Financially Illiterate Couple Needs Help Now! - Til Debt Do Us Part 205 - Let's Make A Deal

Summary

In this episode of 'Til Debt Do Us Part,' financial expert Gail Vaz-Oxlade helps Alena and Dan, who have accrued $60,000 in debt just two years into their marriage, despite a generous $250,000 down payment gift from Alena's mother. As Alena goes on maternity leave and their financial situation worsens, Gail steps in to guide them on managing expenses, consolidating debt, and fostering better communication in their relationship. Her challenge-driven approach pushes the couple to confront their financial habits, cut unnecessary spending, and eventually implement a plan to secure their financial future, ending in a rewarding conclusion both financially and emotionally.

Highlights

• Alena and Dan accumulated $60,000 in debt, alarming on top of a sizable house gift from Alena's mother. 🏠
• Their debt problems were largely due to high-interest loans and unsustainable spending habits. 💳
• To help, Gail introduced a strict cash budget and eliminated their credit card use. 💵
• The couple participated in weekly challenges to improve their financial standing and relationship. 🏆
• Dan successfully consolidated their debt into the mortgage, saving them $19,000 in interest. 💰

Key Takeaways

• Communication is crucial in resolving financial conflicts in relationships. 👥
• Understanding and managing expenses can prevent couples from accruing overwhelming debt. 📉
• Consolidating debt may be a smart move to prevent exorbitant interest from accumulating. 💸
• Living on a cash budget helps in visualizing and minimizing unnecessary spending. 🤑
• Positive changes require teamwork and commitment from both partners. 🤝

Overview

Alena and Dan seemed like they were living the dream, but dive deeper and you'd see financial turmoil bubbling under the surface. With a generous gift of a $250,000 home down payment courtesy of Alena's mom, this couple should have been set. Instead, they found themselves drowning in $60,000 of debt due to frivolous spending and high-interest loans - a situation that took both of them by surprise when the bills piled up!

Enter Gail Vaz-Oxlade, financial guru and relationship mediator, ready to make sense of their fiscal fiasco. Gail put in place a rigorous cash-only budget and tasked the couple with series of playful yet eye-opening weekly financial challenges. This was not just about crunching numbers but also repairing communication gaps that money issues had frayed in their relationship.

Through commitment to the tasks and each other, Alena and Dan managed to turn the tide. The highlight? Consolidating their debt under their mortgage and smartening up everyday expenses. In the end, the couple not only found financial balance but also enjoyed each other's company more, strengthened by the storms they've weathered together. And as a cherry on top, they received a check for $5,000 from Gail to pay down their debt, and a playset for their daughter.

Financially Illiterate Couple Needs Help Now! - Til Debt Do Us Part 205 - Let's Make A Deal Transcription

