This financial planner racked up $12,000 in credit-card debt — ‘I went a little overboard’

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Financial advisers need to have their own money matters in order before they can guide clients, right?

Don’t tell that to Alexandra Wilson.

The Atlanta, Ga.-based certified financial planner is climbing out of $12,000 in credit-card debt and she’s not afraid to share the story with her clients. It’s actually helped many clients absorb Wilson’s lessons about controlling spending, budgeting and not getting carried away with credit cards.

“They don’t see me as a perfect person and I don’t want them to,” said Wilson, 24, who never wants to be indebted again after paying off her remaining balance of approximately $5,000.

Wilson doesn’t make her finances her main talking point, but it sure does help. “It just helps build that trust and relationship a lot sooner.”

‘I went a little overboard’

When Wilson started college in 2012, her mom let her stay in her house’s finished, 800-square foot basement. Wilson didn’t have to pay rent or tuition, but her mom wanted to teach a lesson about self-sufficiency. So Wilson had to pay for just about everything else, including food, gas, clothing, toiletries and furniture.

That wouldn’t be a problem, Wilson figured. She had a $12-dollar-per-hour part-time job first processing medical bills and then car loans. Earning $1,200 a month, Wilson bought cabinets, a couch, a dining-room table, a mattress, chairs, a television, and a laptop. She also painted the basement. “I wanted it to look really nice,” Wilson said.

Wilson bought lunch on campus and decked out her wardrobe, using her Amazon AMZN, -0.40%   credit card, an American Express AXP, -0.66%  card and store cards from places like Kohl’s KSS, +2.50%   and Old Navy GAP, -2.65%. “I went a little overboard for a while,” she said. “Whatever I wanted, I would buy,” she said.

Wilson, a finance major, graduated from Georgia State University in 2016 with $12,000 in credit-card debt. College taught her how to analyze stocks and bonds, but not how to budget, she said. The school offered a personal-finance class, which she now wishes she took. “I think every single person should have to take a class like that. It’s one of those lifelong skills they really should be teaching.”

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Wilson graduated and moved out of the basement to her own apartment. She got a job as an administrative assistant at a financial planner’s office. She took out a $12,000 loan with a 13% interest rate from Upstart, an online lender, in order to pay off the credit-card debt. Wilson’s store cards all had interest rates upwards of 25%, she noted.

She didn’t tell her mother about the loan “because I didn’t want her to know how bad it was.”

With just one loan to pay down, Wilson “enjoyed life a little.” She used her credit card to buy clothes for the office and drinks and meals with friends. She took on another $4,000 in credit card debt.

“It took me a couple months to realize, ‘Oh, the credit cards are creeping up again.’”

‘There was a lot of shame’

Months after graduating school, Wilson picked up her first book on budgeting.

She also asked for another loan — this time from her mother, Sharon. “There was a lot of shame around that and feeling I let her down.”

The conversation went better than expected. Sharon loaned her daughter around $4,000 with zero interest — but she made it clear this was a one-time deal. Wilson paid at least $100 a month and paid even more when she could. She now owes her mom less than $500 and she owes around $5,000 on the Upstart loan.

Wilson said her mother “helped me stay accountable. It actually turned out be a good thing that she knew.”

$75 weekly grocery bills

By the winter of 2018, Wilson and her now-husband, Mike, got serious about tackling the debt.

They overhauled their grocery expenses and stopped eating out. They now buy their meat once a month at Sam’s Club WMT, -0.79%, freeze it and use it throughout the month. The weekly grocery bill can be as small as $75, but can climb to $200 when buying diapers and formula for their infant daughter.

Wilson doesn’t buy any new clothes until she sells last season’s items on the online secondhand shop thredUP or the local consignment store.

She also uses Calendar Budget, an app that lets her see her household’s cash flow and allows her to adjust expenses accordingly.

A fresh start for Wilson, and her clients

Around the time Wilson started hacking away at the debt, she also started her job at SmartPath, a personalized financial-coaching service. The Atlanta-based company doesn’t sell financial products or manage investments, but it helps clients determine their way to goals like retirement or extinguishing student-loan debt.

In her first couple months on the job, Wilson didn’t mention her back story as clients discussed their struggles. “It was hard for a while. I did feel ashamed because I thought clients would want to talk to someone who already had their finances in order,” she said. “But then I tried it and the results have been incredible.”

Clients start talking candidly about their situation after they hear Wilson’s tale. Now she often discusses her own grocery-shopping tips with clients. “If a client is spending more than they make, it typically boils down to food spending,” she noted.

See also: This financial adviser shed 100 pounds, and $60,000 in debt and back taxes — here’s how he did it

Ryan McPherson, director of coaching at SmartPath, said it was “absolutely wonderful” Wilson talked with clients about her personal money-related problems. “When you hear a financial coach or financial adviser who claims to never have any struggles of their own, beware.”

Part of Wilson’s skill was her capacity to connect, McPherson said. “You’ve got be able to relate to your clients in order to help them.”

Wilson said she’s come to grips with the fact she can’t trust herself with an unlimited access to credit. The couple now has two credit cards, and they both watch their statements closely.

“I just had to set that boundary for myself. I think that helped dramatically.”

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