$200,000 Debt Denial

[jeffrey]

This family is in a financial mess

<a href="http://www.usatoday.com/money/perfi/basics/2005-11-06-port-hetmer_x.htm">With $200,000 in debt, where do you start?</a>

How many things can you find that they're doing wrong?

[Tree0164]

Re: $200,000 Debt Denial

I had read this earlier this week and shook my head. Talk about not knowing where you money is and trying to keep up with Jones.

Get on a budget bigtime.
Pay off the taxes that should be first priority
Children are going to have to take out student loans.
Tme share need to get rid of that asap


I think the advice they got was good but any savings that they have outside of retirement should be used to pay down their debt.

[BAGAGT1]

Re: $200,000 Debt Denial

I read this article yesterday. I honestly don't know how these people sleep at night. On the plus side they have a good combined income. Obviously if they can get rid of the time-share, they will save $400 a month. I think the addition of a new vehicle was a mistake, they should have bought a used minivan. I would cancel any vacations for the next few years, clip coupons to save on groceries. Someone needs to pick up a second job to help pay down the CC's.

[robex]

Re: $200,000 Debt Denial

I have to throw up my hands on this one...I'm so glad that they decided to cancel their 'lawn service'--out of five kids you'd think that one of them might be able to mow the lawn! As for the time share, in two years they've spent $9600.00 on it, plus taxes and maintenance (add about another $6000), that would be an awesome trip to Hawaii which would include airfare and hotel.
Sometimes you really have to wonder what people are thinking...

[Snoopy2645]

Re: $200,000 Debt Denial

Ya I dont know how you could sleep at night either. The time share would have to go the kids would have to get jobs & start paying something on thier own if anything it may actually be good for the kids. I would sale the new van & buy a used one for under 3k & then start ebaying & having garage sales & maybe sale the house & buy a smaller one or cheaper one. If its better to stay in the same house maybe rent a room or something!!

[baselle]

Re: $200,000 Debt Denial

Wow. Jones with all caps. All good advice above, but in addition they are going to have to make sure they didn't miss any other tricks - check to see if they are buying too much insurance (or the wrong type), make sure that their student loans are consolidated, check to see if they need PMI, and check to see that their tax withholding is correct.

And then they are going to have to suck it up and take a very, very hard look at their spending patterns. From the article, they had bought into the "if you look rich, you are rich" trap. They have to get into "be clever, don't listen to your TV or your kids, and don't pay retail".

[barbara L]

Re: $200,000 Debt Denial

I would think that one of their biggest ongoing issues is that they keep incurring debt. I'd start by cutting up the credit cards.

I am curious to know at what point did they think they had a problem?

[Snoopy2645]

Re: $200,000 Debt Denial

I wonder why so many people think if you look rich you are rich even if you have so much debt I am seeing this all the time & I just dont understand it.

[KathMorgan]

Re: $200,000 Debt Denial

Well, unless it is court ordered otherwise, the two oldest ones in college need to get a job, get a student loan, whatever and work their own way through school just like eeryone else. The three younger ones need to plan on doing the same thing. If there is money set aside for their college later, it needs to be used now to pay off bills. Sounds like they need to go to the cash in the envelope treatment. An envelope for everything they NEED to have and ones for things the WANT to have. Once the NEED to stuff is paid ( and that includes extra on all debt) what little that is in the WANT to envelopes is used until it's gone. Once it's gone that's it until next payday. I agree with Barbara, cut all those CC's up except for maybe one for emergencies that gets put in a place that is hard to get at, like a safe deposit box. They also both need to agree on the definition of "emergency".
I know it can be done because in 10 months we will be debt free (including the house) from over 160K in debt 3 years ago.

[Tree0164]

Re: $200,000 Debt Denial

I think people who alot look "rich" are very similar on this. They must have the lastest car, the lastest gadget, a timeshare. Kids must go to the right schools. Meanwhile they are earning a decent income but charge everything

[jmjj215]

Re: $200,000 Debt Denial

They need a budget.

[miclason]

Re: $200,000 Debt Denial

...ok, I know one shouldn't do this, but: I thought I had problems!! WOW!!...How do you even get to that??...I could buy a MANSION in ES for that money! (then again, I could pay a downpayment for a small house with what I owe!)

[Gailete]

Re: $200,000 Debt Denial

Good grief. How could people 'smart' enough to earn that high of income be so dumb as to not know how to handle their money! They need cut throat tactics for getting out from under that debt and cutting out lawn services isn't going to do it. Sell the time share, sell their house and move into something cheaper mortgage-wise and maintenance-wise, Learn to cook cheap economical meals, have a mazzive yardsale/ebay sale, etc. to get rid of all their excess (since they need to move into a smaller house anyhow they won't have room for everything), kids need to work for their education. The college kid should only be provided with what the letter of child support decree said to provide, period. It won't kill a college kid to work part-time while in school.

The one thing I would be very upset about is if I heard that these folks filed for bankruptcy as their bills seem to be all from their own stupidity and they shouldn't be leaving someone else to hold the bag. They don't have the income for their life style and need to learn to live below their income.

Gail

[Armywife]

Re: $200,000 Debt Denial

Wow.. this is definitely a toughie. Three things that caught my eye:

1. Why isn't the junior taking out student loans? (city universities are less expensive!)
2. Time share in Hawaii? Just the airfare alone for so many people is a budget breaking disaster waiting to happen.
3. New car? Geez.. used minivans are much, much better.

with so many people in the house, i'd say make the kids with working papers get a part time job to help out!

[katwoman]

Re: $200,000 Debt Denial

You know as a nation we are in REAL trouble when stories like this become, not only newsworthy, but common.

Yesterday, the Sunday Chicago Tribune ran a verrrry similar profile of two families in financial difficulty. I couldn't get the article out of my head and now this one!

Here are the parallels: 2 incomes, kids in college, homeowners. In the case of the Chicago people, the college costs are too great. The daughter chose to go out-of-state (to the same school I attended also o-of-s) and her total bill was 110k! The son attends an expensive arts type school in the city. His tuition will likely exceed the daughters! Otherwise, the family lives in a 2 flat where a rental "helps" to pay the mortgage. They're worried about the cost of heating gas this coming winter as they're already stretched to the limit.

With burdens such as these and the additional ones of having to pay for health insurance it's not hard to see where people fall into trouble.