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Tina Esparza-Luna, 32, is a hotel marketing consultant. Her husband, Josh Luna, 33, is a technical consultant in the hospitality industry. They have a son, Raymond, and a household income of about $130,000.The Good Life
"When I met Josh nearly 11 years ago, we both had debt. I was getting my MBA and racking up $64,000 in student loans. He had about $16,000 in car loans and $8,000 in credit card debt. Not that we ever talked about it -- we were having fun and dating, and it didn't dawn on us that we couldn't afford our extravagant lifestyle.
"In hindsight, so much of our spending was unnecessary: We traveled a lot -- to Hawaii, Mexico, Europe. Josh bought a new truck every year for three years in a row. I got a diamond ring for our second anniversary -- and while we were at the store Josh saw a cool watch, so we got that, too. We continued to go to restaurants all the time. I'm also really into crafts and I swear I must have spent thousands on supplies."Reality Bites
"The thing that finally made us get serious about reducing our debt? I hated my job but I couldn't quit because we needed my income to pay our bills. So we made a commitment to finally try to get on the right track financially. It really wasn't as difficult as I expected. We started watching our expenses and cutting back on anything unnecessary. And there was plenty. I mean, you look at your credit card statement and you see all these things, little things, that you don't need or never use, like a gym membership or new monthly gadget fee or premium cable TV service."Tough Adjustments
"We also made some big changes, like not eating out at restaurants so often. That was huge. We saved hundreds of dollars every month and used that savings to pay down our debt. I also told Josh we were going to drive these cars until we die, and he agreed. Then we buckled down to pay off the car loans. So I'd know we were making progress, I kept a spreadsheet showing our different credit card balances, the car loans, and our regular bills. It wasn't exactly a budget since we're not the types to live by a strict set of rules. This was more like basic money monitoring. Finally we felt secure enough for me to leave my awful job and work part-time until I found something better."Reaching Our Goal
"It's hard living in a small rental when your friends are moving into houses that look like mansions. But we stuck it out and in seven years we managed to pay off $15,000 in credit card debt, three car loans that totaled $44,000, about $23,000 of my MBA loans, plus a $14,000 time-share. What's more, we even saved enough for a down payment on a house!
"But we still didn't let ourselves relax. For the first six or eight months we rented a room to my brother for $650 a month to keep our expenses down. Then, as we felt more stable, we decided to start our family. I got pregnant and am now the proud mom of Raymond, who's now 1.
"What made it doable was that we never felt deprived. I always built in money for travel and entertainment and we had a slush fund for unexpected things. I still have one. That way, if a friend is in town, we can say, 'Let's get a babysitter and go out.' By being smart about our spending, we were able to splurge sometimes without sacrificing our financial goals."
Rhiann McDonald, 29, is currently finishing her associate's degree and working part-time as an office manager. Ryan, 30, works in the restaurant business. The McDonalds have two daughters, Paige, 8, and Peyton, 6. The family's combined income is about $40,000.Spending Frenzy
"There's something almost schizophrenic about sinking into debt: Part of you worries about what you owe but the other part of you doesn't believe it, so you keep shopping. In less than 10 years my husband and I went from having $15,000 in student loans to owing over $50,000.
"Here's an example of the kind of stuff we did: We were living in Alaska and had to fly down to Washington for my brother's wedding. There weren't many places to shop where we lived, so when we got to Seattle we went crazy. We bought tons of stuff for our kids and for ourselves. That shopping trip probably cost us at least $5,000. While we were there we also decided that our car was too small so we took out a loan to buy a new one, which cost us $25,000."The Bills Add Up
"In those three short weeks we added $30,000 to what we owed. Over the next couple of years we took vacations we couldn't afford: Once we spent two weeks in Hawaii; a few years later we went to Disney World for a week.
