This episode of Maxed Out features Julia, 28, and Mike, 30, a couple on the fast track to losing everything. All the big financial moments arrived at once for Mike and Julia — they have two mortgages and a baby, plus a ton of unmanageable debt. They're living in the townhouse they purchased before their condo sold, on the assumption that the condo would sell immediately.
It has been on the market for almost three months, and they're depleting their savings by covering both mortgages. Mike and Julia only have another month before they run out of savings and face foreclosure. Find out more about their messy financial situation when you read more.
Julia and Mike currently bring in about $50,000 a year — she has a sales job that's 100 percent commission, so Mike took paternity leave and is earning a reduced salary during his time at home. Mike's dad took out a $65,000 credit line to help them, but they're still in deep trouble, and financial guru Allison Griffiths takes a deeper look at their story.
The couple is shocked when Allison announces they're spending three times their monthly income. Their monthly expenditures average $15,400 a month, which means they're ending with a $10,000 shortfall every month. After going through their paperwork and learning more about their habits, Allison finds that it's not the condo that got them into trouble; it's their spending. The condo is just digging a deeper hole.
If Allison can't knock some spending sense into them, Mike and Julia's $90,000 debt (without their mortgages) will balloon into $160,000 within one year. With her guidance, the couple is able to knock out their shortfall (not too unmanageable when you see they were spending $1,500 a month on entertainment) and they're finally able to pay back Mike's dad with the sale of their condo. Mike and Julia are on the road to a more stable future, with only one mortgage and a realistic approach to spending.
Taschen
Coast
Only
1I just don't understand how these ppl can be so stupid? If it's medical related debt I understand because that's not in your control, but $1500 a month on entertainment? What does that mean? Do they like spend all their free time at a high-end strip club?
2Wow, I can't believe that there are really people like this out there. Seriously, how could you be so stupid?
3You should never move out of a property and into a new one with the assumption that you'll sell the old place immediately. That's just stupidity, especially in these tough economic times. Actually, though, that's what the former owners of our house did and that's why they accepted our offer the day after we put it in...they REALLY had to sell because they were moving into a townhouse. Unless you know you'll have enough to pay both mortgages for a while, be careful about purchasing another property before you move out of your old place.
But still, how do you spend 3 times your monthly income? Wouldn't you kind of notice something like that? I guess not everyone pays attention to their spending like others do.
4Sometimes I am confused by episodes. It's not like these people fall on hard times or make a mistake. It's like their wants outweigh their needs and they spend on the dumbest things. Seriously, entertainment has a budget, they don't even need an entertainment budget. No one thinks of changing jobs or picking up a second one or even scaling back.
5There are a few times when you might be paying two mortgages - like moving to another town or state because of a job relocation or new job, but it doesn't sound like case for this couple.
I just don't understand how you could overspend that much each month.
6I'm confused on how to spend $15K a month! What could they be buying?
7And, to think that my husband and I can get by comfortably on $950 a month. Man, we're too frugal. I ought to buy more shoes.
8It's not as easy as it sounds to pick up a second job...
9wow, the pure stupidity of some people and their relationship to money (or lack there of) is just...wow.
10I live in the rural midwest, so I know my numbers are going to seem outrageously low, but my husband and I (and two very large dogs) can get by on less than $500 a month (utilities, food, gasoline, internet, etc.). That $15000 figure is absolutely ridiculous. $1500 for entertainment? You have GOT to be kidding me. I can't stand people that put themselves in those positions by living beyond their means and then have no idea what happened. I refuse to try and keep up with the Jones's, and I have a very full, active, and happy life.
11It makes me sad to read the stories about these episodes. How can you get that massively into debt? Maybe there needs to be better financial education or self-control education.
12$1,500 a month on entertainment?? what was the entertainment? they should be given cash to get through the week (gas, food, etc) and thats that.
i don't get how they didn't know they were spending 3 times their income. and they have a baby? $50k of income is modest, $150k is a whole other ball game. who doesn't know the difference?
13These people will probably always have money problems. This kind of irresponsibility can't be fixed IMO
14If they spend $1500 a month on entertainment, how dare they ask his dad for help?!?
15They should be beyond ashamed of themselves.
Post New Comment
Please share your opinion with our community, but make sure it is on topic and follows our Community Rules. We moderate comments and prohibit personal attacks, threats, spam, lewd images, or the promotion of your personal website.