How a Personal Loan Helped
One Couple Manage Debt

Sometimes, a financial challenge comes when you least expect it.  Amanda and Nathan Rakoczy, a couple from Jacksonville, Florida, with careers in business and two toddlers, were caught by surprise by sudden unemployment after a period of feeling confident about the state of their family’s finances.

“I was called into a meeting at work—a meeting I thought was going to be a discussion about my bonus,” says Amanda. “But instead, I got laid off.” At the time, she worked as a supply chain director for a Fortune 500 company.

If losing her job wasn’t jarring enough, the couple had recently depleted their cash reserves to pay off Nathan’s low-interest student loan debt. “We felt so secure in our jobs that we thought we could pay off the student loans using our emergency funds,” she recalls.

Amanda was their primary breadwinner at the time. So, the couple had to pivot and come up with a new financial plan quickly. They decided that Nathan’s paycheck, as director of marketing for an e-commerce company, would be earmarked for their mortgage, car payments, and day care for their two children—both of whom were under age two at the time. Amanda received $200 a week in unemployment benefits, sent out resumes, and took any odd job that came her way that would bring in more cash, like cleaning and dog walking.

“We had to buckle down the best we could until I landed a new job,” Amanda explains.

They also reviewed their financial options, which included tapping into Amanda’s 401k early with penalties or selling their house that has a favorable mortgage interest rate. But they didn’t want to do either of those things. Instead, they chose to put the expenses they couldn’t cover on credit cards, with the idea that once Amanda found a job, they’d pay them off.

Using a Personal Loan to Pay Down Debt

After seven months of buckling down, job-hunting, being resourceful, and trying to keep life as consistent as possible for the kids, Amanda successfully landed a new job—as a supply chain director in a different industry. But relying on credit cards had taken a toll on their family’s financial health. 

Amanda and Nathan wanted to pay down all the debt they had accrued, but they’d learned from their previous mistake. They didn’t want to pay it off as aggressively as they did when they wiped out their emergency fund to pay off low-interest student loans. This time they wanted to consolidate their debt—while simultaneously rebuilding their depleted emergency fund.

“We were thinking, ‘What if something worse happens next time?' We wanted to have cash reserves,” says Amanda. 

The couple decided that taking out a personal loan—with a fixed interest rate and set monthly payments—made the most sense for them. They identified a payment they could afford, and then structured the payoff terms around that. 

Amanda knew the importance of getting a loan from a reputable company. “My job involves reading contracts and negotiating terms; there are some where I’d read the terms and they included so many penalties and fees,” she says. (With Discover^® personal loans, there are no origination fees, a benefit for those looking to consolidate higher-rate debt without having those fees shaved off the loan amount when they receive it.)

Nathan and Amanda chose to have automatic payments sent directly from the lender to their creditors, and with the extra cash that the personal loan provided, they kickstarted a new emergency fund. Although they discussed paying off the personal loan faster than the loan term (four years), they decided it was better to keep adding to the emergency fund until they re-established their financial footing. 

If Amanda and Nathan’s story sounds familiar, a Discover^® personal loan could help you reduce your higher-rate debt, too. With Discover, up to $40,000 can be sent as soon as the next business day after your acceptance.*

A Family Lesson and a Brighter Future

After making it through this rough patch, Amanda and Nathan learned not to take their employment for granted—and to assume that it can take a while to find a new job. 

Buckling down wasn’t easy, but they put a halt on unnecessary spending while trying to keep life as normal as possible for the kids. 

The couple also was able to turn Amanda’s unemployment experience into a life lesson about financial responsibility— explaining to the kids why they were in money-saving mode as they worked to reduce their debt and rebuild their emergency fund. 

Fortunately, with the help of a personal loan, the couple was able to get through a challenging time while working toward a brighter future for them and their family. “This year, we were even able to buy an annual amusement park pass for all of us again,” she says, proving that victories, no matter how small, are within reach if you take the necessary steps to manage and reduce your debt.