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Chris estimates that he spends about $7,000 a year on his hobby. Can he keep it up? Suze runs the numbers.

Chris and Michaela's monthly income is $9,000, and their monthly expenses are $7,700. Even with $1,300 leftover every month, they still face their large student debts and only have $5,000 in an emergency fund. "In this economy, what I'd like to see is that people have at least an eight-month emergency fund, which would be $40,000 because we have three children here," Suze says.

Suze denies Chris—but with love. "We only have $5,000 of an emergency fund," she says.

Chris and Michaela have life insurance, but Suze says it's simply not enough. Chris is insured for $350,000, and Michaela is insured for $200,000. The couple still owes $290,000 on their mortgage, which is $2,200 each month. If Chris dies, his life insurance policy will only cover the mortgage—and still leaves the Michaela with $4,000 a month in expenses.

"What is the rule of thumb? You plan for the worst and you hope for the best," Suze says. "But [Chris is] in sales. Anybody in sales, anything can happen at any time. So I love that you love football ... But you cannot afford it, sir."

Chris takes everything in stride. He says he's already started to look into better life insurance policies and wants to start college savings funds for his kids. "My friend, he gets it!" Suze says.
FROM: Suze Orman: Can You Afford College, a Wedding, a Divorce?
Published on March 04, 2009
Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.


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