This Florida Couple Earns $350,000 a Year, But Bad Spending Has Left Them With a Shocking $1 Million in Debt

You can’t manage what you don’t measure. So when Henry, from Tampa, Florida, started analyzing his personal finances after watching The Ramsey Show, he was shocked to discover the true extent of his heavy debt burden.

“After listening to you guys I realized I owe a million dollars – what in the world!?” he told co-hosts Rachel Cruze and Ken Coleman during a recent appearance episode.

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Much of that debt comes in the form of a $690,000 mortgage, but Henry also has student loans, credit card debt, and a car lease for a luxury Mercedes GLE 350 that costs as much as $1,500 a month.

“Henry, you lived life, didn’t you?” Cruze said. Fortunately, Henry and his wife earn a combined income of $350,000, which gives them breathing room to tackle this debt load – although Henry’s wife is reluctant to make the necessary lifestyle adjustments.

This is why so many higher-income families end up in debt, living paycheck to paycheck, and ultimately struggling to make the essential sacrifices to turn things around.

Lifestyle creep

Lifestyle creep, or lifestyle inflation, is one of the most common pitfalls for many people experiencing rapid growth in their incomes.

When your paycheck increases, it’s easy to lose some financial discipline and steadily build up a debt load that’s unsustainable.

Henry’s combined household income of $350,000 puts him comfortably in the top 5% of U.S. households, based on income data published by SmartAsset.

However, the family also has about ten times the debt burden of the average American household, at $101,915. according to Debt.org.

“You’ve got plenty of money, you just gotta get it under control,” Coleman told Henry.

This lack of control could be why just over one in three consumers earning $250,000 (or more) annually are currently living paycheck to paycheck, according to a study study by PYMNTS. Unfortunately, many of these families lack the skills needed to change the situation.

Read more: 5 Ways to Boost Your Net Worth Now – Easily improve your money game without changing your daily life

Lack of financial literacy

Henry admitted that he didn’t keep track of his family income or family debt until he recently started tuning into The Ramsey Show.

His lack of financial knowledge is not unusual. Only an estimated 57% of Americans are financially literate, according to MarketWatch Guides.

Moreover, 40% of Americans are not familiar with it Roth IRAs, money market accountsAnd savings accounts with a high returnand even those who Are those familiar with these options do not use these accounts to improve their financial situation.

In the same survey, respondents said they were familiar with it 401(k)sa whopping 70% said they don’t even use them.

In 2023, the average American without basic financial knowledge lost an estimated $1,506 as a result. according to the Council for Financial Educators.

However, Henry’s situation shows that the cost of not having financial literacy is much higher when the family’s lifestyle is too high.

For example, he claimed his car lease is about $13,000 underwater. By comparison, the average auto loan rose by $6,458 in the third quarter of 2024, according to facts from Edmunds.

Fortunately, Henry’s income is high enough that a few lifestyle adjustments can make dramatic changes.

Assuming Henry is correct in saying that he and his wife are $1 million in debt, if the family were to trade in the car for a cheaper model and focus on saving even 10% of their annual gross income, can pay off the approximately $250,000 in unpaid income. -mortgage debt in just over seven years.

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This article provides information only and should not be construed as advice. It comes without any form of warranty.