Courtney and Alex, 35 and 37, are a couple who say they’re struggling with the harsh reality of living in an ultra-expensive part of the country.

But that’s not their biggest money problem, according to personal finance adviser Ramit Sethi.

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Even as the pair is on the brink of financial ruin, Courtney admits she consistently downplays the situation. “We’re two months from going bankrupt, but I pretend things are fine,” she confessed on a recent episode of Sethi’s “I Will Teach You To Be Rich” podcast.

Sethi’s deep dive into their financial lives paints a grim picture, but he sees hope for them on the horizon.

Expensive events popped up

A lot has changed for the couple in a short period of time, they say.

“Four years or so ago we were doing really well,” Alex claims. “We were in a place where the rent was cheap, we didn’t have a child, we were both working and making decent money. And saving money!”

In fact, their financial situation was so good that Alex claims they’d managed to pay everything off and were living debt free. “I had more money in the bank than I ever had,” he says.

So how’d they get so far off track? Well, first the couple got married. Alex says they spent $15,000 on the whole event, including the rings and bachelor/bachelorette parties.

Then they had a baby. With the family expanding, they decided to swap their apartment for a large house. This left them paying rent that “was about $800 or $900 more than we were paying at our original place,” Alex says — adding on that they’re now also making less money than they did before.

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On the verge of bankruptcy

Getting married and starting a family are common money drains for young couples like Courtney and Alex. But not everyone ends up on the precipice of financial ruin for it.

As the conversation continued, Sethi started to identify the factors that were making life so hard for the couple.

The couple has roughly $45,000 in assets, mostly in vehicles (Alex has five motorcycles), and $130,000 in total debt. And considering over $100,000 of that debt is in student loans, Courtney treats it differently from their other debts — something Sethi warns is common but problematic since you’re still on the hook for that money plus interest.

On the income side, Alex and Courtney make $4,000 and $5,000 a month, respectively. However, their rent in Orange County, Calif., which is $4,100 a month, swallows up one of those incomes completely. “It’s high, but also worth it,” says Courtney. Sethi and Alex disagree. “I think it’s high,” Alex says. “It’s much higher than anything I’ve ever paid.”

They don’t have much to fall back on either — with just $15,000 in cash savings, which could only cover their living expenses for two months tops. “That is as red-flag as it gets for me,” says Sethi. “If I was down to two months of expenses, I would be making drastic moves.”

What’s missing and moving on

Finally, Sethi gets to the heart of their issues by asking them what they think is missing from their conversations around money.

And he then offered them his own theory: “The way that you approach money has got to radically change. Here’s what I see is missing from the way that the two of you talk about money. There’s no shared vision.”

He recommends the couple be true to themselves and face their individual fears about money matters. Better communication and adjusting expectations could lead them to have a unified vision about their financial life.

Sethi also offered some practical solutions:

• Move out of Orange County. Right now, the couple spends 45% of their gross income on rent alone. “A good guideline for housing costs is to keep it under 28% of your gross income,” he says. In expensive regions like Orange County, that metric can go up as high as 32% to 33% but Alex and Courtney are still way beyond that.

• Cut back on luxuries. Alex has five motorcycles and so needs a larger house with a garage to store them all. “It’s fine to buy really nice things but you have to factor in all the costs, the time and the money and the mental overhead — because if you don’t, these inanimate things will start to own you.”

• Face reality. Sethi claims Courtney isn’t taking her financial situation seriously enough to change things. “Even in these dire circumstances, perhaps especially in them, Courtney continues to evade and joke and distract from really taking an honest assessment.”

If the couple manage to get on the same page about both how they spend their money and the seriousness of their situation, Sethi believes they could bounce back from their dire financial situation.

And better yet, they won’t have to pretend they’re doing fine, because that will simply be their reality.

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

Dave Ramsey couldn’t contain himself recently when responding to a caller on his show.

