My sister: Demolished $20K debt in 2 years

My sister, the 36-year-old who will be an RN and a bride within the next 12 months, got herself in a mess of debt in her 20s. The reasons are numerous: friends’ weddings (flights, dresses, gifts, etc), seasonally variable income, living in a very expensive part of the country, lousy family examples. 

When I moved back to the U.S. in 2000, she didn’t even know how far in the hole she was – she had a drawer full of unopened bills, collection letters, etc. Periodically she would call for advice on how to get out from under the oppressive burden of two student loans, four credit cards, furniture that burned in a housefire 2 months after purchase, an outrageous phone bill that an ex ditched her with, and some problems with a repossessed lease car that she kept (but paid monthly for, reliably) nearly a year beyond the contract. At one point, she consolidated the cards with CCCS, who got her interest rates halved. That’s when I learned all about how a lot of these “helpful” consolidators are actually owned by the credit card companies, whose goal it is to keep you from declaring bankruptcy.

I tried to convince her to file for bankruptcy, because her credit was completely trashed from years of overdue payments and buying a home within the next 7 years was a laughable prospect, so what difference would it make to her life? I still wish she had – the vultures had already gotten more out of her than she’d ever borrowed, so I didn’t see any moral dilemma in cutting them all off. However, she didn’t want to go that route.

She needed something I couldn’t give her: a low-interest (5%) loan. In 2003, she got one from her then-boyfriend, and was determined to pay him back well ahead of the payment plan. She used to get the guilts whenever she spent money on anything but food and bills. Even a $15 haircut caused her angst.

But get this — she paid off her full $20K worth of debt in less than 2 years working 50 hours a week at a $12/hr job while still keeping up her half of the shared living expenses. She left that boyfriend after a year (with a loan from me for moving expenses), but did something an awful lot of people in her position don’t: she did not bail on the loan, and continued to pay him back at an accelerated pace.

To this day, she’s scared to get in any kind of debt and this is how it currently affects her, years later…

  • She has student loans for nursing school, but could only bring herself to take them after consulting with half a dozen nurses to make sure the career prospects were worth the risk.  
  • She borrowed money for a good second-hand car from me a couple of years ago, and insisted on paying me interest.
  • She has felt awful about not paying me back yet, but I recently thanked her for the delay because I’d have lost at least 1/3 of it in the market this fall. She doesn’t feel so bad now.
  • Given a $10K budget for her engagement ring, she chose one under $6K. And there’s an excellent chance that she’ll be getting a “label” gown for <$700 at a consignment shop in NYC this month – something she’d never have considered 10 years ago.

She looks back on the dark days of deep debt with shame, but I only feel pride at the way she aggressively recovered and found focus and direction.

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8 Responses

  1. Wow, that is an amazing story. Your sister certainly is determined. I applaud her!

  2. Congrats to your sister! That takes a lot of character.

  3. Hi there-very well done to her-she turned a bad situation around and is very focused and determined as a result!

  4. What a great story. She will have financial peace for a lifetime with that attitude.

  5. I know – I’m so proud of her, and yet she still feels ashamed that she ever let things get that bad. I think it’s great that all the sudden, consumer credit is headlining the news and she can understand how it happened – and feel awfully glad that she nipped it in the bud when she did.

  6. I wish my sister (still young at 23) can do something similar someday. She is up to her eyeballs in student loan debt (my parents are paying it!), and has bad credit (luckily, never got enough credit to run up consumer debt). Her checking account is currently overdrawn by $1500, and close, so her $7/hr paychecks are being direct deposited towards the balance she owes.

    What a mess.

    Anyway, your sisters example makes me have a little hope for her future.

    You should be so proud, that is an inspirational story!

  7. […] My sister: Demolished $20K debt in 2 years says MoneyMateKate. […]

  8. […] in student loans and is carrying a $6K balance on her credit card. Yes, this is the same sister who slaughtered $20K in credit card debt a few years ago to prepare for 2.5 years of being a full-time student. We talked about it […]

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