Nov 6, 2023
The U.S. may have avoided catapulting into a deep recession — as many economic pundits prophesied would happen — but climbing costs have still left plenty of Americans plagued with debt.
And finance personality Suze Orman is raising the alarm. On a recent episode of Who’s Talking to Chris Wallace? on Max, hosted by the eponymous CNN anchor, Orman said the country is now living through a financial “pandemic.”
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Wallace mentions that credit card debt eclipsed the $1 trillion mark for the first time ever this year, household debt is at record highs and interest rates that folks pay on that debt are continuing to rise.
But if Americans are looking for someone to bail them out this time, Orman says they only have themselves to count on.
“The government's not going to save them. The economy's not going to save them. They're gonna have to be their own financial vaccine, so to speak,” she continues.
The author and podcast host believes that if you want to continue going out and having fun, or get yourself out of a paycheck-to-paycheck cycle, you’re going to have to save yourself.
Americans have spent away their pandemic savings
The money maven went on to explain that during the first couple years of the COVID-19 pandemic, Americans were hoarding away some major savings.
Stimulus checks were bringing extra income, student loan repayments were on pause and isolation measures ensured folks saved on their work commute and coffees and spent less on things like travel and dining out.
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But when these measures were lifted, many consumers made up for lost time by splurging on luxury items, concert tickets and travel. Their big cash cushion facilitated higher spending and helped the country sidestep a recession, while also pushing inflation only higher.
However, since then, 80% of Americans have run out of their extra savings — and now have less cash on hand than they did when the pandemic began.
“What if I were to tell you that 75% of the people in the U.S. don't have $400 to their name in case of an emergency,” Orman says. “On the whole, ordinary human beings in America today are living paycheck to paycheck, and they're not doing well at all, in my opinion.”
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You need to make your own “financial vaccine”
Orman fears that very soon, Americans will be unable to pay off their credit card balances and bankruptcies will go up — unless folks figure out how to get their finances under control soon.
Take a good look at your spending habits and consider keeping track of your monthly income and expenses with a spreadsheet or notebook. If you’re making a budget, it’s crucial that you stick to it.
Next, make a game plan to help you pay off your debts. Several experts recommend the avalanche method, in which you focus your efforts on the balance with the highest interest rate attached to it and work your way down your list. This way you’ll lose less money to interest over time.
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You could also consider consolidating your debts if you’re having trouble keeping track of all your credit cards and loans.
And make sure you have an emergency fund in place in case something goes wrong — say you lose your job or get hit with a big car repair bill. Orman recommends saving between $1,000 to $2,000 to get you started.
It might even be helpful to chat with a financial adviser, who can examine your finances and help you get on track with your savings goals.
More: Find the best high-yield savings account
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
