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Maxed Out 2008-04-21 09:43:25

Maxed Out: Expensive Bad Luck


This episode of Maxed Out features Jen and Jay, who are all too familiar with the old saying when it rains it pours — for them, a down-pour of bad luck has left them $67,000 in debt on top of their mortgage. It started with the sewage filled basement they discovered after closing on their first home, which was followed by lost jobs and a car crash that required heavy repairs. All the while, Jen was pregnant with their child, which added both happiness and additional financial stress to their already strained state. Both of them have decent paying jobs but are overwhelmed with their heavy debt and can't make ends meet each month. To see how financial guru Alison Griffiths helps the couple focus on fixing their finances instead of letting their unlucky past get the best of them just read more

Jen can't stand their current home and pictures moving in just a few years, and they are weary of spending any money for repairs for this reason. But Alison points out that in three years and taking into consideration repairs needed to resell the house and interest owed on their existing debt, they'll be $87,000 in debt and in no place to buy a bigger home in a better neighborhood.

She instructs the couple to simplify their bank accounts from five accounts down to two in order to cut down on the amount of transfers, negotiate with the bank to consolidate their three credit lines into one with a lower interest rate, and focus on paying off their highest debt first while paying the minimum on the others. She also made the uncharacteristic recommendation to fix the roof on a "buy now, pay later" plan. Their house is their biggest asset and they need to protect it, and in order to stay out of trouble with this kind of payment plan they need to set aside a certain amount each month. That way, when it comes time to pay for the roof they'll have enough set aside.

Alison convinces Jen and Jay that they'll need to stay in their home for at least five years — and maybe more depending on the market — in order to get where they need to be with their debt and be in a position to buy the kind of home they would like. They make improvements to their home to make it livable and comfortable, and suddenly their home didn't become such a point of discontent for them.

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