"We Got Out of Debt"

Digging yourself out of debt can take a heaping dose of commitment and healthy portions of sacrifice and time. But the end result is peace of mind, so it's well worth the effort. Daunted by the challenge? Get inspired by three families who allowed us to peer inside their wallets to see how they tackled the debt monster.
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We paid off $96,000 -- and saved for a house

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."

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