by Larry Wiener
Charles and Sharon (not their real names) were at a crossroads. Married about three years, they were in debt. Marrying just before the New England winter set in, they moved into their first rented home. Like most New Englanders, they prepared for a large heating bill. Month after month the bill didn’t come and Charles kept calling the power company. They kept putting him off.
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Once the bill came, it was not only for several months, but included a large sum for interest and penalties for nonpayment of the bills that never came. The utility wouldn’t budge and their busy life didn’t allow them to pursue the matter legally. They also had accumulated mountains of credit card debt buying new appliances.
That year, Charles and Sharon made a decision. They would do what it takes the next year to get the debt under control. They figured that sacrificing for one year would pay off and they were right.
They moved into a smaller house that really wasn’t big enough for their blended family of six children. Not only would they save on rent, but since the house was both smaller and better built than their previous house, they would save on heating costs.
Charles worked for a low-paying company. His job as a systems analyst would keep the family going, but would only allow small dents in the massive debt. He took on some extra work with the company to go toward paying off the bills.
Sharon didn’t have the marketable skills at the time to bring in enough to cover child care, so she couponed massively and did after school childcare for a friend who was returning to work.
It might sound like a miserable life. Six children and two adults in a small house with one bathroom. Charles and Sharon didn’t even have their own bedroom, but slept on the sleeper sofa in the den. Two more children coming for childcare would only add to the confusion, you would think.
That is not what Charles and Sharon report, however. Several years later and living in a house they had eyed for years, looking at family pictures from that year reminds them what a good year that was.
Everyone was working together, Sharon recently told me. The mood became more upbeat as the balances went down. They knew this living situation wasn’t going to be forever and their former mood of gloom and hopelessness rapidly turned to one of hope.
If your financial situation is slightly–or maybe not so slightly–out of control, consider taking a year or so to concentrate on improving your situation. It may involve some discomfort, but everyone I know who has done it has found it a positive experience.
Here are some practical tips to make that year work:
Have a Plan
Decide exactly what you are going to do to get back on track. For example, you may make part of your plan to save $50 a week on groceries and use $30 of that money to pay more than the minimum on your credit cards. Make your plan realistic. If it involves too much work (taking on 20 hours of extra duty a week at work) or too much sacrificing (not heating the house if you live in the snowbelt), you’ll abandon your plan before it does you any good.
Develop a Grocery Shopping Strategy
Charles and Sharon happened to live in an area in which the supermarkets had very generous coupon policies. By combining sales and coupons, Sharon was often able to save as much as $100 a week on the grocery bill. Your strategy may be different depending on where you live and your family’s needs.
Consider Buying Used
Sharon discovered that she could get children’s clothing at outgrown shops and consignment shops for a fraction of the cost. She found lots of household items at garage sales. You can even get warranties on used appliances at some thrift stores these days. Remember, you aren’t going to necessarily be doing this forever.
Develop a Reserve While You are Paying Down Debt
As your plan begins to work, be sure to save money for emergencies so you can keep your plan going. Charles and Sharon found that the babysitting money was just what it took to keep unexpected mistakes from throwing them for a loop.
Enlist the Support of Family and Close Friends
Don’t be too embarrassed to tell people close to you what you are doing. Many will find ways to help you along. When I found out what Charles and Sharon were doing, I sent them coupons every month.
Look for Low-Cost Entertainment to Get You Through the Time
You can’t expect to go without entertainment altogether. While a vacation at Disney World may be out for now, consider taking the family to a local museum and then having a picnic.
If you are not used to black belt shopping, get advice both by reading and by talking with others. There is a great deal of expertise out there.
Look Forward to Better Times
If you stick to your plan, better times will be ahead. As the balances go down, your mood will improve. Toward the end of Charles and Sharon’s year of work on the budget, Charles began feeling confident enough to seek a much better job which truly allowed him to use his many talents.
So much good can come out of a year like Charles and Sharon took. Besides turning the corner on the budget, families often learn to work together. You develop financial skills that help you manage more effectively the (hopefully) larger sum of discretionary money you will have when you get through this.
I have known several families and individuals who have taken on this process and every one has benefited massively.
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Copyright © 2003 Larry Wiener. All rights reserved.