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Maxed Out 2008-02-06 03:59:48

Maxed Out: Money Comes Between Sisters

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.


Join The Conversation
wackdoodle wackdoodle 9 years
Yeah money and sisters don't mix but sometimes that's all you've got. If you do loan money between sisters or from sister to brother you've got to ask whether it is a loan or a gift that they are expecting from you? And be very clear - burn me once, you could have no sibling. I've got 4 older siblings (1 sister a widowed mother of two and 3 older brothers). Since our parents died my brothers are all emotionally and physically unavailable for the most part, its pretty much my sister, my nephews and myself. Then throw into the mix that my sister's husband died unexpectedly, leaving her and her two sons near broke and depressed. They were living off my brother-in-laws substantial VA military disability pension. Then when he died the government cut them off instantly - I couldn't let my sister and my nephews suffer so I paid her $3,000 house payment a couple of times. Paid her other bills and my dad paid for her husbands memorial service. I bought groceries to fill her house and storage freezer for months and gave her pocket money so she would not feel that things had changed that much. I don't expect to ever get that money back nor do I want it back - that was a painful time for everyone who loved my brother-in-law and my sister. However, since then my sister has financially recovered and gotten a high paying RN job but because she's never addressed her depression and grief she has a problem with overspending and poor planning. She will know that her house tax is coming up but instead of saving for it she'll buy a new tv or new linens for all the rooms in the house. Then when the tax is due I get the "I'm gonna lose my house call". Because of our age difference-she's 13 years older than me and helped raise me after our mom died - I figured I owed whatever she wanted without the expectation of being paid back. But you cannot have an adult relationship if someone is always in the position of power and authority while the other is subservant. So that our dad is gone too and cannot mediate fights between the two of us I try to avoid them before they ever start by setting an adult tone to our conversations. Now I honestly ask her "Is this a loan that you intend to pay back to me? Or am I gifting you this money as I have done before? Because if I am gifting the money I need a receipt for tax purposes." She finally has gotten it - even when I fall on hard times I don't ask her for money EVER and I don't expect or want her to loan me any, I hate asking for money from family or friends, - I figure it my fault that I am having financial difficulty and should not inflict my problem on anyone else. However, I don't mind giving money to others if it's needed but I won't keep giving it because someone has continually made the same error over and over again. The thing is right now she did borrow money from me while I've been out for a disability - I've been living off my savings, calculated to the penny. She knew this but still she asked to borrow money - I advised her of my situation, weighed to pros and cons and let her borrow the fairly large sum on condition that when she got her tax refund I would be paid back immediately. Well, she filed her taxes online two weeks ago and got her refund with in the last couple of days. No mention about paying me back -yet. why the heck do i write so much?
PeachyKeen19 PeachyKeen19 9 years
Thank you Savvy, this sounds like a cool tv show :)
juju4 juju4 9 years
I would say that if you change positions, most people would not want to move on for less than a 10-15% increase in salary. In this example, it sounds like she was making significantly below what she was worth based on her degree and/or experience. (I wonder what city she lives in; that would make a huge difference). There are people that make huge jumps in salary, but I think that you would have to have FABULOUS interview skills, steady work experience and longevity at those positions, and a really winning attitude. (Hotstuff-- you must have really impressed them!) But I do think it is unrealistic in most situations for folks to think that they can double their income by just changing jobs. Unless you change professions, earn a degree or certificate, or just happen to interview at a very generous company, it probably won't happen.
hotstuff hotstuff 9 years
Oh, and thanks Savvy I'm definitely going to have to put this show on my Tivo!
hotstuff hotstuff 9 years
Making twice what you earn isn't so impossible. I'm currently being offered more than twice what I earn and I already earn a great salary. So don't think that it's so impossible, stay positive!
nola45 nola45 9 years
