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The Story of Andrew’s New Debt

Aug 15, 2014

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Andrew has $12,000 of debt! And yes, I did mean Andrew and not Matt. Has he forsaken his Listen Money Matters principles? Find out the shocking details.

It’s not as scandalous as it sounds. Half of this is on a zero APR Home Depot credit card and those were expenses to remodel the kitchen. The other half is a series of things that all hit at once, conference tickets, a vacation, mortgage tax. Life got in the way and he did end up with finance charges.

This episode is one of the reasons I was a fan of LMM long before I started working here. Andrew owns up to his mistake and talks about it so he can help other people avoid the same. Because if it happens to someone like him, it can happen to any of us, no matter how together our shit.

This is how Andrew plans to redeem himself, and as penance, he’s going to document it in an article for us all to judge, (getting a little Dave Ramsey up in here.)

The first thing he did was to set up an account with our friends at Ready for Zero to make payments to kill the debt fast. He’s going to automate the payments and use the stack method.

The next step is to take out a loan from Lending Club and refinance for less than 10% which will be less than half of the rate of the credit cards.

Matt asks a good question, why not just pull money from investments to pay the debt?

A few reasons, firstly, Andrew isn’t in dire straights. This is a temporary set back. The other reason is altruistic, for the love of his listeners, he’s going to take the hit because he doesn’t want to disrupt the Betterment Experiment.

This is a learning experience for us all, Andrew included. He wants to show that one mistake doesn’t have to completely derail your personal financial plans and to show how using Ready for Zero and the stack method work.

This can happen to anyone and Andrew is angry with himself like anyone would be. But he has a plan to right the ship. If it can happen to him, it can happen to anyone. But by seeing him fix it, we see how we can fix our own situations.