"You're At Retirement age and Broke!"

A couple nearing retirement age, with the husband turning 65 next week and the wife 64 in the summer, face significant financial challenges. They have no savings or retirement funds, a joint income of $116,000, and $83,000 in personal loans, credit card debt, and car loans. Additionally, there's a $28,000 mortgage lien on their primary residence, which the wife disputes but acknowledges its existence. The husband is considering a cash-out refinance to consolidate all their debt into a single loan, believing it would free them from debt. However, the wife correctly points out that this would merely transfer the debt onto their house, extending their mortgage, which currently stands at $53,000, into a new 30-year loan. A loan officer is actively supporting the husband's idea, suggesting that this route would free up an extra $3,000 a month and that adding an additional $2,000 a month could pay off the mortgage in six years. The wife remains skeptical, feeling that this plan doesn't address the underlying issue of their spending habits and would leave them in debt again by the time they are 70. The couple owns three vehicles: the husband's truck, on which they owe $32,000; a Jeep, on which they owe $24,000; and an F-150 that was paid for in cash and is worth about $6,000. The husband primarily drives the more expensive truck, occasionally using the F-150. The wife questions the necessity of owning two vehicles with outstanding loans, especially since the truck was bought to move a concession trailer they now use less frequently. The advice given is to avoid the cash-out refinance and instead sell both the truck and the Jeep. Selling these two vehicles, which have outstanding loans of $32,000 and $24,000 respectively, totaling $56,000, would significantly reduce their $83,000 non-mortgage debt. After selling the vehicles, their remaining non-mortgage debt would be $27,000. Adding the $28,000 mortgage lien and the $53,000 mortgage to this, their total debt would be $108,000. However, the calculation provided during the discussion simplifies this: if they sell the two cars, they would be able to pay off $56,000 of the $83,000 debt. This would leave them with $27,000 in consumer debt plus the $28,000 mortgage lien and $53,000 primary mortgage, totaling $108,000. A more direct calculation was then presented: with $83,000 in debt excluding the mortgage, and selling the $32,000 truck and the $24,000 Jeep, the debt would reduce by $56,000. This leaves $27,000 of the original $83,000 debt. Adding the $53,000 mortgage, the total debt is $80,000. With a joint income of $116,000, paying off $35,000 a year would clear this debt in just over two years, and paying $25,000 a year would clear it in three years. This approach would make them debt-free, including their mortgage, in two to three years, well before the six-year plan proposed by the loan officer. The speaker emphasizes that this strategy, unlike the refinance, addresses their habits and avoids making the bank richer. Being debt-free would free up approximately $4,000 a month, allowing them to save $50,000 a year for four to five years, building a substantial nest egg for their 70s. The wife acknowledges the need to confront her husband about their financial situation, despite potential marital discord, recognizing that their current path of buying unaffordable items, including vehicles, is unsustainable as they approach retirement with no savings.