The day after New Years, Elizabeth Bracher, a 29-year-old children's librarian in Ohio, posted a powerful message on Instagram: a screenshot of the calculator app showing the amount of $16,200.46. The total represents the credit card debt she has racked up from over six years of moving expenses, vet bills, car repairs and more.
Now, she's ready to turn things around: "It's 2019 and time to start getting real about my credit card debt," she wrote. "I feel like consumer debt has a more shameful connotation than other types of debt, but it can affect anyone."
About 40 percent of millennials (defined here as those 20 to 35 years old) have credit card debt, according to a recent survey by LightStream, the online lending division of SunTrust Bank. That's in addition to student loans, car loans and other kinds of debt. Owing so much money can leave millennials feeling pretty hopeless: The same survey found a quarter of them believe it's almost impossible to dig yourself out of a significant amount of debt.
It is possible to get out of debt, though. Especially with some expert guidance.
CNBC Make It brought in Cleveland-based financial planner Michael Kelley to review Bracher's current goal: to wipe out at least half of the roughly $16,000 she owes in the next year. They talked strategies and together formulated a plan for how to move forward.
Bracher's Instagram post about her credit card debt from January 2, 2019 — click to enlarge
Bracher can do this — she's already "on the right track," Kelley says. But she needs to be really diligent about cutting any unnecessary expenses. That will help her have a better sense of "what's leaving" her accounts on a monthly basis, so she can easily check on her progress.
"You've got to be as frugal as possible," Kelley says.
If Bracher sticks to the plan, he says, she could cut down her debt by over $8,000 within a year.
Bracher's debt is about three times more than the average millennial carries. Those under the age of 35 have an average credit card debt of $5,808, according to ValuePenguin.
"This level of debt has been building since 2013," Bracher says. A significant portion of it, roughly $5,000, comes from medical expenses accrued over the past year by Bennett, Bracher's dachshund.
Last summer, Bennett had a major health scare. Bracher noticed Bennett wasn't walking well — and it only got worse. Two emergency veterinary clinic visits later, which included X-rays, an MRI, extended observation, medication, and physical therapy, and luckily, Bennett was back on his feet. Bracher, though, was stuck with a massive bill.
"I don't make a lot of money to begin with, and so it's not always easy for me to handle the big, unexpected things," she says.
Bennett's bills were just the latest to be added to the pile. Right after college, Bracher moved out to Denver to work in AmeriCorps, and she used credit cards to supplement her meager income.
Moving costs and car repairs over the years also set her back. "It's not like I've been spending on stupid things," she says. "It's just added up."
Over the years, she has made moves to tackle her debt. She moved a lot of what she owed onto Ally and Chase balance transfer credit cards, for example, to take advantage of 0 percent introductory interest rates while she worked on paying down the principal. That consolidated her outstanding balances and helped her cut down her payments.
Bracher's dad also lent her $8,000 in August to pay off credit card debt. So far, she's paid him back about $300.
It's all helped, but not enough.
Bracher's credit card debt is spread across two balance transfer credit cards and a personal loan from her father that allowed her to consolidate what she owed — click to enlarge
In November, she and her fiancé, Zach Sullivan, got engaged, and a wedding is planned for August.
"The less debt that I can have once we get married, the better," Bracher says. "It's my responsibility and I don't want him to deal with the detriment of that."
She and Sullivan have talked a lot about her financial situation, and Bracher says he's been very supportive, though he doesn't have debt himself. A software engineer, Sullivan makes more than twice Bracher's salary of roughly $30,000 a year.
While marriage is a big motivator, real estate is another: Bracher and Sullivan plan to start looking for a home this spring. Currently, they live with Sullivan's mother.
"It would be nice to be able to contribute more and not worry so much about paying past-due money," Bracher says.
Bracher's job provides a solid pension plan, which she pays into and which helps her save for the future. Still, her $810 bi-weekly paycheck means she needs to be thrifty to save on day-to-day costs.
One of the biggest fixed expenses is gas, since she drives about an hour to and from work each way. The $175 she spends to fill up her tank is "where a significant portion of my paycheck goes every month," Bracher says.
Since she doesn't have to pay rent right now, her other major expense is food, which typically costs her between $150 and $200 a month. "The grocery budget has been difficult because we live right behind a Giant Eagle," a Midwest grocery chain, Bracher says. "I always spend more than I intend to there."
