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Debt burdened

Kenneth’s job as a sterilization technician should allow him to afford rent in Houston. He earns $18 an hour and works 35 to 40 hours a week, which puts him on track to earn $32,000 in total income this year.

However, a significant portion of his bi-weekly income goes towards debt payments. Kenneth owes $14,000 in credit card debt and has $16,000 outstanding on his car. He pays $346 a month for the auto loan and another $529 to pay off all his credit cards, which means nearly half his paycheck goes to debt payments, leaving little left to pay rent or save to buy a home.

This situation is increasingly common. Consumer debt has been steadily rising in recent years, with American households collectively owning $1.13 trillion in credit card debt and $1.6 trillion in auto loans at the end of 2023, according to the Federal Reserve.

Ordinary families are being squeezed by the rise in cost of living — especially in the housing market. There are only seven million affordable housing units available for 11 million households with extremely low incomes, according to the Houston Habitat for Humanity. Texas is one of six states with the most severe housing shortages and Houston ranked fifth-worst among major metropolitans for housing affordability.

Kenneth faces a difficult situation with limited options, but Ramsey Show co-hosts Rachel Cruze and George Kamel believe there is a path out.

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An uphill battle against debt

Kenneth said he sleeps in his car and uses a gym membership to access showers. He parks near the building where he works, so transportation isn’t an issue.

Cruze believes Kenneth needs to secure stable shelter first in order to start improving his situation. “Your living situation is my biggest concern,” she told him. “Four walls is what we say — food, utilities, shelter and transportation — [are the] bare necessities of life.”

Unfortunately, Kenneth is reluctant to live with family because it causes emotional distress. “The environment for me around them is [something] I do not enjoy, so I [would] rather stay in the car,” he revealed. He also said his family would expect him to pay rent to live with them, which would make it impossible to keep paying his credit card balance every month.

Nevertheless, Kenneth could seek social assistance to find shelter. Houston was one of the first cities to experiment with a “housing first” approach, which provides basic shelter to those experiencing hardship. This strategy has helped reduce homelessness by 63% since 2011, according to the Cato Institute.

Kamel also encouraged him to seek additional employment. Overtime hours at the office or a side hustle could give Kenneth some breathing room to pay off his accumulated debt balance and eventually turn his situation around.

“Right now, every dollar you can get out of those paychecks needs to go to covering your four walls,” Kamel told Kenneth.

Cruze suggested Kenneth also look into working night shifts and on weekends to supplement his income as much as he can. “It’s going to be exhausting, but you’re going to need to dig yourself out of this hole,” she said.


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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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