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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.

By Sondra Forsyth

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

Face Your Finances
The Blinzler Family
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By Amy Schlatter

Jaci Blinzler, 49

Parkville, Missouri

Insecure about her money-handling skills, Jaci didn't resist when her husband demanded that he do it all. "I was clueless," she says. "I just let him take care of everything." But when he left the marriage—and withdrew all support—she got a crash how-to course. "It was painful," she says. "The phone and utility bills were in his name, and I had trouble getting the accounts switched." In addition, the couple had joint bank accounts, so for the first time in 22 years Jaci had to open her own.

Hungry for guidance, she entered a financial makeover contest at her credit union. "I met with a coach periodically for almost a year," says Jaci, who has a 15-year-old son and 13-year-old daughter. "The kids attended every session and learned right along with me." It quickly became evident that the family was overspending and not saving at all. "At first I didn't see how we could possibly sock anything away, considering what I make," says Jaci, who's an office manager for a medical coding company. "But our mentor suggested asking my son and daughter to come up with some ideas." The two decided they could babysit and pet-sit to pay for some of their sports fees, and offered to drop some activities to save money. They each chose a favorite one and withdrew from the others.

During the early months on the new budget, Jaci's daughter kept asking, "When will this be over?" Finally she admitted she just wanted to buy some inexpensive jewelry and hair bows. "I told her we'd find a way," says Jaci. "Being careful is for life, so it's important to set aside a small amount of money for fun. Otherwise you start to feel deprived and discouraged."

The Blinzler family won the $10,000 grand prize in the credit union contest—they saved the most and paid down the biggest debt. The extra cash was a big deal, Jaci says, but not as important as the knowledge she and the children gained. "I went from being a scared suddenly single mother to being in full control," she says. "Plus, the kids don't see finances as frightening and mysterious. They understand that they can be in charge. And now so do I."

Be the Boss of Your Money

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

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