This episode of Maxed Out was about Casey, a 24-year old whose goal is to be famous and has $31,000 in debt. She has a business degree and is making $24,000 a year — between paying her consolidated loan, credit card debt, student loans, and rent she barely makes ends meet. In fact, financial investigator Allison Griffiths figures that she's living above her means by $250-$400 each month.
Allison breaks down Casey's debt like this: Good debt (student loans), bad debt (credit cards and consolidation loan), and ugly debt ($5,000 that she owes her sister). She says her main priority is the debt to her sister because it has become a major strain on their usually close relationship, but has yet to pay anything towards that loan. Allison agrees they need to figure out a way to start paying back the ugly debt right away. To see what her solution is just
At the rate Casey is going, it will take four years to pay off her consolidation loan and another four before she can even begin paying her sister. Casey is given a four step plan to get her finances in order.
- Earn more: Casey knows that she could get a better paying job but hasn't been motivated to look for one. With Allison pushing, she finds a new job that pays $42,000.
- Spend less: You can't cut back when you don't know what you're spending your money on, so Casey keeps a spending journal that helps her create a budget.
- Write post-dated checks to her sister: She'll have the $5,000 paid in twenty weeks, and on top of that the consolidation loan will be paid in three years instead of four.
- Get Real: Allison tells Casey to stop wishing she was Paris Hilton.
Casey and her sister hug at the end of the episode, knowing that every check her sister gets will help mend their relationship. It's a very difficult thing to mix family and money. It can be too easy to give that debt last priority because it doesn't affect your credit score.