Being in Debt While Earning Six Figures

Show Notes

• Guest: Melissa John
• Host: Adam Walker
• Publication Date: March 12, 2024

Highlights

1:58 | Melissa explains how school loans and living in an expensive city started her down the path to debt.

3:49 | Adam and Melissa talk about how a lack of financial education can leave young adults unprepared to handle their money.

4:50 | Melissa explains how a meeting with a financial advisor was the turning point when she realized she needed to do something about her debt.

7:50 | Melissa shares how the interest rate reductions in her debt management plan helped her finally start making progress against her debt.

9:30 | Melissa talks about how good it feels to finally not have debt looming over her life.

Episode Transcript

Adam Walker: Debt. We've all heard of it. Most of us have it. Debt is an almost unavoidable reality of life. But what happens when it starts consuming life? The experts at Money Management International believe that financial challenges aren't meant to be faced alone. On this podcast, we hear stories of people's whose lives have been changed by MMI's role as their toughest coach and loudest cheerleader. Their stories are unique, personal, and inspiring. So stay tuned because we're sharing each guest's Long Story $hort.

Today's guest is Melissa John from Salisbury, Massachusetts. Melissa was first referred to MMI by a financial advisor when she found herself in 70,000 dollars in debt. Even though Melissa was making six figures, she found she just couldn't get on top of that debt. With the help of MMI, Melissa has paid off 70,000 dollars in just three years and increased her credit score by over a hundred points. Melissa, welcome to the show.

Melissa John: Thanks, Adam. Thanks for having me.

Adam Walker: Man. I'm just, I'm always like, those numbers are so unfathomable. I'm so impressed. Your tenacity has just got to be out of this world. I love it. So anyway, let's start with your story. Let's start with you. Who are you? Where do you live? What do you do? What are you about?

Melissa John: Sure. So I live in a little town called Salisbury, Massachusetts. It's the northernmost town in Mass up near the New Hampshire border. For work, I'm a corporate attorney and I work for a global technology company.

Adam Walker: Nice. Okay. Corporate attorney for a global tech. That sounds incredibly complicated. So I'm good, better you than most of the rest of us. All right, so let's talk a little bit about your debt story. Like I mentioned in the intro, you ended up in debt. How did you get to that point? And, when, once you were at the point where you knew you needed to help, how did you know you needed help?

Melissa John: Yes, it was a little bit crazy because I didn't spend a ton of money on things that you shouldn't be spending money on. Like I didn't buy a bunch of clothes or designer bags or anything like that. What happened with me was we just had really high bills. I was coming out of law school, so I had a bunch of law school loans to pay off. We lived in Boston, Massachusetts, which was one of the most expensive cities in the U. S. And, my husband was diagnosed with colitis. And as the out of pocket expenses in our healthcare system can get to be pretty astronomical. So when we had all of those bills to pay, we didn't have a lot of extra money to spend on things like going on vacation or maybe some books or things like that.

So what I ended up doing is putting those types of purchases on my credit card and saying, "I'll pay it off when I get my salary increase next year or when my bonus comes through." And the problem was, the salary increases and the bonuses were never as much money as I expected them to be. And I didn't budget very well when I was younger in my twenties.

So by the time I made it to my thirties, I had 70,000 dollars in debt, in credit card debt. I really could not keep my head above water. I was just paying the minimum payment every month and I was paying the interest off, but not really making a dent in the principal. So I was struggling to find these minimum payments and the amount wasn't going down any farther. And so I had about five or six different credit cards that I just maxed out and paying one at a time. It really was not a good situation for me.

Adam Walker: Yeah. So I heard a few things in your story that feels so familiar to me. Like the first is, I feel like a lot of us did not learn budgeting very well at a young age. And so I heard you say that. And then also like this idea that life happens unexpectedly and then you need to, a lot of times you use some debt to deal with that. And then I think lastly, like whatever it is, like you were optimistic that I'll get the salary bump, it'll pay it off. And I feel like that optimism can sometimes sort of bite us if we're not careful. So I very much empathize, I guess is what I'm saying with your story. Because it feels very familiar to me and I think into a lot of people, so I really appreciate you just sharing it that way.

So when you got to the point where you knew you needed help, what caused that? What was the moment like where you knew "I need help" and then what did you do?

Melissa John: I realized that I wasn't finalizing any of my goals. So I wanted to buy a house by the time I was 35. I wanted to make sure that I got to Europe and those kinds of things were just being pushed off over and over. I was pushing them farther and farther ahead. And I said to myself, "I need help. I'm not going to be able to do this by myself. I've been trying to do it by myself for a few years now."

