This video was posted in March 2017. They were very blasé about their financial obligations, fully confessing where it all came from. It roughly breaks down as follows (I think I have all the number right):
- Debt #1: $542,000 mortgage (they wanted to live in a neighborhood with good schools since one of their children is in public school; the other is still a baby)
- Debts #2, 3: Student loans: $418,000 (Hers, $220,000; His, $198,000) (they’re both attorneys)
- Debt #4: Car loan $14,000 (they wanted a safe car with advanced features)
- Debt #5: 401(k) loan: $13,000
- Debt #6: HVAC loan: $9,000 (home improvement)
- Debt #7: New windows: $12,000 (home improvement)
If the numbers are right, that puts them $1,008,000 in debt.
This couple does a good job (in their eyes) of justifying their spending, and I congratulate them for getting serious about paying it down; but I can’t help but wonder why they saw fit to incur it to begin with. Sure, they’re high earners; but they’re clearly big spenders as well. Is it worthwhile to use your entire adult productive years fixing mistakes you made before you’re 30? That’s insane.
They put out a follow-up video this month discussing the progress they’ve made in paying down their obligations: So far this year they have paid down $31,050 in non-mortgage debt. If you include their mortgage payments, they’ve paid down closer to $47,000, and they hope to hit $50,000 by the end of the year.
They seem like a nice young couple, clearly intelligent and well-spoken, both highly educated; so I find it disturbing they can discuss the crushing burden they bear with such composure and shrug-your-shoulders calmness. I wonder what lessons they’re teaching their children about money management?
However it takes a lot of courage to publicly admit this kind of debt load and a willingness to tackle it legally and ethically, so I'll give them credit for that. Another point in their favor is they have an impressive amount of money in their retirement account. Prudent saving is clearly important to them. I just wonder how much more they could put in their savings account if they weren’t spending all their discretionary income paying down their debt burdens?
And you know what seems like the height of irony? This couple also does videos on frugality and minimalism. I think I’m going to have to explore their YouTube channel a bit more closely. I don’t know anything about them except for these two debt videos, so maybe I’m judging them unfairly; but yowza, I can’t fathom being in their position and being so calm about it. How much different would their lives be if they had a lower mortgage, a cheaper car, and trade school degrees? (Just sayin’…)
Don and I have been in debt. (Still are, if you count our modest mortgage.) We hated every minute of it and do not – ever – want to be in that position again. We hope we’ve passed that on to our girls, who both look like they’ll be savers, not spenders.
I guess this is just a glimpse into how the other half lives. Me, I’m glad we live in this half.
I about fell out of my chair with this one. Wealth can be a very fleeting position. it can be gone in a flash or blink of an eye. To incur this level of debt is insane. One or both of their jobs can simply end, or one of them can get seriously ill. Even if they were to take the easy way out and file bankruptcy, the majority of the debt, student loans would Not be included if it is to a government agency of some sort. Lord help them.
ReplyDeleteCarl in the UP
We'd never made any payments on anything but a house up until September when we bought a tractor.
ReplyDeleteI was raised in a debt hating family, so even that rational decision for a "modest" loan amount was incredibly nerve wracking... I wouldn't even be able to sleep if I was one million dollars in debt.
My family has been debt free for a number of years. We had a 15 year mortgage that we paid off in 10 years, our new home was paid off with the proceeds from the sale of the old house. Years ago we had some debt car loans and mortgage on other houses but we have always paid as much as we could each month because neither of us can stand being in debt. I can not even imagine having that much debt and as you have said the student loan can not be discharged through going bankrupt!
ReplyDeleteWOW,
ReplyDeleteThat amount of debt would be all consuming to me, I think the stress of that would be unbelievable.
We are now living relatively debt free, no morgage, no time payments,no power or water bills( we are fully off grid) and the thought really scares me that people are living with this financial burden.
We are by no means from affluence, our parents never owned homes, and we have been a single low /medium income family which have just made careful and hopefully wise choices.
Hope they come through it ok.
Cheers
Jane from Australia.
