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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"I hated it," she says. She found the job so stressful that she broke out in hives at weekly staff meetings. The $37,500 salary hardly seemed worth it, given that daycare cost $900 a month, and insurance took nearly $400 more. And she felt disconnected from her kids—especially one January night in 2009 when the daycare teachers refused to let her son leave with her. "Jim always picked Cole up, so the staff didn't know me," she says. Soon after, she quit.

A few months later, when Cole started kindergarten, Christina tackled the job market again, this time more strategically. "I spent six hours a day researching employers. I wanted to find a company that treated people well," she says. To test the waters, she took a temp job doing accounts payable with a construction company. It soon turned into a full-time job managing payroll, and before long her pay rose to $45,000. "But there were no women in any power positions," she says. So in late 2011, she took a position as a project administrator overseeing regulatory compliance for another large construction firm. Her current income is "a significant increase."

In September, the Harrises made their final payment, for a grand total of $66,376.07. Along the way, they established a new dynamic. "I've stopped thinking it's Jim's responsibility to support the whole family. It's mine, too, and I relish it," Christina says. By way of celebration, "I bought a Coach bag," she says. "But instead of paying $400, I got it used on eBay for $75."

Tom Sparks

Minneapolis

Debt: $36,000

When Tom Sparks, 57, ended up with sole custody of his three girls after a divorce in 2002, it quickly became clear that his $30,000 income as manager of a mattress store wouldn't sustain their lifestyle in Minnetonka, a suburb of Minneapolis. They left their 2,800-square-foot house for an apartment in the same school district. But his financial struggles worsened when one daughter developed chronic health problems requiring hospitalization not entirely covered by his insurance. He realized he would need a second job. "I tried various work-at-home schemes," he says, "but none of them turned out to be legitimate." He considered night jobs at retailers, but the hours wouldn't let him see his daughters.

The solution: a paper route, which added about $400 a month to his income. For five years, Sparks got up most days at 1:45 a.m., delivered papers, and went back to bed at 6:00. "Then, I'd get up at 7 or 7:30 when the girls got up. I'd shower, shave, and have breakfast as if it were all a bad dream," he says.

Still, ends didn't meet. He had to tell one of his daughters that she couldn't try out for the competitive cheer squad, because participation would cost some $2,000 a year. Instead, she and her sisters took jobs at a local malt shop, for pocket money and to save for their own cars, gas, and insurance.

He was managing to pay all his bills on time, but then one card's rate moved from 9.9 percent to 12.9 percent. Another card went to a variable rate. "That was the last straw," he says. "That's when I knew I was in trouble." With $36,000 outstanding, he sought help from Lutheran Social Services Financial Counseling, which helped hammer out a five-year plan with monthly payments of $633 and a rate of just 1.75 percent on some of his debt. He also worked out an arrangement with the hospital where his daughter had been treated. Meanwhile, the girls were getting ready to leave home. Two went to college, mostly funded by scholarships and financial aid, and the third took classes to become a certified nursing assistant. As soon as they left, Sparks canceled his cable and Internet service.

Then he made a move that might seem counterintuitive for someone digging out of debt: He took out a mortgage. "The housing market had plunged in Minneapolis and the economic stimulus package was offering incentives to home buyers," he says. He left his $1,200-a-month apartment in Minnetonka for a $53,900 two-bedroom townhouse and now pays just $400 a month for his housing. Sparks says he's on track to be free of credit card debt by 2015.