Home > Managing Debt > How I Repaid $5K of Debt While Making $21K a Year

Comments 1 Comment

Kim Mathis couldn’t seem to catch a break. Almost 16 years ago, shortly after she gave birth to her youngest daughter, Dantina, Kim’s brother asked her if she could help take care of her parents, both in failing health. They were divorced and living in different parts of Philadelphia; her father had terminal lung and brain cancer, and her mother had suffered a stroke, which led to dementia. Kim gave up her two-bedroom apartment and moved in with her mother. Then came a heartbreaking diagnosis: Her baby girl had spastic cerebral palsy and would “be totally dependent on my care.”

The physical stress involved in caring for her daughter and her mother was too much; she quit her job at a cable company. And then her mother’s condition worsened; she lost her sight and had balance problems. Kim went to court and obtained guardianship. Her mother’s “estate,” at that point was $50,000 in debt. Kim had already exhausted her own savings on living expenses and legal fees, but she was able to find a place for her mother at a nursing home. The family home was sold by the sheriff’s department; she filed bankruptcy and went to live at the home of a fellow church member who helped her get back on her feet.

In the meantime, she needed a source of income, and she had no idea what she wanted to do. “I picked up an employment paper, opened it and before I looked down I said a prayer to God,” she recalls. “Within that prayer, I asked to please let the first thing I looked down at in the paper be an elevation for me for financial growth and a job in which I can help others.” It was an ad for instructional programs leading to certification as a pharmacy technician, massage therapist, medical assistant or computer technician. She picked massage therapy because she thought the skills she would learn could also benefit her daughter. She earned her certificate and even taught massage therapy. (Though she also acquired student loan debt in the process.)

Believing She Could Do It

Through it all, Kim continued to believe she would find a way out. While she studied massage therapy, she thoroughly researched low-income housing options. She was interested in Habitat for Humanity, but she had no income and couldn’t qualify. But once she graduated and started working, she remembered Habitat Philadelphia. She reapplied and was accepted.

Though she was keeping up with her mortgage, Kim said she owed about $5,000 on credit cards from “times of transition” and caring for her daughter. It was more than she could pay, and the bills went to collections. “I felt as though it would never end . . . Debt collectors were constantly calling and harassing me,” she says. “I received at least 30 calls a day into the late evening hours. I tried not to get to angry because it was debt that I made and needed to pay it back, but the interest was crazy high,” she says. She had to learn to budget better, and some of it was painful, but she knew “I needed to get that debt paid.”

She enrolled in a debt management plan with a settlement company, eventually contacting a Financial Empowerment Center run by the city of Philadelphia and staffed by Clarifi, a consumer credit counseling agency. She paid off her debt in a year, supplementing regular payments with a tax refund and other unexpected income. And she did it while earning $21,000 a year, she said. A few months ago she got a letter confirming that her debts have been paid in full.

A counselor helped Kim pull her credit and develop a spending plan. “[He] took time to listen to me to hear how I got into debt and then gave me suggestions on what I should do moving forward … He mapped out my budget.” He also followed up to ensure she was able to follow the plan, she said.

Clarifi clients typically receive free coaching and help making a budget, and the agency can contact debt collectors on behalf of its clients. Asked about her credit score now, Kim confessed that she hadn’t checked lately, but intends to do so. (You can monitor your own credit data for free on Credit.com.) Watching a credit score rise — and debt usage go down — can be encouraging as you make progress paying off debt. If debt feels overwhelming, a credit counselor may be able to help.

What Life Is Like Now

At the moment, Kim is making ends meet by working two part-time jobs. She and Dantina live in a home built with the help of Habitat for Humanity. (She put in her 350 required hours of “sweat equity” in monthly 14-hour days while her brother cared for Dantina.) And she serves on the local Habitat board and is active in neighborhood improvement and church work.

She continues to work around her youngest daughter’s schedule, and her oldest daughter, 34, also helps care for Dantina.

“My life now is much better,” she said in an email. “I’m blessed and thank God every day for what I have. I work hard to give back and help yet another through community volunteerism. . . . I’m just staying above water, dealing with being a Habitat homeowner, paying a mortgage, property taxes, utilities — which are very high in Philadelphia — and all the other responsibilities it takes to own your own home.” But complaining? Not a chance. These are the problems that, not so long ago, she’d only dreamed of having.

More on Managing Debt:

Image courtesy of Kim Mathis

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.

  • Highscore Z

    Just shows how determination pays off. Sometimes you do need a little outside help and guidance.

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