happy about that but I'm happier that many of you that are in retirement are reviewing this book when you go to Amazon, and they're off the charts reviews. And you're telling me now, I don't have to wonder if this book is working for you, you're telling me that it is. So, here's what I want to say to you and I've never ever done this before, is that obviously, if you go to Amazon, it's like I think, $16 a book right now and you pay for shipping or whatever else if you're not a Prime member. But, I've talked to my publisher, and I've said to them that I want people to be able to get this book for the cheapest possible price. Is it possible that they can get it for $10? This is a hardback, New York Times bestseller that has just come out, so this is unheard of, everybody. Can you let them have it for $10 including shipping? And the publisher said, sure, Suze, but if they buy it directly from us, it's not going to count towards the New York Times bestseller list and you're not going to get credit and commission and all this other stuff. And I go, I don't care, I want them to have this book in their hands. So, if you go to www.SuzeOrman.com/WomenAndMoney, if you do that, you can order the book for $10. You can order as many as you want for $10 and they will ship it to you for free. Now that is a deal, I have to tell you. But I'm doing that simply because for those of you that are 50 and over, you now really need a strategy and this book will absolutely help you do that. I also want to say, on March 28 and March 29 I will be on HSN. On March 28 it will be at 6 p.m. and 11 p.m. East Coast time, adjust that because it's live for wherever you are. As well as March 29 at 3 p.m. East Coast time, again, adjust that because it's live. And if you have questions and you just want to talk to me, you don't have to buy anything, you just want to talk to me or whatever, call into HSN and let's see if I can answer your questions. I also will be offering on HSN, obviously, the book, the audio of the book, the online version of the book, eight CDs and where you can stream them. Also, there are videos of Eight Mistakes You Can't Afford to Make as well as the Must Have documents that all of you have been writing in to me that you want to purchase, and all of that will be $72. You know that usually the Must Have documents are $69 alone. So, it's really, I'm trying to bring things to you at a price that I hope you can afford, but that really will help you in every possible aspect of your life.All right, I know I went longer than normal, but this isn't normal times. So, I'm asking all of you to stay strong and to stay safe and healthy. Remember, the goal of money is for you to be secure. Don't panic. Don't do something out of fear and just know in time, everything really will be more than OK. But, you have to take action to protect yourself more than anything else. In providing answers neither Suze Orman Media nor Suze Orman is acting as a Certified Financial Planner, advisor, a Certified Financial Analyst, an economist, CPA, accountant, or lawyer. Neither Suze Orman Media nor Suze Orman makes any recommendations as to any specific securities or investments. All content is for informational and general purposes only and does not constitute financial, accounting or legal advice. You should consult your own tax, legal and financial advisors regarding your particular situation. Neither Suze Orman Media nor Suze Orman accepts any responsibility for any loss, which may arise from accessing or reliance on the information in this podcast and to the fullest extent permitted by law, we exclude all liability for loss or damages, direct or indirect, arising from use of the information. To find the right Credit Union for you, visit https://www.mycreditunion.gov/. Interested in Suze's Must Have Documents? Go to https://shop.suzeorman.com/checkout/cart/index/.

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