"We relocated to Washington three years ago because we wanted to be closer to our families. We moved in with my parents, thinking we'd just get the girls settled and then find our own place. Ryan and I both got jobs right away, so we had plenty of money. But instead of saving or paying down debt we kept shopping. When I finally sat down in 2008 and realized how much we owed, I thought I was going to die. It was $51,000."Learning the Basics
"I finally decided to take action. I began by reading everything I could about getting out of debt. I particularly liked The Total Money Makeover, by Dave Ramsey. That book taught me some basic techniques, such as 'snowballing,' which worked well for us: You pay off the smallest balances first, then take what you were paying toward those cards and put it toward your higher balances. It really gives you a sense of accomplishment. Another method we tried was the 'envelope system': You put set amounts of cash into separate envelopes -- for gas, groceries, and so on -- and use only the amount inside. That didn't work for us because if we spent what was in one envelope, we'd just go into another. What helped me the most was using the financial software that was already on my computer, because I could download all of my credit card and checking account transactions and look for areas where we could cut back."Budget Savvy
"I'm constantly finding ways to economize. I use coupons and discount codes I find on retailmenot.com. I take the girls' old clothes to a consignment shop for credit, which saves us a bundle. We recently moved to a new apartment where we're saving $250 a month on rent and we can walk the kids to school. We still love to travel -- but it's not Disney World these days. We use frequent-flyer miles or visit family or friends so we don't need to pay for hotels.
"When Ryan lost his job last August I was sure our bills would skyrocket again. But these new habits really worked. He was out of work for eight months before he landed another job, and we didn't add any more debt. In fact, I'm proud that we've been able to pay off $20,000 in the last three years. I only wish we didn't have another $31,000 to go. But luckily I've found other women in my area who are in the same boat. We meet once a month for breakfast -- a sort of anti-debt club -- to swap budgeting ideas and give one another encouragement."
Nanci Singleton, 50, is a stay-at-home mom, and her husband, Charles, 56, is an information technology manager. They have a 9-year-old son, Javan. The Singletons' household income is about $67,000.The Debt-Free Challenge
"I've never liked owing anybody anything. It bothers me to pay interest because it means I'm paying more for something than it really costs. My husband and I never had any consumer debt -- and never plan to. The only money we owed was what most people consider acceptable debt: $16,000 in car loans and a $54,000 mortgage. But even that bothered me. It stresses me out to think about owing anything. And I was worried about the state of the economy. So I decided we would pay off those loans in full."Redefining Wealth
"My husband and I were missionaries in Ghana for 12 years. We weren't the type of Americans who lived like kings on a U.S. salary in a developing nation. We managed on the same allowance as our Ghanaian colleagues did -- under $30 a month. That meant we had to think about every penny. I mean, we couldn't even go out and buy an ice cream cone. We'd have to save up money just to invite friends over for dinner. You get a different perspective on consumerism when you live in a place that has so few material things. So now I know that I can be happy living on relatively little.""No Spend" Days
"I was very systematic about how we could eliminate all our debt. I created a spreadsheet with all of our expenses on it, including fixed costs like housing and utilities as well as our discretionary spending. I decided that one way to save a lot of money would be to have 'no spend' days.
"Here's how it works: First you figure out your discretionary expenses -- not essentials like the mortgage and utilities, but money you spend on things that aren't necessities. Let's say your basic living expenses come to $3,600 a month and $1,200 of that is discretionary spending. Then you divide that number by the 30 days in the month and figure you've got $40 a day for nonessentials. So the trick is to not spend for a day or two each week, and immediately put that $40 or $80 or whatever it is toward your debt."Financial Security
"Once you get into the habit, cutting back like this gets easier and easier. I think my record was 15 'no spend' days in a single month. Also, by making a commitment to reduce your spending, you drive less, spend less on gas -- and you are less likely to give in to impulse purchases. And that makes it easier to save more money.
"We don't feel deprived. In fact, our lives feel very rich. Because our mortgage is paid off, we were able to save for a down payment on another house -- a foreclosure -- which we closed on this spring. We've moved and are renting out our original house, so we have an additional income stream. It's amazing what you can do when you have no debt."