Become Debt-Free

This millennial got married and launched a new career—all while trying to pay off $16,000 in credit card debt

Elizabeth Sullivan, 30, accomplished her goal of paying off half her credit card debt — though not exactly in the way she expected.
Source: Elizabeth Sullivan

In 2019, one millennial woman set out to accomplish a big financial resolution: get serious about paying off her $16,000 in credit card debt. She vowed to, over the course of a year, wipe out at least half of the balance, or about $8,000, that she'd accrued from over six years of moving expenses, vet bills, car repairs and more.

CNBC Make It followed up a year later to find out how she did. Elizabeth Sullivan, 30, met her goal — though not exactly in the way she expected.

She was able to allocate over $8,500 toward paying off her outstanding credit card balances. But it was a busy year for Sullivan, who got married to her husband, Zach, in August, quit her job as a librarian in Northeast Ohio, and took out student loans for a 14-week course that helped re-train for a new career in tech.

Sullivan's Instagram post from Jan. 2, 2019.

While Sullivan paid off the high interest balances on her credit cards, she's far from completely debt-free. Yet over the course of the year, she picked up some money-saving habits and increased her monthly income, steps that Cleveland-based financial planner Michael Kelley says will set her up for long-term financial success if she continues to make the right moves.

Here's a look at where she's at after a year of focusing on paying down her debt.

Wiping out credit card balances

When CNBC Make It interviewed Sullivan last January, she had $8,500 in debt spread across two balance transfer cards. Additionally, her father had given her an $8,000 interest-free loan in 2018 to consolidate and pay off other credit cards and accumulated debt. So far, she had paid him back about $300.

Over the course of six months, Sullivan was able to knock out over $2,500 of her credit card debt by slimming down her monthly spending. She took the advice offered by Kelley and trimmed down her food expenses by shopping primarily at budget grocery store Aldi and doing more meal prep to avoid dining out. She also dropped her nearly $100 per month cell phone service with Sprint for the more budget-friendly provider Google Fi, which starts at $20 per month.

Elizabeth Sullivan, got engaged to her now-husband, Zach Sullivan, in November 2018. They were married in August 2019
Photograph by: Debra-Lynn Hook

Sullivan also managed to avoid racking up any additional credit card debt throughout the wedding planning process. About 28% of U.S. couples go into wedding debt, according to the 2019 Global Weddings Report. And among those taking out the so-called wedding loans, the average balance is about $16,000, paid off over the course of three years.

"It's an incredible feat that she was able to not go further into debt," Kelley says, adding that even with financial help from family and friends, many couples go over budget.

"It all fell into place in a weird way," says Sullivan. "The dollar store provided a lot of the decor," she adds, noting her mom helped her craft centerpieces partially made out of cheap paper towel holders. While they did have some help with wedding costs, Sullivan and her husband paid out-of-pocket for many of the expenses and were able to stay within $200 of their original budget.

But scrimping alone wasn't enough. The big chunk of her payoff came in the form of retirement funds. Because of her debt, Sullivan had not been contributing much to the pension plan offered through work, leaving her with a balance of about $6,000 — almost exactly the same amount remaining on her credit cards after factoring in the early withdrawal penalties.

"Despite the balance transfers I did, there were cards that still had interest rates and I made the decision to take out that money and pay off my cards," Sullivan says. She's confident she can rebuild her retirement savings and hopefully exceed her $6,000 in savings relatively quickly with her new job. She does have some debt to still pay down, but it's at a much lower interest rate than her credit card balances.

While using retirement funds to pay off debt isn't always advised, Kelley says that there wasn't a lot of "wiggle room" because Sullivan's $30,000 salary as a librarian was so low. Plus, the money in her retirement account probably wasn't making 20%, and she was guaranteed to lose 15% to 20% with the interest she was paying, he says.

Still, Kelley views tapping retirement funds as almost "an emergency response" to debt. To make it worthwhile, Sullivan needs to do all the right things going forward, he says.

Boosting her income

In order to make her finances work long-term, Sullivan decided she needed to increase her income. After months of deliberation, she quit her job as a librarian and enrolled in Tech Elevator, a 14-week coding boot camp, in October.

To pay for the Tech Elevator program, Sullivan took out a $16,000 private student loan and relied on her husband's income and health insurance for the last three months of 2019.

Cleveland-based financial planner Michael Kelley regularly works with millennials on their financial goals.
Source: Micheal Kelley

While the student loan was a risk, the skills Sullivan learned through the boot camp helped land her a job with a bank as a technology specialist in January. The best part: She was able to negotiate a salary that was $25,000 more than what she earned as a librarian, plus the new job offers more room for growth and career advancement.

"It's really, really different and it's definitely not as emotionally rewarding [as the library], but it's not as emotionally exhausting either," Sullivan says of the new gig. "It's a better fit for me work-wise."

The IT job is also a lot closer to home and allows employees to work remotely when needed, saving Sullivan money on gas. Before she was spending about $175 a month on gas alone.

Looking ahead

Sullivan still has about $7,700 remaining on the personal loan from her dad. And she'll need to buckle down and pay off her student loan.

"Once I knock out my student loan, ideally within the year, my plan is to start paying him back, but that may depend on other factors," she says, adding that her dad has said he wants Sullivan to focus on paying off everything that has interest first. "[The debt] is a weight on my shoulders, but at the same time, the fact that I have more to work with helps a lot," Sullivan says. She pays her debts on her own, without help from her husband.

[The debt] is a weight on my shoulders, but at the same time, the fact that I have more to work with helps a lot.
Elizabeth Sullivan

Within the next year, Sullivan and her husband plan to move into their own home. Currently, they live rent-free with her mother-in-law to save money, but they're ready to move out. Sullivan's husband, Zach, has been saving for a down payment for years, so they plan to use that while Elizabeth focuses on paying down her debt.

"We want our own space again," Sullivan says, but notes there's not a lot on the market at the moment, so they're taking their time to find something they really want. That said, because of the tight market, they're not planning to wait until Sullivan pays down her student loan debt if the right house comes on the market.

Yet waiting is exactly what Kelley recommends she does. Ideally, he'd like to see Sullivan wipe out her student loan debt and build up an emergency savings of three to six months of living expenses before buying a new house. Additionally, he recommends that the couple have a down payment of at least 20% to put down on a house.

"I'm sure 2020 will bring its own kind of crazy," Sullivan says. But at least now, she feels confident to tackle the financial challenges on the horizon.

Don't miss: 29-year-old aims to cut her $16,000 credit card debt in half this year—here's the plan

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How this woman paid off $102,000 of student loans
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