Money Saving Tips and Tricks: Daniel and Mandy

Blowing Their Budget

"My greatest fear is that Mandy and I won't be able to pay our bills," says Daniel. When Mandy and Daniel got married, they say they were about $40,000 in debt. "Every month we go over budget ."

"Whenever we weren't able to cover a bill, we would borrow it from friends and family," Mandy shares. "My parents' donation to us over the years is in the tens of thousands."


[AD]"If we do run out of money, we will use some of the reserve that we have, which is gone now," Daniel reveals.


One area they often go over budget is on groceries. "The original amount for groceries was $300," Mandy says. Last month, their grocery budget was $700. "When we rented the apartment, everything was included " water, sewage, garbage " now that we're in a house, each one of those is another individual bill."

"I didn't think the thermostat was going to be that big of a deal. It turns out, in the winter months, it is a very big deal," Daniel says. "We're in this financial tailspin that is just leading us nowhere."

"Why do you think you're in the financial pickle?" Dr. Phil asks Mandy.

"I don't think we should have rented the house that we live in. I don't think we should have purchased the second car. I just think that we're doing things that we can't afford," she says.

"Why are you doing those things that you shouldn't be doing?" Dr. Phil asks Daniel.

He explains that they were living in a one-bedroom apartment and expecting their second child, so they moved into a rental house to have more space. "I'm glad that we did because I look at the yard that our 2-year-old is able to now play around in. It has more room. We're not confined to an 800-square-foot house," he says.

"Why are you in financial trouble?" Dr. Phil probes.

"We spend above our means," Daniel says.

"I'm just wondering if you guys have an idea of why you have X and spend Y," Dr. Phil says.

[AD]"Because we don't know where we are exactly financially, so we get what we want, and we don't know when we're going over," Mandy says.

"Is that really what it is?" Dr. Phil asks. "I don't think this is about math. I don't think you spend $3,500 a month when you've got $3,000 because you don't know the difference between 3,500 and 3,000."

"I just don't keep track," Mandy says. "I think when I go to spend money, I want the emotional payoff, and I just don't care."

"Therapy's cheaper than shopping," Dr. Phil says in jest.

"I've got a theory, and my theory is that people don't get into financial problems because they don't have enough money. They don't get into financial problems because they don't know how to add and subtract in their checkbook or on their budget sheet," Dr. Phil says. "Would you agree that that's true with you?"

Mandy and Daniel agree.

Dr. Phil points out that the couple justified renting their house as something they needed, although they knew that it might be a stretch to afford it. "You are so tight on the budget, if you get so much as a head cold, you're bankrupt," Dr. Phil says. He adds that the couple filed for bankruptcy in 2004, and their debt was cleared. "Would you agree that your financial profile today is pretty much exactly the way it was when you took bankruptcy?"

[AD]"Yes," Daniel says.

"You were able to wipe all of that out and get a fresh start, and you're right back where you were when you wiped it out before," Dr. Phil says. "You do things based on what you need, what you think you deserve, what you think you are entitled to." He tells the couple they must start making decisions based on what they can afford, not what they feel entitled to or can justify. "You have to take the emotionality out of it, take the denial out of it, and deal with it."