SavvySugar

Maxed Out: 26-Year-Old Single Mom Spends Rent on Clothes

SavvySugar — Mon, 15 Jun 2009 10:30:05 -0700

This episode of Maxed Out is about Crystal, a 26-year-old legal assistant and single mom with two kids - she also happens to be $50,000 in debt ($20,000 of that is from student loans). She's been ignoring the state of her finances to the extent of not paying some bills in four months and owing $200 to a gym she's never used. Everything is in crisis mode all of the time and Crystal is completely stressed out. She's still getting handouts from her father even though she's not earning much less than he is, and she's concerned that her neediness is damaging their relationship. Get more details about Crystal's finances and learn how guru Allison Griffiths tries to help when you read more.

Crystal says it all when she admits to consciously choosing to be short on rent to keep up with latest trends, and she avoids heavily trafficked areas while driving because she can't afford to update her expired license. When Allison investigates Crystal's situation by reviewing months of statements, she finds that on average, Crystal has a $430 monthly shortfall. To add fuel to the fire, Allison finds that Crystal is paying $0 toward her debts; at the rate she's going, the $50,000 debt will be $110,000 in five years. Allison finds a red flag number of $4,000: that's how much Crystal has in critical debt, meaning the amount she's behind on rent, daycare, and utilities. Besides giving firm instructions to slash her expenses, Allison tells Crystal to go to her landlord, daycare, and utility company, and say sorry about getting behind and ask how much she can pay every month until she's caught up and back on her feet. After three months, Crystal is saving over $300 a month and is determined to stop leaning on her father for handouts. She's taking control of her finances and able to set deadlines for herself instead of procrastinating and ignoring her bills.

Maxed Out: Couple Spends Three Times Their Monthly Income

SavvySugar — Mon, 01 Jun 2009 12:00:29 -0700

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.

Maxed Out: Debt by Comic Books Isn't Funny

SavvySugar — Wed, 20 May 2009 08:30:17 -0700

This episode of Maxed Out features the financial struggles of Adrianne and Greg, a young couple who have home ownership on the mind, but debt is holding them back. Greg is a habitual spender and has $20,000 in debt, spent mostly on DVDs and comic books, while Adrianne is debt-free.

A big reason Adrianne's last relationship didn't work out is that she was paying for everything, and this put her into debt (which she was able to eventually pay off). Financial guru Allison Griffiths says the couple needs to leave their spending past behind and focus on their futures. Find out how she helps them when you read more.

When she looks through Greg's statements, Allison discovers that in the past year, Greg worked for one entire month just to pay interest on his debt. Allison restructures the way the couple handles their bills in order to eliminate their monthly shortfall. All of Greg's income will go toward debt repayment, while Adrianne's income will go toward all of their other expenses. Adrianne is uncomfortable at first because she has flashbacks to her last relationship, but she goes along with the plan.

Allison encourages the couple to examine their investments to make sure they're in line with their short-term goal of buying a home, and she suggests that Greg sell back some comic books to raise extra cash. The couple finds it difficult to part with their individual financial habits, but discovers that teaming up really is the best solution. After cutting monthly expenses by $1,300, Adrianne and Greg are now saving for a down payment.

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Maxed Out: Love Does Not Always Conquer Money Problems

SavvySugar — Mon, 27 Apr 2009 06:30:29 -0700

This episode of Maxed Out features Adrianne, a woman in her 20s whose relationship with money compromises her romantic relationship with her boyfriend, Mike. It’s the first time on the show where a couple breaks up during the month it takes for financial guru Allison Griffiths to work her magic.

The show begins with a profile of Mike and Adrianne: Mike is careful, Adrianne is careless; he owns two condos and she rents her apartment; he doesn’t have a car and she has an expensive car payment. Get more details on their breakup and how Allison tries to help Adrianne when you read more.

At one point in their relationship, Adrianne was living with Mike rent free, hoping it would help her get out of debt (she’s more than $25,000 in the red), but a bad shopping habit prevented her from getting anywhere so she moved out to an apartment on her own. Adrianne owes Mike $5,000 and he leaves to take a three month teaching position in Beijing, hoping Adrianne will be on track when he returns.

