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Maxed Out 2008-03-10 09:56:25

Maxed Out: A Lesson in Financial Independence

This episode of Maxed Out features Nicola and Jason, a couple in their 30s with two children who are financially dependent on their family members. With a combined income of $30,000 they can't afford the mortgage on their home, so Nicola's mother pays the mortgage for them. Nicola came up with the term "ostrich financing" to describe their way of handling their money — they just bury their heads and hope it will go away. They have no idea how much debt they actually have, but financial guru Alison Griffiths comes along to calculate their debt and come up with a plan to get their financial lives in tact. See how Alison helps Nicola and Jason when you

Their biggest issue is a cash flow that just isn't enough. Jason is a computer programmer but is working in landscaping earning $11 an hour, and Nicola has many small business ideas but is spreading herself too thin and can't focus on making money. Alison figures that without family contributions, Nicola and Jason are almost $1,000 short each month. Their total debt is $36,600 on top of their mortgage, and at the rate they're going it will be $66,217 in just five years.

Nicola and Jason are able to get on the road to financial independence by taking control and keeping track of their spending. Jason is on his way to getting a new job in computer programming that would double his income, and with that increase they'd no longer rely on family to pay the mortgage. I think the biggest lesson from this episode is that while your debt may seem manageable now, if you don't do anything to change your habits your debt will just continue to compound making it increasingly overwhelming.

Join The Conversation
mjane79 mjane79 9 years
This makes me wonder how this couple was raised. My parents didn't give me everything I asked for as a kid or buy me everything. Certain things I wanted I had to save up my own money and buy. Have I always been responsible with my money as an adult? No, but excepting student loans, my debt is only around $1500. I don't have a house but I pay for my apartment and was able to make the payments when I still had a car payment. I don't make much more than $30,000 a year, around $34,000, but I can live well on that. I can pay my bills and still have a bit to buy fun things. I even went on a vacation a little over a year ago and paid for that. I don't have kids but I would imagine that they could support themselves and their kids on their income, but they may have to cut back on things. Shop for clothes at places like Goodwill, buy groceries at Aldi's, things like that. My cousin has always had everything handed to her and I imagine she has a great deal of debt. I do know that money problems contributed to the split between her and he boyfriend. She had a kid with him and even after she moved out of my aunt and uncle's house and lived with him, they bought her a car. They even paid her car payments when my uncle was laid off and my cousin had a job! At some point, parents need to make their children be responsible for themselves.
tee0206 tee0206 9 years
I agree; don't buy a house when your combined income is $30,000!! Wow.
honeyhoney77 honeyhoney77 9 years
That is just beyond out of control..this just proves that financial sense is a matter of survival. I hate to say it, but it is people like this that make me thankful for my financial situation, no matter how bad things might get, I know i'd never be in that place.There's a difference between family helping family out and family enabling you to be incredibly financially challenged.
emalove emalove 9 years
Their COMBINED income is $30,000?! Wow. I can't even imagine...
beingtazim beingtazim 9 years
parents supporting their children is a cultural thing for many people - like mine. i don't feel guilty or think it is wrong. my parents are great...we all help each other out with money and everyone comes out ahead. i'd love it if my mom could afford to lend me some money for a down payment. i am definitely not totally reliant on my parents at all - and i am "grown up". i think it is rediculace to assume that financial help= someone not "grown up". i don't live with my mom and haven't for 8 years, but being in university, my mom does help me out a lot...and when i get a real job i'll start helping her out more and hopefully pay off her mortgage eventually. how is this a bad thing???
CaterpillarGirl CaterpillarGirl 9 years
My parents havent given me money since I moved out on my own, Not when i bounced a check, not when I had car problems, not when i was late on my rent. You cannot pay your grown childrens bills and than say "you need to grow up" they cant, because you wont let them fall on thier faces! I sometimes think these parents secretly enjoy the power they have by contributing to thier grown childrens needs.
supercoolnat supercoolnat 9 years
Wow. My parents haven't paid for anything on my behalf since college. How can you put on the act of being "grown-up" by having kids and a house, when it's mommy who's supporting everything? Especailly when they were so deep in denial about it. Geez.
Liss1 Liss1 9 years
I know, who gave them a mortgage? That is crazy! Why was he working as a landscaper if he computer programmer? That is a huge difference in pay. It's sad people get themselves into these positions.
SkinnyMarie SkinnyMarie 9 years
whoa. $30,000 together? how were they ever allowed to get that mortgage?
ur_momm ur_momm 9 years
dont buy a house if you're combined income is 30,000 and you have 2 kids!! just my opinion :)
princessjaslew princessjaslew 9 years
i think sometimes people just need a wake-up call before they will actually do something about their lives. you become so reliant on your family and friends (enablers??) that its hard to live outside of that until somebody very firmly comes and shakes some sense into you.
terryt18 terryt18 9 years
Wow. I hope they make positive changes.
Shopaholichunny Shopaholichunny 9 years
My Mom would NEVER pay for my mortage. LOL
bellaressa bellaressa 9 years
I would be so ashamed to say my mom is paying my mortgage for me and my husband. This sounds crazy. They should try for second jobs, on the weekend. SMDH
Lovely_1 Lovely_1 9 years
That is nuts. I could never live like that...
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