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Sather Financial Group

120 E Constitution St
Victoria, TX 77901

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Life Or Debt

I am not normally one for reality TV, but recently a new show on Spike TV caught my attention. Life or Debt is reality at its purest as the cameras take viewers into homes across the country, all of whom suffer from poor financial stability and flawed money management habits.

The host of the show, Victor Antonio, is a Fortune 500 financial strategist. He is also a determined Type-A personality, often sounding like a drill sergeant amped up on Redbull. However, his message is of tough love and discipline.

A show of this nature helps to spotlight the national epidemic of shaky personal finances. According to research from the Pew Charitable Trusts, between 2004 and 2014 household expenses have increased by 14% while incomes have dropped by 13%.

The simple math results in savings being depleted, or worse, going into debt to fund expenses. Antonio is passionate and speaks from his heart.

Growing up in one of the poorest areas of Chicago, he did not come from a privileged upbringing. However, that did not stop him from earning a B.S. in Electrical Engineering or an M.B.A. He reminds me of many of the people profiled in the book The Millionaire Next Door.

Upon arrival, Antonio implements a one month “financial fast” in which money is only spent on mortgage or rent, utilities, food and insurance. During the fast, there is no spending for restaurants, bars or alcohol, social shopping or travel.

This allows families to create a baseline and identify how much income they must pay for basic necessities. In the process, there is considerable emphasis on differentiating needs versus wants and identifying a plan to not only survive, but thrive.

Families are required to purge unnecessary material things, many of which still have price-tags attached. These are taken to resale shops in an effort to raise cash equal to six months’ worth of living expenses. By building a cash cushion, families have far greater flexibility the next time an unforeseen crisis arises.

This offers a foundation from which to make strategic decisions such as how to further cut costs or change employment to improve cash flow.

Antonio also helps families deal with the numerous emotional issues arising from their stress. So often, when couples are in financial distress their communication devolves into screaming, shouting and crying. Often, divorce is not far away.

Ultimately, the goal is to get household finances to run like a well-oiled business machine. In doing so, families must identify their Magic Number…the amount of money needed to cover expenses, pay down debt and create regular and recurring savings.

Throughout the show, there are numerous financial and life factoids to educate the audience.

  • 75% of Americans live paycheck to paycheck.
  • 49% of couples don’t discuss finances prior to marriage. They are 30% more likely to divorce.
  • Couples that don’t have financial stress are 70% more likely to stay together.
  • 57% of households have no budget.
  • 60% of Americans have no emergency fund.
  • The average credit card interest rate is 15%
  • People spend 12 to 18% more when using credit cards instead of cash.

There are no secret financial formulas or other mystical solutions offered up in Life or Debt. Instead, it is the cold hard truth that you can’t spend more than you make. You must “right-size” your life.

Your networth will not be enhanced with clothes, jewelery, big homes or shiny cars. You cannot spend your way to financial stability by keeping up with the Joneses.

People need a logical plan with structure and logic to it. Planning allows you to anticipate things that might go wrong in the future and put your household in a position to deal with it.

The business aspects of any house needs to be led by a thoughtful, disciplined and prudent chief financial officer in concert with the chief operations officer. In doing so, remember it is a partnership, not a dictatorship, and that most of the world’s problems are solved with good communication.

The financial stresses so many Americans feel today are painful to watch. They are not alone.

Life or Debt shows there is light at the end of the tunnel. Although Antonio’s methods may seem extreme, he knows what is necessary to truly help people ditch the debt and live life on their terms.

Dave Sather is a Victoria certified financial planner and owner of Sather Financial Group. His column, Money Matters, publishes every other week.