That’s how much debt Aldo was hiding from his wife Cassandra, the couple recently revealed to self-made billionaire Ramit Sethi. Podcast “I will teach you how to get rich”. The couple’s last names were not used.
Aldo and Cassandra earn a healthy joint income of $165,000 a year, and Aldo says he could earn an additional $127,000 in commissions this year. However, the couple made some financial decisions that left them in debt.
First, they have a $339,000 mortgage and about $14,000 in student loans. Then, several purchases they had planned over the past few years, including home renovations and multiple vacations, ended up being beyond the couple’s budget. They made up the difference with credit cards and personal loans, bringing their total debt to $500,000.
Cassandra knew that her family was spending money, but she didn’t know how everything was paid for because Aldo was in charge of all the household finances.
Before appearing on Sethi’s podcast, the couple had been watching Sethi’s Netflix show, and Cassandra said she asked Aldo how much he owed.
“When he wrote it all down, I almost fell off my chair,” she said on the podcast. “I didn’t know everything would be charged to my credit card.”
Aldo told Sethi that he wasn’t necessarily trying to deceive Cassandra, but that he wanted to protect his wife from financial stress. Sethi’s view: If you put off telling Cassandra about her debts or include her in her financial plans, you will make her problems worse and end up hurting Cassandra. .
Here’s why keeping financial secrets from your partner can be problematic, and Sethi’s advice for Aldo and Cassandra.
Aldo’s family didn’t have much money when he was young, and he learned from a young age not to ask for things after seeing how stressed out his parents were about finances, Sethi said. Told. Even as an adult, he continued to believe that money was stressful and tried to handle everything himself.
As a child, he understood that his family did not have much. As a result, he has strived to provide a comfortable life for himself, Cassandra, and his children.
Although Cassandra did not know about the debt, she was responsible for leaving all financial decisions to Aldo. “I was doing nothing and leaving everything to him…I never thought we would be in this predicament,” she said. “But I felt hurt, and I felt like we had lived a life that maybe we weren’t meant to live.”
While some people lie about money in relationships to hide unwanted habits or larger issues, Sethi says that’s not the case with Aldo. He added that he came from a place of love and wanted to be a hero to his family.
“In many relationships, the ‘hero’ when it comes to money is the person who says ‘yes,'” Sethi says. “But the real heroes, in my opinion, are those who develop a partnership with their spouse to discuss money on a regular basis and truly include their spouse in their decision-making.”
Aldo and Cassandra are disappointed when Seti tells them that it will take at least five years to pay off this debt. Mr Aldo suggested using a home equity line of credit to consolidate some of the debt, but Mr Sethi said they saw it as a “quick fix” that would not last. I was worried that this might happen.
“Today, we see debt upon debt and debt upon debt. The home equity line feels like another ‘get rich quick’ opportunity,” Sethi told them.
HELOCs and credit card balance transfers can be a useful tool for some people to get out of debt. They may even be able to consolidate your debt so you only have to make one payment on him and lower your interest rate. However, they will have to pay off the “new” debt and promise not to continue accumulating balances on their cards, which Mr Sethi believes Aldo and Cassandra are not willing to do given their current habits.
Rather than complicate their debt repayment strategy, Sethi encouraged Aldo and Cassandra to follow three black-and-white rules: Please note that this is a plan tailored to Aldo and Cassandra’s situation and they may need a different strategy if they want to deal with their debt.
- Use all bonus and commission checks to pay off your debt. Sethi advised the couple to start by putting 80% of their bonus towards debt and 20% towards increasing their savings. This will “significantly limit” day-to-day spending, but Sethi said this is what is needed to get out of debt.
- No more credit cards needed. Aldo and Cassandra have trouble even adding up their various credit card debts. If you want to pay it back, you absolutely have to stop using it, Sethi says. Once your card has been paid, you must close each account.
- Be honest about their discretionary spending. While some may need home repairs or new clothes, Sethi encouraged Aldo and Cassandra to take time to think carefully about whether their new purchases are necessary. By finding areas where you can cut back on spending now, you’ll have more money to put towards your debts and avoid falling into deeper debt again in the future.
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