Couple on the Brink of Declaring Bankruptcy For the Third Time

Maxed Out: Third Bankruptcy Is Not a Charm


This episode of Maxed Out is about Jessica and Greg, a couple who just can't grasp financial responsibility. They declared bankruptcy separately before they were married, and as parents of one-year old twins and a six-year old they are on the brink of declaring bankruptcy together. Their $55,000 of debt is overwhelming their relationship and dissolving their dreams of home ownership, and even though they earn a combined annual salary of $120,000, they are always one payment behind on all of their bills. Financial guru Allison Griffiths says the only way to avoid another bankruptcy is to overhaul their finances. To see what she found out when she took a deeper look into their spending habits, read more.

It quickly becomes obvious that Jessica and Greg have an unhealthy reliance on debt. They spend $420 a month on bank fees alone and have a $594 shortfall every month, mostly from bouncing checks and paying interest to the payday loan service. They have $6,000 in collections, owe $33,000 on their cars, and are about $15,000 in debt to their parents. Because of their bad credit history, the loan on one of their cars is at 22 percent interest— when it's paid off in five years, they'll have paid for the car twice.

The couple spends $450 a month on coffee and cigarettes alone, and when Allison points out that in five years they would have $32,000 (the equivalent of their car loans) they realize that it's time to make big changes. By following Allison's instructions to get rid of Jessica's SUV, Greg's hot rod hobby, quitting smoking, and making coffee at home, they are on their way to financial stability.

They are still at least five years away from being able to buy a house, but Greg says he's learned it's necessary to pay attention to the little things in order to get the bigger things you really want. They're finally able to pay their bills on time, which is a big step from living on the edge of bankruptcy that got them on the show in the first place.

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