This week on Life or Debt: Courtney and Luke Miller

life or debt Courtney and Luke Miller Downward Dog…Right Into Debt

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.

Living in a suburb of Baltimore, MD, Courtney and Luke Miller have a great marriage and raising their four wonderful children is the center of their universe. Running a holistic wellness studio, they enjoyed working together helping people improve their most valuable asset, their health. They taught yoga and nutrition, something they practiced in their own lives… but then the economy took a nose dive and so did their studio.

Next thing they knew, they found themselves filing for bankruptcy and having to find new jobs in order to generate income. With rent where it is, three of four kids in private school and a passion for organic eating, they need to generate $9,000 to just make ends meet, and that doesn’t include saving or paying down any debt. SO, they’ve got three options:

  1. Move to a new home to reduce their rent
  2. Increase Courtney's income
  3. Take the kids out of private school

In reality, they need to do all three, not a combination of the three because there’s not a world that exists in which their current situation is sustainable. So they have to figure out a way to make sacrifices in each area.  Not to mention, the current $36,000 in credit card debt will easily crest $150,000 by the time their kids finish high school. Then they will be in an even worse position. In fact, the credit card debt may eat them alive and force them into bankruptcy, again, before the kids even finish school.

So they really have no choice but to do all three. A complete holistic revamp to their perceptions about money, school, and life. Some tough love from Victor may be just the ticket as he calls in a favor to a friend who has fallen on hard times. She and her husband were blindsided by two job losses and found themselves splitting up and homeless… with children in the picture! This hits home to the Millers who love their kids more than anything and will do whatever necessary to get their finances on solid footing.

Taking the kids out of private school may feel like a disservice, but sinking your family into financial disaster will prove much more devastating in the end. The public vs private debate is very polarizing.  Parents that send their kids to public school have a visceral reaction to other parents who insist on private, especially when they can’t really afford it. It’s like these parents are saying, “I’m sacrificing for my kids, and you’re not… so I’m a better parent than you!” What a debate.  Sounds like a recipe for great television…!

If you related to what this family is going through, here are a few blogs you might find helpful.

Why Cash Flow Is Not The Same As Budgeting

Financial Mistakes To Avoid When Nearing Your Midlife Crisis

Have Some Street Sense When Deciding Whether You Should Sell Or Rent Your House

How Much Money Should I Have In My Emergency Savings Account?

When Good Debt Goes Bad

This week on Life or Debt: Aaron Carter

aaron carter life or debt You Can’t Have Your Candy And Eat It Too!

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.

In a bad version of “Where Are They Now,” former childhood pop star, Aaron Carter, has found himself dead broke. Not just broke, but in debt. And this is AFTER filing for Chapter 7 bankruptcy to clean the slate with the IRS. He had back taxes owed from the money earned during the height of his popularity. As so many child stars have experienced, Aaron’s parents didn’t do him any favors and instead spent his money on luxury homes, yachts and cars… thus he finds himself in one helluva mess.

Thanks to a law best known as the Coogan Law, a mandatory 15% of childhood stars earnings have to be set aside for them when they turn 18. So that’s good news, right? In most cases “yes,” but in his case “NO.” Aaron had several million dollars in the bank when he turned 18 but decided to sign it all over to his parents in order to keep them from going to jail for tax evasion. The hits just keep coming… and no, I’m not talking about Aaron’s Party.

Aaron has earned over $100 million dollars in his career, but due to total mismanagement of his business and money he’s found himself in debt to the tune of $150,000… or so he thought. Remember how we said the hits keep coming? Well, Victor Antonio brought in a forensic accountant to help Aaron out. What she found was eye-opening to say the least. He was over $220,000 in debt and had over $112,000 unknown withdrawals from his bank account in the last seven months. Here’s a guy making half a million dollars a year and he doesn’t have two nickels to rub together. Why you might ask? To borrow Victor’s words, three reasons:

  • Negligence
  • Not paying attention
  • Not knowing his numbers

The sad part is that Aaron wants to build a family and provide for them. But he can’t if he keeps going on like this. He MUST take charge of his own life and business if he wants to get back on track. That means getting rid of all the money-grubbers that find their way to celebrities. The people who don’t add any value but just suck the life (money) out of whomever they can attach to.

Aaron Carter went from being featured on MTV’s cribs to living in a leaky apartment with no money. But with Victor’s help and some big life changes on Aaron’s end, all that can change.

This week on Life or Debt: The Beeman Family

When Passion Becomes a Pitfall

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.

Eric and Staci Beeman have been happily married for 15 years and have four rambunctious boys. On the face of it, life is great. They own a beautiful home and Eric is a pastor at a local church while Staci works at home raising their four boys. Their family’s foundation is sturdy and lots of love flows through the Beeman’s household. But under the surface, their financial foundation isn’t so sturdy. Turns out, it’s the house built on sand and at any point could crumble into the Pacific Ocean.

All of a sudden, out of (what felt like) nowhere, Eric loses his job as a pastor and they are forced to move. But move where? Well, it was his idea to move in with his in-laws (yes, all six of their family members) for a couple of months or so. Three months max was the plan. Well, 24 months later they still find themselves packed into the home Staci grew up in! Yes, she and Eric are in the bedroom that she inhabited as a child. So her folks have had eight people (including four boys, granted their grandchildren) living with them at a time they’re supposed to be enjoying their golden years! This undoubtedly causes strain on the family relationships.

