Client Case Study – LJ (Debt. Credit. Savings.)
How It Started
In 2022 I began working with LJ. Initially she came to me because she wanted to move out of her studio and into a one-bedroom apartment in a neighborhood. There were a lot of newer apartments in west Midtown. After touring a few she paid the high application fee for one she fell in love with. Her application wasn’t approved because her debt to income ratio was too high and hwe credit score was low. The combination meant she would have to wait.
LJ was initially going to give up. At just 28 she wasn’t sure what to do. She had a decent job, but between student loans and several fun years after college she’d accumulated what felt like a mountain of debt. She figured she would be stuck in what she called a “crap studio” for another five years.
The Dream
When we first talked I asked her about her goals and she mentioned moving to a new apartment and what she’d come up against when she’d applied. She got quiet then. Then she said she didn’t want to get stuck. I asked her what she meant by getting stuck and she told me about a cousin who had gotten into serious debt and never seemed to move forward in life. This cousin who she used to admire was stuck in the same life and cycles she was in when she was 27. LJ was scared she would get stuck too.
After more conversation I told her she didn’t have to be stuck and that she could get into the apartment she wanted, if she were willing to do the work. Again, there was silence. Then she said, “I don’t want to start my 30s like this. What do I need to do?”
What LJ Did to Go from High Debt and Low Credit
Her life began to change that day. It wasn’t over night and it wasn’t always easy. Together we built a conscious savings and spending plan that prioritized paying down debt, starting with some of her higher interest credit cards and getting caught up on student loans. I let her know that if she stayed delinquent, at some point the government would start counting that on her credit.
Paying off the credit cards would do three things for LJ. One was to reduce her overall debt to income ratio, giving her more breathing room so she wasn’t as overleveraged. Two was to pay off the debt responsibly so it would improve her credit profile and score. And three was to remove monthly payments on debt that she could then use towards saving for her new apartment.
It took LJ about one and a half years to do it, but her goal of being in a nicer one-bedroom apartment by the time she was 30 drove him. Along the way, she met someone special. Her vision for her life got even bigger.
No, it wasn’t easy and it took sacrifice but she wouldn’t change a thing.
How It’s Going
LJ is now saving with her fiance for their first home so they can take advantage of when the housing market corrects.
