They hadn’t hit rock bottom, but they were close.
They had racked up so many bills that they couldn’t step out of the house without acquiring more debt. They were putting every purchase on their credit cards. And they were so stressed they couldn’t sleep but refused to turn the fan on because that meant a higher electric bill, which they already couldn’t afford.
“Every month, we were going more into the hole, and we thought, ‘Eventually our credit cards are going to be maxed out, and then what? We got to do something,’” said Rob Nyhlen, of Moorhead, N.D. “That was our wake-up call.”
When Rob and Nicole Nyhlen married in 2003, they didn’t have a lot of debt, just two credit cards with a couple hundred dollars on them. But, within a couple of years, they said their poor decisions and careless spending had put them in a tight financial bind.
Among their house mortgage, car payments and credit card bills, they had acquired so much debt, they were one accident away from filing bankruptcy.
“The biggest thing for me was putting our groceries on credit cards just because … we couldn’t pay for it up front,” Nicole said.
Rob added: “When you’re strapped to the point where you can’t even feed your family without going deeper into debt, it causes a lot of stress on your family.”
The debt wasn’t just affecting their lives financially; it was affecting their well-being and their marriage.
There were days when Nicole was so stressed she couldn’t sleep, and they were getting into more and more arguments.
“I knew when those things happened she was worried about money,” Rob said.
According to the U.S. consumer debt report, 75 percent of Americans are in debt, with an average household credit card debt of about $7,000, plus a mortgage and student loans.
But, like many others, the Nyhlens are working to overcome their debt and gain control of their finances.
In 2010, they came across financial expert Dave Ramsey’s radio show and book, “The Total Money Makeover.”
Ramsey’s financial plan, which includes seven baby steps for overcoming debt, helped the couple realize where they were spending their money and allowed them to take control over their financial situation.
“The big thing to start off with is … a savings account you can rely on because that’s what it’s there for. It’s your saving grace,” Nicole said.
Ramsey recommends $500 for an individual or $1,000 for a couple as a starting point.
After one builds a savings account, the next step is to start paying off the debt with the snowball effect.
“The debt snowball is key,” said Mark Kennedy, of Grand Forks, who has used Ramsey’s financial guidance as well.
“He has you list your debt from smallest to largest and pay the minimum payments on all the largest ones, and just attack your smallest ones with anything you have left,” he said. “You pay it off, and then you get the motivation to pay off the others.”
Creating a budget and using an envelope system – setting aside monthly allotments for groceries, clothes, gifts, etc. – are also important factors.
“The cash envelope system works perfectly because if you don’t have cash you can’t spend it,” Nicole Nyhlen said.
While it hasn’t been easy, the Nyhlens are learning to better monitor their expenses and pay off debt.
They said the communication between the two people in the relationship is key.
“If one is trying to do it and one’s not, it’s not going to work,” Rob said. “One will be digging the hole and the other’s trying to get out of it.”