To help manage her expenses, Bracher turned to You Need a Budget, known as YNAB, which costs $6.99 per month. But while it helps her, Bracher still finds it challenging to account for unexpected costs that pop up, such as a baby shower gift last month, or going out to dinner with her fiancé.
"Sometimes it's hard because Zach will want to go out and do things and I don't want to have him pay for everything — I don't want to be a gold-digger or anything like that," Bracher says. "So I'll offer to pay for things when I really have no business doing that."
Financial planner Kelley says the principle behind a good budget should be simple: Spend less than you make.
Still, that's easier said than done, he says, especially when trying to pay off loans. "When working to get out of debt or get fit, you have to find a more long-term solution. A plan that is more natural, more realistic, and one that your emotions won't fight you on," Kelley says.
Bracher should focus on getting the budget in order and cutting out discretionary expenses, Kelley says. Even a reduced budget can probably be trimmed. Here's where Kelley suggests that Bracher start.
1. Cut back
The first step is cancelling subscriptions. Bracher's Spotify Premium, which she listens to on her daily commute, and extra iTunes storage should definitely go.
Also on the chopping block: Costco and Amazon memberships. Bracher shares a $60 membership with her mom, but Kelley suggests doing away with it and focusing on shopping at a budget grocery store like Aldi. Or, if she wants to benefit from deals at Costco, use a hack like bringing a gift card, which lets you shop without a membership.
To cut down on the fluctuations in Bracher's food budget, Kelley suggests picking up a gift card to Giant Eagle at the beginning of the month and then, if she needs to stop to pick up a daily ingredient or fresh produce, limit herself to the pre-allocated funds.
The other big expense Kelley urges Bracher to consider trimming is her cell phone. Currently, she pays $94 a month with Sprint. If she switched to a budget carrier like Boost Mobile, she could pay as little as $35 per month for a 3 GB plan.
2. Use more balance transfer cards
The interest-free promotional period is almost up on both of Bracher's current balance transfer cards. Since the Chase card's term ends first, in March, Kelley suggests Bracher attempt to do another balance transfer of her current $5,800 Chase balance to a new credit card to avoid a much higher interest rate.
The current average credit card APR is a record-high 17.52 percent, according to CreditCards.com.
For paying down debt in this type of situation, Ted Rossman, card industry analyst CreditCards.com recommends three cards: Amex Everyday, Chase Slate and BankAmericard. All three have a $0 balance transfer fee and offer 0 percent APR for 15 months. (Ordinarily, balance transfer cards charge a fee of 3-5 percent, which would cost Bracher an extra $174 on the low end.)
After the balance transfer is complete, Kelley says Bracher should begin aggressively paying down her roughly $2,700 Ally balance, since the promotional period on that card expires in June. Once the Ally card is paid off, Bracher can put those dollars towards the Chase card.
"You could have this Chase card paid off in nine months if you're putting all of that effort toward it," Kelley says.
Bracher says the game plan sounded reasonable and she's already cancelled her Spotify Premium and the Apple storage monthly charges.
"I've found I don't really miss Spotify Premium all that much and realized that I really like the Amazon Music feature that I get with my Prime membership," Bracher says.
She's keeping the Costco membership since it's already paid, as well as the Amazon subscription for now. Bracher plans to put her tax return towards paying off the $160 remaining on her phone contract in order to own it outright, and then she'll switch to a cheaper provider.
So far, Bracher has been approved for two balance transfer credit cards: AmEx and Bank of America. But neither approved a limit large enough for her $5,800 transfer. She's still waiting to hear from Chase about whether she's been approved for the Slate before seeking out other options, which might require her to pay a balance transfer fee.
Another goal in progress: cutting down on the unnecessary grocery costs. "I'm proud to say the only grocery trip I've done since our chat was an $11.73 trip to Aldi for bread, oranges, bananas, oatmeal, and frozen berries," she says. She's also planning on buying a $25 Giant Eagle gift card on her next payday and limiting herself to that for the upcoming month.
Last, Bracher plans to map out the expenses associated with her upcoming wedding. "We have a final number that we don't want to go over, but as far as individual spending, we should probably talk more about that," Bracher says.
Overall, Bracher says she's felt really comfortable with all the advice from Kelley and excited to try out the advice she's received. "I'm grateful for the opportunity to share my story with others," she says.
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