Are We a Bankruptcy Case?

Barefoot,

I am humbled by the current state of the WA economy. My current job is paying me 50 per cent less than what I was earning four years ago. I now earn $115,000 and my wife earns $70,000, and we have a teenager in private school. We have dwindled away $120,000 in savings just to survive. Our house is worth $900,000 (oweing $720,000), and we have car loans of $35,000 and credit card debt of $50,000. We have now hit rock bottom and do not know what to do. Are we a bankruptcy case?

Terry

Hi Terry,

Are you a bankruptcy case? You’re certainly spending like it.

Despite what you’re telling yourself, you don’t have an income problem, Terry -- you have a spending problem. You ‘dwindled away’ $120,000 (and $50,000 in credit cards) ‘just to survive’?

Fair suck of the sav, Terry!

Even on your current household income you’re pulling in $11,000 a month after tax. Your mortgage is around $4,000 a month. Even with a kid in private school, $300 haircuts, and fuel for the jet ski, you should be able to make ends meet ... but you can’t. You’re spending way more than you earn, and you’re basically broke. That can only keep going on for so long.

So it’s time to wake up and shake the sauce bottle, buddy. You are still spending like a high-earning FIFO when you’re all but ... FIFO-ed. Financially, you can turn this around within a few years without going bankrupt -- but only if you and your wife are prepared to change your behaviour.

Scott