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Client Profile: Tanya

Furloughs and cutbacks in hours can seriously affect public employees, including first responders like Tanya.

Loss of income has become a huge challenge for millions of Americans as a result of COVID shutdowns. Even if your household is not facing unemployment, furloughs, reduced hours, and pay cuts make maintaining a balance household budget immensely challenging. When income gets cut, people often rely on credit cards to get by, which leads to challenges with debt that can last long after your income recovers.

This isn’t the first time Americans have faced this type of situation. During the Great Recession of 2009, people faced these same types of cutbacks, particularly those who are employed by cities and municipalities. Public workers, such as first responders faced similar pay cuts and furloughs. Here’s one first responder’s story of overcoming debt after a loss of income.

Overtime pay was Tanya’s way of making ends meet…

When Tanya, a law enforcement officer in a small city in Florida worked overtime, she was able to afford a little more than her basic needs – food, clothing, shelter, bills – including her credit card payments.

But then as the Great Recession started, the city limited overtime hours for officers. It was then that Tanya realized just how much credit card debt she was also racking up – over $8,000 on 20 credit cards. To make matters worse, the drop in her income prompted an IRS audit and she had to pay back taxes. To pay down her debt Tanya, on occasion, sacrificed from what she ate to how often she ate.

“Sometimes when funds were low I would just eat fruit. A couple of times my check couldn’t cover all my expenses so I postponed food shopping.”

Things happen and you know, you do what you have to do – you sacrifice.

Low credit limits and low minimum payments masked how much she was really charging …

Tanya says low limits and payment requirements made the situation seem fine at first. It made it easy to think she was managing her money responsibly.

“My credit card limits were so low – $100, $200, $300 – and my payments were also so low that if my minimum payments were $15, I’d pay $25. Then another one would come in and if the minimum payment was $20, I’d pay $30.”

Unfortunately, those minimum payments weren’t helping her get ahead. Her balances would go right back up with new charges next month. She was stuck in the cycle of debt.

Then she had a wake-up call …

“Reality really set in when my overtime was cut completely,” she remembers. “It got to the point where about two years ago I spent $700 before Christmas and $800 after Christmas on gifts for my granddaughter. That’s what did it – that was a wake-up call.”

She sacrificed to pay down her debt. The bare essentials became luxuries…

I couldn’t buy anything because all my money was going to all those credit cards.

“I was barely eating. I never got to go out. I had to rob Peter to pay Paul. Something had to give. I got rid of stuff I didn’t really need. I cut my cable off, cut those credit cards down, and consolidated them. If I could get rid of the light bill I would’ve too. Taxes and insurance, those were the basic needs.”

One ad changed everything…

“I was feeling crazy,” she says. “I was watching TV and your commercial came on.  I picked up the phone and made that call. A wonderful lady put me at ease. It took a huge strain off me. And now by the end of the year, I will be debt-free!”

Consolidated Credit helped her regain control…

Some of my interest rates were as high as 24%. Consolidated Credit was able to lower them to about 8%.

Consolidated Credit helped Tanya set up a debt management program. It’s a consolidated repayment plan that pays back everything you owe in a more efficient way. We work with creditors to lower the interest rates applied to each balance, so it’s easier to pay them off faster.

“During the negotiation, a couple of creditors refused to lower their rates so my counselor helped me arrange my debt management program to pay off those cards first.”

Her credit score got a boost…

Throughout the course of the program, Tanya was pleased to watch the balances on her cards go down and then disappear. Each month, her creditors were paid as agreed on the program.

“My credit score improved a little bit. It was between 300 and 400 now it is about 572 and climbing. My counselor recommended that I hold off applying for anymore credit to give it some time and by the end of the year it should go even higher.”

The collector calls stopped and even her hair is starting to grow back…

“I’m so relieved! I have a much more positive outlook,” she says. “I was so thankful when the creditors accepted my accounts and Consolidated gave me one set payment. I will be totally honest with you – my hair stopped coming out. That’s how stressed I’d been. You guys took a big burden off my shoulders.

I no longer have creditors constantly calling me. I sacrificed to make the payments but now I’m debt-free and stress-free.

So what did the debt management program teach Tanya?

“Really, I learned something I knew all along. That I needed to be more conservative with my money,  to not buy stuff that I do not need. That I don’t need all those credit cards, just one – maybe.”

How will she celebrate her freedom from debt? By moving on to pay off the next debt

“Well, the money that I was sending to Consolidated I will send to the IRS. I need to make at least 3 to 5 more payments and then be done with them, too. Then I can really celebrate.”

If a loss of income has led you to rely on credit cards, we can help. Talk to a certified credit counselor to discuss your options to get out of debt.

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