$60,000 in debt, and nothing to show for it

Then this year Uhazi learned she was going to have to start taking unpaid furlough days, resulting in a nearly 10 percent drop in her salary, because of California’s budget crunch. Around the same time, she started noticing that her minimum card payments were increasing as lenders raised her interest rates and reduced her credit limits.

One morning this spring, she sat down and tallied her debt. The total: $62,597.

“It’s awful, just looking at it,” she said.

If the debt was startling, so was the amount she was paying to service it. That month, Uhazi realized, she would have to pay $1,932 just in minimum credit card payments, about two-thirds of her reduced take-home pay of $3,018. After rent and other fixed expenses, she figured she’d have just $127 left for gas, food and other incidentals.

Perhaps the worst part was trying to figure out how her debt had reached that point.

“It was like, what do I have to show for this, really?” she said. “If I have anything, it’s just material stuff, or it’s a waistline from, you know, going out to lunch or something.”

Uhazi has stopped using most of her cards, except for the gas card and one that she uses for reimbursable work-related expenses, and that doesn’t carry a balance.

Mary Weikert / Special to MSNBC Mary Uhazi took camera phone photos of a chair set to help make a sale to Stan Brodeur (pictured) of Sacramento during her garage sale in East Sacramento.

She also has cut back her spending habits, including eating out less and not buying anything but necessities. On a recent holiday weekend, her plans including using some free baseball tickets and “splurging” on the $1 specials on hot dogs and ice cream at the local River Cats minor league ballpark. She said she doesn't miss shopping.

“I’m not tempted,” she said. “I know what I’m trying to do.”

She also began calling her credit card companies, to see if there was a way to reduce the highest interest rates or make her payments more manageable. The results were mixed.

One major retailer agreed to drop her interest rate from 20.24 percent to 9.99 percent for up to a year, but she had to agree not to use the card anymore. Another agreed to drop her interest rate from 22.9 percent to 18.9 percent. But a third retailer said it could not go below her current rate of 23.99 percent.

The bank that issued a credit card with Uhazi’s highest balance, about $13,000, said it could drop the interest rate on about $10,000 in credit card debt from 27.99 percent to 24.99 percent. But if it did that, the rate she pays on her cash advance balance of about $3,500 would go up, from 28.99 percent to 30.99 percent.

Meanwhile, she continues to get more credit card offers in the mail.

Uncertain future
Despite her efforts, Uhazi’s financial situation remains precarious. The furlough days and reduced salary are expected to last until June 2010, and she worries that her salary could be cut another 5 percent or more as the state grapples with severe budget woes.

She’s thought about trying to get a second job in the evenings, but such jobs are hard to get these days, and she worries about taking a position away from someone else who has no other means of income. Recently, she held a garage sale, raising $183.65 — almost enough to make up for the drop in pay she had that month because of the furlough.

Uhazi has depleted most of her savings tryingto make up for the drop in salary. Even as she works to pay down her debt, she worries that she’ll have to start using the cards again just to pay for necessities, like food. Financial goals she once dreamed of, like buying her own home, have been put off indefinitely.

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At times, she frets that her only option will be to file for bankruptcy, especially if her salary is cut further.

For now, though, Uhazi said she is hoping to avoid a bankruptcy filing. The panic she felt when she first realized how deeply in debt she was has subsided, she said, as she’s talked with more people and learned how many others have grappled with similar problems.

She said it’s also been good to finally tally up the debt and talk to the credit card companies about her situation. 

“It’s so stressful, but I feel a lot better about it,” she said.  “I’m trying to fix it.”

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