In 2017 Serena and Jim came to see me. Serena owned her own business. Jim was a lawyer who worked for a well-respected firm in Buffalo.
Jim and Serena were $55,000 in debt, not including their mortgage. Each month they would pay the minimum amounts, which equals $14,632 a year. Since their minimum amounts were just interest, they were getting further and further behind. Serena was determined to stop the bleeding process. Jim wanted to, but couldn’t see how that was possible.
Step 1: The Initial Meeting
Serena’s first step was to convince her husband it was worth meeting with a Certified Financial Advisor. He didn’t see how spending more money could help alleviate their financial issues. However, he reluctantly agreed.
When we met, I asked them what their number one goal was. It was to be debt free, although they didn’t see how. When they left the first meeting they were still rather hesitant about the path forward.
Step 2: The Financial Plan
Serena and Jim provided me with all their financial paperwork. Everything from credit cards, to student loans, to retirement, to a budget I directed them to make for the previous 3 months. With all this information, I was able to provide a snapshot of what their financial life was at that moment and highlight their financial issues.
- 3 credit cards with balances that had interest rates between 17-25% which equaled over $29,000
- Student Loans for the son in excess of $25,000
- Discretionary spending: i.e. lunch out with co-workers, coffee at coffee shop every day, etc.
Step 3: Planning
How to cut down the debt:
Jim had been getting 0% for 18 months credit card applications, over the last few months. We discussed that this could work in their advantage if they were able to pay off most of their debt before the 18-month deadline.
Serena needed to increase her revenue for the family. We discussed:
- Ideas about increasing her business revenue OR
- Finding a full-time job
We looked at the equity in the house as a possibility to help pay off the debt by refinancing. The housing market was looking good at the time.
Jim would need to find a way to get a raise OR
look for a new job that would help them out.
Step 4: Implementation
Jim applied and was accepted by 2 credit card companies. They were able to move all their credit to the 0% cards. Again, I strenuously reminded them that they only had 18 months to pay off the card before the interest returned.
Serena was very sad about the thought of having to put her business on hold. She called me a couple of time, over the next week, with ideas that she hoped would help. None did. Then about 2 weeks after we had talked, she called me so excited. She found an app that helped clients find her. She already had 4 new clients. She was on her way to producing the amount of money needed to help expunge the debt.
They refinanced their house, which helped pay for most of their student loans.
Jim found a better job that provides him with more income and better benefits.
Step 5: Review Meeting 6 months later
“I think you saved our marriage,” said Jim.
- Money can be stressful
- It can be hard to take the first step
- Financial goals allow for a path to be built to achieve what you want
- A knowledgeable professional can help clients get back on their feet
- Don’t give up