Gwinnett couple conquers $83,000 of credit card debt
This is a good-news column about conquering debt, brought to you by Courtney and Michael Wacker of Lawrenceville.
Courtney and Michael Wacker (Photo by Robin Henson)
Buried in a credit card hole and staring at financial disaster, the Wackers managed to whack about $83,000 in principal and interest in a little over five years.
How they got into the mess — fairly typical — and how they climbed out — determination and good advice — can be an example for consumers facing similar messes.
“We had so many cards full of so much stuff that we started just paying the minimum. That was the big trap,” said Courtney Wacker, a 46-year-old former teacher who works in educational testing.
It wasn’t the house or car payments that got the Wackers in trouble. It wasn’t the two kids. It was the plastic.
“You charge it,” Courtney Wacker said. “It’s the American way. I’m going to pay it off later.” Only “later” didn’t come until after the mountain of debt was about to crush them. As their credit scores kept falling, the interest rates on the nine credit cards shot up to as high as 32 percent. By paying the minimum each month, the Wackers were looking at about 30 years to get out from under the load.
Since they didn’t want to be in their 70s before the cards were paid off and since they were opposed to filing for bankruptcy, the Wackers sought help from CredAbility, the nonprofit group formerly known as the Consumer Credit Counseling Service of Greater Atlanta.
First, the nine cards were cut up. Then, a CredAbility counselor went through their budget, put them on a debt management plan and contacted their creditors. The counselor was able to negotiate a critical change — the interest rate on the debt was cut to 3 percent from 32 percent.
“That’s what saved us,” Courtney Wacker said.
Each month, the Wackers paid a figure they’ll never forget — $1,456, which included a $50 monthly fee to CredAbility.
To hit that monthly target, they had to completely change their spending habits. No impulse buys. No meals out. No vacations, other than driving to see family or friends. No expensive Christmas or birthday gifts. Handmade gifts instead.
“We had to adjust to strictly cash, even to pay for gas and food,” said Michael Wacker, a Georgia Power maintenance specialist. “Once that first year got by, we were OK.”
Did it affect your relationship, which began back in high school?
“You have to be able to work together,” Michael Wacker, 46, said. “You have to be patient with each other.”
They had to establish priorities, which were essentially living expenses, plus one other thing — continuing to pay for the kids’ competitive swimming activities. Everything else was eliminated.
As their debt was being retired, their credit scores steadily rose to 750 from the 500 neighborhood. Now, with all of it paid off, the Wackers still plan all of their spending, and pay with cash. They literally have a written, five-year plan detailing how they’re going to tackle many home-improvement projects they plan to do themselves.
Any advice for others?
“If you can’t pay for it, you can’t get it,” Courtney Wacker said. “If you fall into the credit-card trap, don’t wait long to get help.”
- Henry Unger, The Biz Beat
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122 comments Add your comment
Alphare
April 26th, 2011
4:59 pm
“It’s the American way”?
No. It’s only a way for some Americans. Most Americans don’t foolishly charge cards they know they cannot afford.
bikerchick
April 26th, 2011
5:08 pm
Jason, If you have the ability to pay off the card at the end of the month, that’s great, but what happens if you lose your job tomorrow and the day after that, your car breaks down. How would you pay off that balance at the end of the month then? Some people can manage credit cards with military-like discipline all their lives and that’s great, but invariably, at some point in time, that credit card is going to cost you, either in interest, in spending more than you should in a moment of weakness or in annual fees. Using credit cards is fine for some, but for most of us, it costs us more than it is worth.
Jason
April 26th, 2011
5:25 pm
@bikerchick If I lose my job I would still have enough money in my bank account to cover my necessary bills for the next 2 months. Plus the emergency fund. Plus my vacation fund. Ive learned from watching other peoples mistakes not to live check to check. My cards have never cost me anything, they pay me. Ive never been charged interest in the 6+ years Ive had a credit card. I only have cards with no annual fees. I have better discipline than to spontaneously charge a $1500 tv or something similar. My credit cards pay me for using them either with cash back, sky miles, etc…
Brad
April 26th, 2011
5:40 pm
I use credit cards for EVERYTHING that I can. I then pay them off in full every month. I’ve been doing this for 20 years and I’m sure the credit card companies hate me
Using credit cards allows me to
1) Earn Interest on the float of MY money in my bank account
2) Earn points / miles / etc., which turns into free trips, merchandise, cash back etc.
3) Carry a minimum amount of cash: very little risk of ever losing money from theft or some fault of my own
4) Never carry or use an ATM/debit card so I never have to worry about someone stealing it and emptying out my account, causing cascading problems with my finances.
5) Manage my finances – I have a record of everything I buy, so it’s easier to keep up with my money and where it is going
6) Always have buyer protection on everything – If I have a problem with anything, I just call my credit card company and they have the charge removed – I’ve never lost a dispute
7) And, on occasion, some charges never show up on my statement, so I get that service/product for free (you would be surprised at how often this happens if you use cards for everything)
How do I do this? I’m not rich, I know how much money I can spend per month and I never spend over that amount. It’s all about managing your finances responsibly.
Cash sucks. If you are using credit cards to loan yourself money, you are doing it wrong. Don’t stop using credit cards, just start using them correctly.
-Brad
mojo
April 26th, 2011
5:54 pm
Jason..you are wise beyond your years. Starting off right when you are 24 will only lead to a very stress-free,debt free existence. My husband and I did not even qualify for a credit card until we were almost 30(this is many years ago) and I am SO thankful for that! I don’t think I could have been as disciplined. Kudos to you!
