Dealing with Reduced Income
March 17, 2016Planner: Mark via Financial Helpline
Problem: Her family was struggling with reduced income after her husband’s job was downsized and he could only find part time work.. Even with her substantial promotion, they were struggling to get ahead of credit card payments and medical bills.
Suggested Action Steps: We reviewed her budget; compiled a debt inventory, ran a Debt Blaster strategy, and discussed negotiating with creditors for better terms and payment extensions.
Results: It took a few months, but they are now cash flow positive. Using the debt blaster strategy, aggressively applying tax refunds and bonuses from work, they were able to pay off all but two credit cards, and are still aggressively paying these balances down. This increase in cash flow also allowed them to begin rebuilding thier emergency fund. Contacting their creditors helped them not only get lower interest rates and extend payment terms, but the hospital also agreed to forgive ALL outstanding medical bills. Although it was difficult, they now have much less financial stress and can begin to see a positive way forward toward becoming debt free and saving more for retirement.
Testimonial: “Since we last talked, it’s been a very difficult few months. Many things have happened and we hit a point financially where I didn’t think we’d make it out unscathed. We were overdrawn most of the time and at any given moment, we were behind on many bills. However, we are better now. [We] sat down and took inventory of everything financial and then split up the bills to call and ask for help where we could. [Auto lender] gave us 2 “free” months of no car payment (tacked on to the end). [Hospital] wrote off ALL of our outstanding balance to them! [Credit Card Co.] gave us 45 days of no payment and then for 12 months took our very high interest rate to 9.99% where we’d be hitting the principal hard without all the interest. We got back way more in our tax refund than we were expecting/hoping and my bonus check was double what we expected. We have managed to pay off all the credit card debt except the two highest ones… Now that we are in this [better] place, I wanted to visit with you again. I think we need a bit of time to build that “floor” you spoke of earlier, but I think it’s a good time to revisit our financial situation and start thinking about what positive changes we want to (and can) make going forward (increase 401k, tithe, savings, pay off debt etc.)” – Anonymous