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

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.