Not sure whether or not this would make you feel good. I was able to regain my life after visiting a credit union

General
1

I was deep in debt, partly from helping others when I couldn’t even help myself, partly due to a failed relationship during the pandemic, and some from my own mental health struggles. By the time I realized I was using my credit card just to buy groceries because I didn’t have enough, it was too late.

I ended up with $53,000 in credit card debt over five years. I got a new job with a big raise, but it was only enough to stay afloat. Ironically, I was never late on payments, but only because I was on borrowed time.

I started therapy and worked through my mental health issues, but the stress of paying nearly half my income toward minimum payments was overwhelming.

A few months ago, I went to a local credit union to open a checking account for spending money. While there, they showed me that even though I didn’t qualify for credit (I had a 620 credit score and they required 640), they walked me through how to manage my direct deposits and which credit cards to pay down within my means.

Now, 4 months later, my credit score has increased to 645. The credit union representative, along with the underwriters, advocated for me. I was able to get a credit card with a $18k balance transfer at 0% APR (interest only applies to new purchases at 14.65%), a $30k line of credit at 12.5%, and a $5,000 unsecured debt consolidation loan at 13.75%. We set up a plan to pay off all my debt in the next 5 years. I also opted for their unemployment insurance plan, which covers my payments for up to 9 months if I lose my job.

I canceled all but my oldest credit cards, removed them from Apple Pay, and locked them away to avoid temptation. This freed up $600 a month, and I’m on track to be debt-free in 5 years.

They also helped me set up savings plans for my goals, so I don’t feel deprived and fall back into the same situation.

I’m incredibly grateful. No other financial institution took the time to explain what to do, but the place I least expected gave me the guidance I needed. I’m literally in tears right now.

2

That is excellent. If there is a balance transfer on the card, I wouldn’t add any more charges. It will take longer to pay and accrue interest if you can’t get the new expenditure at 14.66% be paid before the 0% balance transfer money. Using a different card that you pay off each month is safer. Think of it as a debit card.

With the additional $600 each month, what are you doing? Applying it to the 13.75% would be my first step in clearing the path. Set aside $100 of it, perhaps, for an emergency fund.

3

I was initially putting $610 into an emergency fund, but it got depleted due to unexpected car expenses (I need a car to get to work as there’s no public transport).

Now, I’m contributing about $1,210 a month to rebuild the emergency fund, aiming to reach $3,500 in the next 3 months, which gives me peace of mind.

After that, I plan to save $1,200 for a “car maintenance fund” and $500 for a “sick fund” (to cover takeout and medication during minor illnesses like the flu).

Once those are in place, I’ll continue setting aside $60 a month for car maintenance, $100 a month for the emergency fund, and $300 a month for a vacation fund.

The rest will go toward paying off my lowest debt first, then tackling the line of credit.

After those are taken care of, I’ll focus on paying off the 0% APR card over 5 years since there’s no interest, allowing me to build a 6-month emergency fund for non-debt expenses (with the credit union covering 6 months if I lose my job).

Over the next 18 months, I hope to save enough to move into an apartment on my own for peace of mind. I expect a 3.5% raise next year, and I’ll use part of that plus $300 of the $600 I saved to cover rent closer to work, reducing gas costs. Overall, I’ll likely spend about $100 more a month due to reduced gas and lower utility costs like electricity.

4

Congratulations on a wise decision! Until the debt is truly paid off, I would proceed cautiously when it comes to things like a “vacation fund” and breaking up with housemates. Every little amount counts.

5

I’m so glad you were able to meet real individuals that genuinely want to assist! Well done for keeping to the budget, being open to communication, and listening. All of it is difficult, so hopefully you feel pleased of yourself! Well done!

6

I have been with my credit union for 45 years and would never bank with a large bank. I know the staff on a first name basis. They know my kids as they now bank there also. Credit unions are awesome and I am glad they were able to impact your life.

7

For your credit profile, the credit line they assisted you in obtaining is unprecedented. Bravo, you’re almost a miracle. I hope you manage to turn green and stay there. Interesting tale.