Original Air Date:
Monday, October 13, 2008
What Can I Afford with Suze Orman:
Oprah welcomed Suze Orman back to the show to continue to help viewers figure out what to do in this financial crisis. This time Suze wanted to help people figure out just what they can afford by using guests as an example to decide what they should do. After watching Suze on the Oprah Show in the last few weeks, people have been making changes in their lives to start living a life based on honesty instead of lies. Kerry and Bill from Baltimore as well as Michelle from Phoenix appeared via Skype to share with Oprah and Suze the recent changes they have made.
Kerry and Bill decided against spending $6,000 on a honeymoon while Michelle cut up all of her credit cards. Michelle realized that if she was paying with credit, she was living a lie and she wanted to set a better example for her 2 young children.
Oprah responded by saying that the country is in a true wake up call and needs to see this crisis from both a financial and spiritual point of view. Suze agreed and stated that people need to get back to a value system based on who we are and not what we have or do. Oprah observed that Americans needed something this big to happen to take notice and make changes.
What Can I Afford with Suze Orman - Megan:
Megan was the first guest to come on stage to ask Suze a question of what she can afford. Megan wanted to know if she could afford to be a stay-at-home mom as her second child is due in April of 2009. Megan's husband works full time and Megan works 4 days a week. Here is their financial status currently:
- Monthly income: $9000
- Monthly expenses (with childcare): $6583
- Emergency fund: $6000
- Monthly excess: $2417
Here is their financial status if Megan leaves her job:
- Monthly income: $6666
- Monthly expenses: $5783
- Emergency Fund: $6000
- Monthly excess: $883
What Can I Afford with Suze Orman - Hannah:
Hannah was next to share her story to see if she can afford to stay in Boston. Hannah is $63,000 in debt with student loans and post-college works at Starbucks. With a small income, Hannah still buys expensive items, goes out with friends and gets manicures. Here is Hannah's financial status before making any changes:
- Monthly income: $2010
- Monthly expenses: $3200
- Expense for car: $810
- Monthly deficit: $1227
Suze sat down with Hannah and her mom Lois to go over the situation. Hannah opened up that she thought she was young enough to get out of debt and she had no interest in her degree to pursue that career.
Suze pointed out that Hannah had been lying to herself for justification and is in severe trouble with a FICO score in the 400s.
Hannah made major changes after talking to Suze: the car was sent home to Florida to sell, she paints her nails herself, a friend cuts her hair for free, she walks to work, she packs her lunch and has friends over to entertain. Hannah cut more than $800 off of her monthly expenses. The audience voted and only 6% thought that Hannah could afford to live in Boston, but Suze felt that she could afford to stay on a 3 month trial basis with the goal of finding a better paying job.
What Can I Afford with Suze Orman - Joanna:
Joanna was next to share her story to see if she can afford to buy her first house. Joanna is single and is a school teacher and wants to buy a house and adopt a child. Here is Joanna's financial status:
- Monthly income: $2908
- Monthly expenses: $1845
- Emergency fund: $8500 (excluding retirement and summer savings)
- Monthly excess: $1063
Only 19% of the audience felt that Joanna was able to afford her first home and they were correct. Since Joanna needs $5,000 down, she would have to take that from her emergency fund and with moving she would be left with nothing saved so she needs to save more first.
What Can I Afford with Suze Orman - Marilyn:
Marilyn was up next to ask Suze if she could afford to retire in 6 years. Marilyn at 50 has worked for IBM for the last 24 years and would like to retire at 56. Marilyn owns IBM stock and has her 401K contributions maxed out, but lost $200,000 in a failed business and pays for her daughter's tuition to Duke. Here is Marilyn's current financial status:
- Monthly income: $9105
- Monthly expenses: $8191
- Retirement savings: $393,000
- Monthly excess: $914
44% of the audience felt that Marilyn would be able to retire in 6 years, but Suze said no way.
While Marilyn's new income retired would be $6525 and her expenses would be reduced to $6302, she still owes over $6000 in credit card debt, she does not have enough saved in an emergency fund, her home is not paid off, she can't touch her retirement money yet and she will need to be prepared for 30 or 40 years of retired life. For Marilyn to be able to retire in 6 years, she needs to save more of her income and cut back on her lifestyle.
What Can I Afford with Suze Orman - Maria:
Maria was the final guest to ask Suze if she could afford to buy an SUV. Maria is a nurse in Boston who lives alone and works until late at night; concerned about the snow in New England, Maria wants to make sure she has a reliable car to get home with and wants to buy an SUV. Here is Maria's financial status:
- Monthly income: $3400
- Monthly expenses: $2500
- Current lease: $316
- Credit card debt: $800
While only 22% of the audience thought Maria could afford an SUV, Suze felt that she should get one, saying that sometimes you put people before money. Wanting Maria to feel safe getting home, Suze recommended when Maria's lease is over, getting into an SUV with the same payment. Buying a used SUV for $10,000 would be the best buy for Maria. Suze suggests not financing a car for more than 3 years, because if you can't afford the 3 year payments, you shouldn't be buying the car.