• 00:00 - 00:30 we really realized our financial problems when we started running out of money it's something we fight about constantly I need is for you to be calm and I need you to think about it because when you stress out we fight me somebody's not saving the maternity leave is stopping we're gonna be needing more money all some bill collectors are calling I don't understand from 24 how we get to 61 it's I think it's just going from bad to worse we're in trouble here [Music]
• 00:30 - 01:00 my name is Alena I'm an early childhood educator right now I'm on maternity leave so I stay at home and take care of my 9 month old daughter I'm going to have a baby sometime in December in the winter so this family is gonna need more
• 01:00 - 01:30 money my name is Dan and I'm an electronic sales we owe them an extra payment because we're behind the bills that stressed me out the most of the loan we took out for our wedding this is where the problems begin the mistake I guess the way I see it is because it's such a high interest rate we're not paying off the principal or paying more for the interest that's been added on I have a couple personal loans that I need to pay back that that are with members of my family or cable company and called me up doesn't bother me I know how to talk to them yes hydro calls me up
• 01:30 - 02:00 doesn't bother me in order to talk to them yes my car is flying apart we have to replace one of our cars dan has hobbies which I find maybe a little expensive he goes to a gun club I think our major thing is the gym so I signed up for the most expensive gym membership they had the buy now pay later is the table and then since that barbecue barbecue I said fine what's another $200 when they moved into that house they
• 02:00 - 02:30 didn't have to buy anything everything was here my mom is a great person very overbearing but great she's given us a lot of stuff furniture and things like that now Elena's pregnant again and now they need some help there won't be any help for me it's a lot of stress it's a lot of arguing between Dan and I we're not happy this month I'll help this couple move from red to black I've been solving many problems for over 20 years tacking everything from high
• 02:30 - 03:00 finance the low income I help people understand money and debt which is still a huge mystery for most folks and it's the number one recent couple split up so now I'm making house calls dan and Alina should be on easy street Elena's mom gave them two hundred and fifty thousand dollars for their home so they only have a forty thousand dollar mortgage but in their two years of marriage they've racked up $60,000 in debt and their high interest loans have become high interest hell these two have
• 03:00 - 03:30 to change their ways or they're going to lose it all hi Gayle boss Oxley nice to meet you before we get started if you don't mind I just like to drop my back and have a quick look around no problem okay great it's a nice room is this by no pay later uh-huh have you finished yet uh-huh I wonder if you know how I feel about that I'll just bow my head lots of pose everything is just very
• 03:30 - 04:00 cool and Leena but there's not a lot of fancy stuff so it makes me wonder where the money's going here's what I saw okay you're fighting like crazy and you really don't like it he's your best friend but you would rather be somewhere else you didn't even realize how badly off you were until you actually started pulling together the paperwork for the
• 04:00 - 04:30 show yes yeah took your breath away the other thing I saw I said you my love are the consummate salesmen but I'm married to one of you sometimes you buy on the pitch like the gym membership been there yet having that time now we've been managing the money you've been managing the money right that kind of a partnership we've both been doing it but yeah I take like a little bit more of it
• 04:30 - 05:00 next we're going to look at the details because the details don't lie can you believe what you spend in bank fees so what's this convenience whose convenience the bank's convenience cuz you're not doing it anymore no I'm not dancing up money management means that every month they're spending the equivalent of a week's worth of groceries in unnecessary bank fees if I said to you you were spending two
• 05:00 - 05:30 hundred and nine dollars every month would you say I was not but now you know how I feel about you that's bad management remember I told you you were necked yes do you believe me now yes okay good what do you think shocking could you do a better job I think I could like to hear you say that it's a little stubborn he likes done things his way and that's his way or the highway type of a thing so I think that this is what I've wanted to do in a long time between your bank fees and your
• 05:30 - 06:00 smokes and your restaurant costs and your gym membership you are spending almost $11,000 a year that you have nothing to show for his restaurant smoking his gym it was there wasn't like it was all from his side there was nothing I spent crazy money on now this is a screen who really should make the bottom fall out of your stomach you have
• 06:00 - 06:30 a lot of debt two years ago you guys barred $14,000 for your wedding and even though you're making payments because of the ridiculous interest rate you're paying you want to manage to pay off five hundred and fifty dollars you still all whopping thirteen thousand four hundred and fifty dollars you actually owe more in consumer debt than you know on your mortgage alena and dine are actually spending twice what they make that of a spending
• 06:30 - 07:00 means that they're going four thousand dollars deeper in the hole every month overall they've managed to rack up $60,000 in debt if you stay on this track in five years you all four hundred and sixty thousand dollars that's half a million dollars almost like I'm scared I'm sorry it scares me the projection of a half a million dollars is unbelievable so I have your promise you will do what I need you should do in order to get to
