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Money Lessons from Real Families

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Own Your Life
The Smith Family
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By Cheryl Zibisky

Travise Smith, 38

Rock Hill, South Carolina

The Smiths were living beyond their means. "In 2002 we had a beautiful home, nice furniture, stylish clothes, lots of toys for our sons, a riding lawn mower, and two late-model SUVs," says Travise. "We looked great to the neighbors. The problem was, nothing was paid for and we had racked up $172,000 in debt."

Travise was a stay-at-home mom to their two boys, now 11 and 9. Her husband, Adrian, 38, earned a decent income with a regional telephone company, but his salary wasn't enough to maintain their lifestyle. "We'd skip the phone bill one month, electricity the next, the car payments the one after that," Travise says. "We were endlessly juggling money, taking from Peter to pay Paul. The stress was terrible."

One Sunday, she says, their pastor gave a sermon based on a Bible verse, "Owe nothing to anyone except mutual love." Around the same time Adrian heard a radio show about living debt-free and told Travise. "This was our big 'aha' moment," she says. "We decided to give it a try." Their first move was to unload one SUV, along with its large payment, and replace it with a used car that cost a flat $600 and was more fuel-efficient.

Next, they chipped away at what they owed on store and credit cards. To raise cash, she says, "I gathered up everything that wasn't nailed down and sold it at flea markets." She also became an ardent couponer, and Adrian took a second job cleaning offices at night. Finally, they sold their pricey home and rented a two-bedroom cottage from her parents for $400 a month. "The place had no heat and no air-conditioning," says Travise. "It was difficult. We told the kids on a regular basis it was for the best, and we wouldn't be there any longer than necessary." Within weeks of the change, Travise landed a position as a loan officer at a nearby bank.

In just 29 months they had paid off every penny of their debt. They had also saved enough to make the required 20 percent down payment on a new custom-built place, taking only a mortgage they could handle on one income, if necessary. "That was a smart strategy," says Travise. "I lost my job two months after we moved in."

Adrian has a better job now with the power company, and he has quit the cleaning job. "We simply stick to our budget and never charge anything," Travise says. She's proudest, though, of what her sons have gained. "They have their own bank accounts, and if they get $10 as a birthday present, they know to put part of it in the bank and give a portion to a good cause. Then if they want something, they either have to pay for it themselves or ask 'Is it in the budget?' And they know the difference between wants and needs."

Travise now works full time for herself, conducting workshops about couponing and responsible money management. "I want to keep other people from getting into the mess we were in," she says. "If you can't pay for something outright, you can't afford it! When I think back to when we were saddled with all that debt, I thank God we were able to turn our lives around."

Dig Out of Debt

  • Go out long. Your spending habits should reflect your big-picture plans, meaning you might choose to skip or scale back on restaurant meals and pricey vacations, for example, in favor of reducing credit card balances and saving for retirement. "If impulse spending is a problem," says Weston, "carry a little notebook or use your smartphone to write down a description and the price of an item you're tempted to buy, then wait three days. Most things lose their appeal after a cooling-off period."
  • Ditch mom guilt. Today's parents are overly concerned about giving their kids everything, says Price. "Believe me," she adds, "they care far more about having time with you." Encourage your children to earn their own cash for the gotta-have-its. If you can and want to, offer a matching fund: You'll pay a certain amount if they can raise part on their own.
  • Leave ego out of it. Your intrinsic value shouldn't be connected with your job title, income, or possessions, says Needleman. "Money is a tool," he says. "Don't let your mind exaggerate its role in your life. You want to have it, not be had by it."

Originally published in the May 2011 issue of Family Circle magazine.

 

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