Getting Out of the Red

Loral Langemeier, best-selling author of The Millionaire Maker, entrepreneur and self-made millionaire pays Greg and Brandy a visit to see if she share her expertise and help get their finances in order.

 

"Right now, you have about $26,000 that's due," Loral tells the couple. She breaks down the debt: $8,000 owed to five credit cards, a $700,000 mortgage on their house and $5,000 owed for their car. "Creditors are calling, hounding you. What's the biggest challenge?"

"We had to take our kids out of preschool," Greg says.

"Do you think you were living beyond your means?" Loral asks.

"I think we just didn't plan. We were living the income that we were making, and then all of a sudden, that income changed drastically," Greg says.

"There are just different expenses that I disagree on," Brandy says, noting that Greg often buys Starbucks coffee.

Greg explains that he goes to Starbucks to do work. "I feel like I have to buy one cup of coffee while I'm there," he says.

When the couple shares with Loral that they have no money saved, she asks, "Do you guys feel like you have any plan?"

"No," Brandy says.

"What is your assessment of this story?" Dr. Phil asks Loral.

"When income patterns change that drastically, there are ways to intervene earlier, which could have given us a lot more solutions than we have today," she says.

Dr. Phil asks her to outline out a 90-day plan for Greg and Brandy.

"I think that, for sure, we need two incomes again," Loral says. "We've got to have you both own your balance sheet."

"You've got to be willing to say, ‘We are in this together.' Money is a partnership decision, and so you've got to stop fighting and get a plan you can both be excited about," Dr. Phil reiterates. He comments that Loral suggests the couple get into a tiered-mortgage plan, but he disagrees.

Loral outilines the idea of a tiered mortgage. "It's one choice where you can reduce your mortgage to more of a place where you can afford it and then gradually go back up," she says.

Dr. Phil points out that the couple owes $700,000 on their house, they have no money to buy their children birthday presents, and they argue over every dime spent. "I think that house should have been dumped four years ago," he says. "To me, the idea of trying to service a three-quarters of a million dollars debt on a house you don't have to have, it just seems there would be such a sense of freedom to be out from under that."

Loral agrees and adds that the couple needs to make new money in the next few weeks, or they should sell the house.

"I think we're open to either," Brandi says.

Dr. Phil counts down the Five Biggest Money Mistakes people make and says that No. 5 is living beyond your means.

 

"It's math, it's not magic. It doesn't matter what you think you deserve, it doesn't matter what you think you need, and it doesn't matter what you think you have to have to fit in. If you don't have the money, then you don't need to be incurring the responsibilities, the debt and the obligation," he says. "If the bottom line is you just simply can't afford what you have, then get out from under it. That's where you've got to put ego aside."

Loral adds that if Brandy and Greg sell the house, the next step is to work on improving their credit score. "We've got to restructure the debt," she says. "Their credit score is below 400. A very small percentage of people in America have that, so them qualifying [for a loan], we're going to need to look for a second person to sign on to get them a home."

"There's a place, there's a way, there's a will," Dr. Phil assures the couple. "You've got to have a roof you can afford with peace of mind. If you lose your family, you lose everything."

Greg and Brandy have bill collectors calling 20 times a day. The constant pursuit has become so relentless, that the couple has unplugged their home phone to avoid the calls.

"You can run from creditors, but you can't run from your credit score," Loral tells the couple, reiterating that their credit score is so important when applying to rent an apartment or buy a house.

Dr. Phil points out that Greg is working as a mortgage lender, but because of the troubled housing market, is not earning an income.

"I'm making a draw of very little a month," Greg says.

"That draw is against earnings, so you're going in the hole," Dr. Phil clarifies. He adds that Brandy has worked in the past, but Greg doesn't want her to go back for fear of unsettling the home environment.

"It's very chaotic at our house to keep everything running smoothly," Greg explains.

"I completely disagree," Brandy interjects.

"I thought it would also interfere with my job, at night, if she's going to work," Greg clarifies.

"There aren't perfect solutions," Dr. Phil says. "One of the things Loral has talked about is: you've got to create new money."

"You have to," Loral agrees. "She's proven in the past she can do it." She explains that Brandy cleaned another family's house and then came home and cleaned her own. "She's proven she can make money, and that was way undercharged." She adds that Brandy has also worked with Greg before, something she could start again. "There's a lot that these guys can do together to really generate some real cash again."

"This is about survival," Dr. Phil stresses. "You both have an earning capacity, and both of you are earning zero." He advises Greg find a different job or an additional job, and Brandy to start working as well.

Dr. Phil tells Greg about his friend Tony Beshara, a headhunter and author of The Job Search Solution. "I've talked to Tony, and I've asked him to work with you to see what your options are," he says.

Greg says he's open to meeting with Tony.

"How do you feel about [Brandy] going to work?" Dr. Phil asks Greg.

"I've realized that it probably is something we definitely need to do," he says.

Dr. Phil tells the couple that Loral will continue to work with them. "This can get better quick," he says. "The only way you're going to start fixing that credit score is to start generating some new money."

"And, paying their bills and a new spending plan," Loral adds, noting that she will help them with devise a plan of action.

Brandy and Greg agree to make changes.

"Do you feel better?" Dr. Phil asks.

"Oh, my gosh, I feel relieved. I feel like there's hope," Brandy says, fighting back tears.