Don’t worry, I do not have any credit card debt.
However, a pastor and his wife living in Michigan sure did.
The Story Of A Couple That Found Themselves in Massive Debt
According to an article on Yahoo Finance, Jerry and Sue Bailey managed to charge up $92,000 in credit card debt, spreading it across 17 credit cards. What makes things worse is that the wife had no idea. See, Jerry was kind and protective. He didn’t want to upset his wife, so he hid all the debt from her. I mean, she knew they were spending money, but she didn’t know that debt was piling up.
That is, not until those pesky creditors started calling.
Jerry also admitted to Sue that the cost of their daughter’s wedding would have to go on a credit card. The evidence started piling up that they really did have money issues, and the couple went through and totaled up their debt. The grand total of debt was $92,000, which was nothing short of shocking.
I don’t know everything the Baileys spent their money on, but at least the major expenses that were listed were not totally frivolous. The major expenses were 2 weddings (at $5000 each), home repairs, a new roof, and a new car transmission. Obviously, there is a lot more baked into that $92k than the major expenditures listed above. However, unlike many other people with massive debt, at least they had a little something to show for it.
Where The Baileys Went Wrong
I don’t know the whole story behind the family, but I see some real issues with how this couple managed their money.
- There was not open communication between the husband and the wife. I am not saying that the whole family needs to know every detail of how money is spent. However, debt should never be hidden, and finances should be a discussed frequently between the adults (and sometimes the kids) in the household.
- Pastor Jerry, who managed the finances, didn’t even know how much debt they had until it was all added up. I know the end result may not always be pretty, but people need to keep track of how much they owe and how much they have saved. That is the only way to handle both today’s expenses, and expenses that are likely to occur in the future. Spending and then putting your head in the sand is a recipe for disaster.
- The couple had 17 credit cards! How in the world do you manage 17 credit cards? There should be a maximum number of credit cards a family can have, 17 is just ridiculous in my opinion.
- Jerry and Sue bought things they couldn’t afford. OK, so when the roof leaks, you have to fix it. However, you don’t have to pay for a wedding if you don’t have the money. I am sure many parents would love to pay for their child’s wedding. However, if you have to pay for it with a credit card, then you need to have a discussion with your kids and set realistic expectations. In other words, sometimes a parent just has to say ‘no’.
- They didn’t have an emergency fund. Going back to my previous point, roofs will leak and people will get married. Neither of these expenses are shocking, and they both should have been planned for. Had the couple experienced huge medical bills or something that couldn’t be anticipated, then that is one thing. However, there are some things you can pretty much count on in life- homes all eventually need repairs, and kids grow up and start families of their own. People need to save for those expected expenses and not just react as they happen.
Where The Baileys Went Right
Now, I am not an expert on all the resources available for getting out of massive debt. However, the Bailey’s did not go it alone, which was smart. Jerry and Sue tried contacting their credit union to discuss their debt problem, and the credit union just advised them to file for bankruptcy. Whereas bankruptcy MAY have been a good financial option for them, I applaud them for not going the bankruptcy route.
Since the couple decided that bankruptcy was not an option for them, the credit union advised them to contact a non-profit credit counseling agency, which they did. What the agency did for the Baileys was manage the payment to all the creditors. All the Baileys had to do was send one monthly payment to the credit counseling agency, who would disperse the funds to the various creditors. I imagine that when you have 17 creditors, having just one point of contact must be a huge relief. (Not only do these agencies handle payment to the creditors, but may also negotiate lower interest rates on behalf of the payee. Also, I have no idea if there was a fee associated with the credit management service, the article did not specify.)
It took 5.5 years, but the Baileys eventually got their debt paid off, and they definitely learned some hard lessons along the way.
How I Would Pay Off $92,000 In Credit Card Debt
I found this article interesting, because prior to reading it, I didn’t really know that non-profit organizations existed that would handle the task of disbursing debt payments to all your creditors. I know a debt consolidation loan would work similarly in that you would pay off the credit card debt with the money taken out from the loan. However, whatever debt reduction strategy you follow, you must make sure you destroy those credit cards immediately. Have a card-burning party or something, and vow to not take on new debt while you have a loan balance
Anyway, if I lost my mind and somehow charged up that amount of credit card debt, I would probably refinance my home and pay everything off. I know that is putting my primary residence at risk, but with interest rates so low, that option would probably make the most sense for me. However, I would also cut up my credit cards and involve everyone I knew in helping me control my spending. I would tell friends I couldn’t eat out and would go for walks with them instead. I would totally revamp my life and spending habits to help ensure I never found myself in that horrible situation again.
So how would you pay off $92,000 in credit card debt?