How Four Sisters Got Rid Of $182,000 In Debt In Just Two Years
We all have debt, right? Student loans, car payments, credit cards, you name it, we’ve spent it… and have had trouble paying it back. In 2010, four Millennial sisters in Texas discovered that they shared more than genes—they shared problems with debt. So they decided to help each other and confront their common issue together, as one.
“We had accumulated $182,000 in student loans, credit cards and car loans collectively,” Rufina Barrientos, 30, one of the sisters, told Forbes. “Our yearly income came out to about $106,000, so it sounded plausible that we could effectively pay down our debt in three years. Being the youngest, I thought I was getting the best deal out of the arrangement. I was two years out of college, when most student loans take 10 or more years to pay off. Score!”
So, in 2010, Barrientos and her three sisters (Ana, Amy, and Dee) came up with a plan to help eradicate the debt. “We’d had our disagreements in the past, but we grew to respect each other as women out in the real world,” Barrientos said. “So not only did we decide to live together, but help each other pay our loans and debt regardless of how much we came in with.”
As far as Millennials in debt, the sisters are not alone. About one-third of Millennials owe money on student loans.
A study by the online financial education site, iQuantifi, found that Millennials have debt amounts ranging from $13,116 to $69, 552 (and more).
- Ages 21-25 = average debt of $13,116
- Late 20s = $46,622
- 30s = $69,552
“It’s a real travesty what is going on in our country with student loans and our children,” financial guru Suze Orman said.
“Students are paying more in interest on student loans than what they pay for a car or a mortgage, and those loans (auto and mortgages) can be discharged in bankruptcy.” Student loans cannot. Hence, the severity of the student loan debt crisis.
I know I can relate. A few years ago, to whittle down my $99,000 student loan debt (that’s what happens when you go to two private schools in a row), I couch-surfed through L.A., eliminated credit cards, and learned to live on less (the value of wants vs. needs).
Other friends of mine rented spare rooms in their homes through Airbnb to provide them with more money than roommates would, and downsized to smaller living spaces.
The Texas sisters, too, came up with a pragmatic way to help each other out. Aside from living together (which immediately enabled them to save $400 a month), they met on Sundays to assess their financial statuses and would also budget food for the week.
“These sessions were like therapy too because only three other people in the world knew what I was going through, and it was nice to have company during our joint quarter life crises,” Barrientos says. “The emotional setbacks were overshadowed by the amount of traction we were hitting with our debt.” —Barrientos to Forbes
The sisters also made rules:
- Direct deposit. All checks went into one joint account (to pay things like monthly bills and car payments) and the rest would go toward debt(s)
- They went after smaller debts first (i.e., not student loans).
- Each received $75 every two weeks
- They wrote down everything the spent money on
And forget about impulse buys. Instead, they bargain shopped for groceries and clothes (using thrift stores). They used Redbox instead of cable, took advantage of the library vs. buying books, negotiated with loan collectors, made people gifts instead of buying them, drank water when going to eat out, etc. “We basically became minimalists,” Barrientos said.
I don’t know about you, but I think we can all use some of the sisters’ living-with-less wisdom. After all, wouldn’t it be nice not to worry about the $182,000 (or what have you) that we owe?
Photo by 401(K) 2013