Overcoming Life’s Debt

With $158,000 in debt outside their mortgage, Kenric and Christina Brooks of Charlotte, North Carolina, feel they are in a constant state of struggle. “Our No. 1 mission is to get the debt gone,” says Kenric, 33. “We have a great life, we vacation, we pay our bills on time, and we have jobs. But we feel like we are struggling and we want relief,” further explains wife Christina, 30.

Over their 10 years of marriage, the Brookses have had three children (ages 18 months, 6, and 9), purchased two homes and two cars, and have earned three degrees between the two of them. But the bill for most of this lifestyle is still outstanding to creditors. The couple owes $101,000 in student loan debt, nearly $14,000 in auto loans, $3,000 in credit card debt, and $40,000 in a home equity line of credit (HELOC).

“We are in our early 30s and our life is what it is going to be–we have three children and a dog” says Christina. “We just want to free up some of the money that goes to bills so we can live our life normally,”says Kenric.

In addition to the couple’s primary mortgage of $116,000, the couple also purchased a rental property in March with a mortgage of $26,000. But outside of the HELOC, the couple is not as concerned about the mortgage debt because they see their homes as assets that will appreciate.

The couple hopes to sell their primary home, which they purchased in 2006 for $191,000, and buy their dream house in the next couple of years. They also want to better prepare for retirement and save funds for their children’s education. “My oldest son is 9 and there’s not much longer to save for his education,” Christina says, noting that they have only about $1,000 in his 529 plan. The couple has saved about $500 for their 6-year-old and nothing to date for the 18-month-old.

Although saving for a down payment on the family’s dream home is a priority for Christina, retirement planning is key for Kenric. When asked about retirement, Christina quips “It’s not in my focus. I’m just hoping and praying I’m still married to Kenric and can live off his retirement.” She has just under $7,000 in her 403(b) at Winthrop University, where she has been an archeology professor for the last three years.

Fortunately, Kenric has been diligently contributing 6% of his salary to his company’s 401(k), but he previously borrowed from it to pay down credit card debt. He borrowed $13,400 and still owes $6,500.  Kenric has amassed about $47,000 in his 401(k) at Verizon Wireless, where he’s a store manager.