Part 1 (1/2)
The money cla.s.s: learn to create your new American dream.
by Suze Orman.
How to Enter The Cla.s.sroom
Welcome to The Money Cla.s.s The Money Cla.s.s. The information in this book provides the foundation for your work: The facts describe the new financial reality we have to apprehend, both collectively and individually. The new perspective offered paves the way for the inner work-the emotional and psychological s.h.i.+fts-to be considered. The financial guidance and information contained in this book are supported by a number of important tools and resources that are housed in The Cla.s.sroom on my website. It's also where I'll post any information updates you need to know.To gain access, go to the home page of my website, .Click on The Cla.s.sroom The Cla.s.sroom icon. icon.You will be asked to enter a pa.s.scode.The code is: 999 999 999 999 999 999In The Cla.s.sroom you will find everything you need to put the lessons learned in this book into action. Throughout the book, this icon[image] will alert you to the additional information you can find online. will alert you to the additional information you can find online.In The Cla.s.sroom you will also find a special offer for readers of The Money Cla.s.s The Money Cla.s.s that you can learn more about that you can learn more about here here.
CLa.s.s.
THE NEW AMERICAN DREAM.
The American Dream. As a concept, it is so ingrained in our collective imagination that it doesn't even need to be defined, right? Think about it: Did you ever need to have it explained to you? My guess is you did not and that even from a young age, you, like me, knew it represented a promise-of opportunity, of possibility-that came with being American.
But on closer inspection, it is not just an American impulse that the American Dream describes, it is a human one, and it unites us. No matter your socioeconomic, ethnic, or religious background, we all aspire to the same things: We seek to provide for our family and keep them safe, no matter what shape that family takes, no matter if we are talking about our parents or our children, a blended family or a family ”by choice,” not blood. We want future generations to have even more opportunity than we ourselves have, a dream that is intrinsically linked with education and the advancement that follows from it. We want to live in a home that is secure in every sense-as a haven for our loved ones and as a wise place to have spent our money. We want the guarantee that our hard work will pay off, that it will support us financially, that it will allow us to achieve our goals, and that when it is time to stop working, we will reap the benefits of those years of dedicated service and live out the rest of our lives comfortably in retirement.
As universal as these desires are, we refer to them as the American Dream because for centuries this country has, for the most part, been able to make good on this promise of America as the land of opportunity. This belief has played a defining role in shaping our national psyche. It is at the heart of our Declaration of Independence-that we each possess ”certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness.”
How truly terrifying, then, to take stock of the American Dream today and to question the truth of it-to wonder if it still exists in reality or if it has become an illusion, a myth. Take a look around: As of December 2010, more than 14 million Americans were out of work; another 9 million were working only part-time because they cannot find full-time employment. That is 23 million people who are struggling to make ends meet. Many of those lucky enough to still be employed in their 60s are looking to hang on to their jobs as long as possible because they simply cannot afford to retire-which also means there are fewer job openings for young people entering the workforce.
In many areas of the country, the dream of homeowners.h.i.+p has backfired. Real estate values have deflated to such an extent that a record number of people owe more than their homes are worth. That's not an American Dream-it's a nightmare.
Because of the dire economic conditions of recent years, many parents are unable to afford the high cost of college tuition for their children. And there is a record number of student loans in default, making people question whether they ever should have taken them on to begin with.
The sum total of all these facts and figures? The home, the job security, the education, the retirement-the very standard of living that all of us took for granted for so long is completely under siege.
Whether we speak about it or not, we are grappling with the frightening possibility, the fear, that we no longer live in a land where effort applied to opportunity produces a better life. The doors leading to more and greater things, once wide open, now seem to be closing. It is hard to move up in an economy where there has been no job or wage growth over the past decade. Once a manufacturing powerhouse-”Made in the U.S.A.” was our calling card-we have ceded that engine of growth, and the jobs that go with it, to other countries as our own economy now relies on our ability to consume, not produce.
