Photo by quaziefoto

A Wisconsin family won the Professional Achievement and Counseling Excellence (PACE) Award for paying down $106K in debt.  You can read the original article by clicking the following link:

The Biggest Losers (of Debt): How a Family Shed $106,000 in Debt

While they still have a mortgage, they’ve eliminated $89K in credit card balances and a $17K loan to family members.  While I applaud them for their efforts, I wonder, how do you rack up $89K in credit card debt?  The interest payments must have been enormous.  At what point did they feel they needed credit counseling help?  $50K?  $75K?  It seems like they waited a little too long to put on the brakes.

The family wasn’t a victim of a balloon mortgage; in fact, they rented their home:

Not that the Hildebrandts’ lifestyle was lavish. The couple, along with their twin daughters, Heidi and Holly, lived in a rented 1,000 square foot townhome. Vacations consisted of visits to extended family members in the Midwest. Russell was a chemist with a Twin Cities-based environmental testing laboratory; Kandy was a stay-at-home mom and home-schooled their daughters.

It seems that the family had its share of medical problems, and continued to tithe to their church, even though they were sinking deeper into debt.  If I were in their shoes, the tithing would have been the first thing that I cut back on.  I know, I’m a cynical Catholic, and I’m going to hell.  But 10% of your salary is a big nut.  Well, the husband was a better man than me, and refused to file for bankruptcy even while he continued to tithe.  Instead, the family signed up with a credit counseling service and vowed to stick to a five-year plan to eliminate their debt.

It was rough sailing from the beginning.  The family couldn’t come up with the $2,000 per month to pay their creditors.  This equated to half of their take-home pay.  They had to make sacrifices:

Several steps were key to making the plan work. Kandy and Russell eliminated discretionary spending. Kandy began buying generic food and frequenting thrift stores for clothing purchases. They stopped exchanging Christmas and birthday gifts with each other and their relatives.

The husband took on a second job, cleaning a local grocery store several nights a week.  They made do with one car.  Their credit card balances started to slowly decrease.

And then the wife got pregnant again.

The couple could have thrown in the towel with the new baby expenses, but they used their new addition as a positive, and remained on track to pay off their debts.  They paid off their credit cards 6 months ahead of schedule.  They even used the first-time home buyers tax credit to purchase a home.

So, all that they have left is a mortgage payment.  At least they bought the house after the bubble burst, so they’re not underwater.  While I admire their determination, and their execution, I would have done things a little differently:

Send the kids to public school - The kids were homeschooled.  Nothing wrong with that, but by sending them to public school, you’d free up their mother (You see where this is going).

The wife gets a job - Another income, even for a limited period of time, would be a big help.  Apply it directly to the debt payments.  That should knock some months off the schedule.

Cut back on the tithing - (Watches for thunderbolt from above) I’m sure this suggestion would be dismissed by this family, but I would at least cut this back a little.  I mean, the kids didn’t even get Christmas presents!

Don’t get me wrong, they did a great job getting out of debt.  I just would have done some things differently.  What about you?  Is there some opportunity that they missed?

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