The Money Class: How to Stand in Your Truth and Create the Future You Deserve

289 Pages·2012·1.45 MB·English

by  Suze Orman

“A one-woman financial-advice powerhouse …
At heart, Orman is a personal-finance cheerleader who motivates people to take
control of their money life. She’s playing a vital role in the financial education of
many people.”
—USA Today
“Suze Orman can’t let a stranger walk by … without asking, ‘Do you have credit
card debt?’ She needs to know so she can help. So she can change a life. And not
later or a little bit. But now, profoundly.… Her optimism comes from a belief
that all of us have the power within us to improve how we save and spend our
money and thus the power to forge lives that are better, fuller and richer in every
way.”
—Time, “The 2009 Time 100”
“She possesses an encyclopedic command of financial planning.”
—Money
“Ms. Orman is a success because she knows how to reach many people, and
shows some sympathetic understanding of their concrete problems.”
—The Wall Street Journal
“There’s an enormous number of Americans who don’t know anybody earning
more than $250,000 a year; Suze Orman can speak to these Americans—and
especially the women among them—like no one else in or out of government.
When she does so, she gives good advice. That advice might not always be
followed to the letter, but thanks to Orman, there are now millions of Americans
who have a very good idea what they should be doing, financially.”
—Portfolio.com
“Orman can be a fierce critic with exacting standards. But what clearly animates
her is creating new possibilities in the lives of her viewers. Orman’s emotion and
energy peak when she’s knee-deep in the challenge of helping people get out of
their own way.… Orman doesn’t trade empathy for expectations, or expectations
for empathy. She reveals both in almost every interaction she has with her
audience.”
—Harvard Business Review
ALSO BY SUZE ORMAN
You’ve Earned It, Don’t Lose It
The 9 Steps to Financial Freedom
Suze Orman’s Financial Guidebook
The Courage to Be Rich
The Road to Wealth
The Laws of Money, the Lessons of Life
The Money Book for the Young, Fabulous & Broke
Women & Money
Suze Orman’s Action Plan

