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Natasha's Debt, Take Two…

As I walked into my Mom’s dining room on Thanksgiving, the first thing I saw was a massive turkey on the table -- the biggest you’ve ever seen -- but it was PURPLE. Yes, purple, like something from a Dr. Seuss story.

I shouted, “OMG! It’s a purple turkey!" and everyone in the room looked at me in disbelief. My beautiful wife shot me a look, popped me with an elbow, and whisper-shouted shamefully under her breath, “Quiet! Don’t you dare embarrass your Mom like that or I’ll kill you!"

OK, I totally made up that story. My mom’s turkey is the best I have ever tasted, and it sure isn’t any color it shouldn’t be. But I wanted to set the tone: Natasha has to deal with her own Purple Turkey on the table, her credit card debt.

At the beginning of this Boot Camp, Natasha mentioned that she owed about $9,000 on 15 cards. That was a lot of debt, but didn’t seem impossible to deal with. However, we recently pulled her credit report and it looks like she owes around $20,000 on those cards. That’s a massive amount of debt, and all of the accounts are seriously past due. Most are 30 to 60 days late, and nearly half are over 120 days late. It looks like the minimum payments total over $1,000 per month. Probably more worrisome is that she also owes more than $3,000 in past due rent.

When we had our first meeting back in September, I asked Natasha to send me some information, including her credit card statements. I only received 2 or 3 statements. That’s a huge concern. Where are all the other statements? Is Natasha aware of the balances? Are they going somewhere else and exposing her credit information to strangers in this time of rampant credit card and identity theft? Are all these debts really hers (although the report includes the same number of accounts that she mentioned, just much larger balances due)? Can she truly appreciate this situation?

Making around $30,000 a year makes $9,000 of debt tough to deal with, much less $20,000. I understand why the bankruptcy option caught her attention a few weeks ago, but I don’t want her to view it as a quick fix -- she really needs to deal with the underlying financial behavior that got her into this position in the first place or she will likely be back in this situation again.

I’m glad to say that Natasha and I spoke for a while last week, and have agreed that she needs to deal with her situation head on. The first step is to understand her cash flow and how we can, hopefully, find ways to generate more income. She needs to pay her back rent and make sure she and her family will at least keep a roof over their head. After that, we'll figure out how much she can pay toward the rest of her debt. She has agreed to fill out the cash flow worksheet I provided, and to track her daily spending in a notebook.

Until now, Natasha may not have wanted to, or been able to, deal with this massive challenge that many may think should be obvious. Just as the other Thanksgiving guests ignored Mom’s purple turkey, we often don’t deal with the obvious for our own reasons. But that avoidance is in the past now, and I hope Natasha and I can push on and deal with this huge challenge.