Couple with over $285,000 in debt made 3 common money mistakes, says self-made millionaire Ramit Sethi: ‘You are broke’

Trin and Lucas have big financial dreams.

The 35-year-old couple wants to build wealth and savings for their two children’s futures — ideally they’d have $3 million in the bank in five years. But currently, they’re in a pretty deep hole. 

As a couple, they have $285,100 in debt and currently spend around 154% of their monthly income, they told self-made millionaire Ramit Sethi on his “I Will Teach You To Be Rich” podcast last month. Only their first names were used.

Lucas runs his own consulting business, which means his income can be inconsistent, ranging from around $8,000 to $12,000 a month, he tells Sethi. Trin brings in a little under $3,000 a month from her corporate job. Together, they earn around $140,000 a year.

“You are broke,” Sethi told them.

Their financial problems didn’t appear overnight, though. And after going through their finances and hearing about their money mindsets, Sethi identified three major mistakes Trin and Lucas made that contributed to their current predicament.

Here are their top missteps and how you can avoid them.

Lucas and Trin want to be out of debt. But their goal of having around $3 million in the bank within five years is “not feasible,” Sethi says.

He warns against setting “outlandish” goals like this because it can lead people to make incredibly risky decisions in order to meet the goal.

“It’s one thing to set ambitious goals,” Sethi says. “It’s another to be totally unrealistic.”

Here’s a glimpse at Trin and Lucas’ finances at the time of the podcast’s recording:

• Assets: $40,000
• Investments: $27,000
• Savings: $20,000
• Debt: $285,100
• Net worth: -$198,100

The bulk of the debt comes from Trin’s $200,000 in student loans, she says. But the couple also has around $12,500 in credit card debt, Lucas tells Sethi.

Their debt is a huge problem. But going through their budget, Sethi says the reason they haven’t been able to address it is because their monthly costs have exceeded the couple’s typical monthly…