Client Case Studies

Elizabeth

Elizabeth was a freshman in college when she received her first credit card with a credit limit of $1,000. She was so excited because now she could shop for clothes with her friends and use her credit card to buy the clothes she had always wanted but never had enough money to buy. When she used all the available credit on her credit card, she applied for more credit.

After several months she had a closet full of clothes, but had accumulated over $8,000 of debt on several different credit cards. Her part-time, minimum wage job at a local bagel shop no longer provided enough money to make her minimum monthly payments. Like the rest of her friends, she turned to her parents for help with her debts. When her parents found out how much debt she managed to accumulate, they cut her off financially and refused to pay her tuition until the debt was paid off. One of her friends encouraged her to call a credit counselor for advice. So, with nothing else to lose, she called and made an appointment.

During the meeting, the credit counselor asked Elizabeth if she knew how interest and credit cards work. Unfortunately, Elizabeth had no idea. The counselor educated Elizabeth about the concept of interest. She was amazed when she found out it would take more than 18 years to pay off her debts if she continued making only the minimum payment amount each month. Elizabeth now realized why she received so many credit card solicitations in the mail and why credit card companies make it sound so appealing to buy now and pay later.

The counselor recommended Elizabeth immediately cut up her cards, which she agreed to do. Then, after they completed her budget, Elizabeth could clearly see she wasn't making wise spending decisions. She spent most of her money on food and entertainment. The counselor told Elizabeth if she was serious about getting the debt paid off, she needed to make some big changes. This meant not eating out so much with her friends and going to movies on the weekends. The counselor recommended she go to the library to check out free movies and cooking dinner at her apartment with her friends instead of eating out. That actually sounded like fun to Elizabeth.

After analyzing Elizabeth's budget a little further, the counselor showed Elizabeth exactly how much she needed to earn in order to make just the minimum payments on her credit cards. It was obvious Elizabeth needed to earn more money to get out of debt and return to school. That meant working full time the following semester and taking only a few classes. Luckily, Elizabeth's employer had asked her if she was interested in working more hours. Even though Elizabeth did not want to jeopardize her social life by working more at night, she told the counselor she would pick up as many shifts as she could and even get a second job when the semester ended.

Three months passed and Elizabeth called her Credit Counselor to tell them she paid off all her credit card debt and was returning to school the next semester. Elizabeth said she learned a valuable lesson. The counselor asked Elizabeth if she would be interested in helping their organization by sharing her story at an upcoming event. Elizabeth was excited for the opportunity.