Credit-card debt holds back progress

David and Tammy Halfpap are expecting a third child.

David and Tammy Halfpap have saved more than many couples in their 30s. They have $45,000 in retirement plans and about $3,500 in the bank for emergencies - and as a cushion because they are expecting their third child in April and Mr. Halfpap is unsure how upcoming labor talks at work will go.

But money is tight, say the couple, largely because of payments on about $15,000 in credit-card debt. “We spend too much money on credit cards,” said Mr. Halfpap, 37, a route salesman for Perfection Bakeries in the Toledo and southeast Michigan areas and a member of the Teamsters union. “If we could get out of the credit cards, then I think we'd be all right. I just want to get out of debt.”

Mrs. Halfpap, 35, is a dental assistant. Between them, the couple make about $65,000 annually, but they said they don't have enough money left after paying bills.

They are keeping up payments on four credit cards - a Visa with a balance of about $12,000 and three department-store cards with smaller balances - Mrs. Halfpap said. They make at least the minimum payments, she added.

The Halfpaps hope to sell their Toledo house for $90,000 or so and plan to buy a new home.

Planner Peter Ruma, Jr., said discipline is the key. “They need to buckle down,” he said. “They need to pay down their card debt and not run it up again.”

If the family buys a new home, Mr. Ruma said, the credit-card debt may be rolled into the new mortgage. Based on income, they should be able to buy a home in the $150,000 range, he said. If they keep their current home, the Halfpaps should refinance at a lower rate than the 10 percent interest they are paying, he advised.

Mr. Ruma lauded the couple for keeping their retirement funds intact. “That's good, as young as they are, that they have retirement as a concern,” he said. “Time is still on their side. They're still a pretty young couple. If they paid attention to it, they could achieve their goals.”

He urged them to draw up wills and start funding a Section 529 tax-advantaged college-savings plan for their children.