Under 30 Years Old with $1,000,000 in Debt

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JodyBuchanan

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I just watched a Dave Ramsey video where the caller indicated that she and her new husband were in nearly $1,000,000 of debt. She was 29 and he was 32. Their mortgage was around $250,000, their student loans were approximately $300,000, their car loans were about $30,000, and the rest were credit cards and personal loans. I'm not even sure what personal loans means. Did these people go to a bank and take out personal loans? Do banks even do that? I'm sure they do. They'll lend to pretty much anyone these days.

The caller said that she was scared and ashamed. They were trying to avoid filing for bankruptcy. Again, late twenties and early thirties. Both she and her new husband had advanced degrees and worked for the government. He holds an MBA and she a degree in Social something. She said that the two of them had been married for a few years, which means that they were in financial trouble before they met. Can you imagine meeting someone who holds over $150,000 in student debt and then choosing to marry them? Who does this? More importantly, who borrows over $150,000 to go to college? It was actually her who held most of the college debt and him most of the credit card debt. She said that both of them exhibited bad judgement. Ya think? I bet they weren't thinking about how bad their judgement was when they were experiencing the high of borrowing all that money.

She wanted to know what to do. That they were at the end of their rope. As I was listening to this, I wondered if they felt like they were at the end of their rope because they were being cut off from borrowing or were ready to default on that borrowing. I bet if they won the lottery, they wouldn't feel bad at all; that they'd merely go out shopping again. So really, I don't think there was any mental awakening or anything like that. It was more likely the pressure of not making enough money to cover their bills. This is actually a variant of the dreaded rat race. Earn and spend. Earn and spend. Keep going until you can't anymore. Until someone won't let you spend. And then, call a radio show to ask for advice. Ask someone else to do the mental work to get them out of their bind. Why didn't either of them ask for advice when she was signing the paperwork to borrow hundreds of thousands of dollars to get a junk degree? Or while he was putting tens of thousands of dollars on a credit card? Why not then? Why only now? It seems like the music has stopped and there were no chairs left.

There's a section in Dave's book, The Total Money Makeover, that's called The Big Challenge: Find a Mirror. He actually alluded to this section in the video. He said what these two were facing wasn't a math problem in the least, but a personal one. In the book he says that successful personal finance is 80% behavioral and 20% head knowledge. Basically, that if someone who knows what they're doing puts you on a plan, if you follow that plan like a lumbering idiot and without wavering, you should see success in the future. Being successful with finances doesn't take a lot of brain power. The only brain power you'll need is to know when to avoid doing dumb things. Borrowing hundreds of thousands of dollars for college is dumb. Having over $30,000 in car loans is dumb. Having hundreds of thousands of dollars in credit card bills is dumb. Extraordinarily dumb. There's no other way to describe it.

Dave says that the only thing standing in the way of these two getting out of the trouble they're in is themselves. That if they follow his plan and eat rice and beans every day for the next three years, they'll fix their situation. That it won't be easy and they'll hate every minute of it, but since they're the ones who got themselves into this mess, they'll have to be the ones to get themselves out. You should have heard the girl sighing on the other end of the phone. She didn't like hearing any of this at all. She loved the fact that she and her husband spent more by the time they hit their late twenties than most retired couples spend, ever. She hated the fact that she'd have to suffer through the next few years cleaning up the mess they created. As if it was someone else's problem. As if she should be able to simply walk away.

Dave told her that while the next few years would be tough, it would be good for them. Personally, I think the time will introduce them to a few concepts; responsibility, accountability, and restraint. I guess, for some people, there's no other way to teach them about these things. They need to hit rock bottom.

Here's a question for you: what's the most you've ever been in debt? Have you ever felt like you'd never get out of it? Does money stress you out? Do you feel as though you're owned by bad decisions you may have made in the past? I'd love to hear your story (or the story of someone you know).
 
Under 30 Years Old with $1,000,000 in Debt was posted on 02-25-2021 by JodyBuchanan in the Finance Forum forum.
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