How This Woman Cut Her Mortgage Payment in Half and Saved $525/Month

TPH photographer, Tina Russell, in various scenes showing credit card debt, consolidation and bankruptcy on August 14, 2018.
Aileen Perilla/The Penny Hoarder

In 2005, Melinda Smieja was spiraling into credit card debt. With a 13-year-old daughter undergoing treatment for a brain tumor, an 8-year-old daughter at home and her only income from disability, she relied on plastic to cover everyday costs.

“I used [a credit card] for dinners; I used it for food,” she says. “For a place to stay. It got to the point where all of my credit cards were maxed out.”

By the time she thought to check, her credit score had plummeted to 480, and she had somewhere between $20,000 and $40,000 in debt on 11 credit cards.

Though she was living much of the time in Seattle to be near her daughter in treatment, Smieja still paid $1,200 a month — including 6.5% interest — toward a mortgage on her Seabeck, Washington, home.

“I knew that if I could get it [the interest rate] down, then that would help me out,” she says.

When she was denied twice for refinancing because of poor credit, it really struck her how much of a hole she was in.

How She Cut Her Mortgage Payment in Half

Smieja finally realized, “I knew that I could only go for so long the way that I was going. I was going to crash and burn.”

Nearing 40 in 2010, she knew it was time to grow up and get a handle on her finances. But she had no idea how to do it.

“I was struggling. It was stressful,” she says. “I would cry every night, because I didn’t know how I was gonna pay these bills.”

Then an email campaign led her to Credit Sesame, a company offering an easier way to monitor your credit history and see how to improve your credit.

Most consumers like Smieja won’t put in the work to request a free credit report from the major bureaus, she pointed out, even though we’re entitled to them every 12 months. It seems like a hassle, so most of us steer clear.

Smieja signed up with Credit Sesame to receive her free “credit report card,” which revealed her credit score, along with everything that went into it. She could see exactly what was hurting her score — and keeping her interest rates high — and how to fix it.

Slowly but surely, she used her credit report card and suggestions from Credit Sesame to pay down her credit card debt. In 2015, her credit score hit 680 — up 200 points and, for the first time, crossing the line of what lenders consider “good credit.”

She applied again to refinance her mortgage, this time with a company Credit Sesame recommended and was finally approved, more than a decade after her first attempt. With the interest rate reduced to 4.1%, her monthly payment dropped to $675.

With so much of her monthly budget freed up, she was able to pay off credit cards faster and apply for new ones with better interest rates. That way she could keep her credit limit up but her balance low — maintaining a healthy credit utilization, great for your credit score.

And, she told us, “It’s so much easier. Oh, my God the stress. It was so nice to have that stress gone.”

Dana Sitar is a writer and editor at The Penny Hoarder. Say hi and tell her a good joke on Twitter @danasitar.

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