Several weeks ago a young couple visited my office. Their situation wasn’t all that unique.
He’s a teacher and she’s a CPA. Together they take home about $100,000 a year – not too shabby.
They had a little under $10,000 in credit card debt – mostly from their wedding. They also had a $20,000 car loan and $65,000 in student loans. Not the end of the world.
They had about $20,000 they saved since before they were married. I suggested they take $10,000 and get rid of the credit card debt pronto. They agreed to do this.
Up until this point of the story – I liked what I was hearing. After all, they are a young couple with plenty of upside income potential. I wasn’t crazy about the credit card debt they had accumulated but it only came about as a result of the wedding – not a slow creep of living beyond their means on a monthly basis. I wasn’t too concerned.
However, I started to sweat when we went through their monthly expenses.
While they were in deed paying down their debts, they had the option of doing so much faster and weren’t taking advantage of that opportunity.
Instead, they were spending $400 a month on personal trainers and a whopping $1200 a month on dinning out with friends. This $1600 was only the tip of the ice berg. Together we figured they could easily cut a total of $2500 off their monthly spending.
I showed them that once they did that, they’d be completely out of debt (including the student loans) in about 3 years. Then we looked at what their financial life would look like if they continued to save that $2500 a month. The picture looked very rosy.
So why was I sweating it?
Because they didn’t seem all that interested.
They came to me looking for a solution to their debt problems. I showed it to them and they shrugged. I just didn’t get the feeling they were willing to roll up their sleeves and really do the work.
Forgive me, but I think part of it has to do with their youth. They were enjoying life and maybe they figured they could always get out of debt and cut their spending “manyana”.
This was frustrating to me because I know that for many people, “manyana” never comes.
I couldn’t find the right words to get them interested in taking action to get out of debt and on the path to financial freedom.
Was there something I could have said? What would you have said in order to motivate this couple? Is it a case of leading a horse to water and therefore, a lost cause? What’s your take?