So part of Victor’s challenge, in addition to increasing their household income, is that grandma and grandpa must kick Eric and Staci out of the house within 90 days or he’s going have them evicted! The idea of allowing them to move in was to help them get back on their feet. Eric found a job at a new church and he and Staci were supposed to be building their savings. They didn’t even have enough to cover first and last month’s rent! Well, apparently that hasn’t been happening… and they’re one bad day away from financial disaster.

Sure enough, that one bad day arrives and Eric loses this job. Pastor Troy heard from the Lord that Eric must go. There is good news, however, Staci has found a job working part-time for $20/hour. Plus, they’ve sold their house and are able to sock away part of the proceeds into savings. Bottom line, Eric must find a job stable enough to support his family of six. Maybe his calling is in the pulpit and that’s fantastic, to be passionate about what you do, but if that passion doesn’t pay the bills then something must be done to supplement income. And that can’t continue to be handouts from family.

If you related to what this family is going through, here are a few blogs you might find helpful.

Financial Mistakes To Avoid When Nearing Your Midlife Crisis

When Good Debt Goes Bad

Have Some Street Sense When Deciding Whether You Should Sell Or Rent Your House

Why Cash Flow Is Not The Same As Budgeting

How Much Money Should I Have In My Emergency Savings Account?

This week on Life or Debt: Julian and Erika Singleton

victorreturn1280ah Shoes, Shoes and More Shoes

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.

The Singleton family lives in a great neighborhood in Chicago where the median household income is $60,000. It’s safe and they have a nice home there…this coming off the heels of living in a free apartment where they didn’t have to pay for rent, power or water. Safety was a major concern however as they were living in a dangerous part of town. Fear for their family drove them to a safer suburb.

So the move was a necessity but what they didn’t plan for was the real cost of living. Rather than budgeting and being cognizant of where their money was going, they instead spend, spend, and then spend some more!! To the tune of thousands of dollars in credit card debt and other personal loans. This on top of over $70K in student loans that Erika brought to the table. But the real problem is the daily decisions they make with their money.

Julian borrowed money from his retirement plan to buy new furniture for the whole house and doesn’t have the money to repay the retirement plan. Now, he owes money on his own money! This is not the recipe for building wealth. And he didn’t stop there either. He financed a brand new $5,500 television, which is a depreciating asset. Financing consumer products is a terrible habit to get into and the Singleton’s are waist deep in it.

In an effort to pull out all the stops, Victor enlisted the help of a forensic accountant to help them get back on track. In her investigation, she uncovers a $7K loan that was spent on SHOES and other online shopping and Julian was none the wiser! As one might imagine, this has disaster written all over it. Victor’s next act was to buy a Pavlock in order to “shock” them out of spending. The idea being that they had to press the button on the Pavlock before pressing “check out” of their online shopping cart.

Julian and Erika have a beautiful family and it seems as though they want to keep it that way. But the spending has to get under control. They need to open up to each other and begin communicating about their finances. They need to hold each other accountable and start working on their debts or they’ll find themselves up a creek without a paddle.

This week on Life or Debt: Steve and Raquel

life or debt raquel 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.

How Does Your Neighbor Drive THAT Car!?

Why Cash Flow Is Not The Same As Budgeting

Entrepreneurs - Why They Need Financial Planning Too

How Much Should You Budget For Taxes, Savings, and Life (TSL)?

How Much Money Should I Have In My Emergency Savings Account?

This week on Life or Debt: Ernie and Gina Peleaz

spike gina and ernie peleaz 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.

Gina and Ernie Peleaz have found themselves with an Income problem more so than a Spending problem. They seriously need to get their cash flow in line but it may not be possible to cut spending any more than they already have. The solution often lies in a lack of income…and therefore we need to find ways to remedy this! Of course, 11 out of every 10 people surveyed would say they want to increase their top line income. This may be easier said than done.

The Peleaz’s are committed to taking the necessary action to get their situation under control. Total debt hovers around $250,000 with about half of that being owed to family members. They’ve trimmed their discretionary spending to bare bones and are operating on a very tight budget. Ernie is working around the clock and Gina is going to work as a substitute teacher in order to bring in more income. They do have personal assets, including a good bit of equity in their home, which may come in handy to help pull them out of debt.

Increasing income from the restaurant is a must. They need to generate $38,000 more each year than what they’re currently earning to fill their spending gap and start paying down debt owed to family members. That comes out to revenue of $105 more per day. If this doesn’t happen, drastic measure may need to take place. This is where their assets come into play. Selling the house and renting for cheaper may be a move to tap equity in their home to start paying down debt. Moving the kids from a private school to a public school will help cash flow tremendously. Tuition expense is 12 times their annual property taxes!!

They’ve already made some pretty tough cuts in their budget but more drastic action may be necessary if top line income doesn’t improve. If they can’t get the restaurant’s revenue numbers up, then it may be time to close shop and find a different job. One that improves household income in order to make ends meet and pay down their debts. And when push comes to shove, it may be time to start driving an Uber at night!