• 07:00 - 07:30 the end of this yeah okay so there are three things we're gonna do during this process we're gonna get you communicating in a positive way and we're going to get you managing the banking as part of that we're gonna make sure that we take care of the debt problem because it's a huge problem hanging over your head and we're gonna even up but play money so that you play together but you're also playing fair perfect so the next thing I need to do
• 07:30 - 08:00 is get to your credit cards and your debit card coming up will Alena by Dan's pitch I don't want to go head-to-head with in this is what worked in his opinion in [Music] Alena and Dan have been hooked on credit cards and high interest loans living on money they haven't made in less than two years of marriage they've accumulated
• 08:00 - 08:30 $60,000 in debt all the more shocking because Alina's mom gave them a quarter of a million dollars to put down on their mortgage she's helped them a lot and she's not very happy they have to understand once and for all this is finished the fun is over now they'll live by my rules for the next month this couple will learn to live on a strict cash budget no more credit cards they'll complete weekly challenges to tackle their money and
• 08:30 - 09:00 relationship issues and if they're willing to change I'll reward them with thousands of dollars no changes no money give me those cards excellent no your budget is actually made up of two parts they're your fixed expenses and your variable expenses your fixed expenses are things we can't do very much about things like your mortgage payment car payment all those things that are sort of concrete and non-negotiable your variable expenses are all the things that we can muddle with so you know we
• 09:00 - 09:30 decide whether you spend a hundred dollars a week on food or $200 a week on food I have cut your variable spending by about 50% and you live on that mm-hmm I I think it just as we got in the habit of spending a lot of money we should be able to get in the habit of not spending as much money what it means is you'll have $22.50 a week for clothing you'll have $25 a week for entertainment you will have 81 dollars a week for transportation you're gonna live with 81
• 09:30 - 10:00 dollars on gas a week to do that with the car okay and you will have a hundred and seventy five dollars a week for food now because you're living on cash and you know how cash can just escape we also have the budget binder and what the budget binder is as a means of recording everything you spent it shows how much one you have in each jar and you should keep a running total of what you have spent it's a huge payoff at the end so
• 10:00 - 10:30 if you're prepared to commit to the whole process and live on a fixed budget what it means is you won't have that $4,000 a month overrun and ultimately that means you won't have a half a million dollars in debt in five years so this week's challenge is called a future plan challenge and it's about getting organized and planning ahead first of all you're taking over the managing of the finances which means you're gonna have to go out and find yourself a cheap bank account okay Dan come with me
• 10:30 - 11:00 [Music] we have a little problem with our car right this one is running out of steam and that one's running order of miles so we have to find a way to get a new car into this family when you go looking for this car I don't want you to walk on to some guys lot and negotiate like a Salesman okay I want you to think outside the box auctions the guy who's been working on your car and keeping it running maybe he knows someone that's your challenge for
• 11:00 - 11:30 this week the more you work together the better you will be as a couple what's important is that as you're talking about it you are agreeing you are not folding because you don't like the confrontation and you are not overselling to the point where you just get her to do what you want by bullying or with your fabulous sales techniques I think the challenge is well at least the car challenge may be a little hard I'm feeling really excited about getting everything straightened up and I'm getting really excited to see what comes
• 11:30 - 12:00 next we're looking for something for a small compact car it'll get him from point A to point B we've talked about having to get rid of the car for a long time and I thought about going to a used car and Elena's thought about going to a new car because of the warranty the problem with the online auction is that they're not held very often okay so right now the next auction is sometime in mid-july I'm not a confrontational person I don't want to go head-to-head with in this is what worked in his opinion and I don't see any new cars I
• 12:00 - 12:30 expect you to a new car may already have our eye on something oh you do tell me the pitch was good didn't buy you know what that's worth a gold star right there we actually find a really nice car off lease low kilometers on it really good price right and the nice thing about it is even if we don't buy it now or in two months from now because the style of lot that it is we can order something similar okay the same type of price and how did we do with the banking
• 12:30 - 13:00 you found out a lot of information that I don't think then you know that you don't over you're in charge I have mapped out a whole list of which bill is doing so I know exactly what's going on doesn't that just make sense it just it makes life easier are you planning to go back to work I haven't made up my mind a hundred percent here there it may be doing a home daycare this is what we're going to do I would like you over the next week
• 13:00 - 13:30 to develop a business plan for staying home your challenge this week specifically is to create the business plan that will allow you to bring in five hundred dollars a week ultimately what I want you to do is I want you to come up with a debt repayment strategy that needs to consolidate their loans the cheapest way to do that is to add them to his existing mortgage since his mother-in-law co-sign that mortgage she's gonna have to be on board how easy
• 13:30 - 14:00 is it for dent to speak to my mom he's in sales he can smooth talk anyway let's see all kind of credit cards here like one two three four coming up is Dan smooth-talking going to work with his mother-in-law this is a big big mess Alena and Dan started their life together with a $250,000 down