Shaft
April 26th, 2011
6:09 pm
Whatever Jason – you think you have it figured out but what if you lose your job for an extended time? You’ll be using those credit cards to get by – wait until you have kids (if you have any) – your days of no bills will be out the window!
Jason
April 26th, 2011
6:12 pm
No problem, Shaft – I can always go back to dealing drugs.
Neil
April 26th, 2011
6:21 pm
It is funny how many middle and low income people will read this story and feel great about the couple who got themselves out of debt. What they fail to consider is how you get to be so irresponsible that you charge that much on credit cards, and they also fail to see the analogy with the federal gov’t.
This story is a perfect analogy for the US gov’t…don’t run up huge bills on a credit card that you may never be able to payoff. Live within your means…make sacrifices and a realistic budget. Do you think the “gimme” constituency will get the moral of the story?
Chris
April 26th, 2011
6:43 pm
Its possible to wipe out debts . . .
Bubba
April 26th, 2011
6:46 pm
Hey losers ,pay Your debt. its only your fault, not the banks. You liberals always think its someone else because you live a miserable life.
the real Old Gold
April 26th, 2011
7:43 pm
You don’t need the credit council scammers….. Just pick up “Total Money Makeover” by Dave Ramsey. Or listen to his show or podcasts online. He’ll get you out the right way.
Neil
April 26th, 2011
10:58 pm
Actually it’s pretty simple to avoid these kinds of credit card debts, just like it’s simple to not become a fat lard ass, but so many people are these days.
If you don’t buy things you don’t need, and you only use cash that you’ve saved up for purchases you need to make, then you won’t accumulate $83,000 in credit card debt. $83,000 in debt? What are these dumb asses planning to do for their retirement….live off the taxpayers?
The same thing is true for become a lard ass. Don’t eat the twinkies and get off the couch….simple. Take in less calories than you expend, and you’ll lose weight. Spend less money than you earn, and you’ll save money and not accumulate debt. It is incredibly simple, yet so many fail to grasp the concept. Stupid is as stupid does.
Trollin
April 27th, 2011
1:48 am
Who was it that said “Deficits don’t matter?”*
Bonus Question: Who was the last president to have a budget surplus?**
Clues: *Republican **Not a Republican
Clueless: Anyone who votes Republican
Pro athletes who've gone broke | The Biz Beat
April 27th, 2011
6:35 am
[...] I wrote about a Gwinnett couple who managed to pay off $83,000 in credit card [...]
mojo
April 27th, 2011
7:29 am
totally agree with Bubba and Neil…I would love to have five coach purses and plastic surgery…but for now I will deal with my purse from Belk and make up to hide the wrinkles. I am not saying that is what this couple spent their money on,however, must have been some extravagant items to have 83K in debt. I clip coupons, cook at home a lot to save money and am doing just fine!
How One Couple Dug Out From $83000 In Credit Card Debt | Financeation
April 27th, 2011
8:06 am
[...] Gwinnett couple conquers $83,000 of credit card debt [AJC.com] [...]
TnGelding
April 27th, 2011
9:09 am
If you’re healthy you’re wealthy!
Live within your means and don’t be petty and mean. Create, don’t destroy. The world will be a better place and you’ll be a better person.
Moerbeck
April 27th, 2011
2:08 pm
I am on an austerity plan as we speak. I earn a high income but want to get out of 20K of credit card debt fast. Since February, my wife and i are on a cash-only basis for mostly everything and it’s working out great. I think we should be done in August paying off the debt… credit isn’t evil. Frivolous spending is absolutely evil and gets people in trouble.
Get Out Of Debt By Switching To A Cash-Only Policy | Lifehacker Australia
April 27th, 2011
4:03 pm
[...] Gwinnett couple conquers $US83,000 of credit card debt [AJC via The Consumerist] Tagged:debtsaving money [...]
tom
April 27th, 2011
5:54 pm
I have lived an all cash life for the past three years. I have one credit card I am still paying off and three other credit accounts I am paying on. My credit score is 550 and was able to purchase a new car in Nov. Interest rate is 20%. No other bank would give me a loan. I have eliminated three other credit card accounts by paying off the one with the lowest balance first. Min payments on all accounts expect the one I am targeting. I have gotten good with the cash only concept. I pay my bills first of the month give myself an allowance for the month in cash divided by four in envelopes. It works for me and I actually have money left over at the end of the month. Suck it up and sacrifice for your future. Be free.
Get Out of Debt by Switching to a Cash-Only Policy [Debt] | That Soviet Guy
April 27th, 2011
7:31 pm
[...] Gwinnett couple conquers $83,000 of credit card debt | AJC via The Consumerist You can follow Adam Dachis, the author of this post, on Twitter and Facebook. If you’d like to contact him, Twitter is the most effective means of doing so. [...]
Tomas
April 28th, 2011
9:40 am
Great Story. You should also read the “Total Money Makerover” by Dave Ramsey. My wife and I are able to put over $1000.00/month towards our debt by just being smart with our money. Also, cash is king. Ntuj was stating how he has 8 credit cards and he pays them off that month or in the lastest, 2 months. That is great but if he was to walk in the store with cash looking for a $600.00 washer, he would be able to negotiate a lower price which is better than 6 months no interest.