The impact of these economic s.h.i.+fts has been felt deeply within our homes. While the median household income for adults born in the 1960s is indeed higher than the income of their parents' generation, much of that is a function of smaller household size and the fact that there are now likely two wage earners per household. It takes more of us working more to maintain our forward progress. Even so, the pace of our growth has slowed considerably. According to a study commissioned by the Pew Charitable Trusts, family income doubled in the postwar years, between 1947 and 1973, but in the three decades since then the increase has been a mere 20%. That statistic provides important context to why household debt relative to income more than doubled over the same period: For many, borrowing was a way to keep up with our parents and grandparents. To put it in more emotional terms, it is why so many of us wonder how our parents and grandparents seemed able to enjoy a higher standard of living even though their means were so much less than ours.
The meritocracy that underpins our economy and culture-work hard, move up the ladder-has also been weakening, as the distribution of income has become increasingly uneven. In the 1950s and 1960s, our national economic growth trickled down across a broad spectrum of income levels. Since the 1970s it has been more fractured, with much of the economic gains benefiting upper-income households. This concentration of wealth leaves the middle cla.s.s, the heart and soul of this country, struggling just to hang on.
The epic financial crisis-and there really is no other way to describe it-that began in 2008 may have delivered a decisive blow to the stubborn optimism that we held on to in spite of the on-the-ground reality of how our financial lives have been marked by increasing struggle. For many, the crisis was a rude awakening; for others, it was a grim confirmation of the creeping anxiety we've been feeling about how we are going to make it all work. Either way, it is hard to find a family that was untouched by this financial disaster. It was a galvanizing moment for us as a nation-it has forced us to reckon with our beliefs in our country and our individual ideals.
Is it time, then, to p.r.o.nounce the American Dream dead?
In many ways it pains me to say this, but in my opinion the American Dream as we knew it is is dead. dead.
But listen to me: That is not such a bad thing. The old American Dream has been in need of revision for quite some time; we have just been very good at avoiding that truth. It's time to take that dream back into our hands and reshape it. It's time to create a New American Dream that is based in honesty, authenticity, good intentions, and genuine need.
What is important to understand is that the American Dream is not something to put your faith in, to pray for, to embrace blindly, and hope that everything turns out okay-despite its long, dependable run. Rather, it is a concept, a loose set of goals that beg for individualization. The American Dream was never one-size-fits-all. The New American Dream asks you to fas.h.i.+on a dream that suits you-not one based on false premises and the expectations of others. It asks you to take measure of your own needs and understand what it will take to provide for yourself and those around you-your family, your community, and those less fortunate.
The truth is, we are on the threshold of an important moment. We can come together, right here, right now, and each one of us can envision our own New American Dream-a dream that is rooted in reality, not superficiality; in truth and integrity, not illusion and faslehood.
MAKING CHANGE.
I am a great believer in the power of perspective. Often when we find ourselves in a difficult situation we come to believe we have no options. We convince ourselves there is no way out. Despair and frustration take root and convince us that things are more desperate than they may actually be. When I've found myself in those situations in my own life, I have learned that a change in perspective can change everything. What seemed insurmountable can be overcome. Not without difficulty, but through ingenuity and dedication. We can make a difference when we think differently. If you have any doubt about the truth of that statement, think of any significant achievement throughout American history, from our founding as a nation built on those inalienable rights and freedoms, to the civil rights movement.
What we need first and foremost then, to erase the feelings of hopelessness and to ease our fears, is a change in perspective. Let us recognize what the American Dream no longer is, in order to give birth to a New American Dream.
We must abandon any vestige of the old dream that suggested it was delivered on a silver platter as a matter of national birthright, and that our economy would forever be the rising tide that lifts all boats. The dream I am asking you to create-this New American Dream-is a very individualistic pursuit. It calls upon you to take stock of the challenges we face as a nation with an economy that is still struggling to recover from the effects of a crippling recession. And then it calls upon you to take stock of your own life, your own needs, your own security. We must transform ourselves from dreaming society's dreams and putting our faith in a false and misleading sense of ent.i.tlement, to being a society where each of us strives for dreams that are personal and realistic and that are in the best interests-in the truest and most honest sense-of us and our family. I am calling upon each of us to rethink the very way we dream.
WHAT I LEARN FROM YOU.
I am confident you are up to the challenge. I know you are absolutely capable of everything I am going to ask you to do. I also can feel that lurking just beneath your fear and frustration is an even more powerful resolve not to resign yourself to a life of less. You are resilient. It is a hidden upside to times of great turmoil. When we are shaken to our core, when the status quo no longer works for us on any level, we are motivated to change. Transformation becomes not just possible, but imperative. How do I know this? I have been listening to you-so many of you-over the years. I have heard your hopes and fears; I have made it my job to expose the falsehoods and deceptions we perpetrate on ourselves and others and encourage honesty and truth. And I hear how ready you are for change.