This book is designed to provide accurate and authoritative information about personal finances. Neither the
author nor the publisher is engaged in rendering legal, accounting, or other professional services, by
publishing this book. If any such assistance is required, the services of a qualified financial professional
should be sought. The author and publisher will not be responsible for any liability, loss, or risk incurred as
a result of the use and application of any of the information contained in this book.
While the author has made every effort to provide accurate telephone numbers and Internet addresses at the
time of publication, neither the publisher nor the author assumes any responsibility for errors or for changes
that occur after publication.
A Certified Financial Planner® is a federally registered mark owned by the Certified Financial Planner
Board of Standards, Inc.
2012 Spiegel & Grau Trade Paperback Edition
Copyright © 2011 by Suze Orman, a Trustee of the Suze Orman Revocable Trust Introduction copyright ©
2012 by Suze Orman, a Trustee of the Suze Orman Revocable Trust
All rights reserved.
Published in the United States by Spiegel & Grau, an imprint of The Random House Publishing Group, a
division of Random House, Inc., New York.
S & G and Design is a registered trademark of Random House, Inc.
PIEGEL RAU
Originally published in hardcover in the United States by Spiegel & Grau, an imprint of The Random
House Publishing Group, a division of Random House, Inc., in 2011.
Library of Congress Cataloging-in-Publication Data
Orman, Suze.
The money class: how to stand in your truth and create the future you deserve / Suze Orman.
p. cm.
eISBN: 978-0-679-60470-9
1. Finance, Personal—United States. 2. Wealth—United States. I. Title.
HG179.O75764 2011
332.024’01—dc22 2011001394
www.spiegelandgrau.com
v3.1_r2
To all the great teachers who’ve taught me everything I know
CONTENTS
Cover
Other Books by This Author
Title Page
Copyright
Dedication
How to Enter The Classroom
Introduction
CLASS 1: THE NEW AMERICAN DREAM
Making Change • The Dreams of Tomorrow Reside in Today’s Choices •
The Money Class Curriculum
CLASS 2: STAND IN YOUR TRUTH
LESSON 1. FINDING YOUR TRUTH: A PERSONAL FINANCIAL
ACCOUNTING
LESSON 2. LIVING TRUTHFULLY: HOW TO STAND TALL IN
YOUR REALITY
Focus on What Is Real Today • …and What You Will Need Tomorrow •
Live Below Your Means but Within Your Needs • The Pleasure of Saving Is
Equal to the Pleasure of Spending • Define Yourself by Who You Are, Not
What You Have
LESSON 3. THE FOUNDATION OF ALL TRUTHFUL LIVING:
THE POWER OF CASH
Debit Card Rules • The “Life Happens” Fund • Credit Unions: A Great
Place to Save • Safety First with Your Savings • Saving for Big-Ticket
Items • The Truth Will Indeed Set You Free
CLASS 3: FAMILY
LESSON 1. HOW TO BUILD HONEST FAMILY RELATIONS
Opening the Lines of Communication
LESSON 2. HOW TO RAISE YOUNG CHILDREN TO STAND IN
THE TRUTH
Your Priceless Legacy • Set the Right Tone • Imparting Good Values When
It Comes to Money • Money Lessons for Children • Money Lessons for
Tweens and Teens • Money Lessons for Teenagers Heading to College •
How to Handle Money Gifts and Savings • The Three-Option Approach
LESSON 3. HOW TO CREATE A FINANCIALLY HONEST
COLLEGE STRATEGY
Who Should Save for College • The Best Way to Save for College: 529
Plans • UGMA/UTMA • Coverdell Accounts • How to Invest Your 529
Plan • The College Talk Every Parent Must Have with a High School
Freshman • Borrowing Rules for College Loans • The Risks of Private
Loans for College • Stafford Loans • PLUS Loans • How to Choose the
Right School
LESSON 4. HOW TO HELP ADULT CHILDREN FACING
FINANCIAL CHALLENGES
How to Handle Student Loans That Are in Default • How and When to
Help Independent Children Who Are in Financial Trouble
LESSON 5. THE CONVERSATION EVERY ADULT CHILD
SHOULD HAVE WITH HIS OR HER PARENTS
Building Family Financial Security Under One Roof • Updating Legal
Documents • When a Parent Remarries
LESSON 6. ADVICE FOR GRANDPARENTS: HOW TO BUILD A
LASTING LEGACY
Follow the Parents’ Lead • Pay It Forward • Give Experiences, Not Things
CLASS 4: HOME
LESSON I. THE TRUTH ABOUT HOME VALUES
A Decade of Extremes • A Home Is a Savings Account, Not a Hot Stock •
Financing Is Cheap, but Not Easy
LESSON 2. WHEN IT MAKES SENSE TO RENT
The Math of Rent vs. Buy • Advice for Owners Who Now Want to Rent
LESSON 3. THE NEW RULES OF BUYING A HOME
Set a Budget That Satisfies Your Needs • Know Your Income Limits • Aim
to Make a 20% Down Payment • A Special Note About FHA-Insured Loans
• Special Rules for Buying Condos and Co-ops • Where to Come Up with
the Down Payment • Opt for a 30-Year Fixed-Rate Mortgage • Understand
the Risk of Distressed Property
LESSON 4. WHAT TO DO IF YOU ARE UNDERWATER
If You Are Underwater and Cannot Afford Your Mortgage • Loan
Modification • Short Sale • Foreclosure • If You Are Underwater but You
Can Afford the Mortgage
LESSON 5. HOW TO REDUCE MORTGAGE COSTS
When It Makes Sense to Pay Off a Loan Ahead of Schedule • The New
Realities of Refinancing • Refinancing Rules • Lower Your Mortgage Costs
Without a Refinance
LESSON 6. THE DANGERS OF HOME EQUITY LINES OF
CREDIT
The Dangers of Rising Interest Rates and Falling Behind on Payments •
Home Equity Loans
LESSON 7. REVERSE MORTGAGES
Reverse Mortgage Basics
LESSON 8. INVESTING IN REAL ESTATE