Truth be told, there are millions of couples out there who’ve made extremely poor decisions where their finances are concerned.
Interestingly, those who mismanage their money tend to be people who would ordinarily come out as good financial managers, as one Business Insider freelance writer admits.
She starts off by confessing that together with her husband, they made numerous mistakes with their money, ones that led them to a hefty credit card debt of $30,000.
Taking us two years back, she reveals that she almost always received overdraft alerts. Although her husband was earning a pretty sum from his job, the journalist admits that they were miles away from being healthy financially.
Their two kids were both in daycare, with that expense totaling to $1,500 each month, and they were also knee-deep in debt. $100,000 isn’t that small an amount, as anyone would agree. $70,000 was their combined student loans debt, while $30,000 was what they owed credit card companies.
With so much debt hanging over your head, you’ve got to be smart on how to go about it. Unfortunately for these two, nothing they tried to make even the slightest dent in their card debt worked.
They had their normal bills to take care of, and hundreds of dollars to pay in interest. Even after making mega sacrifices, their debt remained the same.
This couple even considered moving into a smaller apartment, but they thought it would be too much for their young sons, considering that they had already moved around quite a bit already.
While having dinner with one of their friends, they happened to mention that they needed a new strategy with which to handle their money, and it was then that they were referred to a CFP.
The first meeting with the financial expert was at their house, and our freelance writer admits that she was nervous that the certified financial planner would suggest a drastic measure.
Surprisingly, the CFP advised them to open additional card accounts, suggesting that two zero-interest accounts would work best for the couple, one for each partner.
They could then transfer their interest-accumulating balances from their other accounts to these new ones, then pay them off within twelve months.
After scouring for the best zero interest accounts in the market, they settled on BofA Mastercards, and the institution approved them for a limit of $5,000 each.
Their financial planner then advised that they check which of their previous accounts charged more interest, and upon doing that, move more money from that one and into the new accounts.
The following 12 months progressed with the couple accumulating zero interest on their cards, but they did not stick to the advice their CFP had given.
An Inflated Interest Rate
They failed to pay them off by the time the 12th month was up, and you know what happens after the first year of a zero-interest account elapses, right? The interest rate shoots up to between 14-24%. For this couple, it rose to 23%.
Thinking about it now, the freelance writer admits that they should have sought another sit down with the CFP when they sensed that things were going haywire.
They didn’t, and although they are almost debt-free, she says that they’ve paid a whole lot more in interest. If they’d stuck with the CFP’s advice to the letter, they’d have been home and dry much, much earlier.