A man named Dave from Philadelphia told the finance guru on The Ramsey Show that he was “barely making it” on a family income of $180,000. He was unsure whether to save more or take out a loan to make ends meet.

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The family’s household income is set to rise once his wife finishes medical school (she was making $70K as a resident at the time of the call and set to finish school with no student debt), but in the meantime they struggle with his student debt and child expenses.

Rather than pick either of the presented options, Ramsey, as per his trademark style, suggested a different route.

“Option C, work more,” he said. Ramsey then asked: “Can you explain to me why you can’t get by with income at $180,000?”

The caller revealed he and his wife spend around $80,000 a year solely on their kids.

“I’m going to be as nice as I can,” Ramsey replied. “You guys have lost your minds.”

The (expense) monster under the kids’ beds

Asked to dig deeper, Dave from Philadelphia revealed some eyebrow-raising kiddo expenses: at least $50,000 in daycare tuition for two, plus before- and after-school care, along with paying a nanny in the summer months.

Maybe you’re thinking what Ramsey said: “Are they going to Harvard? What the crap!”

The caller admitted it was a pretty fancy school, especially given that his kids were still pre-school age. The average cost of child care in Philadelphia is just above $17,000 per child, slightly more in the suburbs, according to child care website TOOTRiS.

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“We’re going to take out student loans for the four-year-old,” Ramsey teased. “That’s what we’re coming down to.”

Budgeting for cost-effective child care is even more critical considering the expenses many Americans can’t readily escape, such as gas, insurance, groceries and utilities. Budgets can play a crucial role in bringing things under control — especially if you start by tallying your last three months of spending. What’s costing the most? What are the non-negotiables? Where can painless, sensible cuts be made?

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What about Ramsey’s ‘Option C’?

As Ramsey suggested, income from added work can countervail the dollar figure of a loan. Ramsey recommends staying away from loans in general, as taking on a side hustle or even a part-time job while you create an emergency fund can turn the numbers in your favor.

These days, a side hustle can be as simple as renting out an empty room in your home, an unused shed as storage space or even a parking space you might have but don’t need.

When to consider a loan

Dave from Philadelphia clearly needed a reality check on his children’s child care costs. His family’s $180,000 income has relatively little financial drag, and represents more than twice the median income of nearly $71,000 nationwide as of 2021, according to the Census Bureau.

Would a combination of cost cutting and a smaller loan make sense for the time being, then? Perhaps — but only if you avoiding borrowing at a high interest rate. If it’s a personal loan you have in mind, shop around. Banks and other loaning agencies want your business, so make them compete to give you the best rate.

Of course, married people who sit down with a neutral party — in this case, a professional financial adviser — will get a much clearer picture in terms of separating needs from wants and waste. After all, no one wants to stay stuck in financial pre-school.

What to read next

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

ATLANTA (AP) — Three of the Georgia Republicans who signed a certificate falsely claiming that then-President Donald Trump won the state in 2020 were not fake electors, their lawyers argued Wednesday, but instead were a “contingent” slate in case the original election results were tossed out by a court.

U.S. District Judge Steve Jones heard arguments on why David Shafer, Shawn Still and Cathy Latham believe the case against them should be tried in federal court rather than in Fulton County Superior Court. They, along with Trump and 15 other people, have pleaded not guilty to charges accusing them of participating in a wide-ranging scheme to keep the Republican president in power after Democrat Joe Biden won Georgia.

Lawyers for Shafer, Still and Latham argued their status as electors means they were acting as federal officials and were performing the duties required by federal law. The three defendants were not in court Wednesday.

“By federal law, these people were not fake, sham or impersonators,” said Craig Gillen, an attorney for Shafer. “They were contingent federal electors when they went and did their duty on Dec. 14, 2020.”

Prosecutors rejected that notion, alleging that Shafer, Still, Latham — and the other Georgia Republicans who participated in the plan — “falsely impersonated” electors. Related state charges against them include impersonating a public officer, forgery, false statements and writings, and attempting to file false documents.

