When we don't know what to do, we tend to do nothing. The key is
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Julie Medina could be the poster child for the recession's
impact on families.
Family: Julie and Jose Medina, with sons
Carlos, 4, and Benicio, 8 months, of Romeoville
Income: $3,848 monthly
Expenses: $4,022.70 monthly
Debt: $61,480 in student loans, medical bills,
credit cards and loans from family
Back in 2008, she and her husband, Jose, were financially
stable, with enough for some little extras each month, when both of
them were laid off within months of each other. They had a new
baby, Carlos, and it wasn't long before they lost their home and
found themselves dependent on family for a roof over their
Fast-forward three years and Jose now has a decent-paying job as a
Web developer at DePaul University in Chicago while Julie is a
stay-at-home mom. And, although his monthly salary sounds like
enough to support his family, including the new baby, Benicio, the
reality is that the money runs out long before all the bills are
Their lengthy unemployment saddled them with credit card debt,
medical bills (both parents are uninsured) and loans from their
So when Julie saw Chicago Parent was running a contest to win a
financial makeover from financial guru Lori Mackey (right), she had
"We really prayed, right before we won this contest, for another
chance," Julie says. "We don't want this for our kids. It breaks my
heart when my son wants to go see a movie and we can't. So we're
doing this for each other, but also for the kids. We don't want
them to live like this." She was determined to get back on track
The first thing Mackey did was ask Julie and Jose to list every
dollar spent and match it to revenue coming in. "One of the biggest
breakthroughs is to know exactly where they're at financially,"
When Julie listed out their finances, they found each month they
had $3,848 coming in and $4,022 going out. "There was almost $200
they were floating," Mackey pointed out. "First things first: we
have to balance this out. And that's the scariest part for most
people, because most people do have more going out than coming
Not only that, but the family had $60,000 in debt.
Mackey checked each item on the Medinas' list. Things such as rent
and car payments would have to stay as is, so they would focus on
things that could be changed. First up? Ditch the cable.
Julie, who wasn't ready to completely get rid of cable, brought it
down from the $60 package to $10. Mackey also told them to unplug
everything each morning, and then only plug in what they use to
bring down the electric bill.
Next up: All the stuff sitting in a storage unit that cost $129
each month. Julie posted some on Facebook and sold $200 of office
furniture immediately. They held a garage sale and posted items on
Craigslist to sell the rest. She also took some of the children and
baby items to a resale consignment store. By eliminating the fee
for the storage unit and lowering the cable bill, they brought
their monthly expenses into line with their revenue.
Mackey advised them to take the money they made selling the
storage unit items and open an ING checking account. "ING is an
online account. If you open it and do three transactions within the
first 30 days, you will get $50," Mackey says. "I love ING. …
They're all about teaching financial literacy. They have an orange
savings account where you can earn 1 percent. ... ING also gives
you the ability to track your savings."
Once Julie and Jose brought their expenses and revenue into line,
Mackey told them it was time to start bringing in more income to
pay off some of the debt, starting with the smallest debts
Julie started selling Avon. She also is taking tax classes so she
can start doing other people's taxes. Little by little each month,
they began paying off debts, starting with the credit cards with
the lowest balances.
Several months after starting the financial makeover, Julie knows
they have a long way to go, but she's seeing success. "I've paid
off some store credit cards. … Now I'm up-to-date with accounts, so
I'm paying the real balance, not late fees."
And their new ways of being fiscally conservative have become part
of their life.
"I've been doing little things like pulling out the cords and
stuff like that, and my Nicor and ComEd bills are a lot lower than
I've seen in a while, and they don't have late fees attached to
them," Julie says. "And my husband is more careful now. If he's at
work and wants something, he'll actually call first and ask if it's
in the budget, or he'll check the account. He's the one saying now,
'If we have extra, let's just save it in case.'"
Liz DeCarlo is the senior editor at Chicago Parent.
See more of Liz's stories here.
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