She knows that her lack of control over her finances is eroding her independence and her relationship with Mike, and she wants to use his time away to get on a road to self-sufficiency. She never gets the chance to prove anything to him because they break up shortly after he leaves, which pushes her to keep spending money because she sees it as a mood elevator.

With a monthly shortfall of $450, it’s no wonder Adrianne can’t get out of debt. Allison encourages her to get rid of her car because it’s taking up 35 percent of her take home pay, and suggests that she find a better paying job to get more money in the bank. In the end, Adrianne is successful on several accounts: she gets a job making $15,000 more, it's within walking distance from her new apartment, which eliminates the need for a car, and the apartment is $300 cheaper in rent.

What would you have suggested to the couple?
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Maxed Out: Financial Dependency Prevents Marriage

SavvySugar — Mon, 16 Mar 2009 04:30:55 -0700

This episode of Maxed Out is about Lisa and AJ, a couple living together in a lopsided financial relationship. AJ covers most of their shared bills because Lisa can't pay her half - she has more than $52,000 in debt and a bad shopping habit, while AJ has no debt to his name. He says Lisa needs to get her debt down to a manageable place before they can consider marriage, and this makes Lisa upset. AJ longs to go back to school, but Lisa's debt is standing in the way; he can't save for tuition because he's paying twice his share in bills. Find out more about their financial situation when you read more.

Lisa is a waitress making $1,100 a month, and she spends the $600 she makes in tips without ever depositing the money into her account. She's only paying $89 a month to her debt, and financial guru Allison Griffiths determines that at the rate Lisa is going her debt will grow to $100,000 in five years time. That's nearly twice as much, and AJ is visibly overwhelmed with the news.

Allison instructs the couple to each take out $50 a week and track how they are spending the cash. She tells Lisa to put her tip money in the bank, sell some of her 40 pairs of shoes to a consignment store, and gives her three weeks to earn more money so she can contribute 50 percent of the bills and pay down more debt. Allison instructs AJ to open a separate savings account to make monthly deposits toward going back to school.

At the end of the episode, Lisa has quit her job as a waitress for a higher paying job at a salon, and AJ is earning more money because of a promotion and more overtime hours. Lisa is making much larger payments toward her debt, and their goals of marriage, a mortgage, and education seem more in reach.

What's your take on the situation and resolution at the end of the episode? Do you think they have taken the proper steps to make their relationship work and work themselves out of debt?

Maxed Out: Debt Puts Marriage and a Home on the Rocks

SavvySugar — Wed, 25 Feb 2009 07:15:31 -0800

This episode of Maxed Out is about Kim and Kevin, a couple so financially unstable that their money troubles already caused them to separate once - but they had to stay in the same house together because neither could afford to pay rent somewhere else. While they are back together, the couple still lives separate financial lives and is clueless about where their money is going.

Kevin tells Kim everything is OK and she just goes off the assumption that he's telling the truth because they don't communicate about money. He admits they are on the road to financial failure, and it could also mean the end of their relationship. Find out more about their situation when you read more.

Together, Kevin and Kim earn $80,000 a year and have $50,000 in debt. Kim prefers to keep their accounts separate because he has a spending weakness - he uses their line of credit to pay for everything and never knows how he'll make his next payment. Financial guru Allison Griffiths discovers they have a monthly shortfall of $2,700 and in two years, their $50,000 of debt will be $119,000!

Allison encourages them to cut back spending by limiting cash withdrawals (they had been taking out $1,600 a month), temporarily reducing retirement contributions, cashing in their life insurance policy for a cheaper one, and merging their money to keep foreclosure and divorce at bay. Through a team effort, Kevin and Kim are able to cut their monthly spending by $2,800, pay down a substantial amount of credit card debt, and their open communication about money makes them hopeful about their relationship.

Maxed Out: Third Bankruptcy Is Not a Charm

SavvySugar — Tue, 17 Feb 2009 07:15:45 -0800

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.

Maxed Out: Quitting More Than 50 Jobs Lends Itself to Debt

SavvySugar — Tue, 27 Jan 2009 11:30:16 -0800

This episode of Maxed Out is about Ron and Jennifer, a couple living on a single income and unsure of how they'll pay next month's mortgage. Ron has been unemployed for three months due to injury, but their financial problems began 10 years ago, mainly because of his inability to retain a job - Ron admits that he has quit between 50 and 100 jobs in just one decade. They have six credit cards, two mortgages, and an emergency line of credit they used to pay the past month's mortgage. Find out more about their situation when you read more.

