Milwaukee Couple Uses a Small Inheritance to Clear Their Credit Card Debt

Mariza and Geffrey Gordon of Milwaukee signed up for CNN’s Savings Challenge with a plain goal: build an emergency fund and stop living paycheck to paycheck.³ Standing in the way was nearly $40,000 in credit card debt.²

That card debt has now been cleared. The couple received a modest inheritance and used a large piece of it to pay off their credit cards, CNN reported on Oct. 24.¹ Before that, they had been paying about $1,400 a month just to cover the minimums.²

It is a real relief, and it is not the end of the story. CNN reports that paying off the cards was a huge weight off the couple’s shoulders, but it did not erase their need to rethink how they manage money so they are no longer just getting by.⁴

How they got here

The Gordons, 40 and 39, moved back to their hometown of Milwaukee from Houston. They were chosen to work one-on-one with a financial expert as part of the challenge.³ When they applied, they listed a household income of $145,000. Soon after, Mariza was laid off.³

Most of the card debt, Mariza said, came from paying for their wedding the year before.² A wedding is supposed to be a one-day event. On a credit card statement, this one had turned into a monthly one.

The usual escape routes were closed

Before the inheritance arrived, the couple looked at the standard tools for getting out from under high-interest cards. A balance transfer card, which lets you move existing card debt to a new card with a temporary interest-free period, could have given them up to 21 months without interest. Their credit scores kept them from qualifying.¹

They also did not qualify for a lower-rate personal loan. A debt management plan, a structured repayment arrangement, was on the table, but the terms they were offered weren’t workable.¹

Then came the inheritance. The Gordons shared the news with financial educator Tiffany Aliche, who advised them to make a plan before doing anything. They later emailed her to say they had used a large part of it to pay off their credit cards.¹

What the payoff doesn’t fix

The timing is tight. Mariza’s two months of severance pay were about to run out. With unemployment benefits, the household would bring in about $2,000 a month less than when she was working.⁴

She also still needed health insurance. The couple missed a deadline to add her to Geffrey’s employer plan.⁴

And there are student loans: more than $200,000 combined. Geffrey said their payments on those are currently under $75 a month.³

Lessons for the rest of us

• Plan before you spend a windfall. When the inheritance came up, Aliche’s advice was to make a plan before doing anything with it.¹
• Your credit score decides which tools you get. Balance transfer cards and cheaper loans can help with card debt, but the Gordons’ scores shut them out of both.¹ It is worth knowing what you qualify for before counting on an option.
• Clearing debt is not the same as fixing a budget. Even with the cards paid off, the couple still has to rework how they handle money day to day.⁴
• Asking for help is a step in itself. Aliche praised the couple for seeking help. “A lot of people just stay stuck,” she said, according to CNN.²