Comment about the salary raises. In general, the company will set a cost of living amount. But then, there is a promotional amount, too, and if you are a more valuable employee, you may get more than the cost of living, but not a promotion. I'm talking about compensation policies in large companies. In large companies there will be a band of compensation for each type of position, and if you are at the top of the band, there won't be anything except cost of living unless you get promoted. In large companies, the manager will know the cost of living amount, and should be able to discuss it with you. If your company has determined that 3.5% is the cost of living, and you think it should be more, tough -- that's company policy. And if you are not judged a good performer, they might not give you this full budgeted amount in order to give it to someone who is judged a better performer. To negotiate a lot more money, you better be angling for a promotion, or go outside and get another offer (but be ready to take it if your boss won't go as high as the offer). For small companies, all bets are off. Did they make money that year? As much as last year...? For some folks they might not have any raises, just be happy that you kept your job. And so on. Best thing is to ask your manager about how compensation increments are determined -- if you are armed with this information, you are prepared to argue your case. Hope this helps.
amers230 amers230 9 years
i don't get the post-dated check advice. so she's writing a check for money she doesn't have yet? that would make me really nervous.
moss1080 moss1080 9 years
5% will cover cost of living increase but not much else. 7% is a nice place to start and if you can prove your worthy over the last year it is not unreasonable to go up from the 7%.
artsugar artsugar 9 years
I am glad people are getting help to fix up their finances! I had a question for all you ladies... heading into salary negotiations/annual reviews, is there a formula most employers use to calculate raises? Is there an average raise amount across the country to use as a bench mark? 5 %? Thanks!
moss1080 moss1080 9 years
When I first got married I was so deep in debt it was silly. Shane and I made it our priority to get out of debt and in doing so I found out what my priorities were and how off I had been. It has been 6 long years but we are now debt free (except for our new home). Life is so short and relationships are so fragil, yet important to add the stress and frustration of money issues. Ironic enough, now that I am debt free I find that I can buy more of the clothes I thought I needed and afford to take the vacations I never should have taken in the first place. I hope that she can get her life on track. It is hard, but worth it.
nola45 nola45 9 years
By the way, the moral of the story isn't just "stay out of debt". If you ever want to start your own business, then handling debt is a way of life. And in most cases, the banks will make you sign "personally" for the loans which means that the debt is a personal debt not just a business debt, and your house and personal assets are liable in case you can't pay. And family members might be invested with you, too...
nola45 nola45 9 years
I think this is a good story, and I think the salary jump isn't unrealistic. Lots of folks don't make earning a high salary a priority, as long as they like their boss and co-workers, but the debt makes this an unrealistic approach to life. I changed careers because my first career wasn't enough to support the child care, and we needed the second income. My earning capacity changed dramatically!
amybdk amybdk 9 years
Ugh... that salary increase seems to be unrealistic. I'm lucky to add on a couple thousand dollars each new job - and that's with experience! Maybe I'm wrong... if so, I want to find a job that doubles my salary!
precious_pets4 precious_pets4 9 years
Money and sisters DON'T mix... I never thought it would happen to me, because my sister and I were so close... but my father's money came between us (I offered to give her every cent because she cared for him while he was ill -- that offer wasn't good enough for her, believe it or not) The whole family suffers... her kids are my daughter's only cousins... and my mother only has the two children -- it's been 7 years and it still is breaking everyone's heart :(
melizzle melizzle 9 years
I'm with ashcwebb... absent a medical crisis or other serious, unexpected situation like that, I do not understand how someone can get into such severe debt. I treat my credit card like it's cash and never leave a balance on it.
cowbark cowbark 9 years
That's insanity!!! How does someone almost double their salary like that - I can't believe that she stayed in that lower paying job with so much debt. I guess not everyone really knows what their worth, salary-wise. Every time I hear about this show it makes me wish I had cable so I could watch it!
Lovely_1 Lovely_1 9 years
I honestly can't understand how people do this! Don't you get like NO sleep worrying about things like this! I am a LITTLE bit in debt (nothing compared to this!) and I worry enough as is!
eruntale eruntale 9 years
the solution was very sensible, specially the last one. sometimes we think we can spend like celebrities and we are just average people with average incomes.
gooniette gooniette 9 years
That is a huge jump in salary. But the fundamentals are the same. Spend less than you earn and you will be able to pay off debt and accumulate wealth!
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