I went to see a financial advisor who said to me, "You're literally drowning in debt, you make six figures and you're drowning in debt and we have to do something." And he recommended that I contact MMI and really it just changed my life using MMI. I still can't get over the fact that it's a free service to use. I feel like it's something that you should have to pay for just because they've done so much for me. And I kick myself for not contacting them sooner because they just open up so many doors for you.

Adam Walker: So, what was that process like? You, called up MMI, you're nervous, you don't know what's going to happen; tell me about that experience.

Melissa John: So one thing about MMI is they made me feel very comfortable about the whole situation. We have this sort of stigma attached to being in debt. You're embarrassed. It feels a little bit humbling to have to ask for help. And they didn't make me feel like I was a failure.

It was, "This is a common story we hear all the time. We have these negotiations going on with major credit card companies. We can get you a lower rate, which will help a lot." And it did. And all I really had to do was go through my finances in a really easy to use form, I filled everything out, they came back to me and they said, "This is the interest rate that we got for you. Here's what your monthly payment is going to be every month." And it was one monthly payment, which was, instead of me trying to figure out which payment I was going to do first in order to pick and choose. And they just made my life so much easier and it was such an easy process to go through.

Adam Walker: Yeah. Wow. I love that. And when you saw that monthly payment, did you think, "oh, this is doable?" Or did you think, "oh, this is overwhelming?"

Melissa John: I thought this is doable because I was paying that basically already, but it wasn't making any dents in my debt. So because the interest rate was so much lower, I was making the same payment, but it was actually chipping away at my principal instead of just paying off the interest and my principal was staying the same. So , that was a huge thing. And they have this little pie chart that they give you every month. And in the beginning, you have 1 percent paid off and 99 percent of your debt looming and your stomach drops a little bit and you think, "Oh, this is going to be, this is going to be really bad."

But then the next month, the pie chart makes such a shift that you say to yourself, "okay, that actually made a difference. It's only been one month and it's making a difference. Maybe I can do this."

Adam Walker: Wow. Okay. So let's walk through that period of time. There was a three year period, you paid off 70,000 dollars in debt, which is just a tremendous accomplishment; what was that like for you for those three years? Did you eat rice and beans every meal? Tell us about that.

Melissa John: No, it had its ups and downs, because I was paying the same amount that I had always paid, it didn't really make a difference in terms of my other bills. Like I was still able to pay my other bills. I was still able to buy food. Where it made a difference, and I think it was actually a good thing for me, is I had to pay cash for everything because my credit cards were frozen. So if there was a big purchase I had to have enough saved, say something happened with my car and I needed to get my car fixed. I had to have the savings there, because I didn't have the money on my credit card to use. And that turned out to be a lifesaver because now I've developed that habit of having the cash there and I'm able to make those big purchases when I need to by having that money in my account already without using the credit cards.

Adam Walker: So you went through three years, you developed some great habits along the way. What's life like now for you? What's your day to day like now as compared to those three years?

Melissa John: I can't even tell you how good it feels to not have that looming credit card debt over me all the time. I'm getting more opportunities. I'm learning how to use my credit card safely so that I'm able to pay off the balance every month, but then still get access to great rewards, which I can get now because my credit is so much higher. My credit score is so much higher. We're buying a house. We close on January 30th. So I'm really excited about that. It's a beautiful place. And it's going to be great to not have to rent anymore and watch my rent tick up every month by 3 to 5%. So I couldn't have gotten the mortgage that I got without MMI doing what they did for me.

I'm just so grateful for the opportunities that I've been able to, all the opportunities that have been coming my way since then.

Adam Walker: Wow. That's amazing. Melissa, your story is, it's inspiring. I really just appreciate you so much sharing it with us. My last question to you is, what does freedom from debt look like for you?

Melissa John: Just happiness and peace. And a way that I can live my life without stress.

Adam Walker: Wow. I love that. Happiness and peace and life without stress, that's the dream right there. You just nailed it. That's the dream for all of us. Melissa, again, thank you for joining us on the show today. Thank you for giving us a peek into your own life and just being very real with us. It's very very inspiring, I really admire what you do.

Melissa John: Thanks so much, Adam. I appreciate being here.

Adam Walker: This guest is a real MMI client whose success is the result of hard work and dedication. While MMI cannot guarantee results, taking early action can increase available options and improve long term outcomes. Thanks for listening to this episode of Long Story $hort, brought to you by Money Management International.

To learn more about how MMI helps people from all walks of life get unstuck and out of the vicious cycle of debt through personalized solutions that inspire hope, visit MoneyManagement.org. This episode was produced by Edgewise Media. Script writing and production by Clara Jennings. Editing by Brandon Ellis. And show hosting by me, Adam Walker.

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