‘Til Debt Do Us Part – Story of John and Lisa
A majority of Americans feel financial stress. In fact, 73% of us say finances are our number one stress in life! (a) Here at Mentoro, we feel the workplace is the last great hope for many to learn how to manage their finances better. To illustrate what some of your employees are facing, here is a fictional story that, unfortunately, is factual for many:
John and Lisa started off their marriage like a typical American couple. They met at college, dated a few years and started to get series shortly before graduating. While they tried to be careful, they each graduated college with student loan debt. In fact, they each owed the average balance, almost $30,000. (b)
After being in their careers for a few months, John and Lisa began discussing their futures and decided they wanted to take that next step. Yep, you guessed it, they decided to get married. John wanted to make this engagement as memorable as possible. Even though he only had $1,000 in his savings account, he decided to buy a $10,000 engagement ring! He went to the jewelry store in the mall and financed this ring. He paid no attention to the 20% interest rate on this loan – love can be blind. Besides, the minimum monthly payment was only $100, and John figured once he and Lisa were officially a couple, they would combine their salaries and add extra to this minimum monthly payment.
After John got down on one knee and Lisa said yes, they began planning for the big day. They talked about keeping the costs to a minimum but, because they were both well liked and had a lot of friends, it was difficult to cut the guest list down. Lisa’s parents were able to pay for half of it, but the newlyweds were on the hook for the rest. As fate would have it, the cost was the average price a couple spends on their wedding – almost $34,000. (c) While this was a steep price, John and Lisa felt it was worth it. All of the guests had so much fun, and they started off their marriage on the right track (at least they thought so at the time).
The following day, they flew off to an island in the Caribbean for a week-long honeymoon spent in the sun. Even though this entire trip was paid for with a credit card, it was a great week. After the honeymoon, Lisa and John decided to start off their married lives by renting a small apartment. They signed a one-year lease and figured they would move out after twelve months and into a starter home. However, one month later, the credit card bills (along with the added stress) started to arrive. Their wedding expenses alone totaled more than $30,000! This included the cost of the engagement ring, their part of the wedding and the honeymoon. When they were planning these events, they sounded like worthwhile expenses. However, they now have doubts. After adding their student loan payments to their other debts, John and Lisa barely have enough left over to cover their current living expenses let alone save any money for a future down payment on a house. Even though they both love kids and want a large family, they don’t see how it will be possible to support even one child. Once the honeymoon ended, it seemed like the fun did, too.
Many would agree that this is not a great way to start off a marriage. Unfortunately, numerous couples fall into this debt trap and begin their lives already behind the eight ball. While this may not be the exact story some of your employees have, some of the numbers probably are. The silver lining is Lisa and John’s story can have a happy ending with some help. We are here to help your employees on their financial wellness journeys and believe each one of them has the capacity to be financially well no matter their salary or current financial situation.
a. https://www.cnbc.com/select/73-percent-of-americans-rank-finances-as-the- number-one-stress-in-life/ b. “Student Loan Debt Statistics – Updated July 2020,” Credit Summit, https://www.mycreditsummit.com/student-loan-debt-statistics/ c. “Couples Spend an Average of $33,931 on Weddings, Creating Completely Personalized Celebrations With Emphasis on Reclaiming and Redefining Tradition, According to The Knot 2018 Real Weddings Study,” Cision PR Newsire, February 14, 2019, https://www.prnewswire.com/news-releases/couples-spend-an-average-of-33- 931-on-weddings-creating-completely-personalized-celebrations-with-emphasis- on-reclaiming-and-redefining-tradition-according-to-the-knot-2018-real-weddings- study-300795628.html