U.S. News and World Report shares money lessons from four families that destroyed their debt. Here’s part of one…
For years, Christina and Jim Harris enjoyed a picture-perfect life. Jim’s remodeling business brought in about $100,000 a year; Christina, 36, managed the company and raised their three kids, now 8, 12, and 15. Then came the recession. It was “like falling off a cliff,” Christina recalls. “Our income basically dropped by half, but we didn’t cut back on expenses.” By August 2008, their credit card debt stood at more than $50,000 and they found they could no longer make the minimum payments. Some people recommended bankruptcy, recalls Jim, 38, but “we decided we should pay the money back. We’re not deadbeats.”
“Nobody forced me to buy that $600 Coach bag,” Christina says.
The credit counseling service that Christina consulted got the Harrises’ lenders to drop rates as high as 32 percent to as low as 7 percent. The couple agreed to make one consolidated payment of $1,400 a month to the agency for four years, which the agency would then dole out to the banks.
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