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Debt problem

Dustin, the caller, said his wife’s student loans are the leading cause for their financial struggles. Her loan is worth an astounding $200,000.

To be fair, the money was borrowed for a valuable degree in anesthesiology, and on average, U.S. anesthesiologists earn more than $300,000 a year, so the debt was certainly productive.

And as enormous as the debt is, it’s less than the $250,000 owed by the average medical-school graduate, according to the research from the Education Data Initiative.

Meanwhile, Dustin and his wife also have two mortgages and two car loans. The combined balance on the car loans is roughly $100,000.

“With these numbers, you owe as much as you make a year, so it’s going to feel tight,” Cruze said.

Unfortunately, there isn’t much of a cash buffer to rescue them. Dustin claimed they have just $25,000 in savings, well below the average balance in U.S. transaction accounts — $62,410, according to the Federal Reserve’s recent Survey of Consumer Finances.

Given their extraordinary income, this shouldn’t be the case. But debt is the key issue. The student loans are the bulk of it, but the car loans are extreme, too. The average car loan balance was $22,612 as of 2022, according to Experian data. Dustin and his wife have more than twice that amount on each of two cars.

It’s clear the husband and wife have pushed themselves to the edge and are now forced to live paycheck-to-paycheck. To change the situation, they need a radical mindshift.

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Radical mindshift needed

Cruze and her co-host, George Kamel, both said they believe the couple can turn things around quickly. But to do so, they need a fresh perspective on money.

Cruze recommended getting rid of the cars and buying used cars instead. The average used car sells for $27,000, according to Consumer Reports, so Dustin and his wife can potentially lower their debt burden by swapping their vehicles.

Meanwhile, Kamel recommended halting investments until the debt is mitigated. “If I had $300,000 in consumer debt I would definitely pause investing,” he said. “That’s going to free up a whole bunch of money if we pause that temporarily.”

Kamel said the couple can pay off their debt in just two years, with aggressive repayments, lower living costs and a disciplined approach. Cruze agreed, adding the cost of living in West Virginia should make things easier.

“You guys live in Charleston, West Virginia,” she said. “You're not out in L.A., California, with an insane lifestyle. You guys can do this, you have so much going for you.”

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Vishesh Raisinghani Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

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