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Be realistic about long-term prospects.

Six years ago, Amy and Tom moved their family from California to Hawaii in pursuit of a better quality of life. In terms of their finances, though, pulling up stakes made no sense. Amy confided that making their mortgage payments on the mainland had been a stretch, so I was puzzled as to why their solution was to move to an island where basic living costs like gas, food, and rent are about 55 percent higher. In addition, opening the nail salon required a $44,000 loan from Tom's 401(k) and left the couple saddled with a $1,200 monthly repayment. They made the decision to move with their hearts, not with their heads. Returning to a state with a lower cost of living isn't an option for the immediate future, but it could be a smart move down the line.

Start building an emergency savings fund.

I calculated that with the IRS and credit card debt paid off, Amy working a few more hours a week, and everyone pitching in to cut expenses, the couple could deposit at least $2,000 a month into an emergency savings fund. If they stay focused, the family could set aside $50,000 in just over two years. And as soon as they finish paying back the loan they took out from Tom's retirement plan, they'll have another $1,200 a month to contribute.

Prepare for the unexpected.

Tom's job provides a $400,000 life insurance policy, but ideally, he'd have more coverage (preferably $1,000,000). He was recently diagnosed with a very treatable form of prostate cancer, though, so an increase might be cost prohibitive right now. Yet there's no excuse for Amy not to have insurance; a $500,000 ten-year guaranteed term life policy for a 45-year-old woman in excellent health typically runs about $45 a month. Plus, she won't need to renew it when the term expires—her youngest will be 21 and on his own by that time. Amy and Tom should also create a revocable living trust, which will protect their kids if anything happens to the two of them. (I gave Amy free access to my Must Have Documents online kit so she and Tom could get started.)

Less than 24 hours after we spoke, Amy contacted me. She'd had a heart-to-heart with Tom and the kids, and everyone was on board with what I called Project Take Control. "I'm determined to work diligently to gain a sense of balance, stability, and peace," she told me. That's an amazing gift for Amy and everyone she loves so fiercely.

Next: How to talk to your kids about family finances

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