(OPRAH.com) -- The American economy has hit a new low. Home values are plummeting, bills are rising and job layoffs have every worker concerned.
If we cared more about people than money, we would not be having what happened today, Suze Orman said.
Factor in the sudden bankruptcy of 158-year-old investment bank Lehman Brothers, an $85 billion federal bailout of insurance giant American International Group Inc., Bank of America's quick purchase of Merrill Lynch and rumors of future sales and the rejection of a $700 billion government bailout, it's no wonder Americans are worried about their money.
Are you sick to your stomach and scared out of your mind?
Money expert Suze Orman is here to explain what's really going on -- and how you can protect yourself.
"We have built an entire economy on lies and deceit," she says. "It's like building a home or an entire building on a sinkhole. You have a foundation, supposedly. But a little crack, if something goes wrong -- a little earthquake, a tremor -- and it starts to open, everything starts to fall down and ... that is exactly what has happened in the United States of America."
Suze says the current financial downturn started all the way at the top of banks, mortgage companies and brokerage firms.
"There was greed at the top -- serious greed," Suze says. "When you have stocks, you have individual companies that want to make money. And [CEOs] want to make more money because the more money they make, the more their compensation is, the more their stock price goes up."
These companies made money by selling investments like mortgages to people who couldn't afford them, Suze says.
"Have you all ever wondered, 'Why does Suze Orman say people first, then money, then things?'" she says. "It means if we cared about people more than we cared about money, we would not be having what happened today, because the people who run the corporations, if they had cared about all of you, they wouldn't have created loans that you couldn't afford."
A lack of regulations also contributed to the downfall -- and Suze says there weren't more rules established because they would cut into the bottom line.
"The more money the brokerage firms, the mortgage companies and all those companies made, the better the economy was. Because if they lent you money, you had money now that you could spend," she says. "When the economy looks great, everybody feels like, 'Oh, we're doing good.' The stock market goes up. When the stock market goes up, the price of shares go up. The compensation for the CEOs go up."
As things progressed, Suze says many people fell under Wall Street's spell.
"A lot of you have built your personal financial foundation on deceit and lies. You bought a home that you couldn't afford ... You spent money like it was going out of style and it wasn't your money to spend, because why? They were borrowing it," Suze says. "When you borrow money, you leverage yourself. The United States of America leveraged itself so high that when it started to come down, the whole thing now has fallen down." Oprah.com: 6 deadly sins of home equity
The recent billion-dollar bankruptcies are going to make things more difficult for the average person, Suze says. For example, Suze says securing credit may be nearly impossible.
"The chances of you being able to really get a mortgage, a car loan, even student loans for your children, may be far more difficult than you have any idea," she says. "If you currently have credit cards that you're not using that have open lines of credit on it, probably you will see them close down."
In terms of investments, Suze says people close to retirement may need to reconsider. "Many people now have seen their 401(k) either cut in half [or] down 40 percent," Suze says. "[People] may have to work a lot longer than they planned, may not have enough money to generate income to send their kids to school."
Homeowners will also feel a burden, Suze says. As people lose their jobs, fewer homeowners can afford to pay their mortgages and property taxes.
"The less amount of people that are paying property taxes, the less your state has to pay the firemen, the police department," Suze says. "The more your property taxes go up, the less you can afford your mortgage."
With all of these economic puzzle pieces in play, Suze says she wouldn't be surprised if we switched to a cash economy -- which means buying only what you can afford now.
"Banks aren't going to want to give you money where they're afraid that you might not pay them back," Suze says. "I personally think that's a great thing."
So what can you do to protect yourself? "People, stop living the financial lies that you have been living," Suze says. "If you don't have the money to pay for something, can you just not buy it? Can you wait? Can we start looking at keeping our cars for 10 years rather than getting a new one every three?" Oprah.com: Are you protected financially?
Tammy and Tim are a couple who asked for help cleaning their financial house. Like many Americans, they say they have no health insurance and owe more on their home than what it's worth.
The couple also says they have no life insurance to provide for their two children should tragedy strike. Since Tim was laid off from his job last spring, the couple has been living largely off credit cards -- and owe more than $90,000 across 29 different cards.
Tammy says the bills added up before they knew it. "We are taking every bit of money that we do make and putting it toward our credit card payments. We're very proud people and never have been late in 20 years on our payments," she says. "We tend to take our cash, pay our credit cards and then use our credit cards to pay our mortgage and put gas in our car and feed our kids."
Tim says he and Tammy have no idea what to do once their credit is maxed out. "Right now is where we really need the most help," he says. "We're open for any advice that we can get."
Suze has some tough love for this struggling couple. After looking at Tammy and Tim's finances, Suze says the couple falls $2,000 short each month. With property taxes, utilities and the mortgage payment together, Suze estimates it costs at least $3,000 a month to live in their current home.
Suze's suggestion is a harsh truth for Tammy and Tim. "I love you enough to tell you what you need to do to not only save yourselves, but to save your children so there's enough money then to buy them health insurance, for them to have life insurance," Suze says. "You need to sell your home."
Tim says he's concerned about putting his house for sale in a depressed market.
"If you had just been honest a year ago, two years ago, that you couldn't afford the mortgage payments -- you couldn't afford the lifestyle that you were living -- you would not be in this situation here today," Suze says. "If you get rid of the house, you will start to live an honest life without lies. You'll start to make more money. You'll feel better."
Tim and Tammy want to know what their next step should be. "Let's put the house on the market to sell. Let's see what it should be priced at. Talk to your bank about possibly having to do a short sale and just see what happens from there. That is our first step toward honesty," Suze says.
It won't be easy, but Tammy says they're ready. "Whether we've been naive or not, it's a reality, and now we're finally seeing the light and realizing that it's a change we need to make," she says.
Cash-strapped couples aren't the only ones concerned by the country's economic crisis. Millions of aging Americans who have money in retirement accounts have seen their nest eggs shrink in recent weeks. Suze reveals which people really need to rethink their plans for the future.
If you're 10 to 20 years away from retirement, Suze says there's no reason to panic. "As long as you are invested in good quality mutual funds, diversified across the board, as this all goes down, you're buying more shares," she says. "The more shares you buy, eventually, when it turns around ... the more money you'll make."
The situation is more serious for men and women planning to leave the workforce in the next year. Suze says if you recently lost money in the stock market, there isn't time to recover your losses.
"The harsh reality there is what? You are going to have to work more," she says. "For something to recover -- even at an 8 or 9 percent annual average rate of return -- it could take you 12 years to get back there." Oprah.com: How you can prepare for retirement
If you need to start dipping into your savings in the next 10 years, Suze says it's best to take your money out of the stock market and invest in CDs and treasury bills or bonds.
"For those people who need the money to be safe and sound, you need it to generate income now. You have to come out [of the stock market] at this point," she says. "It doesn't mean you can't go back in."
Suze says people may also want to start rearranging their funds. "You might put your money in something that gives you a dividend of 4 or 5 percent, so even though it's low, you're getting your income so you can live off of it," she says. "Then if the markets go back up in those areas, you'll make your money back."
From "The Oprah Winfrey Show" "Recession-Proof Your Family with Suze Orman"
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