As I’ve mentioned before I started the blog as a way to stay connected to the personal finance community and hold myself accountable as my family and I climbed or way out of debt. Once we became debt free the focus shifted a bit into helping others. It’s always rewarding when readers e-mail seeking advice. I have had two such recently e-mails that I wanted to share. So please join me to help a reader.
Unemployment and Debt
My first reader, I’ll call her Ginny, e-mailed me just a few weeks ago with her dilemma.
I wanted to share my mess and request for help. $27k student loans, $7k credit card, no savings, no retirement, age 33, mom and dad are paying for everything presently (small 1 bed/1ba, cell phone, food, old car) mom just purchased a newer used vehicle, gave up my RN license due to stress. Therefore, am unemployed–been such for 2 years [cringe!]–and a transitioner. What can you do for me?
A tough spot for sure, but I wasn’t going to sugarcoat it. Here are the steps and advice I gave Ginny.
- No big secrets or get out of debt quick plans.
- It will take hard work and determination.
- Income is highest priority. What interests you?
Ginny was non-committal on her interests a little all over the place, she suggested she lives in a small town with limited opportunities. I offered:
- Try reading two career books Dan Miller’s “48 Days to the Work you Love” and Jon Acuff “Do Over”
- You are best at maintaining and increasing income with something you enjoy doing.
Ginny agree to check out the books. After check back in I offered a few more tips.
- Try things you enjoy doing or at the very least try something – Dog walking, running earns for people, etc.
- Search for brand ambassador or check task rabbit.
Ginny replied that she was Applying for jobs. I suggested:
- Don’t just apply.
- Leverage friends, family, former co-workers before applying to put a good word or recommendation in for you.
- A hand delivered resume will go much further with a hiring manager than an online application.
What advice would you give Ginny? or anyone in a similar situation? What about my advice, any good?
Living Paycheck to Paycheck
My next e-mail comes from a reader we’ll call Don. Don first e-mailed over a year ago, when he read our debt free story. Here’s Don’s note.
Your story sounds similar to ours, our cards are about maxed out, little in savings, living paycheck to paycheck and changes need to be made. The main difference in your story is that your numbers were somewhat larger (we’re at about $35K in credit card debt and our combined salary will be somewhere around $90K) but the basics are the same. I was ignoring the situation for years and after a couple mortgage refinances to pay off credit cards we just need to buckle down, change our financial habits and actually make the debt go away this time. My plans are to read your old posts and glean some info there and take a look at the Ramsey book you mentioned. I’m not really sure why I felt the need to send you this note, maybe some accountability? I’m not sure, but my wife and I need to make this a priority for the sake of the family and our future.
I let Don know that it’s tough at first to make the changes but it gets easier as you go. It was the best decision we ever made. I wished Don and his family luck. I should have followed up. Don reached out again in January 2015. He had not taken any action as of yet, but was now looking to consolidate his credit card debts. They ranged in interest rates from 8.9 to 17.9%. I suggested.
- Call Credit Card companies to try to reduce interest rates
- Work Debt Snowball plan
- Check with your bank, most offer free credit counseling services.
- Suggested a credit counseling services that offers Debt Management programs. (DMP)
Don had trying to lowering his rates, but was unsuccessful. He was going to look into the DMP. I didn’t do a good job of following up with Don again. He contacted me last month a full year from his first e-mail. Don and family still had not taking any significant action with their debt and it still totaled about $36k.
Don was once again looking for my advice. My big concern for Don was behavior change. It was over a year of dancing around the problem and he had not stopped using credit cards. My advice to Don remained the same. Don suggested refinancing his mortgage and rolling the credit cards into the refinance. Again, this is okay, but doesn’t address the underlying credit card and overspending issue.
What advice would you give Don? or anyone in a similar situation? What about my advice, any good?
I know I need to do a better job of following up with people who seek my advice. I have since talked with Ginny and Don and have updates, and I will provide them in the next few days, but really want to help a reader. What advice would you offer? I’m sure there are others out there in similar situations that could use some suggestions. As we get ready to give thanks, and maybe fight the Black Friday crowds, let’s offer our best advice.
Ginny and Don Update
So I’m happy to report good news for both Ginny and Don.
Ginny has landed a job outside her Nursing field, but is earning a salary plus commission. She’s not 100% sure if this job is a long-term fit, but for now she has some income coming in and back on track taking on responsibility for her situation.
Don has entered in a DMP and we begin paying back his debt ASAP. Credit cards will be closed as part of the plan. Don is also taking on a side hustle in the evening to help bring in some extra income.
Good luck Ginny and Don!
Thanks for everyone who offered up advice. I’m sure there are other readers in similar situations who will gain a lot of insight from this post and your comments.