Every Penny Counts

On the Suze Orman Show there is a segment called "Can I Afford It".  Viewers send in their financial information and what they are considering purchasing.  Suze looks over the information and tells them if she thinks they can afford to purchase the item.  In some cases, they may be able to afford the item but she urges them to reconsider, thinking their money could be used better on someting else or to save it.

On last night's segment one of the callers was a 59 year old lady that wanted to spend $50 on a toy for her grandson for Christmas.  She was denied.  Their income was from her husband's pension and disability payments.  There expenses were almost exactly the same as their income.  In addition they had $30,000 of credit card debt and a $20,000 car loan (financed for 4 years, Suze recommends not borrowing for more than 3 years).  They had very little in liquid savings or retirement.
Suze denied her, because she said she felt it was more important to put any extra money towards their debt.  She asked how much of her husband's pension she would get if her husband passed away.  She would get half of the amount they are currently receiving.  Suze told her in that case she would be going in the minus each month.

She suggested she spend time with her grandson instead of buying the toy.

At the end of the show, she said it was difficult to deny the lady for the $50 expense but she said in some cases every penny counts to paying down debt and being able to afford things you need.
Sometimes there are kids calling in for the segment.  In many cases, she tells them how much that money would be worth in the future with the power of compound interest and asks them if the item is worth that final amount. 

It is important to spend money on some items but I feel it is also important to consider if it is worth the money your are spending.  It comes down to thinking about the difference between wants and needs.