Home > Managing Debt > How I Went from $50K in Credit Card Debt to $50K in Savings

Comments 0 Comments

When Julie Berry’s personal and professional lives were falling apart, if someone had told her that everything would be OK — better than before, even — she probably wouldn’t have believed it. Her world had been turned upside down and it was hard to imagine it would ever be right again.

A dressage instructor and trainer in Texas, she had thought she had a good thing going. She managed a busy barn and gave riding lessons. The equine business is notoriously tough when it comes to making money, and she had invested thousands in hers over the years. But her loyal following of students and boarders, not to mention her love for the horses she cared for, made her feel like she was on the right path. She and her husband were also raising their daughter, who was 8 at the time.

But in 2005 her marriage hit the rocks, and her business was hit with what she believes was a frivolous lawsuit. In the span of six months she left both a business and marriage she had worked hard to build.

“Everything spiraled out of control. It was a horrible time,” she says. “I slept a lot. That was my safe place.”

Trying to Start Over

She moved into a farmhouse owned by some friends and tried to pick up the pieces of her life. She started to rebuild her business, but then the recession hit, which meant some clients had trouble affording her services. Some weeks there was barely enough money to put gas in the car or pay bills.

For a while, credit cards help filled the gap. Although she had credit card balances left over from her previous business she had always made payments on time and, as a result, had generous credit limits. But when the financial crisis hit, her credit lines began to shrink and her interest rates rose. “What little I had in savings was cut in half,” she says. She began to miss payments. “I was fearful, anxious.”

That’s when she remembered a television segment where she had seen Today Show personal finance expert Jean Chatzky talking with guest Jordan Goodman, the author of Master Your Money, about a credit counseling agency and how it helped people get out of debt. At the time, she had no idea she would ever need their help, but the name “Cambridge” stuck in her head.

Finally, “out of desperation,” she called Cambridge Credit Counseling, the agency she heard mentioned in the show, and spoke with a credit counselor who reviewed her situation with her and explained her options.

Getting a Game Plan

At that point she had eight cards with balances totaling nearly $50,000, she recalls.

The counselor proposed a Debt Management Plan that would have her out of debt in about four years. It would require a monthly payment of nearly $1000, but upon enrolling, her rates dropped to 0% on a few of her cards, and her rates on the others ranged from 2% to 9.9%. That meant a significant portion of her payments now went toward paying off her debt, rather than toward interest. According to the Cambridge Credit Counseling Service Transparency Report, the average interest rate for clients enrolled in a DMP was reduced 14.6 points, down from 22.0% to 7.4%, saving clients $139.26 per month on average.

Julie Berry

Julie Berry

Berry says making her DMP payment each month was a struggle at times, and more than once she fell behind. But she was determined to be successful and avoid bankruptcy, and she did. In fact, she was able to pay off the entire debt in less than four years.

Now, instead of $50,000 in debt, she has $50,000 in savings. She’s become an active investor and feels much more in control of her finances.

Berry also notes that her credit scores took a hit during this time, going from the “mid to-high 700s to a low of 430.” She’s worked hard to try to rebuild her credit, reviewing her credit reports and disputing mistakes, as well as monitoring her credit scores. Her scores now range between the high 600s and low 700s.

Her credit has improved enough that she just refinanced her home and reduced the interest rate on her mortgage from 6.6% to 4.6%, saving $200 a month.

Like many people who have survived traumatic experiences, she feels that what she’s been through has taught her valuable things about herself and her inner strength. “It was a very difficult experience but a very enriching experience,” she observes. “It’s not about the material things; it’s about who you love and who loves you. I am a lot more compassionate now.”

Indeed, Berry says she feels like she is in a very good place now. Her debt is paid off, she has money in savings, she is engaged to a man she describes as “happy, positive, supportive.” She also decided to change careers and has launched her own line of bath products called Luxe Heavenly Bodies Collection.

“Life just teaches you lessons,” she says, “and if you are alert enough to get through them, it passes.”

Digging out of steep credit card debt can be hard work.  But as you reduce your debt, it can be helpful to keep an eye on your credit along the way. Monitoring your credit scores can show you, over time, how your efforts are paying off; it can also alert you to any problems if, say, your scores unexpectedly drop.  There are free tools that can help you do that, like Credit.com’s Credit Report Card, which gives you your credit scores and an overview of your credit profile, updated every 14 days.  Check your credit reports regularly, too (which you can do for free annually), to look for errors or other negative items that could be affecting your scores.

More on Managing Debt:

Main image: Drazen_; second image courtesy Julie Berry

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team