Break Free of Credit Card Debt

Editor’s note: This article is part of our “Debt Free” series, a Next Avenue initiative made possible by a grant from the RRF Foundation for Aging.

Once Jenny Weimer, 50, of Kalamazoo, Michigan, decided to pay down her credit card debt, she didn’t mess around.

With help from Money Management International, a nonprofit financial counseling agency based in Stafford, Texas, she paid off $30,000 in credit card debt in four years — while also paying off a $10,000 car loan and a $5,000 loan from a credit union.

“I was kicking butt for a while,” Weimer says.

She concedes that she was afraid at the start of her debt management plan from Money Management International even though the terms of the plan were good.

Negotiating Interest Rates

“It was very scary to make the leap because they had to turn off the credit cards,” Weimer remembers. “(But) I got used to living without credit cards very quickly, actually. I went from ‘I want this’ shopping to ‘I only buy what I need.’ “

Money Management International negotiated with Weimer’s credit card companies and persuaded them to reduce her cards’ 25% interest rate to an average of 7%.

Before getting help, her minimum monthly payments on her five credit cards had stretched to $1,500 a month. As part of her debt management plan, she made one $700 payment each month to Money Management International, which in turn paid her credit card companies.

Buy Now, Pay Now

“It was doable,” Weimer recalls of the payment she made for four years. The lower monthly payment toward credit-card debt freed up enough cash to let her to pay down her other debts as well.

“I learned to live on cash,” says Weimer, who cleans houses and works at the front desk at a salon. “I just use cash and debit now.”

That is a radical change from 2009, when Weimer became a single parent and charged away on her credit cards. “I didn’t deny my kids or myself anything,” she recalls. “I wanted to make sure my kids had whatever they wanted.”

Since much of that spending went on credit cards, the balances kept building up and so did her worries.

“It was scary and awful and I didn’t know what to do,” Weimer remembers. “I couldn’t sleep at night. How do I make more money? Physically, I couldn’t work anymore.”

She found herself doing little things to save money to try to scrape by, like using the McDonald’s drive-thru. “I was eating kids’ meals for my lunch because I couldn’t afford anything else,” she says.

Hitting Bottom

Weimer spent a couple of years calling credit card companies asking for lower interest rates, with no success. When two longtime clients of her cleaning business passed away, the drop in income meant her credit card bills might swamp her. “I couldn’t make minimum payments anymore,” she says.

A credit card company that she had called for help said it could not reduce the interest rate on her monthly card balance but it did suggest she contact Money Management International. It belongs to the National Foundation for Credit Counseling, a nationwide organization whose member agencies provide free or low-cost financial counseling to consumers.

“(That was) a life changer, a game changer for everything,” Weimer recalls. “It opened a lot of doors.”

Now that her finances are safely above water, Weimer has this money advice for others: “You have to train yourself to save. You have to train yourself to buy what you need and not what you want. Use your credit card but pay that bad boy off. Don’t let it roll over.”

Losing a Breadwinner

A breakup from her husband caused Inez Garcia of Salt Lake City to use credit cards and other kinds of high-interest-rate debt to pay for ordinary living expenses.

“I separated from my spouse and he was the breadwinner,” she says. “I used credit cards and lines of credit to get that initial ability to leave and get out of there.”

At first, Garcia juggled her debts by using balance transfers on her credit cards, and when they expired, she applied for a debt consolidation loan.

“I wasn’t spending excessively,” she recalls. “I just wasn’t earning enough money for living expenses.”

Severe back pain prevented her from working full-time, but she still faced interest rates of 25% on her credit card balances and 23% on a line of credit. “I was having trouble making payments,” Garcia says. “I had a lot of anxiety.”

Adopt a Debt-Management Plan

She reached out to Money Management International and signed up for a debt management plan for the $10,000 she owed various creditors. MMI negotiated the interest rate on her credit card and other debt down to an average of 3%, making payments manageable.

“It’s a little over $500 a month,” Garcia says. “At least I’m not stressed about it. I know it’s going down.”

Garcia now works part-time in the education department of a museum and lives with a roommate in income-restricted housing where they split $884 in rent. “I do have a roommate and rent has gone down,” she says. “So that has helped as well.”

Garcia encourages people with unmanageable credit card debt to shop around when seeking help. “Look at different organizations,” she advises. “Calculate the numbers. Talk to multiple people and get advice.”

And, she adds, don’t be too hard on yourself over debt struggles.

“Lots of people are going through something,” Garcia says. “Don’t beat yourself up over credit card debt.”