• 14:00 - 14:30 payment on a house paid by Elena's mother with one child and a baby on the way they're about to lose an income and mom is tired of helping there won't be any help for me hello to get out of debt dan will have to sell his mother-in-law and allowing him to consolidate that debt on his existing mortgage I'm gonna grit my teeth I'm gonna bare my way through it Elena's challenge is to find a job that will allow her to stay home with the kids do this and they can earn up to $5,000 I think my challenge will
• 14:30 - 15:00 be hard I have no idea where to begin do you guys know anything about daycare and order prices what's going on like in from aleena has decided to talk to some neighborhood moms is it home base yeah I was thinking of taking one kid but I know if she if Gayle wants me to make up to 500 a week that won't cut it oh we you know who has this anything has this right like this toy this way when I
• 15:00 - 15:30 have kids come to the daycare they have their own toys to bring with them but also I have some stuff while we're only 115 dollars short here that's a whole lot better and a lot easier to deal with the $1,900 short a month but we currently are right now in short you leave well over your means right we're doing everything that we need to do to get out of it we've stopped using our credit cards or asking you to consolidate and they have said then I'm
• 15:30 - 16:00 not upset only at you it's you and Elena but you know if I don't help you you lose the house it's very simple like this I would like you promise we're gonna write it down like an agreement between us both of you are gonna bring in a little bit more money if it's $100 okay okay then okay in the midst of these days full of promise and success the week took a sudden turn for the worse Alena had a miscarriage we are
• 16:00 - 16:30 going through personal issues which are very difficult right now but I mean this whole process is keeping us busy which is a good thing feeling better getting them good so you know we'll start with you dad okay how did your pitch go our pitch went amazing the consolidation alone is gonna save us $19,000 over the next six months so I guess it was a pretty good idea it was a very good it's very good I know you were looking at opening a daycare I
• 16:30 - 17:00 thought you had asked me to UM bring in $500 according to the math that I did the going right here is $25 per child for day yes so that would mean a minimum for children and then when when I think for kids and I look at my house yes I'm thinking that's a small area for four kids so I was thinking of taking in two kids if she'll bring me $250 in per week right if Alena brings in two children between
• 17:00 - 17:30 that and the consolidation rolls are you balancing we go above balance which is all we're trying to achieve we were actually able to trim our budget back even more already yeah past two weeks how much $60 from from from the budget Oh we set out from us just by being a little smarter and our spending having to write everything down in the book just writing down their expenses has helped Daniel Elina see where they're wasting money it's easier to trim when
• 17:30 - 18:00 you can see the fat this week you're going to do a relationship challenge and I like to call this one share it and save you have a little bit of an equity in your relationship and in your budget in terms of how you have your fun so your challenge this week is as follows the first part involves making sure that you can take advantage of that fabulous Club plan that you have
• 18:00 - 18:30 and that bill paid up mm-hmm because you're gonna make a commitment to spend two days two evenings a week at the gym together well dad's expensive gym membership finally yeah before I met them Alena and Dan had managed to rack up $60,000 in debt in just two years of marriage
• 18:30 - 19:00 Dan's expensive lifestyle and hobbies were wasting $11,000 a year for their last challenge they need to start taking advantage of the extra perks in Dan's gym membership I hope working out together will whip them and their marriage into shape if they complete all my challenges I'll reward them with up to five thousand dollars to help pay down their debt getting the membership paid up so I can come back to the gym and start working out those really
• 19:00 - 19:30 it's exciting to have him with me and it's also exciting that I can finally start something different which is a personal trainer which I've never done so I'm really excited about it so good feeling ice for if you maintain that you'll be fine fun to be back at the gym yeah so more succinct I'm ready yeah and how is it for you it was fun was it nice having
• 19:30 - 20:00 him along or was it just like Deadwood beside you know it was fun it was really nice and he's decided he's gonna come to spin classes with me now on Wednesday cool and you've even dug the score on the spending in terms of the fun and you're doing it together so you're saving money right and you're putting that gym membership to work so instead of four hundred and sixty thousand dollars in debt we've stemmed the bleeding in your cash flow we have thirty six hundred dollars a year in your budget for savings if you do just that at 5% in thirty five years you'll have
• 20:00 - 20:30 six hundred thousand dollars saved that'll be nice overall the whole things worked out really well and you got your mother-in-law inside for you I have a check for $5,000 compete on your debt yeah thank you but I have something else for you too a play set for Noi for the backyard and we're even going to
• 20:30 - 21:00 assemble it it's perfect so you'll be able to use it for her she'll have a wonderful place to play in the backyard and you can use it with you take your kids so there you go and it wasn't always easy but you pulled together you did a great job and I congratulate you for the first time in two years I finally feel that I have nothing to be worried about if at the end all we got was a handshake and a good job that that would have been enough as it was so then the show and then plus that set I mean that that's that's
• 21:00 - 21:30 beautiful [Music] [Music]