Personal Finance

The Unverzagt Family's triumph over their credit card debit

Shrimp in the jambalaya instead of kielbasa. For nearly five years, the thought of that simple pleasure helped the members of the Unverzagt family of Sparta, Wisconsin, stay focused on their goal of becoming debt-free. They met this goal in August 2013, having paid off more than $38,000 in credit card debt. "To be done is fantastic," says Hope Unverzagt, family matriarch.

It's an impressive achievement for any family -- and more so for one with 11 children and working within a pastor's salary. The Unverzagts were selected as Client of the Year by the National Foundation for Credit Counseling (NFCC), the nation's largest and longest serving nonprofit financial counseling organization.

"Everyone was pulling together," says Ken King, executive director with Consumer Credit Counseling Services (CCCS) of Sheyboygan, Wisconsin, the NFCC agency with which the Unverzagts worked.

It wasn't always that way. Hope and her husband Jonathan had slightly differing views of money, Hope says. While she preferred to use cash and stick to a budget, Jon was more receptive to using credit cards. "We were like oxen pulling in different directions," she says. The initial intent was to restrict the cards to emergency use, but because the family lacked savings, just about anything became an emergency, she adds.

As their credit card bills mounted and they had to manage fluctuating credit card payments each month, Jon grew more concerned. Finally, he had had enough and cut up the cards. A friend referred the family to CCCS, and the counselor there was able to consolidate the balances from four cards into one, at a lower interest rate.

Bankruptcy was never an option. "We spent the money, so we had the obligation to pay it back," Jonathan says.

Budget cut: $1,800 a month

In order to make the payments yet not incur additional debt, the Unverzagts had to slash about $1,800 from their monthly budget. "They had to both change their standard of living and pay back the standard of living they had enjoyed," King says.

A first step was establishing an emergency fund of about $1,000. When the pump on the family's well went out, Hope was able to write a check for the $1,100 it cost to replace it. "I rejoiced in the fact that we actually had that money in our account and were able to handle the unexpected without being devastated financially," she says. The Unverzagts used tax refunds to replenish the account each year.

Essential to the family's success was including the children -- seven of the 11 still live at home -- in the undertaking. Without their cooperation, the sacrifices required to repay the debt would have been an even greater struggle. "We're not the kind of family that keeps our finances hush-hush," Hope says. The children understood from the start that becoming debt-free would require changes from everyone.

Brown bags, wood stove

Hope pared the family's grocery budget and Jonathan brought brown-bag lunches to work, rather than grabbing something from a store or restaurant. The family installed a wood stove to provide additional heat in the winter, slashing their propane bills. "We chop, haul, split and stack together," Hope says.

When the Unverzagts made the last payment on their van just a few months after starting with CCCS, they resolved not to take on another car payment. "We gimped along with junky vehicles," Hope says.

To earn extra income, Jon refereed basketball games and Hope scored test essays. She also bartered for some services: a piano teacher provided lessons for several of the Unverzagt children, while Hope cooked meals for the teacher's family and taught her children to write. Once they could drive, older children worked part-time; younger ones baby-sat and assisted with children's Bible lessons at their church.

One benefit of the journey the family has made is the financial wisdom it's instilled in their children, Hope says. The older children have purchased cars and paid for college and travel -- to Albania, Brazil and Sweden, among other countries -- themselves. "It's been great to see them grow up and set their own budgets," she says.

Even the younger ones are learning to manage money. For instance, Hope might give them a dollar each to spend at a garage sale, letting them know that when it's gone, it's gone. "You're a lot more careful when it's your own money," she says.

While becoming debt-free has been gratifying, "I don't think a day went by when I didn't think about November 2013," Hope says of the period during which they were on the payment plan. That was the date at which the family was scheduled to make the last payment. The Unverzagts actually paid ahead and eliminated the balance by August 2013. "The sense of freedom that comes from not being tied to debt is so incredible," Hope says.

When Hope stopped at the bank for a cashier's check to cover the final payment, Mindy, the bank teller with whom she'd been working, knew exactly how the family planned to celebrate. Hope says, "and there was shrimp in the jambalaya that day."

See related:Debt payoff choices: Less now or a lot later , NY Fed: debt squeeze eases on households ,

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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