Wela Financial Advisors on what we saw, what we learned, and what we should do on this week’s episode of Life or Debt on Spike.
Steve and Raquel are enjoying their newly married life and are fresh off a beautiful honeymoon to Bora Bora! This, on the heels of their dream wedding out of a fairy tale! On the face of it, things look pretty hunky dory in their household.
But looks can be deceiving… and Raquel riding around in a $100,000 dollar whip is Exhibit A. To say Raquel, as an executive assistant, and Steve, trying to start an apparel line, are living above their means is a gross understatement. They found themselves over $120,000 in debt, and that doesn’t include their mortgage!
So now what? They like nice things, and let’s be honest, who doesn’t? But they must make smart financial decisions, particularly at a time when Steve isn’t bringing in as much income as he once was. They have to begin saying “No” to that new pair of shoes, the “Mani – Pedi’s” or that new mahogany pool table while things are tight. The other thing that must go, the Tesla! It represents the 2nd largest monthly expense right behind their mortgage. For this family of four, they need to re-prioritize to get their household finances in order.
How to solve the issue: selling the Tesla and driving a more reasonable car is step one. They can’t afford to keep that car despite how much Raquel loves driving it. Next, bring monthly expenses in line with income. Spending more than you earn is a vicious cycle and leaves you in a pile of debt before you know it. Living by a reasonable budget is the only way to combat this. And a budget is going to be vital in order to build their emergency fund, which is step three. The emergency fund will help prevent unexpected life events from knocking them out like a roundhouse kick to the face from a UFC fighter! But if spending is not in-line, the emergency fund will disappear faster than that overpriced wedding cake. On top of all this, Steve needs to get serious about his business. He needs to start contributing to household income and building this business would really be a boost to their household.
Steve and Raquel have a great marriage and are willing to do what it takes to get the financial piece back on track. Good thing that Victor is just what the doctor ordered to get them back in shape!
If you related to what this family is going through, here are a few blogs you might find helpful.