Our Investors Embezzled Over A Million Dollars (We Lost Our Income)

The caller, Tracy, and her husband are facing a severe financial crisis, running a $5,000 monthly deficit despite an average annual income of $250,000. They've exhausted savings, maxed out credit cards for business and household expenses, and borrowed from family. Their total debt, excluding the mortgage, stands at $270,000, comprising $152,000 in credit card debt, $30,000 owed to family, and $88,000 in back taxes due to an employee's failure to file. The primary cause of their financial downturn was an embezzlement of $1.6 million from one of their companies, which significantly reduced their income by 70-80%. Although they have an attorney working on the case, the perpetrators are not in jail. They've taken on additional jobs, cut business expenses, and sold non-performing assets to mitigate losses. Their current monthly expenses include $4,300 for credit card payments and fees, a $5,500 mortgage on a home worth $700,000 with $550,000 owed, and $3,000-$5,000 in business expenses run out of their home. They also contribute $1,700 monthly towards college tuition and fees for their children, despite scholarships and grants. Their total monthly outgo is around $20,000. The advice given is to immediately stop borrowing, separate business and personal finances, and prioritize essential "four walls" expenses: food, shelter, utilities, transportation, and insurance. They need to create a strict budget and consider drastic measures like stopping college payments for their children and potentially selling their house to downsize, especially given the mortgage is almost half their current take-home pay of $12,000. The back taxes owed to the IRS should be the first debt tackled in a debt snowball plan. The hosts emphasize taking personal responsibility for their financial situation.