To that end, may I share some more statistics with you that I know you will find as heartening as I do? In a 2010 survey conducted by Charles Schwab & Company, 29% of respondents chose the phrase ”Decade of Hope” to describe the coming years. Another 27% said ”Decade of Great Change” and 20% chose ”Decade of Personal Responsibility.” Three-quarters of respondents understand what it is going to take to create a new, sustainable, and achievable dream: hope, change, and personal responsibility.
Those are the very elements I ask you to bring to The Money Cla.s.s The Money Cla.s.s. At the core of the change I am asking for is a willingness to stand in the truth. To take a clear-eyed accounting of exactly where you are today, what your circ.u.mstances are, and then plot a course that addresses your truth. The pendulum has swung out to an extreme and we now must ease it back to a more stable and sustainable sense of equilibrium. To do that, I am going to challenge each of you, after years of overextending yourselves, to put into effect a correction. I am going to challenge you not merely to live within your means, but to live below below your means. This is not meant to be a punitive strategy; it is a course in self-awareness, a return to values that our grandparents and their parents embraced. It is at the very core of the American Dream of old. Yes, there is still a beating heart in that dream. It is our duty now to rescue what was so right about it: the virtues of hard work and sacrifice; of self-knowledge and steadfastness in achieving one's goals; of aiming for something greater and longer-lasting than the fleeting rewards of instant gratification and indulgence. your means. This is not meant to be a punitive strategy; it is a course in self-awareness, a return to values that our grandparents and their parents embraced. It is at the very core of the American Dream of old. Yes, there is still a beating heart in that dream. It is our duty now to rescue what was so right about it: the virtues of hard work and sacrifice; of self-knowledge and steadfastness in achieving one's goals; of aiming for something greater and longer-lasting than the fleeting rewards of instant gratification and indulgence.
THE MONEY CLa.s.s CURRICULUM.
I named this book The Money Cla.s.s The Money Cla.s.s because what I can provide is knowledge-of what actions to take, what behaviors to correct, how to fortify yourself in the face of economic challenges, how to fas.h.i.+on a responsible dream and achieve it-and knowledge is the key. I can take you from here-a place of fear and despair-to there-a place of security and hope. You will need to learn and in some instances relearn what has changed in our world and in your life, and how you must adapt to those changes. because what I can provide is knowledge-of what actions to take, what behaviors to correct, how to fortify yourself in the face of economic challenges, how to fas.h.i.+on a responsible dream and achieve it-and knowledge is the key. I can take you from here-a place of fear and despair-to there-a place of security and hope. You will need to learn and in some instances relearn what has changed in our world and in your life, and how you must adapt to those changes.
I understand fully: At this moment in time, you are in fear of the unknown. You don't know exactly what to do or where to turn because you aren't sure what works anymore. You don't know who or what inst.i.tutions to trust. The truth is, you must learn to trust yourself. To follow a path that is right for you, to make choices that are realistic for you and your family. And becoming that person requires an education, a course of study.
The nine cla.s.ses that make up this book begin right here, with a lesson in learning how to dream. In the next cla.s.s, ”Stand in Your Truth,” I will teach you what it takes to become honest and stay honest. That lesson is the catalyst for everything that follows. The subsequent chapters on family, home, career, and retirement can only be put into action if you bring along a commitment to stand in the truth. Each cla.s.s will begin with an explanation of the important elements that have changed and require us to rethink our a.s.sumptions and reimagine what's possible. Next I will lay out the essential strategies to help you reach your newfound goals. With my guidance and your commitment, we can be a formidable team.
