Couple Has $232,000 In Debt...Wow.

[james.hendrickson]

Hey Guys,

On the SA user blogs, I just saw this posting:

https://thebudgetingnerd.savingadvice.com/2021/02/06/six-figure-debt_222071/

Evidently a couple in Alaska has $232,000 worth of debt, in multiple vehicle loans, some student loan debt, and some personal debt.

First, its pretty awesome that the couple is tackling this. It's sometimes a challenge to mentally face ones problems, especially large ones.

Second, what I wonder is...how does one actually accumulate that much debt?

[Fishindude77]

Easy to do if you aren't careful.
My buddies kid built up nearly $300k student loan debt to get his veterinarian degree.

[HundredK]

We weren't too far from this. Spent a few years paying it all off, made massive changes in our life to do so. Debt accumulates super quickly, especially once interest starts accruing. Most of the payments you make end up going toward interest and not toward the debt itself.

[cypher1]

what I wonder is...how does one actually accumulate that much debt?

Simple reaction or opinion: by living way above their means. Or by applying instant gratification versus saving and paying for an item in full. Or maybe one of them lost their job and income significantly dropped.

Between two people having seven CCs, truck, van, camper, prius payments, a LOC, two student loans doesn't seem too hard to be in that state.

[disneysteve]

I saw that blog. As with most people in that situation, there's a lot of denial and justification for bad decisions. When asked about the vehicles, she said they need the Prius to work DoorDash. The Prius loan was nearly $39,000. I can't imagine they're making anywhere near enough money delivering food to justify that expense.

She said she plans to post their budget. That should help clarify things a lot.

[james.hendrickson]

I just...think its amazing. Two hundred and thirty two thousand is enough to buy a house.

[disneysteve]

I just...think its amazing. Two hundred and thirty two thousand is enough to buy a house.

Well they do plan to eventually live in the camper full time so that covers the truck and camper being the equivalent of a house for them. And that’s $66,000 of the debt.

[bjl584]

$232K probably isn't all that out of the ordinary.
It's a lot, but I'm sure there are a lot of other couples with that much if not more.
I didn't see the blog, but a couple vehicle loans, some student loans, and a credit card or two can get most people in the 6 figure range.

[disneysteve]

$232K probably isn't all that out of the ordinary.
It's a lot, but I'm sure there are a lot of other couples with that much if not more.
I didn't see the blog, but a couple vehicle loans, some student loans, and a credit card or two can get most people in the 6 figure range.

This couple borrowed $145,000 for 3 vehicles and a camper, though. Only 55K is student loans. They bought a 40K van and an nearly 40K Prius plus a 32K truck and a 35K camper.

She hasn't posted income info so we have no context for those numbers but I'm willing to bet it's way out of line for their means. I make 250K and just bought a car a few months ago. At 26K, it is the most expensive vehicle we've ever purchased. But we're debt-free with a 7-figure portfolio and I decided to splurge. And I paid cash.

[kork13]

They don't want out of the debt bad enough yet. $100k of their debts are vehicles/camper. Just selling those would solve nearly half of their problems, but so long as she insists that they "need" the truck, "need" the Prius, consolidating credit cards only to run them up again.... She NEEDS to actually listen to & follow Dave Ramsey's plan, because for getting out of massive debt.... He's very good at motivating people to succeed. I can guarantee that as a military service member, even if he's a mid-grade officer, he's making no more than $150k. No way they can succeed with those ratios with such irresponsible behavior.

[corn18]

At our worst we had:

$104,000 CC debt
$122,000 Vehicle loans (4 cars and a travel trailer)
$25,000 401k loan

$251,000 Total

And we were spending $3k more per month than we were making.

[LivingAlmostLarge]

Trust me it's super easy to run up 6 figures in debt between 2 things - student loants and car loans. I cannot tell you how many people I personally have done taxes for and have 2-3 car loans. That each car loans might only be $30k which doesn't seem like much but each car loan is $30k.

My fedex guy bought a new SUV (i do his taxes and sell him GS cookies). He bought a new SUV for $50k and makes like $70k. I wanted to tell him it's hard to get ahead even with a 7 year car loan you will be paying for a long time.

Second taking out school loans to keep making no more money rather than get a better paying job is insane.

Do NOT get me wrong personally DH and I had between us probably $100k, I never tallied it up because we racked it up between 2002-2010 and deferred interest but $8500/year for 8 years plus an extra $8500 for 3 years is $93,500. Okay that's what we borrowed between the 2 of us. Plus my $10k undergrad loans puts us at $100k+ for 2 phds and an mba. We did pay minimal interest but we were there without trying.

Then add in our car loans we've had and carried

Focus $5k
outback $18k
Sonata $6k
Sienna $21k
Legacy $23k
= $73k in car loans from 2000-2020

Everyone does stupid stuff. Did we need car loan for Sienna or legacy? No. I'm not sure why we did it. I think because the rates were low and it's what we were supposed to do. We'd have been better off just paying them outright cash. Even with the sonata we could have paid cash. What we thinking? Stupid.

[disneysteve]

He bought a new SUV for $50k and makes like $70k.

That shouldn't even be allowed. How much did he borrow and how did he get approved? Lenders need to have tighter rules on how much someone can borrow relative to income. And 7-year loans shouldn't even be a thing. If you can't afford it on a 3-year loan, you can't afford it.

[terri77]

She said the husband keeps charging as she is trying to pay the cards off. They need to get on the same page.

[disneysteve]

She said the husband keeps charging as she is trying to pay the cards off. They need to get on the same page.

Yeah, I commented on that. One partner can't possibly address this on their own. It has to be a team effort. If one person is bailing out water while the other is drilling more holes in the boat, they're still going to sink.