Texas couple makes $161,000 per year — but is drowning in $90,000 credit card debt, spent $20,000 on California vacation. Caleb Hammer shames them for 'acting like you're multimillionaires'

'Bad decisions'

As a registered nurse with 20 years of experience who was promoted to management in 2022, Alyssa earns $111,000 per year. Connor works in construction, earning a relatively modest $25 per hour, and estimates his annual income to be around $50,000. Their combined income puts them ahead of many households.

“We make enough to live well,” Alyssa said. “We just made some bad decisions.”

One of those bad decisions was pushing off several expenses to credit cards and only paying the minimum monthly balance on them. Altogether, the couple has over $90,000 in total credit card debt. Hammer noted that it would take around 25 years to pay off one card’s debt and 17 years for another if the couple continued paying only the monthly minimums with no additional purchases.

“Congratulations, you're going to be approaching 60 by the time this is paid off,” he quipped.

Despite accumulating so much debt, they have struggled to reign in their spending. In 2022, for example, the couple spent around $20,000 on a month-long family vacation in California.

“You guys are acting like you’re multimillionaires,” Hammer exclaimed. “I couldn’t even imagine [spending] $20,000 on a vacation!”

In addition to their credit card debt, the couple also have nearly $8,700 in student loan debts and over $53,500 left on a Tesla car loan, for which they pay over $1,000 monthly.

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Drastic changes

While financial experts would typically recommend either the snowball or avalanche methods to pay off debt, Hammer estimates these strategies would be insufficient in this case.

To make better progress, he suggested first closing all credit accounts immediately. He then floated the idea of selling off their home and moving somewhere less expensive or applying for a home equity line of credit (HELOC) to help pay off the debt and lower their monthly interest payments.

Interest rates on HELOCs can be significantly lower than the high rates that typically come with credit cards. However, borrowers should be aware of the risks, including the potential to lose your primary residence, closing fees or fluctuations in variable interest rates. If spending issues persist, all one could end up doing is dig a bigger hole for themselves.

If you’re looking to consolidate debt in a similar way, consider reaching out to your financial adviser to understand this strategy.