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Baby boomers need to get real about their spending to survive the financial crisis

Financial adviser Suze Orman has said it before, adamantly. Stop spending and get out of debt.

Today, on The Oprah Winfrey Show, Orman said it again, even more emphatically, and she gave her opinions on how consumer spending and corporate greed have led to our current financial crisis.

Financial institutions are collapsing because of greed “at the top,” Orman told Winfrey’s audience.

Corporate leaders in individual companies wanted to make more money, so more and more stocks were sold.

The lack of regulations also contributed to the downfall. There weren't more rules established because they would cut into the bottom line, Orman said.

Consumers contributed by buying homes they couldn’t afford, piling up credit card debt, taking out home equity loans to buy things, leasing cars, taking vacations, and buying clothes and other items.

People leveraged themselves just the way the U.S.A. leveraged itself, Orman said.

The financial crisis is “more serious than ever it has ever been,” she said.

Corporations and banks didn’t care about people, Orman said. If they’d followed her priorities of people first, and then money, we wouldn’t have a problem today.

“The more money companies made, the better the economy was,” she said. If the economy is great the administration looks great.

Credit will become harder to get now, Orman predicts. That’s for houses, cars, and student loans. 

“It will be years before people recover their loses,” she said. Some 401(k)s that people have saved for retirement are down 40 to 50 percent.

Orman advises people to stop living the financial lies they’ve been living. Pay off your credit cards, keep your car for 10 years, and downsize. If you can’t buy it with cash, don’t buy it.

Click on the link above to see what advice Orman had for two couples who appeared on the show to ask for advice.

Copyright 2008, Rita R. Robison, Consumer Specialist

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