Case study – credit cards

Stephen was an IT professional who was retrenched at the age of 55 after working with the same company for 25 years. His wife, Marcie, had left her job in administration at a hospital four years earlier following an illness that still affected her. Stephen and Marcia’s three children all still lived at home. The eldest was at university, the middle one was working in retail at a music store, and the youngest was in Year 11 at secondary school.

Stephen and Marcia had a large mortgage. Stephen intended to get another job following a six week family break, but when they got back home, finding a new job was more challenging than Stephen anticipated. He also felt that he was being overlooked for the few positions available in favour of younger, more confident candidates.

Stephen and Marcia started to use their credit cards for most of their purchases. Their previous “good credit rating” from the past provided them with access to new lines of credit with very few questions asked. Their credit card debts and associated interest began to build up to a massive level.

Stephen knew what was happening but put off doing anything about it, hoping he’d find a new job, and could pay out the growing debts.

He contacted a financial counsellor who prepared a current financial statement that revealed that Stephen and Marcia had purchased some shares.

The financial counsellor encouraged Stephen to sell the shares and pay the proceeds off the credit card debt. He also helped him to work out a plan to reduce his credit card debt by paying the card with the highest interest rate first, and cutting up all but one credit card that was only to be used in the case of emergencies.

After several months, Stephen managed to get a job, albeit a low paid one compared to what he had been used to. The income was enough for him to cover day-to-day expenses and he worked out payment plans with his creditors.