Financial guru Allison Griffiths says their finances are about as bad as it gets. Ron has thrown a lot of money toward trying to become a self-employed supplement salesman and personal trainer, but without success. Both Ron and Jennifer habitually buy lottery tickets in hopes they will be able to pay their bills with the winnings. But there is no lucky pot in their foreseeable future, and Allison informs them that they have a monthly shortfall of $5,507!

A whopping 96.5 percent of Jennifer's monthly take-home pay goes to their first and second mortgage payments, leaving them only $127 for the remainder of the month. Their total debt, not counting their first mortgage, is $113,000, and at the rate they are going they'll owe $256,000 in just two years.

Allison gives them tools to form better financial habits, but this couple's situation is beyond her usual advice. She gives them an ultimatum: Ron must find a job with steady income, or they must sell their home. With such limited time, they make the decision to sell their house and use the money to pay down their debt.

Maxed Out: High-Maintenance Debt Denial

SavvySugar — Thu, 15 Jan 2009 09:30:19 -0800

This episode of Maxed Out puts faces on the word denial. Gillian (25-years-old) and Ed (27) collectively earn $93,000 a year, they estimate they are $47,000 in debt, and they're moving to a new condo in nine months with a mortgage that's $100,000 more than their current condo. Ed says whenever they do save something, they spend it because it seems like a waste to put the money toward their credit card debt. Find out how much the couple underestimated their debt-load and how they got into money trouble when you read more.

When Allison Griffiths goes through their paperwork, she discovers that Gillian and Ed don't have $47,000 in debt - it actually totals nearly $76,000! They have a monthly shortfall of $1280 that will more than double the day they move into their new condo, and within 10 months they'll be bankrupt. Gillian's secret shopping sprees (she buys clothes and shoes with cash), her regular blowouts and nail appointments, and Ed's affinity for gambling (he says he'll be able to pay off all their debt when he hits the jackpot) are the major culprits for why they're so deeply in the red.

Allison tells the couple they need to learn self-restraint and asks them to cut their expenses to the bone. Obviously, the gambling and shopping sprees are eliminated and Gillian has to blow dry her own hair. They learn to cook together because Allison slashed their takeout and restaurant expenses. They're able to pay down enough debt before their moving day to make the move financially feasible, and Gillian asks the couple about what the hardest thing was about the process. Gillian says that it was cutting her shopping sprees, but she admits that it's better because she doesn't have to worry about Ed finding out. On top of their finances, Allison may have saved their relationship.

Maxed Out: $78,000 in Debt and No Mortgage

SavvySugar — Tue, 16 Dec 2008 11:30:22 -0800

This episode of Maxed Out is about Christine and Ross, a couple in so much debt that it's extremely difficult for them to keep things afloat. Christine can't even speak without crying because she's so distraught and stressed over their financial situation. They are the only couple among their friends who are still renting, and their dream is to have a home and children.

Christine is taking fertility medication, which her doctors say isn't working because of her high stress levels, but their first priority should really be paying off the $78,000 in debt they have between them. None of that debt comes from student loans or a mortgage; it's all credit cards, credit lines, and a small car loan. Find out how financial guru Allison Griffiths intervenes when you read more.

Allison discovers that every penny of Ross's income from the first seven days of each month goes toward the $1,157 monthly interest payments they're making. At this rate, it will take nearly eight years and $52,270 in interest until their debt is paid off. Allison instructs them to cut expenses to eliminate their $770 monthly shortfall, and by living within their means Christine and Ross will pay off their debt in half the time and with half the interest payments.

The couple doesn't proceed with Allison's instructions as quickly as she'd have liked, and they're hurting themselves by resisting to consolidate their 14 bank accounts. The $337 in bank fees they pay each month really add up - it's twice the amount they've been spending on entertainment. Eventually, Christine and Ross come around and get on the Maxed Out plan, but the one thing they'll never budge on is reducing their cable plan.

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