This episode of Maxed Out is about Wade and Chastity, a couple who's had a very big year: they were married, bought a house, and unexpectedly had a baby. Chastity is on maternity leave and earning just a third of her full-time salary, and between an expensive newborn and reduced household salary their debt continues to grow each month. They took out a $40,000 loan to pay for their big wedding and not including their mortgage their total debt is $68,000.
Financial guru Allison Griffiths calculates that by the time Chastity goes back to work in 10 months, they'll acquire an additional $27,000 in debt, which would put them close to $100,000 in the red. Also, it's impossible for Chastity to be a stay-at-home mom like she'd like to because of their overwhelming debt. To see how Allison helps the couple get out of debt just read more
92 percent of Chastity and Wade's income is going toward debt repayment and housing expenses each month. Their lifestyle and fixed costs would be supportable on their previous combined income but not with Chastity's reduced income, so in order to keep their house major overhaul needs to happen with their money habits. The biggest expense Allison tells them to rid themselves of is a leased second car — Wade's car is paid off but Chastity is paying about $700 on her monthly lease.
The optimal situation would be for someone else to take over the lease, but it's usually difficult to find someone to enter that type of agreement. Allison says that even though walking away from the lease will trash Chastity's credit score, she has to get rid of the expense and her credit score is already heading in that direction. Aside from the car payments, Chastity starts working from home four days a week to bring in a substantial amount of income, and they make smaller changes like eating in more and using grocery coupons.
At the end of the episode, it seems that Chastity and Wade are on their way to being successfully debt free, and Chastity will be able to stay at home with her new baby. The biggest lesson I took away from this episode was that no matter how substantial your income, it's important to live within your means and be able to adapt to any surprises. The couple was making $150,000 before Chastity went on maternity leave, but because they took out a large loan for their wedding and had a big credit card balance, they were completely overwhelmed when the baby came along.