Friday Inspiration: Out of Debt for Good

This is part of a series of interviews with people who are either working to improve their financial situation or who have already reached their goals. This week’s interview is with Mitch, who paid off over $14,000 in debt several years ago and has been financially healthy ever since. I think it is telling that he still feels a great sense of relief about being out of debt and is focused on continuing to do things right.

Could you tell us something about yourself?
I’m 43 years old. My ex-wife and I were married on September, 1992. Seven years later we had an accumulated credit card debt of about $14,600. At that time this represented about 20% of our salary. Seeing 20% of our income go right out the door to credit card companies was very discouraging. It always felt like we were working for the credit card industry, instead of working towards our financial goals.

In what way have you turned your financial life around?
A friend told me about Consumer Credit Counseling Service. Initially I did not sign up for the program. However, a few months later the bills became unmanageable and my ex-wife and I were very stressed out. I made an appointment in November, 1999 and we signed up for the program in December.

CCCS is a non-profit organization. At the time they charged a $20 fee per payment to be in the program. I felt this was more than worth it since the payments were being disbursed to our creditors by CCCS. We also set up the automatic withdrawal from our paychecks to CCCS. In doing this, we did not have to worry about the payment being late. It was all handled automatically.

Can you give a little bit of background on your story? What were things like for you pre-change?
Before the debt was paid off my ex-wife and I used to fight frequently about money. It was a constant battle to cut down on the spending so we could pay the bills on time. Frequently we did not have the money to pay a bill, so we did not send anything, then we tried to catch up the next month. This sometimes resulted in late fees which only increased the balance in addition to hurting our credit score due to being 30 or 60 days late.

How much progress have you made?
The debt has been paid off. We made the last payment on May of 2002.

How do you feel about your financial situation right now? (Or how did you feel after reaching your goal?)
After the last payment was received I felt like a great weight had been lifted from my shoulders. Now I could finally stop working for the credit card companies and pursue the things I wanted to do with my money.

What was the catalyst that caused you to take action?
Spreading out the bills on the floor of our apartment and seeing how many there were made me realize that we needed help to pay off the debt.

Did you have any setbacks? If so, how did you deal with them?
Towards the end of the payment program when I thought I only had one payment left, it turned out the balance on one of the accounts was not accurate. This was a psychological setback. I had been looking forward to having this paid off for two years and then to be told that I was not done was depressing. The following month I made the last payment.

What has been the hardest part of the process?
The hardest part was to know that the debt would be paid off. You have to be consistent and determined that you will pay the debt off. Initially it was difficult to believe that we could pay the debt off. But as time went on, this began to change as we could see the balance steadily go down.

The easiest?
The easiest thing for me was to imagine how I would feel when the debt was paid off.

How long has it taken?
It took two years from the time we enrolled in the program.

What will be your next step?
I have recently begun saving towards $20,000 for an emergency fund. I expect to have this completed by mid May of 2009.

What’s the best financial advice you’ve received?
Don’t buy what you cannot pay for immediately.

What inspiration could you give to someone in a similar situation?
Imagine yourself free from debt. Imagine the possibilities that open up for you when you are not diverting a considerable portion of your salary to paying off debt.

When things get rough, go back to imagining what it will feel like when the debt is paid off. There may be setbacks (mine was minor), but keep your goal in mind and you will get there. It takes patience, persistence and the desire to no longer be in debt, to see it through to the end.