Suze Orman's Can I Afford It?: Holiday Gifts
The holidays might be an excuse to eat too much, but there’s no excuse when it comes to spending too much on gifts for loved ones according to personal finance guru Suze Orman.
In the latest episode of "Can I Afford It" Orman fielded calls from folks looking for her approval on purchases of everything from toys to a round-trip ticket on a private jet. She stuck to her rules in spite of it being the season of giving, making sure everyone met her requirements of spending wisely. Read on for this year’s purchase questions, and watch the videos for Suze’s responses.
Christmas Day Football Outing, $900
Becky, 36, wants to give her boyfriend a combined birthday/Christmas gift. She wants to take him to see his favorite football team, the Green Bay Packers, play the Chicago Bears on Christmas Day. She’s estimated it’s a $900 outing.
Becky’s finances look to be in pretty good order:
Income: $6,082/month take home
Expenses: $2,430 monthly bills, $1,550 rent
Debt: $31K student loans @ 1.68 percent
Savings: $30K liquid, $26K investments, $149K retirement
Suze, however, is worried about one important item: “You know my rule of thumb here. I want you to have at least an eight-month emergency fund,” Suze said. “So eight times $4,000, whichg is really your monthly expenses, so you’re a little short.”
It’s a very, very close call for Suze.
Antigua for the Holidays, $5,000
Scott’s family is headed to Antigua for the Christmas holidays and he and his wife want to join, but $5,000 is a pretty big Christmas present. Scott, 42, and his wife have a pretty hefty monthly income, but their expenses are up there as well.
Income: $12,842/month combined
Debt: $483K 15-year mortgage @ 4.375 percent, $92K home equity line of credit @ 3.75 percent
Savings: $80K liquid, $441K retirement
“A great Christmas gift to yourself would be to really put yourselves first,” Suze tells Scott as she gives him her answer on whether he can afford it.
A $25,000 Used Mercedes?
Mercedes SL Convertible, $25,000
Elizabeth’s husband used to have a Mercedes SL convertible, but he sold it to buy her engagement ring. Now, Elizabeth, 30, wants to make it up to him by buying him a used, 2000 model.
She breaks it down the family finances for Suze:
Income: $11,735/month take home
Expenses: $4,888 bills, $2,250 rent
Debt: $12K student loan @ 2.36 percent, $3,000 car loan @ 0 percent
Savings: $66K liquid, $48K investments, $123K retirement
“So you want to spend $25,000 on a car for him to have fun in. I will keep that in mind, girlfriend,” Suze said. Is it a good enough reason to justify the expenditure? Watch the video to find out…
Ernest the Horse, $5,000 + $275/month
Kerry-Marie wants to buy a horse because she loves to ride. The current owners would keep the horse and board him for $275/month.
Kerry and her husband are close on the finances:
Income: $8,488/month combined, $972/month rental income
Debt: $242K 30-year mortgage @ 5.5 percent, $198K 30-year mortgage @ 5.85 percent
Savings: $26K liquid, $109K retirement
“Horses get sick, horses are expensive,” Suze said. Does she think it’s a solid purchase? Watch the video and find out…