Trin and Lucas, a couple with big financial dreams, recently shared their ambitions on a podcast with self-made millionaire Ramit Sethi. The pair wants to have $3 million in the bank within the next five years to secure their children’s futures. However, their current financial situation is less than ideal, as they have a whopping $285,100 in debt and are spending around 154% of their monthly income.
Lucas owns a consulting business, so his income fluctuates between $8,000 and $12,000 per month. Meanwhile, Trin brings in just under $3,000 monthly from her corporate job, resulting in a combined annual income of $140,000. However, their financial woes are nothing new. After examining their situation, Sethi identified three major mistakes that have led to their predicament.
The first issue is their outlandish financial goals. While it’s reasonable to aim for financial independence and debt eradication, setting an unrealistic target can lead to risky decisions. Despite having $285,100 in debt, including $200,000 from Trin’s student loans, they are still striving for their ambitious goal.
Another major mistake is focusing solely on the monthly payment for significant purchases, such as cars, homes, or large appliances. For example, when the couple bought their third car earlier this year, Lucas only considered whether they could afford the monthly payment, disregarding the overall cost.
Finally, the couple’s attempt to “get rich” quickly with various strategies and investments has backfired, as none of these approaches have paid off. They’ve been swayed by risky, complex schemes promoted by financial influencers rather than opting for safer, more conventional strategies that would have secured their financial future.
To help Trin and Lucas get back on track, Sethi advises them to reassess their monthly expenses, cut back on excessive spending, and focus on safer, more sustainable financial strategies.
While it’s easy to be drawn in by flashy, lucrative get-rich-quick schemes, the reality is that safe, conventional financial approaches are the most reliable way to build long-term wealth. Always consider the total cost of significant purchases rather than just the monthly payment, and avoid setting outlandish, unrealistic financial goals. By keeping finances simple and strategic, it’s possible to build a secure financial future without taking unnecessary risks.
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