The rising cost of living has made it more difficult for people to keep up with bills, let alone invest in assets. Those problems compound if you live in a big city where everything is more expensive, and a Chicago couple finds themselves in this situation.
The couple has less than $500 in savings and lives paycheck to paycheck. The couple said they are ‘screwed financially' and turned to Reddit for some advice. These are some of the suggestions from the Personal Finance subreddit.
Don't Miss:
- The same firms that backed Uber, Venmo and eBay are investing in this pre-IPO company disrupting a $1.8T market — and you can too at just $2.90/share.
- ‘Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. You can invest today for just $0.30/share.
Downsize To Reduce Housing Costs
One of the top commenters suggested moving out of the house and opting for a smaller property. The Chicago couple can choose a small suburban property that's further away from the city to save money.
While it's good to cut costs like streaming subscriptions, coffee, and gadgets, you'll save the most money if you reduce your housing costs. The couple doesn't have to live in a smaller home forever. They just have to do it long enough until their finances are in a better position.
A few Redditors also recommended that the couple rent for a bit before they buy another home. Although rent doesn't build equity, you don't have to make an upfront down payment. Furthermore, your expenses won't go up if the landlord's property has a leaky roof or a structural problem. Any of those types of surprises can be financially devastating if the Chicago couple bought a house and encountered one of those issues.
Trending: Accredited Investors: Grab Pre-IPO Shares of the AI Company Powering Hasbro, Sephora & MGM—Secure $0.63 Shares Before 8/14
Don't Pay The Father's Medical Bills
The Chicago couple also mentioned that their father has medical bills, and a debt collection company wants them to pay up. However, many Redditors pushed back on this idea, saying that the medical bills are not the couple's responsibility.
When the father passes away, those medical bills are deducted from his estate. If there is no estate, the medical bills won't be paid. There is no way to force a relative or an heir to make payments on a deceased parent's debt.
The constant calls from debt collectors about the medical bills are a scare tactic that the Chicago couple should ignore. When it comes to money and other things in life, you have to put on your oxygen mask before you put on someone else's oxygen mask.
See Also: $100k+ in investable assets? Match with a fiduciary advisor for free to learn how you can maximize your retirement and save on taxes – no cost, no obligation.
You Cannot Borrow Your Way Out Of Debt
One Redditor told the couple that they cannot borrow their way out of debt. Creating a budget is a good step forward as it will allow the couple to identify ways to reduce their costs. They have a combined income of $120,000, and the commenter said that it comes to $6,000 per month after taxes and deductions.
The commenter then explained that $3,000 per month toward mortgage and consolidation loan leaves the couple with $3,000 per month for their remaining expenses. The commenter then encouraged the couple to look at how they spend their money on gas, food, utilities, and other expenses.
Knowing where your money goes can reveal ways to reduce your expenses and keep more of what you earn. However, it also comes down to raising your income. If the couple managed to increase their combined income to $150,000 per year without increasing their expenses, they can get back on track.
Read Next: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here’s how you can earn passive income with just $10.
Image: Shutterstock
