Hildebrandt Family: Their Frugal Ways Got Them Out of Debt, Won an Award

His wife, Kandy Hildebrandt, and their three kids went without new clothes, and some months they weren't sure where the groceries would come from. But because of their perseverance and sacrifice, the couple managed to pay off more than $100,000 in debt in less than five years.

For their success, the Hildebrandts were honored by the National Foundation for Credit Counseling. They received the Professional Achievement and Counseling Excellence Client of the Year award Tuesday in Washington, D.C.

"We did it. We made it. And there's a sense of pride there," Russell Hildebrandt said.

At the time, Russell and Kandy Hildebrandts' credit card balances of about $89,000, and they owed $17,000 to a family member. While they were current on all the payments, the card companies had begun raising their interest rates, adding hundreds to their minimum monthly payments. Kandy acknowledges that they presented a higher credit risk, given how their balances had ballooned. Even so, with the bump in the required payments, covering the monthly payments was a struggle. "We had to change," Kandy said.

The Hildebrandts maintain they weren't leading a lavish life. The couple, along with their twin daughters, Heidi and Holly, lived in a rented 1,000 square foot townhome. Vacations consisted of visits to extended family members in the Midwest. Russell was a chemist with a Twin Cities-based environmental testing laboratory, who has worked as a chemist in an environmental testing lab in Blaine for 20 years, supplemented his income by cleaning floors and bathrooms at a local grocery store. That extra $10 an hour made all the difference. Kandy was a stay-at-home mom and home-schooled their daughters. He kept a sleeping bag in his car or stayed overnight in a conference room because there often wasn't enough money to buy gas for his one-hour commute home.

While the Hildebrandts weren't living extravagantly, they also weren't frugal, Kandy notes. They purchased most items, such as clothes for the girls, new. In addition, they had medical expenses related to Russell's diabetes and several miscarriages that Kandy suffered. At the same time, they remained committed to tithing, or giving 10 percent of their income to their church. The accumulation of day-to-day expenses left the family going a bit more into debt each year.

Their debt accumulated slowly over 15 years and was compounded by medical bills. Up to a certain point, they were able to make the monthly payments. But as the debt rose, so did the interest rates.

Several family friends recommended that they file for bankruptcy. Bankruptcy just wasn't an option. It didn't feel right.

"It's not our character," Kandy said. "We were committed to paying off our debts."

"I always thought, 'We'll make it through this,' " Russell said. "But everybody hits a point."

In early 2005, Kandy Hildebrandt reached out to the consumer credit counselors at FamilyMeans, an

Advertisement Stillwater-based nonprofit. To get started, Kandy met with Linda Humburg, a manager with FamilyMeans Consumer Credit Counseling Service (CCCS) in Stillwater, Minn. Linda reviewed their finances, and developed a five-year debt management plan. While the schedule was daunting, the Hildebrandts signed on.

"If we didn't make it, we knew that we would go out trying," Russell says.

"They set up a repayment plan and followed it to a T," said Linda Humburg.

Several steps were key to making the plan work. Kandy and Russell eliminated discretionary spending. Kandy began buying generic food and frequenting thrift stores for clothing purchases. They stopped exchanging Christmas and birthday gifts with each other and their relatives.

Even with the drastic cutbacks, the Hildebrandts couldn't cover the $2,000 they were sending to CCCS each month to be distributed to their creditors. At that time, the sum amounted to about half of Russell's take-home pay. So Russell took on a second job cleaning a local grocery store several nights a week from midnight to 4:30 a.m. He would arrive home from his day job, eat dinner, got a few hours of sleep and head to work. After his shift, he would go back home, sleep a few more hours and then get up for his day job.

The first two years were particularly tough. Russell's work schedule was grueling, while Kandy managed just about everything at home on her own. Moreover, while their credit card balances were going down, the drop wasn't yet noticeable. For about a year, the Hildebrandts made do with one car, until they received a used van from Kandy's family.

"We didn't let anything deter them from progress," Humburg says. "If the money wasn't available, they simply did without."

Equally, important the Hildebrandts kept their goal, becoming debt-free.

After the first few years, the Hildebrandts' efforts finally seemed to be bearing fruit. Their card balances were coming down, and some were getting paid off. As one card reached zero, CCCS would apply the money that had gone to it to the remaining balances. As a result, those cards would get paid off even more quickly.

On top of everything else, two years into the program, they had a son. About this time, Kandy became pregnant with Joey, who's now 3. While recognizing that a new child would mean additional expenses, the couple was thrilled.

"The joy he brought to a negative, grinding situation was the light we needed," she says.

In fact, they were so committed to getting out of debt that they finished eight months ahead of schedule, increased their credit score and managed to buy a home.

By the fall of 2008, the Hildebrandts had one year to go on the payment plan. Russell even started daydreaming about a new home when he saw a three-bedroom rambler for sale in New Richmond. It had all that they were looking for, including a large yard and a separate bedroom for Joey. Russell let a real estate agent know that they liked the house, but added that the family would have to pay off their debts before taking on a mortgage.

Several months later the agent called and asked if the Hildebrandts would be interested in a rent-to-own agreement. The current owner of the house had some health concerns and was eager to move. The monthly rent would be $1,000, which included $200 to be escrowed for closing costs. They could manage it.

Now, the Hildebrandts are content in their new home and free of debt, other than their mortgage. Russell has been able to quit his second job and spend more time with his family and catch up on sleep.

Humburg called them "dream clients."

Several things haven't changed, however. Kandy remains a dedicated bargain hunter. Shopping online, she found eight bar stools for their kitchen island and basement family room for $24. At a yard sale, she bought a $2 desk for the girls. The Hildebrandts had to completely rethink how they spent and what was a need versus a want.

"They did everything we talked about," Humburg said. "They found ways to increase their income and decrease expenses. If they didn't have the money for something, they simply did without. That's what it really takes, that focus."

On Friday, the Hildebrandts met with local media to tell their story, which they hope inspires others.

Russell Hildebrandt's advice:

"You have to overcome your pride to do it."

For Russell Hildebrandt, the hardest part was not being able to give his family everything they wanted.

For Kandy Hildebrandt, it was pride and having to admit they couldn't afford things anymore.

They made their final debt payment June 29, and Russell Hildebrandt was able to quit his second job.

"I went outside at 5 a.m. and literally screamed as loud as I could, 'I'm done!' "

He has enjoyed finally spending time with his family and said it's nice "to have a normal life" again.

"I'm not proud of how I got to where I was," he said, "but I'm proud of what I did to get out."