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This Seattle man dropped $35K on a car one year after bankruptcy — here’s the harsh reality he was forced to face

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This Seattle man dropped $35K on a car one year after bankruptcy — here's the harsh reality he was forced to face

For some, an emotional decision might be buying takeout after a bad day or slamming on the horn when someone cuts you off in traffic. But for James of Seattle, an emotional decision means dropping more than $35,000 on a Dodge Charger less than a year out of bankruptcy.

James, 28, was a recent guest on an episode of Caleb Hammer’s YouTube Show, “Financial Audit.” He copped to a number of bad money moves, blaming “lifestyle creep, a couple of emotional decisions, a poor understanding of how finance works overall and how to use credit cards” for landing him in the hot seat.

Hammer — who’s known for savaging guests for their waste and insanity, even as he shows them how to do better — was shocked by James’s choice and he didn’t hold back on expressing his disdain: “To drive around in a Dodge Charger and no one thinks you’re cool when you pull up to them at a stop light… you’re paying $850 a month for that — to be judged.”

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From Beemer to bankruptcy

Though James makes $80,000 a year, he admits upfront that he struggles with personal finance and using credit cards wisely. Hammer told him he should be in the driver’s seat given that his wife makes another $40,000.

But James crashed his finances on a previous car: a BMW he bought for $20,000 that bit the dust after less than a month. Bouncing back from his poor judgment and money miscues — he had no emergency fund when the car died — has been an uphill struggle at best, even though the bankruptcy was a painful three-month process.

For a while, he got by on an electric scooter. But with his wife expecting, James bought her a 2008 Acura TL, on which he still owes $7,252 at 23.69% interest, or as Hammer put it, “a death stupidity interest rate.” That might not be super terrible if the couple were otherwise debt free. But then there’s the monthly $850 Charger payment: Only $411 goes to paying off the principal.

“Dodge Chargers and this kind of debt? After a bankruptcy that just blows my mind. The fact that you actively chose to do this — crazy,” Hammer told him.

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‘More clarity and accountability’

In the hour-long video, it’s clear James knows he’s been a bonehead. He admits to eating out excessively, and because he and his wife have separate checking accounts, there’s a lack of focus in terms of family finances — especially concerning now that they’ve welcomed their son.

“That’s why I’m here,” he told Hammer, “to get more clarity and accountability.” And while the YouTuber may lack the credentials of a professional, he’s relatable for his utter lack of formality and niceties.

He also brandishes some nifty problem-solving skills. In real time, Hammer created a monthly budget pie graph for James that accounted for as many expenses as they could list. In the process, he discovered that the couple’s phones were financed as well, eating up $270 a month — and that the “stupid car” at 14 miles/gallon was guzzling another $600 in gas.

Hammer urged James to use the $2,500 a month left over for setting up a two-month emergency fund immediately, even before tackling the debt. That it would likely take them six months moved Hammer to hammer away: “This sucks. This sucks. This sucks. This sucks.”

On the brighter side, Caleb projected that in three years and two months, James would be debt free with that emergency fund in a high-yield savings account if he stuck to the plan and held off on wasteful purchases. He and his wife could then take meaningful steps towards retirement savings, provided they got on the same page.

His closing encouragement to James was powerful.

“You guys can live the greatest, most fun life — better than anyone around you — just by sacrificing over the next three years and two months,” he said. “It’s so worth it. Please do it for your future and for your child and potential children’s future.”

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

For Daniel, journalism is a way of life. He lives and breathes art and anything even remotely related to it. Politics, Cinema, books, music, fashion are a part of his lifestyle.

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Finance

This California couple owns 5 motorcycles, spends half their income on rent — here’s the real hard truth they had to face

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This California couple owns 5 motorcycles, spends half their income on rent — here's the real hard truth they had to face

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.

Read more: Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here’s how

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.

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Finance

Some Virginia Democrats say livestreamed sex acts a distraction from election’s real stakes

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Some Virginia Democrats say livestreamed sex acts a distraction from election's real stakes

RICHMOND, Va. (AP) — More Virginia Democrats on Tuesday cast the controversy surrounding a legislative candidate who livestreamed herself performing sex acts as a distraction from the stakes in this fall’s elections, while stopping short of fully championing her continued campaign.

Neither the state party nor the House Democratic caucus has publicly called for Susanna Gibson to end her campaign after it was revealed last week that she had sex with her husband in live videos posted on a pornographic website and asked viewers to pay them money in return for carrying out specific sex acts.

But neither group has publicly declared how much support — financial or otherwise — Gibson can expect moving forward.

