Bill and Kerry are forgoing their vacation.

Kerry and Bill heard Suze Orman's message about getting honest about your finances loud and clear. With their wedding just weeks away, they were trying to decide if they could afford to take a honeymoon. At first, they planned on Ireland, then they considered Mexico and, lastly, Napa Valley.

After seeing Suze's recession reality check, Kerry and Bill decided to forgo their honeymoon altogether. "After that show, we looked at each other and said: 'We're not going to go anywhere. We'll stay home and chill out,'" Kerry says. "We just decided that the $6,000 we would spend in seven days would better serve us being left in the bank as our emergency cash flow."

Suze says Kerry and Bill are making a good choice for their finances and for their relationship. The number one reason for divorce is fights about money. "So here we have a couple that's getting married and they're doing it the right way," Suze says. "Doing what matters versus doing something they can't afford. I love that."
Michelle cut up her credit cards.

After hearing Suze's message, Michelle sprung into action too. She says she first cut up all the credit cards in her wallet. Then, she erased all the saved credit card information from her favorite online stores.

"We made a plan to be able to get out of credit card debt completely," Michelle says. "What Suze said really hit home for me, which is: We're living a lie as long as we're using these cards to buy things we can't afford, and it stopped that day."

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Not only is Michelle doing the right thing for herself, Suze says she's setting the right example for her two children. "Kids don't listen to what you say, they do what you do. And if you're an honest person and are proud of who you are versus what you have, your children will end up the same way," she says. "Good on you, girlfriend. Good on you!"
Can Megan afford to be a stay-at-home mom?

Megan is the mother of a 20-month-old daughter, and she and her husband have another baby on the way. He works full time, and Megan works four days a week as a speech therapist. "I love my job, but my concern is that, going forward, the cost of childcare for two children may be almost as much as what my salary is," she says. "I'm wondering if I can afford to make the switch from career woman to full-time mom."

Suze takes a look at all of Megan's finances. When she is working, Megan and her husband's monthly income after taxes is roughly $9,000. They have monthly expenses of $6,583; monthly savings of $2,417; and an emergency fund of $6,000.

But if Megan quits to stay at home, their monthly income would drop to $6,666. Their monthly expenses would be $5,783; their monthly savings would be $883; and they would keep their $6,000 in nonretirement savings.

Can Megan afford to be a stay-at-home mom?
Suze renders her judgment on Megan.

"Oh, you are so denied!" Suze says to Megan. "And let me tell you why with love."

Suze says Megan needs to keep working for two reasons. First, because her reported monthly expenses did not take into consideration all the future purchases for the new baby, like diapers.

Use this worksheet to track your monthly expenses

Second, Megan does not meet Suze's rule for eight months of emergency savings. "If she had $48,000 there and we were okay there and I knew she was being honest with her expenses, okay," Suze says.

Suze Orman

While Suze used to say six months was enough in your emergency savings, circumstances have forced her to change her mind and adopt an eight-month rule. "In today's economy, if you lose your job, it's going to take you eight months to a year to get another one," she says. "The reason all these people are in trouble with their homes and they're losing [them is because] they lost their jobs, they can't pay their mortgage payments."

Calculate how much interest your savings account can make

Suze says she still may approve Megan to be a stay-at-home mom if she is able to put all of her paychecks into a savings account from now until the baby is born in April. "Can she make it right now just on her husband's income alone? ... See what happens. Do your expenses decrease because you don't have as much money to spend? And by the time the baby comes, they'll know for sure if she can afford it or not," Suze says. "If she can't afford it, she'll stay working. If she can, guess what? You're going to have a number of months saved up that add to your [emergency] cushion."
Hannah spends way beyond her means.

Hannah is a 25-year-old living the hip, urban life of a postgraduate in Boston. She graduated with student loans of $63,000, thinking she'd get a great job that paid well. Instead, she has to work two jobs—and get substantial financial help from her mom, Lois, to pay all her bills and keep up with her expenses. She makes $2,010 a month from her two jobs...yet spends $3,237 a month.

Some of those expenses include $200 a month for gas; $810 a month in car payments, insurance and maintenance; $1,400 for a new bed; a $50 snowboard; and a $300 iPod.

"I do feel like I sometimes live a lie because my friends will call me and say, 'Let's go get a manicure and pedicure.' Or, 'Let's go to dinner.' And I know the bank account says, 'You can't afford to do it,'" she says. "I know I need to cut back. It's just tough when all of your friends are living this life."
Suze gives Hannah the smackdown.

To get to the bottom of her finances, Suze paid Hannah a visit.

Watch Suze's smackdown. Watch

Hannah comes clean. "I spend the money on the things I know I shouldn't spend because I think I'm young and I still have time to fix it," she says.

Suze says Hannah's spending spree has real consequences now. "These are the most horrible FICO scores I have ever seen," Suze says. "Every time you decide to pay your rent versus your student loan, a bed versus your student loan, eating out versus your student loan, what you are doing to yourself is really committing financial suicide."

Then, Suze asks Hannah a big question. Why isn't she working a job in the field her degree is in? "Because I'm too lazy to look for a new job," Hannah says.
Hannah has made some major lifestyle changes.

Hannah has made some major lifestyle changes in the three weeks since Suze's smackdown. First, she set the record straight with her friends and roommates and revealed the truth about her finances. She also moved her car back home to her mom's house in Florida. "I want to sell it," Hannah says. "But I knew that keeping it in Boston while I tried to sell was an expense that I really couldn't afford." Finally, Hannah cut back on luxuries. Now she does her own manicures, brings her lunch to work and has a friend cut her hair for free. She even passed on going out for a big 25th birthday bash and had friends over instead.

