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Personal finance expert Suze Orman joins 'Influencers with Andy Serwer' with her thoughts on what Americans should do with their government stimulus checks.
ANDY SERWER: The Senate is likely to pass this $1.9 trillion stimulus bill, and the president will sign it. Does that do too much or too little, do you think, for people's wallets?
SUZE ORMAN: It depends whose wallets we're talking about, Andy. Because the truth of the matter is, in my opinion, the American now-- the United States is now made up of the haves and the have-nots and that isn't distinguished, really, by $75,000 a year of income or $150,000 for a couple. It's really all up to, what did people do with the money that they had, regardless of how much they were making? Because you have people making $200,000 a year that are in food lines. You had people who are making $40,000 a year that were able to make it because they had an 8-to-12-month emergency fund they were prepared.
So I don't know if it's going to do enough for those who have nothing, for those who do not even have the prospective of getting their job back, to having a career that they know what to do with. So those people-- and those-- there are, like, 10 million of them-- it doesn't actually do enough, if you ask me.
For others, is it going to do enough for the schools? Is it going to do enough for the economy? That, I don't know. But I would not be lowering it if I was the Senate.
ANDY SERWER: What do you think people should do with those stimulus checks, Suze?
SUZE ORMAN: I think they should save them. I know everybody really wants everybody to take those stimulus checks and stimulate the economy. Buy this. Buy that. I don't think so. If you don't have at least, like I said, an 8-to-12-month emergency fund, can you just save the money? Because we don't know what's going to happen. We don't know if COVID's going to surge again. We don't know if those that don't have jobs are going to get their jobs back.
So you have to be very careful here right now. I think it's crazy that there-- are projecting, Andy-- and you probably know this-- that a good percentage of people are going to put that money in the stock market. That is not money that belongs in the stock market.
If you are getting a stimulus check, that means you need the money to survive. You need the money to buy food, to possibly pay rent, to keep your utilities on. To put in the stock market-- if you're going to take the money to put in the stock market, in my opinion, you do not need a stimulus check.
ANDY SERWER: Some Democrats are suggesting that we have a permanent reoccurring stimulus, checks just keep on coming until the pandemic passes. Do you think that's a good idea?
SUZE ORMAN: I would think that's a good idea if we could afford to do that, but we're not the only ones. The American people aren't the only ones that are in such debt. The entire country is in debt. Who is eventually going to pay for all of this money that we're giving out to people that we, ourselves, don't have?
I mean, would we ever say to an individual, go further in debt, take money out of a credit card at a high interest rate so that you could keep buying something or help a family member who's in need? I would never tell somebody to do that. And it's almost as if the United States keeps borrowing and issuing money that they do not have. So I, personally, hope that this is the last stimulus that we have and then when we turn things around somehow by figuring out what kind of jobs can we create, what can we do, without going further in debt, that truly does stimulate this economy.
ANDY SERWER: And I think, Suze, though, earlier in the pandemic, you did encourage people to increase their credit card debt if necessary, right?
SUZE ORMAN: And I still would do that to this day. And the reason that I would do that to this day is that I trust credit card companies as far as I can throw them. Do you remember back in 2007, 2008 when everybody was in such trouble? Do you know what many of the credit card companies did? They lowered your credit limit. They closed down your credit cards. I had producers on my show come to me and show me a letter that they had gotten-- I'll pay you $300 if you close down your credit card.
At the time when people really needed their credit cards, they should have been expanding people's credit limits. They should have been there to help them, lowering the interest rates on the credit cards. But that's not what they did, Andy, and so I will never forget that. So if you're somebody who has absolutely no money and now, what do you do? You pay off your credit cards in full and all of a sudden, things go wrong in the United States and they close down the credit cards-- and if you don't have credit cards anymore and you don't have money in an emergency fund, now you're really in trouble.
So pay the minimum payment due on your credit cards. I don't care what interest rates it's at. We can deal with that later. And make sure that you've saved as much money as you possibly can.