How 4 Families Conquered Their Credit Problems

How these savings-challenged families freed up cash—and how you can, too.

Erasing debt on notepad.
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Although Molly hadn't had to shoulder her college tuition, she'd put all her living expenses on credit cards, including books, food, and clothes—and a $1,700 pink Fendi hobo bag. "It was the combination of financial need and some big mistakes like that which got me into trouble," she says.

She'd assumed she'd be able to pay the bills when she got a job in 2007. But her $30,000 salary as a high school English teacher barely covered rent and expenses, and she continued to run up debt on six credit cards. When she couldn't make even the minimum payments, "I had a complete breakdown in my room," she says. She called one of her banks, crying, and was transferred to a credit counseling agency called Novadebt. The organization helped her work out a single payment of $806 a month for five years.

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That commitment would leave almost nothing after rent and utilities. Once a month, Molly stood in line at a food bank for a box of groceries, which she transferred into bags so her roommates would think she'd been to the store. She befriended the cafeteria staff at school, and brought home leftover subs and pizza. When she moved to be near family in 2010, she took four part-time jobs (at a restaurant, an art gallery, a clothing store, and in marketing at a radio station), and freelanced as a social media marketing consultant. Soon, the radio job became a full-time gig, providing about $27,000 a year—and her future husband.

John drew up a spreadsheet to help Molly track expenses and do a better job of planning. "I learned that I'm in charge of my spending at the beginning of the month. I can make a plan for where every dollar goes. But once the plan is set, the budget controls my spending," she says. The two married in February, after saving $5,000 each to host 220 guests. Her sister made the cake; a friend catered the meal; their Mexican honeymoon was a $700 (plus airfare) deal from the bargain site Living Social. Now debt-free, Molly is saving for a new car, and she'll buy it with cash.