It is time to move beyond materialism in order to set our sights on authentic happiness. Authenticity Authenticity is a word I find myself returning to again and again these days. I would ask you to put your finger on what is authentic in your own life-and what endures. Surely that is our relations.h.i.+ps-with those we love, with our community, with the earth. We strive for connection, we gladly sacrifice and find strength in working toward a greater purpose, a sense that there is a reward in being true to yourself and honoring the limitless power that comes from living a life of integrity. More than anything else, isn't that the legacy each of us would like to leave behind? Wouldn't we take pride in knowing that future generations will look to us for inspiration, just as we look for inspiration to the greats who came before us? Then let us embrace the ideals that forged the American Dream, then and now: honesty, integrity, dedication, commitment, courage, and hope. And let us turn toward the future. is a word I find myself returning to again and again these days. I would ask you to put your finger on what is authentic in your own life-and what endures. Surely that is our relations.h.i.+ps-with those we love, with our community, with the earth. We strive for connection, we gladly sacrifice and find strength in working toward a greater purpose, a sense that there is a reward in being true to yourself and honoring the limitless power that comes from living a life of integrity. More than anything else, isn't that the legacy each of us would like to leave behind? Wouldn't we take pride in knowing that future generations will look to us for inspiration, just as we look for inspiration to the greats who came before us? Then let us embrace the ideals that forged the American Dream, then and now: honesty, integrity, dedication, commitment, courage, and hope. And let us turn toward the future.
The Money Cla.s.s is now in session.
CLa.s.s.
STAND IN YOUR TRUTH.
How do we usher in this new era of personal responsibility? By taking an honest inventory of exactly where you are today and what you want most for your future. Sounds like it shouldn't be so hard, right? But trust me-getting honest is the hard part. Based on my experience of working with people and their finances for three decades, I can tell you that culturally we have become a nation that hides from that truth.
I see it week in and week out when working on my television show on CNBC. The most popular segment of the show is ”Can I Afford It?” in which viewers ask my opinion about a financial purchase they are considering. It is a very simple concept: Viewers want me to tell them whether they can truly afford to buy something.
Before I render my Approved or Denied verdict I insist on finding out everything I can about a viewer's financial situation. And I do mean everything. My staff and I pore over detailed financial information each guest must submit to be considered for the segment. Invariably we go back and forth a few times with the guest before the show is taped, until I am absolutely clear about whether they will be Approved or Denied.
Those of you who watch the show know that more often than not I have to tell guests they are Denied. I know that many of you think the people who are featured on the ”Can I Afford It?” segments are just playing a game. I can't tell you how often people come up to me on the street and say, ”Oh Suze, I saw the show last weekend and there is no way those people were for real-it was crazy what they thought they could afford!”
I am here to tell you they are most definitely real. What you don't see is that after they have been Denied and the taping is complete, the guests start trying to negotiate with me and my staff. They come back to us and change their story just a little bit in the hope that I will change my mind. The guests most desperate to change the verdict are caught up in what they wish were true; their desires about what they want in the here and now push them to bend the truth, to hide from the truth, just so I will tell them they are Approved.
I wonder if deep down on some level you are struggling with the same urge. That kind of wishful thinking is not unique to the guests who ask me ”Can I Afford It?”; it's something many of us indulge in because it allows us to avoid tough decisions and owning up to a difficult reality that we may not be ready to face.
There is no blame, no finger-pointing that accompanies my observation. As we embark on The Money Cla.s.s The Money Cla.s.s I want to be crystal clear about my motivation for writing this book: empathy. I understand how painful it can be to face reality. Especially given the realities we are all facing, detailed in the opening cla.s.s. It often seems to be in conflict with a healthy optimistic impulse. I want to be crystal clear about my motivation for writing this book: empathy. I understand how painful it can be to face reality. Especially given the realities we are all facing, detailed in the opening cla.s.s. It often seems to be in conflict with a healthy optimistic impulse.
So trust me when I say that I know it is not easy. But it is necessary. No, make that vital vital. As I explained in the first cla.s.s, I am convinced that we can all move toward a better future, but in order to do so we must create a new template for achieving our dreams. An important starting point to these cla.s.ses is the recognition that the events of the past fifteen years or so that culminated in the financial crisis were caused by a collective disconnect from reality.
The most fundamental lesson of The Money Cla.s.s The Money Cla.s.s is this: In order to create lasting security you must learn to stand in your truth. You must recognize, embrace, and be honest about what is real for you today and allow that understanding to inform the choices you make. Only then will you be able to build the future of your dreams. is this: In order to create lasting security you must learn to stand in your truth. You must recognize, embrace, and be honest about what is real for you today and allow that understanding to inform the choices you make. Only then will you be able to build the future of your dreams.