She's Crying Uncle
Cindy says her daughter has a good job making $50,000 a year but now has $15,000 in credit card debt. She called Cindy and asked for help. Dave has some harsh advice for Cindy's daughter.
QUESTION: Cindy in Omaha says her daughter has a good job making $50,000 a year but now has $15,000 in credit card debt. She also leased a car and rents an apartment. She called Cindy the other night and asked for help in getting out of this hole. Dave has some harsh advice for Cindy’s daughter.
ANSWER: She’s not going to like me. If I’m in your shoes, here’s what I’m going to tell my kid: Sell your car and get a beater. Sell it, and you’re going to have to borrow the money for the difference because you’re in the hole, and get rid of the car payment. Get you a beater. Get a second job. Beans and rice, rice and beans. You do not touch a restaurant unless you’re working there. You roll up your sleeves, and she can be out of this debt in about a year. But she has no life.
She makes $50,000. She’s paying $7,200 in rent. Her taxes as a single girl on $50,000 probably aren’t but $6,000 or $7,000. Where’s the rest of it going? Restaurants. Clothes. Eating out. Goofing off. Acting like she’s cool. It’s easy to lose that much money and not know where it went. It’s going to be hard to not lose it. That’s what’s going to be difficult. She needs to undo all the things you told her not to do, which includes the car. The car’s stupid. She needs to get a beater and get the car sold. It won’t sell for enough to pay off the lease completely, so she’ll be a little bit in the hole. That’ll be another $3,000 or something. If she’ll sell the car, I might help her cover the difference and get her a $2,000 car or something and let her get started. And then after a while, I might match her debt payoff. Every time she pays $1,000, I’ll pay $500 or something, but that’s only after she sells the car and after she gets an extra job. There’s all kinds of stuff she can do—when she decides she wants to badly enough. I think at some point, this advice I’m giving is going to test her resolve. We’ll see if she’s really crying uncle or not.