Before COVID-19 began surging across the U.S., Anna Rogers, 34, was saving up to buy a house. Prior to 2020, Rogers, who lives with her boyfriend in Middletown, Connecticut, was working two part-time jobs as a bar manager and a program manager for a nonprofit community health center. Fearing she would catch the deadly virus, she quit her bar job and took on extra hours at the nonprofit, which allowed her to work remotely.
However, even with the extra hours, Rogers was only making about two-thirds of her previous income and she still had to pay rent and bills while also paying down credit card, student loan and medical debt. On top of that, she was saving only about half of what she was able to save before.
While Rogers has made a habit of paying more than the minimum on her credit card, she said her reduced income was also forcing her to put more money on it every month.
“It wasn't a lot of purchases, but like groceries, gas, you know, whatever we needed to spend money on, was going on the credit card, because I was nervous about draining my checking account,” said Rogers, who shares some expenses with her boyfriend. “So that's how some of my credit card debt accumulated.”
To help her get back on the right path, Rogers sat down with NBC News senior business correspondent and MSNBC anchor Stephanie Ruhle to find out how she could improve her wealth health this year. Ruhle told Rogers that she needed to recalculate her savings and decide on a better strategy to address debt. To save for a down payment by the end of the year, Ruhle advised Rogers to determine a manageable plan and negotiate her fixed bills into smaller payments.
Anna's monthly income and expenses
Over the last six months, Rogers was spending about $2,500 a month on rent, food, bills. and other expenses, that's in addition to $100 a month in medical bills, $170 a month in student loans and $350 in credit card debt.
While the pandemic caused Rogers to lose a significant source of income, it also helped her financially in some ways. Since she works from home now, she said she is eating out less and spending less on hair and makeup.
“Because I had a lot of income coming in, I would just buy whatever I wanted, and so now I'm not doing that at all,” she said. “I'm not picking up, you know, a new pair of jeans for work, or new sneakers or anything like that. I'm kind of assessing more of what I need versus what I want.”
Tackling credit card debt with savings
After Rogers did the math and realized she had enough savings to last six months if she lost her job, she paid off the full $4,000 of credit card debt she owed — a strategy Ruhle applauded. Paying down high-interest debt first (known as the "avalanche method") will usually save people more in the long run.
Rogers said she had been thinking about paying off her credit card for “a long time,” but was afraid to go into her savings, since it took six years to build it.
“I didn't really want to just take $4,000 out of it,” she said. “So I was avoiding, and I was just paying, you know, my credit card month to month.”
Rogers said it “feels good” to no longer have credit card debt lingering over her head.
“I think it's getting me ready to start putting more money away towards bigger goals, and not focus on the smaller payments that I've been doing on my credit card,” she said.
1 month later: On track and saving for a down payment
Rogers said finally paying off her credit card was “a big step” and that she’s much more confident about being able to buy a house in the future.
She added: “Whatever extra money now that I'm making, whether it's with extra hours with my job, or with my tax return, now that can go directly into my savings versus going towards paying off credit cards.”
Rogers is now contributing the $350 a month she was paying on her credit cards to her savings for a down payment. She anticipates having about $25,000 in a little over a year.