Somebody quick, call Dave Ramsey! Like you I despise debt. Debt free except the house for 5 years. Uggh that might debt would kill me!
ReplyDeleteThat's what I was thinking too! I stumbled across their channel a week or so ago, through their video about things they don't spend money on, and was astonished. They do seem like nice young folks but Dave Ramsey would have a field day on them. That house? GONE. The car? GONE. I can just imagine him making them sell everything humanly possible. ... I don't think they'd go for it.
DeleteThey did a video on why their plan is better than the Dave Ramsey plan. I would like to see Dave Ramsey do a rebuttal of that.
DeleteIt sorta makes ya wonder what ever happened to starting small and working your way up.
ReplyDeleteThat's what I was thinking!
Delete$1M in debt is not a 'mistake'. It's sheer stupidity. And then making a video? Does anyone remember 'shame'? Smug little narcissists I say.
ReplyDeleteDock Guy
If anyone here sounds smug it's you, Dock Guy. At least the couple in debt isn't too cowardly to put their names and faces to the things they say - even worse when you're insulting somebody.
DeleteUhhhh and YOUR name is....??? SuccotashRose
DeleteI'm sorry Anonymous but you haven't disputed one criticism of mine about these two losers. Is there a point you wanted to make Anonymous?
DeleteDock Guy
Great example of a "highly educated" couple that are anything BUT "clearly intelligent".
ReplyDeleteDockGal
Younger daughter should be close to graduating soon from boot camp. I still get the live feed from the Navy and they have a class graduating this morning. Always become teary eyed while watching. If she is graduating today, wishing her all the best.
ReplyDeleteShe graduates next Wednesday, Nov. 22 (the day before Thanksgiving). We're hoping to watch the live feed as well.
Delete- Patrice
This is exactly why I think the State and Local Tax exemption should be kept, and the mortgage interest deduction should be phased out. I think most people would be more frugal and not pile up so much mortgage debt (I bet these two have a massive second mortgage to pay for home improvements and other things). The bankers would fight that with hammer and tongs because they want everybody to live on credit. If you think about what would be better for the people as a whole, more equity and outright ownership is far better than more debt.
ReplyDeleteYikes! Debt is slavery! And they justify the fancy house so easily... while waving a hand with a very large rock on it. Like Carl said above, things can change in a moment with a natural disaster or major illness. They have been brought up with debt being normal and the credit (debt) score being important. Who wants debt just to have a score number?
ReplyDeleteIt's "normal" these days. We are debt free (plan to stay that way), but I don't ACTUALLY TELL PEOPLE in my real life that. It marks you out, in this day and age, as being very wealthy, very weird, or both.
ReplyDeleteSounds more like this has become the banks problem.
ReplyDeleteEven if this couple attempts to continue to make the payments, after awhile the interest alone will probably drive them into bankruptcy.
My cousin was a banker, and she always told me that the banks would be out of business if everyone was like my husband and me. We live below our means, and don't worry about what others think. We save up BEFORE we buy something instead of paying for it after we get it. We're debt free by hard work, a frugal lifestyle, and the grace of God.
ReplyDeleteWhile I share you opinion of all those degrees in Medieval French Literature and Peace Studies, there are certainly degrees worth the money and effort to obtain. Accountants are nearly 100% employed, MD's rarely see unemployment, STEM fields are in high demand. I would hesitate to lump all higher education degrees into the "useless" pile. I am old enough to have grown up on Sesame Street, and the skit where the king declares that everyone should be a firefighter comes to mind. Even there, though, things have changed. I graduated med school $37k in debt and paid it off quickly. Now lots come out with over $200k in debt. This limits your career choices, explaining why so few go into primary care anymore. Not lack of interest or caring, simply cannot afford it because the income is not sufficient to carry the debt and still live indoors!
ReplyDeleteI call it Baruka Syndrome. She was the spoiled girl on Charlie and the Chocolate Factory. "I want what I want and I want it now!" They don't have any concept of a starter home. Sad really.
ReplyDelete