Maxed Out is finally back with some new episodes, and it seems like the show will never run out of material. This episode is about Erin and Darryl, newly-wedded 20-somethings who have managed to dig themselves into over $100,000 in debt.
They have $16,500 in credit card debt, $25,000 in student loans, and owe their parents a whopping $60,000. At the rate they are going, it will take nine years and $39,000 in interest for them to become debt free. Find out how financial guru Alison Griffiths helps them figure out a plan when you read more.
Erin and Darryl want to stand on their own two feet in their new life together but aren't able to with the huge amount they owe. Their first priority is paying off the family loans because it "comes with interest called guilt," and Alison scares them a bit by saying their "debt will poison their future." If they continue with the way they're currently managing their debt, they won't be able to start saving until early middle age.
Alison creates a penny pinching budget with the main goal of debt repayment. Her plan increases debt payments enough for them to be debt free in half that time and save $20,000 in interest. Instead of a nine-year plan, they'd be on a five-year plan if they follow Alison's advice. She also strongly recommends they sell their second vehicle and move to a cheaper apartment because their rent is about $250 more per month than they can afford.
A huge amount of debt like theirs is overwhelming, but they found themselves in "debt hell" because they avoided looking at the real numbers, and spent when they didn't have the money to spend. Erin and Darryl didn't even have an estimate for how much they spent on their wedding — the receipts were kept in a plastic bag but they never added up the amounts. The good news is they're on their way to becoming debt free and their money habits should be better for the rest of their lives.