Written by Robert Nelson V
In March of 2021, Rae joined Prosperity Connection. Her sight was set on the objective of better money management, debt elimination, and credit score improvement. We pulled Rae’s credit report during our meeting. Rae owed $74,000 in credit card debt, personal, and auto loans, as well as $3,000 in collections. Rae was aware that something needed to be done, but she had no idea where to begin and was considering turning to bankruptcy.
When a client doesn’t know where to turn, bankruptcy is usually their first thought. In Rae’s case, we started her journey by writing debt validation letters to all the collection agencies on her credit report. While we waited the 30 days for a response, we devised a debt reduction strategy to assist Rae in eliminating her debt. In her case, using the snowball method, she was able to save more than $5,000 in interest. With Rae’s discipline and resiliency, we calculated that she would be able to pay off her credit card, personal, and auto loan debt in three years. The plan was in place, but now it was up to Rae to decide whether to follow it.
After seven months, I get an excited voicemail from Rae. She wanted to set up a meeting to discuss her progress. “I think you’re going to be proud of me,” Rae said cheerfully. In the seven months I hadn’t heard from Rae, all five collections were removed from her credit report (note: if you send a debt validation letter to a collection agency, and the agency is unable to validate the debt, they are required to remove the collection). Rae had also taken the knowledge gained from Prosperity Connection to utilize her monthly Stimulus Child Tax Credit and used those funds to pay down high interest debt. These payments raised her score from a 618 to a 676, allowing her to refinance her home and car to lower interest rates! Her auto loan interest rate was reduced by 2.04%, while her home loan interest rate was reduced by 2.02%.
These minor modifications in her financial situation caused a ripple effect in her life. Ultimately, Rae will save around $60,000 in interest on her house and auto because of these small steps. We revised her current debt snowball strategy and tailored it to her aggressive trajectory. We also factored in her home loan this time, and we learned that if she stays on her current course, she’ll be debt-free by November 2027. Rae is living proof of what hard work and devotion can do in achieving your financial goals. I have no doubt that she will thrive in her financial journey. When Rae told me “I think you’re going to be proud of me,” she was mistaken. I am not simply proud of her, I am BEYOND proud of her.