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Finance

Survival: The Fantastic Story of Willpower and Debt

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“A woman is the full circle. Within her is the power to create, nurture and transform.” — Diane Mariechild

The gender wage gap is still a raging topic of discussion across the globe. It’s a widely covered news in both developed countries like USA, UK, and Canada, and developing ones like India, Russia, and Brazil.

However, there is a debt gap too. Women are vulnerable to get trapped into some sort of debt or another. For instance, women owe more in credit cards than their male counterparts. Moreover, people from the fairer sex struggle to shrug off their college debts way past their graduations days into their retirements.

So, how do women manage their daily lives and wade out of their debt holes?

willpower and debt

How a young woman managed work, life and debt

A Case study: How Carolyn, a millennial married woman nailed it.

About Carolyn and her debt scenario

Carolyn (30) is employed as a Certified Registered Nurse Anesthetist (CRNA) who lives with her husband, Neil (37) and a 2-year old daughter, Sara, in Boston, Massachusetts. Her annual after tax income is a neat $185,000 (including overtime and performance incentives, besides other perks). She completed her master’s and graduated out of college in 2015, and had $135,000 college debt to pay off. After making regular debt repayments she now owes around $50,000 in student loan.

Causes of her serious indebtedness

After graduating out of college with a master’s degree, she returned to college, this time only to become a CRNA. Her overwhelming amount of indebtedness didn’t give her a shock. Rather she was convinced that it’s the norm for any other middle class student.

Due to excruciating study schedules, she had to use her student loans to cover expenses like rent, tuition, book, car insurance, daily living costs, and so on.

Her monthly debt payments

Carolyn made minimum payments of $2500 every month, even though she did her best to increase it to almost $6500 occasionally.

Debt and its effects on her lifestyle

Her overwhelming indebtedness gave her sudden bouts of anxiety, and was about to have a nervous breakdown. However, she chose to fight back and got herself a stable job. Besides, her husband makes a decent living, has no student loan to serve, and got the mortgage covered through his paycheck.

As a result, Carolyn had the space to make extra monthly contributions toward her debts.

She made a couple of smart financial decisions. She refinanced her student loan. That helped her to cut down the rate of interest on it by about 5%. Hence, it brought her total debt amount considerably down to almost $48,000.

After that she planned to pay off her debt by the next financial year.

Her sacrifices

After getting her debt under control, Carolyn, made sure not a single penny goes to waste. She ensured that her funds work the most in her favor and shelved all plans to buy a new car. Instead, she kept using her old, shabby 1997-made Cadillac Catera.

Her motto was to live within her means.

Her emergency fund

She along with her husband raised an emergency fund worth of 5-months’ living costs. She planned to increase her financial cushion more, once all her debts have been wiped off.

Her retirement fund

Both Carolyn and her husband had a sizeable amount of 401(k) fund socked away, besides contributing towards a Roth Individual Retirement Account (IRA).

Debt lessons learned

Carolyn spent weeks fending off her financial worries and managing her debts. This taught her the following financial lessons:

1. Keep record of expenses

willpower and debt

Everyday she spent time organizing and keeping records of her daily purchases. It helped her to create her monthly budget and stick to it. One of the advantages of budgeting is that it helped her to figure out the disposable cash left in her hand to cover all her month’s expenses. Apart from that, she used one of the many free budgeting apps to keep a tab on her expenses while on the move.

2. Carry homemade meals

She stopped eating outside and reduced her frequent visits to Starbucks, and other restaurants every weekend. Rather, she cooked food for her family and carried her meals to work.

3, Reduce food bills

She reduced her total visits to grocer’s shop and used a shopping list to avoid over-buying. She made sure she visited her grocer just once a week, no matter what.

willpower and debt

4. Appreciate saving dollars

She started taking her saving goals seriously. Both her husband and she dedicatedly made their contributions towards their retirement accounts.

5. Opt for public transportation

Daily commuting in a pool car or other means of public transportation could be a real money saver. Moreover, she found out that walking more often or riding a bike to nearby locations wherever possible can minimize car use, thereby, saving on gas costs.

She converted most of her cashless transactions into cash. Credit cards added to her debt burden as they are one of them costliest types of loan. To figure out her monthly payment amount, she used a credit card payment calculator as well as an Annual Percentage Rate calculator. It helped her to assess her affordability to pay off her debts and cover her living costs.

So, how do women manage their daily lives and wade out of their debt holes? Here is a fantastic survival story of willpower and debt.

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