Mary proves you can pay off debt regardless of how much you earn
Sometimes, not earning enough stands in the way of you paying off debt. It can lead to spending more than you make and leaving high balances on your credit cards.
It’s easy to tell yourself you’ll start lowering your balances when you earn more, but what if that doesn’t happen? You may find yourself accumulating interest and inundated with debt.
As of 2020, the average American has a credit card balance of $6,200. Over the past decade, creditors have also boosted credit limits by 20%, making it easier for consumers to bite more than they can chew.
Mary is all too familiar with the cycle of high balances and unmanageable debt.
Mary’s finances were capsized by college debt and divorce…
After mortgages, student loans take the cake with consumer debt. The MeasureOne Private Student Loan Report shows Americans owe $1.5 trillion in student loan debt. While some are able to consolidate their debt, not everyone has that luck. Mary is one of many Americans who left college owing lenders—she amassed almost $150,000.
Shortly after graduating, she moved to Louisiana for work, hoping for a fresh start, but then tragedy struck. Hurricane Andrew hit, and she lost everything.
“I was in so much debt. Then I got my first job in Louisiana and then I had to pay for my place. Then hurricane Andrew hit, and I lost my house and almost everything. The only thing I had was my car, and I still owed on it. I had a really rough beginning, and it snowballed after that. I could never quite get out of it,” Mary explains.
Fast forward to some years later, Mary got a divorce, further adding to her debt. In her words,
“My husband and I had divorced (we’re back together now) but at the time I was pretty much paying for everything alone and I was stressing out. I was really angry at myself for getting into debt.”
Divorce can be pricey, as there are many associated costs. Legal fees, payments requested by courts and recreating one’s life take a toll financially.
She was in $30,000 deep…
Aside from coping with the financial strain of impossible student loan debt and divorce, Mary still had everyday expenses. She had 11-12 credit cards and used them to buy both mundane and essential items. However, when Mary made relatively large purchases, she didn’t consider the repercussions of mounting interest. Mary offered one example, saying,
“We needed a lawnmower so we got it from Lowes and then it ended up costing a fifty bazillion dollars by the time we paid the interest and then we needed a place to put the lawnmower.”
Consumers often make the mistake of buying items on their credit cards with no concrete budget or repayment plan. When you do this, it’s easier to get into the habit of impulse spending and buying things that don’t add long-term value. This can lead to high balances, which become increasingly difficult to pay off.
“What’s funny is that all that stuff is gone. The little cabin we bought to put the lawnmower in rusted and died, the lawnmower died, and I don’t even have anything to show for all that. But you know, I had the debt.”
Until she accidentally stumbled across Consolidated Credit…
It’s easy to ignore debt, especially when there’s no tangible solution in sight. The silver lining is that there’s always a way out; sometimes it finds you when you least expect it.
When asked how she found out about Consolidated Credit, Mary replied, “I think I just found it accidentally on the internet. I was in school. I’m a schoolteacher, and in my planning period, I was stressed out about money.”
She had no idea that her financial burden would soon be lifted.
Mary thought Consolidated Credit Was too good to be true…
It was hard for Mary to believe there was a program that would help mitigate her debt without tricks or hidden incentives. However, she gave Consolidated Credit a chance and enrolled 12 cards into a debt management program.
She was excited about starting and saw progress within two years.
“When that very first bill got paid off, I was like oh my gosh, oh my, I’m really gonna do this…My wish was to have extra cash so I could pay it off faster. I think towards the end I used $3,000 from my taxes because I wanted to be done.”
In four years, she turned lemons into lemonade…
Many agree teachers are underpaid , especially if they’re at the lower end of the pay scale. At the bottom 10%, they can earn just $37,000 annually, while those in the upper 10% could earn up to $97,000. Factors that influence a teacher’s salary include the state, grade they teach, the school they work in, and their level of experience. For those on the lower end of the spectrum, paying off over $30,000 in debt can seem impossible.
Consolidated Credit kick-started the process by reducing or eliminating the interest on each card.
“Some were like 24 percent, knocked down to 10. Others were like 15.9 and knocked down to 0. So, I knew once you started negotiating it was going to make a big difference,” explains Mary.
With little to no interest to pay, it was easier to create a straightforward and more affordable repayment plan. By year four, Mary was set to clear her balances. She explains feeling an amazing sense of relief after finally paying it off.
Mary gained indispensable money management skills…
One of the most invaluable lessons Mary learned from Consolidated Credit’s program is to be a more conscious spender. For her, it meant focusing on essentials and avoiding habits that could put her back in debt.
Mary adopted positive habits, like only using credit cards to buy what she can afford and clearing balances before the end of each payment period.
“Now we only have this one credit card and we only use it if we have money in the bank account to buy whatever we were gonna buy anyway so we’ll buy our groceries on the card and then pull the money right out of the bank and pay that card completely off. Whatever we put on it, we pay right away.”
She has adopted the same practice for paying off medical bills. Considering one-third of credit card users have debt because of medical bills , it’s a good way to avoid it.
So, makes it her mission to share her newfound knowledge…
Schools don’t teach financial literacy unless you’re taking a finance-related course. However, Mary has taken up the initiative and is championing the cause.
“Ever since I was in the program, I have actually taught other people how to make their credit score go higher. I’m a teacher, I’m 50 but I teach a lot of young kids. I pass on these lessons to my students.”
Mary also stresses the importance of not borrowing against retirement. Many Americans want to retire by 67, but they often don’t have the resources to do so. Ameritrade conducted a survey of 2,000 adults between 40-79 to see whether they were on track for retirement. The survey found 41% of individuals in their forties and 28% of respondents in their sixties have less than $50,000 saved for retirement.
She explains, “I always tell them don’t borrow against your retirement. If I had not borrowed against my retirement—I did it two times thinking in my head that what I was about to do was so important that I had to do it—I could’ve retired this year, but I have to work for 14 more years…”
This is golden advice if you have hopes of retiring early.
Consolidated Credit wasn’t too good to be true after all…
When we asked how Mary felt after making the last payment, she responded,
“I wasn’t sure if it was real. I was happy, I had learned so much about how not to do things, in that period of years just by reading the things you guys posted and reading other people’s stories that I just knew I could never put myself in that predicament again.”
Here’s her advice for those skeptical about getting help….
“Trust it. Trust the process. It actually works. Know that people have gone before you have gained success.”
Debt can have a happy ending if you get professional help. Speak to one of our counselors today to see how they can help.
Don’t be afraid to ask for help with your debt, get in touch with a counselor now.