Sunday, September 28, 2008
The Colón Family
Age: George, 53. Kim, 43.
Background: The Colóns celebrated their one-year anniversary in August. They live in Dumfries with Kim's college-age daughter. Kim is an Air Force senior master sergeant. Next month, she'll celebrate 20 years of service. George retired from the Army after serving 22 years. He now works as a contract manager in the District. They have a combined annual income of about $191,000.
Goal: Pay off tax and consumer debt, increase savings and stop living paycheck to paycheck. They also want to contribute more to their retirement funds.
Progress: In June, the Colóns paid off part of their past-due tax debt and five credit cards, for a total debt pay-down of about $8,800. I had them pay the smallest debts first so they'd gain momentum, and it worked.
When the challenge began in February, the Colóns had more than $30,000 of debt on eight credit accounts. Now they have $1,000 left to pay off.
"We did what you told us to do," George said.
There is still the matter of Kim's $40,000 in student loan debt. She borrowed the money to study for a doctorate in organizational leadership. The loans are currently deferred.
In the last installment of the challenge, the Colóns were in negotiations to reduce about $12,000 in outstanding state and federal income tax debt. They won their challenge, and their federal debt was knocked down by $9,000.
New developments: Kim was deployed to the Middle East in August and is to return home in February. With Kim away, the burden of handling the financial books is left up to George.
At first, George said he struggled as the family treasurer.
"When I was single, I'd see something, and I'd get it," he said.
But he's sticking to the budget and handling things just fine.
The couple did hit a financial speed bump. The college financial aid for Kim's daughter didn't come in time to pay for the fall semester. Because they still haven't built up an emergency stash of money, they charged the $1,500 tuition expense.
They didn't check with me. I would have told them to set up a payment plan with the school, which many colleges do these days. This challenge is supposed to be credit-free.
However, when the daughter's scholarship money comes in, they will pay off the debt immediately.
How the economic crisis is affecting them:
"It's a little tough," George said. "It's expensive. You're more conscious of spending and bills."
But they are able to handle the higher expenses because they've paid off so much of their debt.
"We're hanging in there, but if we had not been part of this challenge, we would probably not be paying a lot on the bills. We would be paying a little here, a little there. But oh man, it's a relief not to have those bills now."
Next step: The Colóns need to pay off the last portion of their consumer credit debt, then focus on paying off their car loans. Then they will attack a substantial amount of home-equity debt and Kim's student loans.
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