This may not be news to some of you but this post over in the SavingAdvice.com highlights this problem:
Here's a gentleman who earns six figures (up to $135k) that had $177k in mortgage debt in 1999, and now has double that today. This extra debt is non-producing debt, like auto debt, credit card debt, a souring real estate investment, and financing of other depreciating assets.
First of all, regardless of how he got this far in debt, a couple of things are true:
- It takes a lot of guts to own up to this in a public setting. Airing one's dirty laundry involves taking responsibility for the situation. This is a mature response to a problem. He may have had reasons why he got into debt, but ultimately he cast the blame on himself by saying “I screwed up.”
- The steps to resolve the problem are the same as for a low-wage earner. Cut expenses. Build up an emergency fund. Practice frugal living. Earn more. Make paying off the debt a high priority. The debt may be bigger and the payments he makes on the debt to reduce it may be bigger, but the process is the same.
The good news is that this gentleman is likely in a good position to pay off this debt reasonably quickly because he earns a lot, and because it looks like there are a number of relatively easy ways to cut fat in his expenses. Being in a good position to do something about it doesn't mean anything, though, if he doesn't actually do it.
I hope he succeeds. He's taking the right steps. If you have a chance, maybe check out his story and offer some advice or support if you can.
Well, he's got an extra problem: Bipolar disorder. He's now being treated for it, and hopefully his treatment will go successfully. It's a very tough disorder — people in manic episodes often go on spending sprees, and that's what happened to him…
We have BP in my house (not me, but my girlfriend). It's a very insidious, devilish thing to live with. Makes normal living very, very tough. My heart goes out to this guy, and I hope he can follow the steps to getting out of debt….
Wow, I'm sorry to hear that. It's scary to see what repercussions can result from such a disorder…
I didn't make too much mention of the disorder because I really don't know much about it, and the fact was that the gentleman owned up to the debt problem despite the disorder. Your comments are well-taken, though.
Well he admitted that he made mistakes, and says don't have control over things or spending or his passion for cars, all he has to do is take control over things.
You are absolutely right he is in a good position and earn a lot. He has to make a plan, follow it and try to keep on track.
Well, wealthy is all about how you manage your money and not how much you earn.
I agree with Harrison, wealth is in your net worth not your paycheck!
Being diagnosed with bipolar disease is a start to hopefully controlling the disease. As well as taking the medication and receiving counselling one of the biggest hurdles he is going to face is cutting down on stress which is a major part of the treatment and not going to be so simple with such a debt hanging over your head. I really hope both himself and his family are able to sort their lives out.