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Money Lessons from Real Families

Get out of debt, deal with job loss, and become a better money manager with our expert help, based on lessons from three families who turned economic troubles into fiscal freedom.
Reinvent Yourself
The Nelson Family
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By Cheyenne Ellis

Wendi Nelson, 36

Pasadena, California

Wendi had just taken a Web-management job when her husband, Bill, 43, was laid off from his analyst position with an Internet company. "The pressure on me to succeed was tremendous," she says. One of their biggest concerns was health insurance. The couple and their four kids, now 22, 16, 5, and 3, had been covered by Bill's company. Wendi's new place offered the benefit, but the fee was, she says, "ridiculously high." COBRA, too, was cost-prohibitive. Finally, they found coverage through eHealthInsurance.com, though they had to take a high-deductible policy.

Bill immediately started sending out resumes. When nobody responded, he tried applying for more junior spots. But then, thinking about the future, he realized he wouldn't be content forever with a position less challenging and lucrative than his former one, so he decided to go back to school. He's now studying full time for a B.S. in computer information systems. "Some of his tuition is covered by a government program," says Wendi, "and he bought books and supplies with tax refunds." Bill purposely set up his class schedule for late afternoons and evenings so he can take care of the children during Wendi's work hours. The older kids and a family friend fill in some of the gaps, and Wendi arranged to work from home three days a week.

To make ends meet the couple cashed in some of their retirement savings and cut back on extras. "We do homemade gifts," Wendi says, "or I shop when there are huge discounts. We reduced the grocery bill by eating simpler fare like mac and cheese and building the menu around what's on sale."

There are times when the role of sole breadwinner, along with the day-to-day balancing act, can feel like a slog to Wendi. But overall she's optimistic. "Bill's outlook is so much happier now that he's going to school," she says. "He still sends out resumes in between classes. He says his car is his office. But he's not as upset about rejections because he knows he'll have an upgraded skill set in another year that will make him more marketable. We went from feeling like victims to being proactive about our situation."

Tackling problems together has an upside for the whole family. "We've found that having fewer luxuries isn't a deprivation," Wendi says. "It actually means more time together. I'm so grateful for the closeness and strength we've gained. We're banking memories. No one can take that away from us."

Turn Around a Job Loss

  • Be patient. It can be frustrating to see your spouse dragging through the post-layoff period. Avoid saying, "You have to get a grip and start figuring out what you're going to do if you don't land a job in your old field." Instead, suggests Jacob Needleman, author of Money and the Meaning of Life, initiate brainstorming talks by saying something like, "I love you, and we need to work on how to approach this." The goal is to plan for specifics like rewriting a resume or networking with others. If you suspect depression or substance abuse—which often flare up at times of intense stress—seek out professional help.
  • Search smart. Further education is great if you can swing it, says Deborah Price, founder and CEO of the Money Coaching Institute in Petaluma, California, but before you set off in a new direction, make sure you've gone all out marketing your old job skills. "Hand-deliver your resume to make it stand out from the pile on the employer's desk," she says. "Research a company and write a love letter about what you could contribute." Take temp or consulting spots—one could turn permanent as the economy improves. "And you can't think straight if you're super-stressed," says Price, "so exercise, meditate, or make a daily gratitude list to stay relaxed and sharp."
  • Maintain perspective. Remind yourself and the kids that spending cuts are temporary, says Price, and that you're not the only family going through a transition like this. In the meantime find ways to have fun for less: Netflix instead of cable; potluck with neighbors in place of dinners out; cooking together rather than ordering in; swapping video games with friends as a substitute for buying new. "It's about getting creative and being really flexible," says Price. "Who knows? You might want to continue the economies when your earnings go back up. It's a terrific way to boost saving." You can never go wrong putting money away for the unexpected and for the future.