In June 2010, Brian Brandow and his family had nearly maxed out their five credit cards to the tune of $109,000. About four years later, after slashing their food and entertainment budgets and using the debt snowball method, the New York state family had paid off those debts.
Now, they’ve shifted gears to fund their retirement savings and three kids’ college funds. Brandow is also on the local school board with the goal of bringing financial literacy to local students, and blogs about personal finance at DebtDiscipline.com.
U.S. News recently spoke to Brandow about what he and his family did to change their money habits, how they’re teaching their kids to manage money and why they feel financial literacy in schools is important. The following excerpts have been edited for clarity and brevity:
What messages did you get about money as a kid? Do you think that informed your spending patterns in adulthood?
My parents did teach me the basics. They gave me an overview on balancing a checkbook and understanding a savings account, but they didn’t have a lot of experience with credit cards themselves. I never really had any information on credit cards in college or in high school. I was really left on my own once I was out of college and landed my first full-time job. It was kind of trial and error.
[See: 10 Easy Ways to Pay Off Debt.]
What changes did you make beginning in June 2010 that allowed you to repay those debts?
The turning point for us was [when] we were trying to plan a family vacation and realized that we didn’t have any cash or available credit. Our five credit cards were close to their limits and I tried to increase those limits, but I wasn’t able to because of our high debt-to-income ratio. So, at that point we really knew that there was an issue, and we started to look at what we could change. Immediately, we organized ourselves with a budget, and then we looked at ways we could cut expenses.
What changes did your family make?
We looked at eating out. Once we got organized, we realized that we were eating out, out of convenience, maybe once a week. Whether that was fast food or a quick meal, it could be $40 or $50 a week for our family of five. So, we eliminated that, which saved us $200 a month.
We looked at subscriptions. I had satellite radio in the car at the time, and I classified it as a luxury item. We looked at those types of things that were really just not adding a lot of value to our life and we eliminated those. We wanted to get the budget [balanced] and then have extra cash to pay down the debt.
[See: 12 Habits to Help You Take Control of Your Credit.]
How did you stay motivated during those years when you were paying down debt?
It was something that happened in the first couple months, while getting used to new behaviors and new changes, but we really kept the end goal in mind. We averaged about $2,000 a month in debt repayment, and what kept us motivated was thinking about the end goal. We basically [told ourselves] once we’re debt-free, we’ll have a surplus of $2,000 a month. That really was eye-opening because if we saved that [$2,000] for two months or three months, we could go on any vacation we wanted. If we saved that [amount] for a year, we could remodel the kitchen and we could buy a new car. That was our motivator.
What do your financial goals look like now?
Really, it’s just to continue to build wealth. We have three teenage children [and] we are working … to teach them the things that we didn’t know at their age so that they can have a better financial start to their lives. The two oldest children are planning to go to college in the fall, so our goal is to help them graduate debt-free, and then continue to discuss money with them as they graduate and find jobs of their own.
We started saving for college late because of the debt that we had, but we’ve been talking to them throughout the whole process of getting out of debt. They understand that [as a family] we’re trying to make smart choices on colleges. They have part-time jobs and they are planning on working through college to help pay for books and some of the [tuition] cost.
We want to be able to help them, but we’re also continuing to save for retirement. We have twins, so we have two kids who will be going to school at the same time, and then we have a younger son who will join them in their senior year. We basically have a seven-year span before the kids will be out of school.
You’re now involved in trying to get financial literacy into schools. Why do you feel that’s important?
Our family was a prime example [of lacking financial literacy]. We didn’t have that education at a young age, and we didn’t pick things up until later in life. We’re working with our own children, but there are a lot of people who don’t have a good understanding about money. I even talk to people in their twenties, thirties or forties who have said, “I wish I would have learned these things about money when I was in school.” So, I think it’s important to try to help other kids and teach them what I know about money now.
[Read: Trying to Dig Out of Debt? Don’t Make These Mistakes.]
What advice would you give to other people who are dealing with consumer debt?
The biggest thing is getting organized, whether that’s a formal budget or just getting the numbers down on paper. And then, you need to stop adding new debt immediately. The math part of it is pretty easy. It’s probably fifth-grade-level math. The biggest challenge is going to be changing your behavior. The mental piece of saying no, and not going out to dinner and having conveniences and things like that. The struggle that people have is breaking those bad habits.
More from U.S. News
What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments
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17 Ways to Reduce Credit Card Debt in 2017
How This Family of 5 Paid Off $109,000 in Debt in 4 Years originally appeared on usnews.com
