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.