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Did anyone else catch Oprah today (Wednesday)? She featured two couples whose spending and debt are totally out of control, the first couple much more than the second.
First couple: He earns $100,000. She is a SAHM to 6 kids. They live in high COL California. She likes to shop for herself and the kids. She'll buy new clothes, keep them for a couple of months, then sell them for next to nothing at one of her 4 annual yard sales. Then she'll go out and buy more clothes. So the kids always seem to have new clothes, but at any given time only have a handful of outfits in their closet.
In the video, she admitted she didn't know how much debt she had accumulated but finally figured it out and came up with 50K in CC debt. Then Suze came along. She reviewed EVERY bill they had and informed the couple that it wasn't 50K in debt. It was 135K! In addition, they owe $658,000 on their home on a negative amortization loan that grows by 20K/year. They have zero equity. The payment is $1,800/month and is about to reset to $3,300/month. They have 3 cars, 2 are leased, with monthly payments of $1,700. They have no life insurance and no health insurance. One child has some neurologic disease and is supposed to get annual MRIs but hasn't had one for a couple of years. Another has teeth that are all rotting but they haven't seen a dentist for ages. Oh, and they are now 2 weeks late on their mortgage payment.
Suze said in all her years of doing what she does, this was the worst case she had ever seen. She said the couple needs to put their house on the market immediately before they lose it. The wife has to get a job. Suze suggested Starbucks because they provide insurance for part time workers. Suze also said they need to leave California and suggested they move to Seattle. The husband does IT work and that is available there and the wife could still work for Starbucks. She said to get $1 million policy on husband and health insurance for all.
The 2nd couple wasn't nearly as bad. They were a young couple in NYC expecting their first child. They owe over $200,000 in student loans and earn about $145,000 I think (might have been higher). But they each drive a Lexus, the guy collects DVDs and has over 900 of them. The wife has closets full of designer handbags and expensive shoes. She showed one pair that she recently bought for $900 even though the baby furniture is on lay-away and she doesn't have the money to pay it off.
Suze's advice for them was all common sense stuff that we'd suggest here, too. Sell the DVDs and handbags. Sell the cars and get more reasonable ones. Stop dodging the student loan collectors because the private loans compound and are non-bankruptable. And start making family a priority over things.
I think the 2nd couple will do fine. I'm not so sure about the first couple.
First couple: He earns $100,000. She is a SAHM to 6 kids. They live in high COL California. She likes to shop for herself and the kids. She'll buy new clothes, keep them for a couple of months, then sell them for next to nothing at one of her 4 annual yard sales. Then she'll go out and buy more clothes. So the kids always seem to have new clothes, but at any given time only have a handful of outfits in their closet.
In the video, she admitted she didn't know how much debt she had accumulated but finally figured it out and came up with 50K in CC debt. Then Suze came along. She reviewed EVERY bill they had and informed the couple that it wasn't 50K in debt. It was 135K! In addition, they owe $658,000 on their home on a negative amortization loan that grows by 20K/year. They have zero equity. The payment is $1,800/month and is about to reset to $3,300/month. They have 3 cars, 2 are leased, with monthly payments of $1,700. They have no life insurance and no health insurance. One child has some neurologic disease and is supposed to get annual MRIs but hasn't had one for a couple of years. Another has teeth that are all rotting but they haven't seen a dentist for ages. Oh, and they are now 2 weeks late on their mortgage payment.
Suze said in all her years of doing what she does, this was the worst case she had ever seen. She said the couple needs to put their house on the market immediately before they lose it. The wife has to get a job. Suze suggested Starbucks because they provide insurance for part time workers. Suze also said they need to leave California and suggested they move to Seattle. The husband does IT work and that is available there and the wife could still work for Starbucks. She said to get $1 million policy on husband and health insurance for all.
The 2nd couple wasn't nearly as bad. They were a young couple in NYC expecting their first child. They owe over $200,000 in student loans and earn about $145,000 I think (might have been higher). But they each drive a Lexus, the guy collects DVDs and has over 900 of them. The wife has closets full of designer handbags and expensive shoes. She showed one pair that she recently bought for $900 even though the baby furniture is on lay-away and she doesn't have the money to pay it off.
Suze's advice for them was all common sense stuff that we'd suggest here, too. Sell the DVDs and handbags. Sell the cars and get more reasonable ones. Stop dodging the student loan collectors because the private loans compound and are non-bankruptable. And start making family a priority over things.
I think the 2nd couple will do fine. I'm not so sure about the first couple.
I think I just threw up a little in my mouth. 
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