This week we welcome Travis Pizel, the blogger behind Enemy of Debt. We receive a lot of questions about the process of credit counseling, so I asked Travis to share his experience paying off over $100,000 worth of debt through a debt management plan with a credit counselor. First-hand accounts are always helpful!
Driving through the treated road sludge of Minnesota winter roads had left our van extremely dirty, so I took my place in the car wash line late on a Sunday afternoon. Once I entered the car wash, little nozzles shot detergent, and then water at our vehicle. Finally, the dryers kicked in, blowing hot air at the van. But the van didn’t move an inch. We allowed the work to be done around us while we sat still. I couldn’t help but think to myself how nice it would be if getting out of debt was like that. I could just close my eyes and wait as someone else did all the work.
But it’s not like that at all. Let me tell you my story.
During the first 13 years of our marriage my wife and I accumulated $109,000 of credit card debt. Due to a minimum payment policy change with a major creditor with which we had multiple accounts, we found ourselves in a situation where we could no longer meet our monthly financial commitments. It was then that we enrolled in a debt management plan. They negotiated a lower interest rate and monthly payment with each of our thirteen creditors that would allow us to eliminate our debt in just under 5 years. Our overall payment was not significantly lower, but because of the drastic interest rate reduction, we were finally able to make progress on the principal of our accounts instead of just throwing all our money away each month on interest. We are approaching the end of our fourth year in the program, and have paid off $84,000 of that debt.
But there’s so much more to our story.
Getting out of debt is not like the drive through car wash described earlier. We couldn’t just enroll in a debt management program and expect all the work to be done for us. It’s more like parking the car in your driveway, filling a bucket with water, grabbing a sponge and a towel, and getting to work. We have to be active in our program to make sure we’re headed in the right direction. Each and every month we check our creditor statements to ensure the lowered interest rate is being applied, and that our payments are being received on time. As creditors are paid off, we need to contact our debt relief company and tell them where we want those extra funds applied for future payments.
There’s also the matter of how we got into debt in the first place.
Eliminating our mountain of debt wouldn’t do us any good if we didn’t address the lack of communication and bad spending habits that got us there in the first place. My wife and I have made significant lifestyle changes in order to live within our means for the first time in our lives. To be honest it didn’t happen all at once. It took us over a year of constantly re-evaluating our monthly expenses and cutting out unnecessary expenditures to fully understand how deep those cuts, and how big those changes had to be.
We have also worked tirelessly to improve our communication skills. For the first thirteen years of our marriage we hardly talked about money at all. Changing that by forcing ourselves to talk almost daily about the state of our finances and coming up with a budget system that works for us has been extremely hard.
Our hard work is paying off and we are finally able to see the the finish line.
In twelve months, with the help of our debt management program, we will have eliminated our mountain of credit card debt. We will also have learned and practiced the tools needed to handle our finances the right way for the rest of our lives. After that last payment is made, we will then in a way start over, leaving the mistakes of our past behind us and focusing on bettering our future.
I think our future looks pretty bright.
About Travis: Travis writes about personal finance at Enemy of Debt, where he candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband, he provides a unique perspective on balancing debt, finances, and family. Follow him on Twitter.