(CNN) -- Mortgage crisis. Failing economy. Debt. The buzz words that have been circulating lately are more than just an issue for the upcoming election -- they can also affect your personal pocketbook. So what should you do with your money in this kind of market?
Suze Orman is the author of the best-seller "Young, Fabulous and Broke" and a two-time Emmy award winner.
With six consecutive New York Times best-sellers, Suze Orman is just the person to answer that question.
The author of "Women and Money: Owning the Power to Control Your Destiny," which sold more than 1 million print copies, is a recognized expert on personal finance.
Orman talked with Larry King last night about what you should do with your money in the floundering economy. The following is an edited version of the interview:
Larry King: Is this a good time to invest in money? In other words, don't buy anything, put it in the bank?
Suze Orman: If you're in a 401(k) plan and you've been investing every month and you've been watching the markets go down, the biggest mistake you could make is stop investing now.
You should continue to do it every single month in a good quality stock or mutual fund. Don't make the mistake and just stop.
For new money, however, money that you haven't yet put in the market, you don't know what to do with it, unless you are going to continue to invest every single month from now for a long time, you're better off just leaving that money in a savings account, in a CD and forget about it. The big mistake people are making right now is they're buying.
Maybe they're buying a good no-load index fund. It starts to go down and they just stop investing and just watch it go down. If you're going to invest, the way to do it is every single month, just keep doing it. If you're a lump sum investor, you're going to get yourself in trouble.
King: Let's take a call from Austin, Texas.
Caller: I'm thinking that right now would be a great time to jump in the market because I can buy low, and I'm essentially buying at a discount because things will eventually go up. Am I correct in thinking this?
Orman: Depends how you're going to buy. If you're simply going to buy with one lump sum -- let's say you have $10,000, $12,000, and you're going to put all $12,000 right now into the market, and then that's it and you're going to wait to see what happens, I personally think you're going to make one of the biggest mistakes out there.
What you should be doing is dollar cost averaging, take that $12,000, divide it by 12, put $1,000 in every month.
While you may see the markets rally here, and go up one or two months from now, don't be surprised if you see then them turn right again like they used to do -- and go right back down and then where are you? Be very careful, make sure you are diversified; what sectors are you going to buy.
These are very, very tricky markets here. It's not [that] we're at the bottom and they're just going up from here. These are going to go up and down and all over the place. You need to know what you're doing.
King: We have a question about foreclosures and the future of home buying.
Caller: I'm just wondering, with all the mortgage foreclosures, is there any hope for my children who are in their early 20s to ever own their own home?
Orman: The good news about what's happening is real estate prices are coming down. If real estate had continued to go up like it had been going up, your children never would have been able to by their own hand.
They wouldn't have been able to buy a fence around a home. In some areas, because prices are coming down, and they're coming down pretty dramatically, there should be hope for them.
You know, if they grow up and they save for a down payment, there's always hope and a way to do something legitimately, which is what a lot of people didn't do, which is why we're in the problems we're in right now.
King: We hear stories that people are trimming their spending, trying to budget, less use of a car. Are we changing the psyche?
Orman: I think we're changing the psyche temporarily. Until people get used to $4 a gallon for gasoline, until they're used to the price of food, and then people seem to adapt, and then they kind of just forget about what it was like when gas went from two to $3 to $4 a gallon and they get used to it.
And then, before you know it, their old habits come right back and there they are using the credit cards again, spending money they don't have.
The only thing that will stop them, in my opinion, is if the credit card companies stop extending credit to people. If we stop saying to people, here, spend money you don't have, just so that you can ruin the rest of your life so that you can enjoy having something that really you can't afford today.
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