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Maxed Out 2008-03-24 09:23:42

Maxed Out: City to Suburbs Doesn't Always Save

This episode of Maxed Out is about Kirk and Lenka, a couple who recently moved from the city to the suburbs because they're trying to save money and get out of debt. Instead of seeing their debts reduced, they're adding to it every month and Lenka isn't happy in the suburbs. She was financially independent in the city, and now she's completely isolated with her 11-month old without a car or anything to do within walking distance.

Kirk commutes to the city each day and spends about 3 hours in the car, and then when he finally gets home he spends all evening on his home based business. They have over $40,000 in debt and Kirk doesn't have a clue about how much income he's earning. To see if financial guru Alison Griffiths can help get them on track just

Kirk and Lenka are in a financial and an emotional predicament — they have a cloud of debt hanging over their heads, aren't happy in the suburbs, and hardly see each other. Alison gives them a plan that involves cutting back expenses by $600 a month, putting Lenka in charge of all personal bills including giving Kirk an allowance, and Kirk figuring out exactly how much he's earning.

The couple moved to the suburbs to save money, but the amount that Kirk was spending on his commute each month is the equivalent to the rent of a two-bedroom apartment in the city. By cutting back their expenses and applying the difference to paying back debt, they'll be able to move back to the city and repay their debt in four years instead of eight. Before making a huge decision like moving, it's important to run all of the numbers to ensure you're making the most sensible choice.

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