“Our focus is and has always been on flipping the House and taking back the majority. The MAGA Republicans are continuing to try to distract us while working to implement their plan to ban abortion and roll back the rights and freedoms of all Virginians,” House Democratic Caucus Executive Director Amy Friedman said in a statement to The Associated Press.

House Democratic Leader Don Scott said in a brief interview Tuesday: “Us regaining the majority is all I’m focused on so that we can make sure we protect women’s reproductive freedom.”

Del. Dan Helmer, campaign chair for the House Democrats, said Monday his thoughts were with Gibson’s family while emphasizing that she’s running against an opponent who supports additional restrictions on abortion.

Every seat in the General Assembly, which is currently politically divided with the House of Delegates controlled by Republicans and the Senate by Democrats, will be on the November ballot. Both parties see a possible path to total control, and the suburban Richmond seat where Gibson, a nurse practitioner, is competing with retired home builder David Owen is seen as a critical battleground.

Virginia Democrats, Gibson among them, have made protecting abortion access a top campaign priority. Many Republican candidates in competitive districts, including Owen, have coalesced around GOP Gov. Glenn Youngkin’s proposed ban on abortion after 15 weeks with certain exceptions. Most abortions take place before that cutoff, federal data show.

Virginia, an outlier in the South for its relatively permissive access, currently allows abortion during the first and second trimesters. The procedure may be performed during the third trimester only if multiple physicians certify that continuing the pregnancy is likely to “substantially and irremediably” impair the mental or physical health of the woman or result in her death.

Gibson’s campaign did not respond to an interview request or a detailed list of questions from the AP on Tuesday. Gibson previously denounced the release of the videos as a violation of law and her privacy. She’s given no indication of ending her campaign, saying she won’t be intimidated or silenced.

On Tuesday, the Richmond Times-Dispatch published a commentary piece by Gibson addressing prescription drug prices and her work in health care. She didn’t mention the controversy.

While the caucus and some of its leaders have weighed in, many other Virginia Democrats have either declined to comment, insisted on anonymity to discuss their frustrations or deliberations about the matter, or have not responded to media inquiries. The state party also maintained its silence on Tuesday, with spokesperson Liam Watson declining to comment.

Among elected officials, Democratic state Sen. Louise Lucas has stood out for her early, clear and vocal support of Gibson.

A spokesman for U.S. Rep. Abigail Spanberger, who previously endorsed Gibson, did not immediately respond to an emailed inquiry asking about a post on X, the social media platform previously known as Twitter, featuring Spanberger and Gibson that appeared to have been deleted.

Clean Virginia, an energy policy advocacy group that’s a major donor to mostly Democratic candidates, is “not commenting on this story,” spokesperson Cassady Craighill said. Clean Virginia gave Gibson $175,000 in August, according to campaign finance records, which also show Gibson ended the latest reporting period with over $460,000 cash on hand, about $220,000 more than Owen.

Citing what he called Gibson’s “remarkable” fundraising, Bob Holsworth, a longtime political analyst, said he thinks it’s entirely possible that Democrats “come back in the end” and help Gibson campaign and raise money.

“My big question is: Does she still have the organizational volunteers who are going to generate enthusiasm and turnout?” Holsworth said.

Most Republican elected officials also have kept their distance from the matter, although the state party has spoken out, casting Gibson’s behavior as disqualifying.

In a social media post days after the news broke, the Republican Party of Virginia accused Democrats of “celebrating a candidate who moonlights as a porn star,” adding: “They are the party of moral decay.”

Aaron Evans, a campaign spokesperson for Owen, said Tuesday that Gibson’s campaign was misrepresenting Owen’s position on abortion.

“The Gibson campaign is dumping thousands of dollars into lying about David’s commitment to defend choice during the first 15 weeks of pregnancy and his support for exceptions in the cases of rape, incest, and health of the mother. The fact they are lying about David reinforces that his common-sense, consensus building position is resonating with voters for a win in November,” Evans said in a written statement.

___

Associated Press reporter Denise Lavoie in Glen Allen, Virginia, contributed to this report.

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Finance

Philadelphia man asks Dave Ramsey if he and his wife should borrow money — they make $180K/year but spend $80K on the kids. This was the guru’s scathing reply

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'You guys have lost your minds': Philadelphia man asks Dave Ramsey if he and his wife should borrow money — they make $180K/year but spend $80K on the kids. This was the guru's scathing reply

‘You guys have lost your minds’: Philadelphia man asks Dave Ramsey if he and his wife should borrow money — they make $180K/year but spend $80K on the kids. This was the guru’s scathing reply

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.

“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?

Read more: Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here’s how

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.

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

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