The Egglestons' Progress
Step 1: Calculate debt and get your credit score
After doing the math, Sally and Dan discover they have $43,521 in credit card debt. What's even worse than the debt, explains David, are the sky-high interest rates. With an average interest rate of 20 percent on their credit cards, the Egglestons are looking at $8,704 in yearly interest payments. On top of that, the Egglestons are getting hit with thousands of dollars a year in miscellaneous credit cards fees, including late fees and over-the-limit fees.
Step 2: Track your spending and find extra money to pay down debt
David finds some hidden costs that are sinking Sally and Dan further into debt, such as unnecessary cancer and accident insurance that's costing them $1,056 a year. David calculates that the Egglestons are spending $500 more per month than they are bringing in.
After taking a tough look at their finances, Sally breaks down. "The whole thing just makes me feel really stupid," says Sally. "I feel bad that I got my family into this whole stupid thing. I got my family in so deep. I feel like this has killed my credit."
Following this system has given Sally and Dan a huge emotional boost. "It's very motivating and it feels so good to have a plan," says Sally. Dan shares his wife's enthusiasm. "We're being proactive instead of just reacting to the bills coming," says Dan. "We have a goal and we're going to get there and we can see it."
Overall, the Egglestons say that tackling their debt has been a positive experience. "It's been very emotional, but it's also been wonderful because I really believe it's brought us closer together," Sally says. "Dan was so not a part of the bills or the finances, and he's talking in language I've never heard him talk before."
At first, Sally and Dan were hesitant about making the phone calls—until David put it all into perspective. "I said, 'You guys, it's just a game.' They said, 'It's just a game? Well, we're competitive, we like to win!'"
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Now that the secret is out, Sally says she can be honest with friends. "When you're asking us to go out to dinner and we can't do it, it's because we're cutting back on our Latte Factor®!!" she tells them.
In fact, David says cutting back on little things—like eating out with friends—can add up to big savings. David helps the Egglestons pinpoint areas where they can cut back on spending per month. By making small changes like carpooling, reducing cable and cell phone packages, and eating out less frequently, the Egglestons can save $504 a month! Dan decides to make his biggest sacrifice yet by selling half of his Chicago Bears season tickets—that's another $1,000 saved.
"It's been hard, it's not easy and I don't want to make it look like it's easy," says Sally. "But we're committed. We've got to beat this monster!"
David says Sally's setback is normal. "This is going to happen to people when they go on this diet—you're going to fall off," says David. "Don't beat yourself up about it, just get back on the diet!"
What advice does David have for people with an urge to spend? "We are overleased and underloved," David says. "When you go out to buy something to make yourself feel better, there are other things you can do." David suggests trading your expensive habit for a healthy activity. "If you know you love to shop, go to the park. Come up with something else that you can start doing as a new hobby."
The Egglestons mean business.
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