Member Success Story: Eliminating Debt While Reaching Your Goals

Nathan and his wife had plenty of dreams, like going to Europe, buying a house, and starting a family, but one huge obstacle stood in their way: debt.  Their Money Coach, Lee, showed them how to incorporate debt stacking and still make headway with their short, mid, and long term goals.

Eliminating Debt

Debt stacking is a debt management plan where you pay as much as you can on one debt (usually the debt with the highest interest rate or lowest total amount) while paying the minimum on the rest; once you pay off that first debt, you move that allocated amount to the next debt, and continue until all debts are paid off.  Many MSA members like this approach because you can easily see your progress as each debt is crossed off the list.

In order to implement debt stacking, Nathan and his wife needed to know exactly how much money could be allocated to debt payments, and Coach Lee showed them how to get the answer.  In creating a spending plan and tracking expenses, they discovered ways to change spending habits, so they could put more towards debt payments and stay on track:

• They paid ahead on their car payments so that money could be reallocated to credit card debt.
• They started using the envelope system in order to make sure they didn’t overspend in other expense categories (which would consequently decrease the amount going towards debt payments).
• They talked about how to adjust W4 withholdings in order to boost their monthly paycheck.

Reaching Goals

With their debt strategy in place, Nathan and his wife jumped at the chance to work with Coach Lee on other financial goals and learn the smart approach to new financial situations.  For instance…

• They wanted to buy a house, so Lee discussed how to position themselves financially for purchasing a new home in two years when they’re debt free (other than the mortgage).
• As they shared hopes of starting a family and traveling to Europe, Lee had them prioritize their goals and create an action plan for accomplishing each goal while still having emergency funds in place.

Because of the education from their Money Coach, they felt more confident about how to handle their finances. After two short months with MSA, Nathan and his wife have paid off accounts with a credit union and Home Depot. Also, Nathan got extra money from work that wasn’t expected, so they paid off the car and her ring (around $8,000 and $2,000 respectively), and they still have some money left over.

Nathan and his wife gained so much, and Coach Lee had a blast helping them.  Lee had this to say:  “They are very positive, outgoing, and enthusiastic people.  They have achieved just about every short term goal (debt reduction, emergency savings, and general savings) that we have created.  They are now on track for their long term goals of traveling abroad, returning and settling down to have their first child… all while being in a positive financial position.  It is a pure joy working with a ‘team’ such as they are.”

When Nathan and his wife entered the MSA program, they took a survey that measured their financial well-being.  The couple scored 5.25 out of 10 indicating financial stress and moderate financial wellness.  After working with their coach, they improved their financial well-being and boosted their score to 8.25.

Your Turn

Want to take a page from Coach Lee’s playbook and try out some of the steps mentioned above, like the envelope system? The envelope system is where you put allotted amounts of money into different envelopes, and each envelope stands for a particular expense. For example, if you allot thirty dollars for entertainment for the month, you mark an envelope “entertainment” and put thirty dollars into it. You only use money from that envelope, if it’s for entertainment, and once it’s gone, you’re done for that month. It can be a good way to keep track of your money and stay in the budget. It can also help you stay organized and on track if you’re trying to save money. Say that you’re saving up for something big; you could label an envelope and start putting your savings in it. That way, you don’t accidentally use the money for some other purchase.

For more financial education, work with a Money Coach and enrich your financial situation just like Nathan and his wife. If you have obstacles standing in the way of your dreams, your Money Coach can help you overcome financial challenges and reach your goals. Get started by calling 888-724-2326 today.