I have to be honest…this isn't entirely altruistic on my part. I've been in the "boring middle" for a few years now. Helping someone else who is starting from zero (less than zero actually) is invigorating.
We had a meeting today where I proposed my split-income strategy (a portion to debt, and a portion to living, with no budgeting restrictions on the living money except the general ceiling of having less money to spend). It helped that over THIRTY PERCENT of her take-home was already going to minimum payments on debt, so bumping that up to 40% wasn't as huge a sell. But if she can maintain that 40% diversion rate, that will be a powerful tool once it's redirected to investing.
She has a bonus coming up from work, and I think I've convinced her to use it to create a buffer for the debt paying account. Then she can direct both her bill payments and her direct deposits to the debt paying account, have it all on autopay, and not have to worry about it. A large part of her stress is in constantly juggling when to make payments and how to make sure she has enough in her account to pay for bills. I think removing that stress will be revolutionary for her.
We spent the bulk of today's meeting going through all her debts account by account and writing out the total amount, interest rate, and monthly payment. For now, the most important parts are the monthly minimums, since that gives us at least a ballpark for how much she can throw at it. She's never seen it aggregated like that before and I think seeing the total amount she's spending on maintaining the debt was sobering.
Our next meeting will be creating the new account and setting up direct deposits and automatic bill pay. If she can follow through with that, she's basically past the point where she can flake out - she'll be committed to debt payoff via her own aversion to dealing with money. She'll have set up the system to automatically take care of it, it will only need occasional adjustments. The only thing that could throw her off is taking on more debt, which I am a little concerned about to be honest. She's enthusiastic about paying it off now, but how best to keep that resolve in the coming weeks, months, years? Yes, we can remove her cards as an Amazon payment option, but she could always add them back again. I'm not sure how much friction to push for - deleting her saved passwords? Freezing the cards in blocks of ice? Canceling the cards entirely? Would love to hear everyone's thoughts on this.
