'I Almost Fell Out of My Chair': This 40-Year-Old Wife Was Shocked When Her 'Financial Guru' Husband Revealed $520,000 in Hidden Debts: How Lifestyle Change Catches Up to High Earners

‘I Almost Fell Out of My Chair’: This 40-Year-Old Wife Was Shocked When Her ‘Financial Guru’ Husband Revealed $520,000 in Hidden Debts: How Lifestyle Change Catches Up to High Earners

Talking about finances is not easy, not even with the person you are married to.

That’s what Cassandra, 40, discovered when she discovered that her husband had been keeping a debt worth more than half a million dollars secret.

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“I almost fell off my chair,” she said, describing the moment her partner, Aldo, finally revealed his financial situation. “I was stunned.”

Despite having high incomes, both appear to be victims of a lifestyle change, and recent data suggests this could lead higher-income people to go into debt for long periods of time.

The couple says their conversation began after watching an episode of Ramit Sethi’s Netflix show, “How to Get Rich.” They decided to call the financial expert directly for advice.

secret debt

Cassandra and Aldo, 41, have been married for 18 years and have two children. Despite the length of their relationship, they rarely talked about money, which is why Cassandra, until recently, was unaware that the couple was in total debt of $520,000. About $66,000 of that amount is in collections due to late loan payments.

Aldo’s reluctance to talk about this debt is not unusual. About 30% of men and 19% of women admitted to hiding credit card balance information from their partners in a survey conducted by Bread Financial, a technology-enabled financial services company. Hiding debt, it seems, is easier than talking about it.

Sethi says conversations about money are often laden with guilt and denial, making them similar to talking about health issues.

“We see clues everywhere, we feel aches and pains,” he said. “But instead of taking an honest look at what we eat and our activity levels, we actually make up these very sophisticated and complicated stories about how our metabolism is changing.”

He added: “Everyone around us is doing the same thing, so we really believe it.”

Cassandra, however, overlooked all clues about her family’s deteriorating finances. She says her husband is the “financial guru,” so he was responsible for all the budgets.

“He works in finance, he knows all this. “I have friends who come to him for financial advice, so I would never have thought we would be in this situation,” he said.

The couple seems to recognize that they have a spending problem. Aldo sees his role as protector and provider, so he protected Cassandra from financial stress and had trouble turning things down.

“Most of the time I say yes and then try to think about how I’m going to make that ‘yes’ happen,” he said.

“We’ve gone on vacation and we have nice things, but they’re all credit cards and loans,” Cassandra said.

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Long term problem

Not only can debt be a difficult topic to discuss, but it can last longer for high-income households.

The couple earns more than $165,000 in combined salary, with Aldo earning approximately $130,000 a year in variable quarterly bonuses.

Among those who earn $100,000 or more a year and have credit card debt, nearly 3 in 4 (72%) have been in debt for at least a year, according to data from Bankrate.

Cardholders with incomes of $50,000 or less are more likely to have credit card debt (53%) than those who earn $100,000 or more (38%), but long-term debt is more common among people with high income.

The problem may be due to a change in lifestyle. Data shows that higher-income earners have been spending more money on entertainment and vacations lately, even if it puts them further into debt.

“When people start earning more, they tend to spend more: they increase their spending by buying a bigger house and a better car, taking more enjoyable trips and simply spending more on a daily basis,” the personal finance expert told Bankrate. Andrea Woroch. .

Luckily for Cassandra and Aldo, Sethi sees a clear path out of their situation.

easy way out

Despite their enormous debt, the couple has a realistic path to escape this burden, mainly because they have very high incomes ($165,000 in combined salary, plus $130,000 in bonuses).

They should live a comfortable life. But unfortunately, Sethi estimates that the couple spends a whopping 94% of their take-home pay on fixed costs, much of it related to paying off debt. Excluding debt payments, your fixed costs represent 62% of your take-home pay.

“If I’m honest, the numbers terrify me,” he said.

He recommends that the couple immediately stop using their credit cards and start a car debt repayment plan, preferably targeting the cards and loans with the highest interest rates first.

But the couple needs to change their perspective on money and their spending habits. However, even Sethi admits that it is not an easy strategy.

“People with serious debt will talk about any other option except changing their spending and working out an automatic debt repayment plan,” he said.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

By Sam