The following is a real client success story. The client's name has been changed, per their request. If you've got a debt success story that you'd like to share, please send us an email at Success@MoneyManagement.org and your story could be featured here in coming months!
For Kara, the trouble all started with her house.
“I loved the house, but it had a lot of problems, not the least of which was a leaking roof.”
The house was over a hundred years old. As much as she loved it, Kara knew she needed to get out. The problem was finding someone willing to pay what it was worth. “It took me five years to find a buyer who would pay what I needed to get.”
Faced with an exceedingly unfriendly housing market, Kara was stuck and quickly found herself pouring money into repairs. Eventually she had maxed out a pair of credit cards. That created a new problem. “The credit card payments had gotten so large that, despite my best efforts, I could no longer make ends meet.”
Kara’s story is by no means unique. As much as we like to believe that unmanageable debt is always the by-product of irresponsible spending or bad money management, the truth is that debt is often a consequence of circumstances beyond your control. You get sick. There’s an accident. The national housing market collapses.
Things happen that we can’t anticipate or properly plan for. And while we can’t undo what’s already happened, we can take steps to find a solution and push past our setbacks.
In Kara’s case that meant proactively seeking a way to reduce the strain of her crushing monthly credit card bills. She asked her creditors if they could lower her interest rates, but didn’t find much traction until a representative from USAA pointed her towards Money Management International.
“It was a very positive experience for me,” says Kara. “The people I dealt with at MMI were friendly, knowledgeable, and nonjudgmental. They were able to significantly lower my credit card interest rates. I only had to make one monthly payment, rather than two, which I liked. The amount I had to pay was manageable. I get paid between the first and the third of every month. I set up an automatic withdrawal for the fifth. For me that was very important. I knew the money would be there. My mortgage and MMI were the first bills I paid each month.”
Find a plan and stick with it
Meanwhile, Kara continued to maintain a trim budget. “I live my life trying to cut back in all areas. My financial resources have always been extremely limited. I can be pretty frugal with food and entertainment.”
Two years later, Kara was finally able to sell her 100 year old house and managed to pay off both credit cards at closing. “The amount I had to pay was a lot less than it would have been had I not contacted MMI. More than that, I wouldn't have been able to pay my bills during those two years because those credit card payments had gotten too high. I might very well have lost my house and all the equity I had put into it.”
There is of course no one solution that works for everyone, and if you’re struggling with debt, a debt management plan may or may not be the right option for you. The key for everyone, however, is to take that first step and ask for help. See what solutions are available. Speak to a close friend. Speak to your creditors. Speak to a certified budget counselor. Just take action.
For Kara’s part, she’s happy to report that she’s since purchased a lovely townhouse and provides advice to friends who are dealing with their own debt troubles.
“I have recommended MMI to other people who are struggling with credit card debt. I've suggested to people that they write down everything they spend money on for one month in order to see where their money is going. I've also suggested that people get all their credit card statements together and add up the balances.”
Debt isn’t a judgment. It has very little to say about your intelligence or shrewdness. It’s just a thing that happens – sometimes as a result of our choices and sometimes completely independent of anything we do. What you do about debt, however, says a lot.
This article was written by a Money Management International employee who believes in MMI’s mission to improve lives through financial education. The results described may not be typical and are the result of Kara’s dedication to taking control of her debt.