Other people have been in debt and worked hard to get out.
Here are some of their stories.

Ever wonder where your money went? One young woman discovered the value of tracking her spending when she realized that she was spending $50.00 per week on latté drinks for herself and her friends. She limited her spending on this item and others and eventually saved enough money for a down payment on a house.

A Single Woman
Mary [not her real name] age 43, single and living at home, had ten credit cards with a total balance of $23,000. Most accounts were closed by the creditor because she was over her credit limit, paying late, not making minimum payments or, in some cases, all the previous problems. Creditors were calling her at home and at work. Her net monthly income was $700. Other than room & board and life insurance she had no other fixed expenses.

She stopped watching and purchasing off the buying channels on TV. She also called each creditor and ask that they work with her reducing her payment and/or interest rate and fees; also to stop calling her. Some creditors agreed to work with her immediately while with others took a good part of a year before they agreed. Some creditors reduced the monthly payment as well as the interest rate charged. Regardless, each month she consistently paid something toward each account, even though she sometimes was receiving calls about the amount paid.

Two small creditors were paid off within eight months; she then applied those payments to another creditor. She has continued this practice for four and a half years so she now owes only four creditors! She still owes approximately $15,000 but she is having no problem making payments and within three years she expects to be debt free!

Not only has she been paying her debts, she also has increased her room and board payments; she has several hundred in a savings account; a Christmas Club account and she has increased her 403b contribution to 6%. Since she does not drive, she is saving money to take drivers education classes next spring. Mary has worked very hard to reduce her debt and to be debt free. Even when she was off work for six weeks because of surgery she planned ahead and had money saved to pay her bills.

A Single Mother
A single mother, 32 years of age, was part of a basic financial literacy class taught by ISU Extension in Des Moines. She had approximately ten different creditors and $6,000 debt. She came to the class planning on filing bankruptcy.

This young mother contacted all three credit agencies and found out that part of the $6,000 debt she owed had been written off by the company several years ago, thus lowering her total debt to $2500. After analyzing the ten different creditors she owed money, she decided to run a Power Pay© analysis and see how soon she could pay off these creditors.

(PowerPay© is a debt reduction computer program designed to analyze options for debt repayment. It is designed to save money and pay off the debt as quickly as possible. Contact Barb Wollan at bwollan@iastate.edu to learn more.)

By paying the creditors who were charging the most interest first, and selling an extra car she had, she was able to reduce her total debt to $800 and only have four creditors to pay.

She also noticed how much she was spending on meals outside the home for her children during the week. (As she stated, it is so easy to swing through a fast food drive-up on the way home and pick up dinner for the kids when I am tired and hungry.) She started preparing extra food on the week-ends that could be taken out of the freezer and warmed up for dinner to save $50 a week. 

On the final evaluation of the 12 hour, six week financial literacy class, this young mom wrote, “I was convinced when I started this class that I would take bankruptcy, but now I have been able to get my debt under control, am working on repairing my past credit history, and am saving for a dream to own a home.”

A Married Couple
How would you respond if a home foreclosure letter arrived in your mailbox?  One Iowa family responded by having a large garage sale. All of a sudden all the toys of life seemed unimportant compared to their home. They raised enough to make one mortgage payment and bought time enough to develop a spending plan. The plan they devised contained two parts. First was a no frills spending plan . . . only the necessities.

Secondly the frugal spouse took over money management and bill paying for the family. The spending plan included a small amount of cash for the "spending" spouse who no longer has access to the checking account. Within a couple of years, they were back on track and able to expand their spending plan to include a small number of "wants".  They would say that saving their home was worth the effort.

Middle-aged Couple
Both people in this marriage have regular low paying jobs, but lack basic financial skills. When they came to Extension for help, they were paying most of their bills with cash, and were not keeping any record of how their money was being spent. They owed more than $18,000 consisting of 4 credit cards, a car loan and a personal loan. They wanted help getting their debts in line and their spending under control.

After learning financial management skills, this couple:

• Opened a savings account and began putting a small amount of money in the account each pay period. At the end of two months they had $50 in this account.


• Followed a spending plan and in seven months the couple had paid off two credit cards and had increased their savings to $700.


• Purchased health insurance for the wife within the first seven months.

They are now successfully using and managing a checking account to pay bills on time.

Young Family with Stay-At-Home Mom
A young family was struggling with $37,000 debt, mostly credit cards. The husband was a teacher; the wife was a stay-at-home mom with two young children. They had been repeatedly rescued by one of their parents and saw little hope of ever becoming independent and debt free.

They developed a debt management plan, set realistic spending goals, and began taking control of their finances. Their major goal besides paying off their debt was to become homeowners. They slowly gained the skills and courage to move forward.

The family not only learned money management skills that allowed them to pay off their debt in 36 months, but they were also able to save enough money for a down payment on their first home.

This family is living proof that with motivation, encouragement, basic financial skills, and time people can change their lives for the better.