With her new lifestyle, Hannah has cut her expenses down to $2,326 a month, which gives her only a $316 per month deficit. Still, Suze says Boston is the most expensive city to live in when it comes to utilities.
Hannah is approved to keep living in Boston.

So can Hannah afford to stay in Boston, or does she have to move to Florida and live with her mom?

Suze says Hannah is approved to stay put! "This 25-year-old has made some of the hardest decisions of her life," Suze says. "She has chosen honesty over deceit. She's chosen to do things now out of integrity versus impressing everybody and [acting] irresponsibly to herself. You need to be rewarded for that."

Suze puts Hannah on three-month probation. She says Hannah needs to look for a new job and start making more money. And if she can't pull it together in three months—Hannah's going home to mama!
Use this tool to find out how to eliminate your debt
Can Joanna afford to buy a house?

Joanna is a single woman in her 30s who doesn't want to wait for a man to buy her first house. "It's always been my dream to have a family," Joanna says. "I'm looking to buy a home so that I can adopt a child or two."

As a second grade teacher, Joanna takes home $2,908 a month. She has $1,845 of monthly expenses, and $8,500 in her emergency fund, which gives her a monthly excess of $1,063.

The home Joanna wants to buy is $150,000, and she needs $5,000 for a down payment. She plans on taking the $5,000 out of her emergency fund, and the bank has already approved her for the mortgage.

Can Joanna afford to buy her first home?
Joanna needs to save more before buying a home.

Suze says that Joanna cannot afford to be a homeowner. "You can't use your emergency fund as a down payment on a home," Suze says. "Because if anything goes wrong—you have a refrigerator that breaks, your heating breaks, you get flooded—you have no money to get you by."

The general rule when buying a house is that you should have at least eight months of emergency funds saved in addition to your down payment, Suze says. She also says the bank should never have approved Joanna's mortgage. "The truth of the matter is that the lending institutions should have denied you because you didn't have the money," she says. "Shame on them."

Suze Orman and Oprah

The good news, Suze says, is that real estate prices probably won't go up soon. If Joanna keeps saving, she'll eventually be able to be able to buy a home she can afford and enjoy. "If you buy a home that you can't afford, it's going to be anything but enjoyable," Suze says. "Trust me on that one."

If you truly can afford to buy a house, Suze says now is the time. "I will forever believe that buying a home you can call your own in any market, if you can afford it, is a great investment. Why? Because you can't live in a stock certificate. You can't live in a mutual fund," she says. "Now is that time that you go in and you don't just get an okay deal—you get the deal of a lifetime." 

Learn more about the new first-time buyer tax credit

Struggling with your current mortgage? Find out how you can get help
Marilyn hopes to retire early.

Fifty-year-old Marilyn wants to retire when she's 56. She has worked as a sales manager at IBM for 24 years and contributes the maximum to her 401(k) plan. Marilyn pays for her daughter's college education with the money she's made from IBM stock she bought at the employee rate. But three years ago, Marilyn spent over $200,000 on a small business that failed. "I feel like I just lit a match to money," she says. That loss forced Marilyn to refinance her home and has caused her to rethink her plans for early retirement.

Marilyn's monthly income is $9,105. Her expenses are $8,191, and her retirement savings are $393,000. She has a monthly surplus of $914.

Can Marilyn afford early retirement?
Marilyn can't afford to retire.

Even though Marilyn will take in around $6,500 a month after retirement and plans on spending only about $6,300, Suze says she can't stop working just yet.

First of all, Marilyn has $6,200 of credit card debt at a 14.2 percent interest rate that Suze wants her to pay off before retiring. But Suze says the real reason she thinks Marilyn cannot afford to retire is that women spend more time in retirement than they do working. "After 56, you will have another 30 to 40 years of life," Suze says. "What you did not factor in was inflation. As you get older, you take more medication, you need more help, things become more expensive."

In the current economy, Suze says Marilyn can't count on pensions or health benefits from corporations, because they could cut back or stop them altogether at any time. Marilyn will have to hold off on retirement until she's at least 60 years old, Suze says.

Use this calculator to see if you should continue to invest
Marla wants to buy a new car.

Marla is a labor and delivery nurse in Boston. Because she works long nights in a city with a lot of snow, she wants to buy an SUV to get her home safely at night.

Marla makes $3,400 a month. Her monthly expenses are $2,816, including a $316 payment for the car she is leasing now, and she owes $800 on a zero percent interest credit card.

Can Marla afford to buy a new car?
Suze approves Marla's new car.

Suze says Marla is approved to buy a new set of wheels. "She is out on the roads by herself at night as a nurse delivering [babies]," Suze says. "She's afraid. She is a woman alone, and she has snow. People before money."

Suze says that Marla should buy a car that will have a monthly payment similar to the $316 she pays now. To do that, she'll need to buy a used SUV for approximately $10,000. Suze says Marla can also try to buy the car she has currently, since the lease is up in three months. "You can negotiate big time with them right now when you turn it back in," she says.

The rule of thumb, Suze says, is if you're going to finance a car, don't finance it for more than three years. "If you can't afford the monthly payments on a three-year loan, you cannot afford it," she says.
See how you could get a sales tax break on a new car

Want to know if you can afford a home, a dream vacation, even a pair of new stilettos? Use this calculator to find out!

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