Home > 2014 > Managing Debt

How One Marine Is Getting Out of Debt Before Retirement

Advertiser Disclosure Comments 3 Comments

MSgt Rachel Gause knows a bit about discipline and focus from her military career, but when it came to finance, something was going wrong, and she knew it. She wants to be debt-free when she is eligible to retire (that will be August 2016), so when she realized a few years ago that retirement was on the horizon, she tried to figure out what it would take to get in the black.

First, her debt had been growing, and one of her biggest problems was the Toyota Sequoia she drove. It was justified — sort of — by having three kids and being a really hard worker who happened to get bored with cars pretty easily and who regularly got the itch to buy a new one (and as a result drove “upside down” much of the time). Determined to get rid of the high payments, she sold it and replaced it with a Corolla. Still, in the next six years, Gause traded it in for a Camry, and then a Sienna.

But she was at least watching what she spent. And with a good income and payment history, lenders were more than willing to extend credit. (Gause never missed a payment.) And yet, all the “yeses” were standing in the way of her goals. For her, the way out began with writing things down. How much of her income had she spent on cars? Gause looked back over the years and calculated more than $75,000. For credit cards (cumulatively), the total was more than $55,000, though the balance had never been that high. She figured that most of it was money she hadn’t actually needed to spend, and it certainly was not money she was paying back rapidly. She bought Christmas gifts with cash. She bought a house, but resisted the urge to paint, recarpet and buy new furniture right away. Still, somehow she wasn’t getting quite the traction she needed. She says her debt was continuing to grow, albeit much more slowly than before.

A Longer-Term View

A Dave Ramsey course (Financial Peace University) prompted her to take another look at her habits, her budgets and her bills. This time, things came into clearer focus. Paying cash for holiday gifts was good; spending $1,200 when she was trying to pay down debt was not. Generosity can be good, but was buying cars and bailing out relatives really helping in the long run? And was it worth sacrificing her goal of being debt-free except a mortgage when she retired?

With renewed resolve — and a plan — Gause began paying off her three credit cards, paying as much as she could on the smallest balance and minimum payments on the other two — Ramsey calls this the “snowball method.” Once she had paid off the smallest, she moved to the next one, adding what she had been paying on the first card to the payment she had previously made on the second. She put herself on an all-cash budget, using an envelope system. (She put allotted cash into 13 envelopes. And, if, say, the heating bill was $10 more than Gause budgeted, she’d have to find $10 to cut from someplace else; no paying it back next month.) She also had an emergency fund, so an unexpected expense wouldn’t throw all of her plans off track.

Hardest, she says, was learning to tell her family no. Her children had come to expect more expensive gifts than she could realistically afford if she was going to attack the debt, so Gause explained what she was doing, complete with charts showing how the debt was going down and celebrating milestones along the way. The children are now 16, 14 and 10, and they are learning if you want something, you save for it — and you live within a budget. She says they tell her what they’d like as gifts, and they recognize and respect the dollar limits she sets. “I make sure all their needs are met and some of their wants,” she says.

Gause says it was harder to break free of her habit of bailing out other family members. She had, for example, purchased cars for her mother and brother. Gause paid them off fairly quickly, but cars are a major expense. Her own expenses went up when she was stationed at Camp Lejeune, N.C.; it was so close to her native South Carolina that Gause made more trips home to visit. Family members had come to depend on her assistance because they thought “Rachel has the money,” and they had to learn to find a different solution. “The problem was, Rachel didn’t have the money,” Gause says now.

Helping Others Take Control

Now that it’s done, Gause thinks setting limits and cutting off aid was a bigger favor than saying yes and continuing to buy on credit. Her kids have watched debts shrink on her charts, and they have learned to tailor their wants to what is affordable. They can live within limits. Members of Gause’s extended family have learned to manage their money better, since they know no rescue is coming if they don’t. Rachel is finding she enjoys helping others learn to take control of their finances so much that she is majoring in finance (at this point in her career, her college education is a Marine benefit). “It’s become my passion,” she says. “Money is sometimes a taboo topic,” she says, “and it’s easy to live a big lie — going into debt to keep up with other people.”

She says she’s five months away from having no consumer debt at all. She will reach her goal before she retires from the military. Next goal? To retire her mortgage in the next 10 years.

She continues to check her free credit reports annually to make sure they are accurate. She says she doesn’t check her credit scores now; she still associates that with the times she used to check them just to see how much more credit she might be able to get. (However, we recommend doing so — a big change can tip you off to possible fraud or identity theft, and a steadily improving one can alert you it’s time to refinance your debt at lower interest rates. You can see your credit score for free on Credit.com.) She says she keeps a credit card for when she needs to make travel reservations, but she pays the bill off in full every time.

More on Managing Debt:

Image: Courtesy of Rachel Gause

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Cleveland Rockmore

    Great story and I learned allot just by reading MSgt’s story. Thanks for sharing MSgt!

  • Rachel Gause

    Thanks for reading Cleveland. It took me a while to get over my embarrassing debt but a wise person once told me, you must face your issues before you can start to heal.

  • Eddie

    Ray, Awesome job. We spoke ofor you accomplishing that goal many times while we were in the sand. I’m so happy that you followed up on this. Again, you’re living up to the Awesome lady that you are. S/F

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team