“These private parties did not transform themselves into public actors by a criminal act,” prosecutor Anna Cross said.

Part of the overarching scheme, the indictment alleges, was the casting of false Electoral College votes by 16 Georgia Republicans and the transfer of documentation of those votes to the president of the U.S. Senate, the National Archives, the Georgia secretary of state and the chief judge of the federal court in Atlanta. Those documents were meant to “disrupt and delay” the joint session of Congress on Jan. 6, 2021, in order to “unlawfully change the outcome” of the election, the indictment says.

Republicans in six other battleground states that Trump lost also met and signed similar certificates. Michigan’s attorney general in July brought criminal charges against the group there.

Lawyers for Shafer, Still and Latham argued in court that a challenge to the state’s election results was pending at the time and that lawyers told the gathered Republicans that it was necessary to have an alternate slate of GOP electors in case the challenge was successful.

The lawyers asserted that that pending legal challenge meant the state had failed to meet the “safe harbor deadline,” which dictates that states can protect their electoral votes against challenges in Congress by completing certification of the results and any state court legal challenges by that date.

The failure to do so meant that both the Republican and Democratic elector slates were “contingent” and that it was up to Congress to determine which should be counted, the lawyers said.

Prosecutor Donald Wakeford argued that meeting the safe harbor deadline was “a super shield or protection” for a state and rejected the claim that the Republican slate of electors was equal to the Democratic slate that was certified by the governor.

“The distinction is not obliterated because the safe harbor deadline is not met,” he said.

Lawyers for Shafer, Still and Latham cited the example of the 1960 presidential election when Republican Richard Nixon was initially certified as the winner in Hawaii. Supporters of Democrat John F. Kennedy filed a legal challenge that was still pending on the day the state’s presidential electors were to meet.

That day, the certified electors for Nixon and uncertified elector nominees for Kennedy met at the state Capitol to cast votes for their candidates and sent them to Congress as required by the Electoral Count Act. Kennedy ultimately won the challenge and was certified the winner, and Congress counted the votes of the Kennedy electors.

Cross argued that the Hawaii case was different “for a lot of reasons” and noted that the slate of electors that was chosen for Hawaii was the one that had most recently been certified by the state’s governor. Georgia Gov. Brian Kemp, a Republican, certified the Democratic slate, not the GOP slate.

Even if the Trump campaign’s legal challenge to the election results had been successful, Cross argued, the only solution a court could impose would be a new election, not a substitution of the Republican slate. Holly Pierson, another attorney for Shafer, argued that the law does allow a judge to declare someone elected after hearing the allegations and evidence in an election challenge.

At the time of the actions alleged in the indictment, Shafer was the chair of the Georgia Republican Party, Latham was the chair of the Coffee County Republican Party and Still was the finance chair for the state Republican Party. Still was elected to the state Senate last year and represents a district in Atlanta’s suburbs.

The judge asked Cross whether performing a federal function makes someone a federal official. She said it does not. She also argued that the Republicans who signed the certificate were acting in their own personal interest and in the interest of Trump’s losing campaign.

“They were fake electors. They were impersonating electors,” she said, adding that there was no evidence they believed Trump had actually won.

Asked by Judge Jones at what point they should have known Trump had lost, Cross said they should have known “at every point.”

Pierson contended that it was up to Congress: “We know who won when Congress tells us and not a moment before.”

Jones already rejected an effort by Trump White House chief of staff Mark Meadows to move his case to federal court. Meadows has appealed that ruling. Jones held a hearing Monday on a similar bid by former U.S. Justice Department official Jeffrey Clark and has yet to rule.

If any of the cases are moved to federal court, a jury would be drawn from a broader and potentially less Democratic pool than in Fulton County alone.

In addition to the charges related to the fake elector plan, Shafer is accused of lying to investigators for the Fulton County district attorney’s office. Latham is accused of participating in a breach of election equipment in Coffee County by a computer forensics team hired by Trump allies.