Massachusetts Couple Spends $200K on Crypto, Now Living with His Mom

The Story of a Couple's Financial Downfall

When Angela met David, he had already made some bold financial moves and eventually built up a six-figure cryptocurrency portfolio. However, things took a dramatic turn, leading to a significant financial setback for the couple.

Instead of being cautious with their investments, they decided to have a child, refused to take stable jobs, or took jobs that paid too little and then quit. They lived as if they were wealthy, relying solely on their investments. Unfortunately, this approach led to the loss of all their investments.

Now, the couple and their five-year-old daughter live with Angela’s mother in a two-bedroom house, trying to recover from the financial hole they created. Both have found jobs, but they still struggle with money, even without any housing costs.

The Details of Their Situation

David’s investments in cryptocurrency initially did very well, but the success went to his head. He spent $200,000 of his cryptocurrency, treating it as income rather than looking for a job. He and Angela moved to Colorado in 2021, and over the course of a year, they cashed out David’s investments and spent freely.

Once reality caught up, they moved to Colombia, Angela’s native country, and then back to the U.S., settling in with David’s mom in Massachusetts.

Currently, Angela and David both have jobs and earn a combined income of $118,000. At the time of the episode, they had $4,242 in savings, $4,000 in assets, and $761 invested, but they were $34,632 in debt. Despite having no housing costs, they still struggle to meet their financial goals.

No Plan Equals No Stability

As Ramit Sethi probed the couple further, it became clear that they don’t keep track of their finances. Despite having a goal of buying a house, they can’t even account for how often they eat out or how much they spend on gas.

Getting on a budget and evaluating their spending should be a top priority. David mentioned one of his goals was to add to the couple’s investments. However, the $761 in investments they own are all in cryptocurrency. Sethi advised him to stop putting everything into crypto and diversify his portfolio. A diverse portfolio offers less volatility and more protection in case of a downturn.

Sethi also noted a lack of enthusiasm when it came to tackling the couple’s debt. It’s recommended the couple address this issue before approaching ambitious ideas like saving for a down payment on a home.

What They Can Do

Sethi called Angela and David “dreamers” — individuals who are forever optimistic but don’t look at the actual numbers. They need to face reality and come up with a real plan. Here’s what they can do:

• Get on a budget: The couple needs to start tracking every penny coming in and every one going out. Once they see the full picture of where their money is going every month, they can reign in their spending and bring it down to a level where they can cover their essentials while leaving room for meeting financial goals.
• Attack the debt: The longer you hold onto debt, the more costly it will be in terms of interest. Debt can hold you back from achieving financial milestones, such as saving for a down payment on a home. Focus on repayment, and while you’re at it, start building an emergency fund to give yourself a financial cushion that protects you from going further into debt.
• Fix the communication gap: During the podcast, Angela admitted her stress level was at 10 out of 10, while David said his was a two or three. If one person has less urgency about a situation, it may be a good idea to try getting on the same page and working together. Having regular money meetings where they can both contribute to the conversation may help.
• Diversify their portfolio: Investing in crypto can be part of a financial plan, but probably shouldn’t be the whole plan itself. The couple may want to explore investing in low-cost index funds, which track a portion of the stock market and can offer instant diversification by investing in different sectors at once.
• Cut the “expensive procrastination”: Angela mentioned she sometimes spends thousands of dollars on courses and retreats. Sethi called it “expensive procrastination disguised as self-development.” Now may not be the time to spend an extraordinary amount of money on something that won’t offer a return on your investment.

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