Carla and her husband, Eric, never worried much about money. After they married in 2000, with combined incomes topping $110,000 a year, they made smart financial decisions: buying a house and stuffing $34,200 (over six years) into retirement accounts.
In 2003, they had a baby and decided Carla would work part-time. The next year, Eric and two partners opened their own physical therapy clinic; he invested $28,000. In 2005, the couple had another baby. Now the family of four was looking at life on $90,000 a year. The monthly bills ($780 for the mortgage, $125 for the home equity loan, $400 for the SUV and $1,081 toward their combined student loans) that were so manageable when both Carla and Eric worked full-time became overwhelming. As their credit card balance grew to $6,000, then $10,000, then $14,000, tension mounted.
When Carla first saw Oprah's Debt Diet, she began tracking where her money went . Her Achilles' heel turned out to be bargain hunting. She'd go into Wal-Mart three times a week, intending to buy what the family needed for dinner; she'd come out with groceries, plus a cute outfit or two for the kids, and maybe a planter for the house. Each trip cost an average of $100. Immediately, Carla trimmed her shopping back to once a week and bought necessities only. That saved about $800 a month.
While it was a good start, it wasn't enough. Their student loans were killing them. The couple tried to lower their monthly payments by consolidating loans, but they couldn't find a bank to help them—or even to explain why not. "We've never defaulted on anything, but no one was willing to work with us," Carla says. The couple's problem was that they had mainly private, not federal, loans, and until very recently, there was no practical way to consolidate these debts. I knew that Sallie Mae, the largest student lender in the country, was rolling out a program that would do the trick. By working with Sallie Mae, the couple was able to cut their monthly payments in half. This gave them room to breathe, with a cash flow of about $1,000 a month.