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than a year. Things continued to go from bad to worse. “Our car broke down, which created another expense,” Lisa says. “We began bouncing checks because our expenses didn’t change, even though our income did.” In addition, the couple was unable to pay the minimum on their credit cards, and the interest rate on one card increased from 12% to 30%.

Today, Wade is working full time, and the couple is trying to whittle down their debt by spending less. However, their next _financial challenge is right around the corner: sending Chris to college next year. “We don’t have much of a college fund for him,” Lisa frets. “We’re hoping he’ll get a good financial aid plan.” So far, they’ve managed to save $10,000.

The Battle Plan
A team of financial experts weighed in on Lisa and Wade’s _situation. This is what they had to say:

Consolidate Debt The Norwoods should consider joining a credit union and taking out a personal debt-consolidation loan to lower their monthly fees, says Herb White, a certified financial planner and managing director of Colorado-based Life Certain Wealth Strategies. Although debt consolidation seems like a cure-all, there can be drawbacks. Borrowers with very high debt may not qualify for the lowest interest rates, which are usually given to those with excellent credit. However, this option will work for the Norwoods because they have paid their cards in full and on time for more than a year. And if they take out the loan through a credit union, they can benefit from lower rates. The average interest rate on an unsecured personal loan taken out through a credit union is 10.99%, 1.75 percentage points lower than a traditional bank, according to the National Association of Federal Credit Unions. The Norwoods should be able to locate a union through the National Credit Union Administration (www.ncua.gov). Furthermore, the couple should stop using their credit cards and convert to a
cash-only lifestyle.

Tap Home Equity “Another option is for them to get a home equity loan through a credit union to pay down credit card debt and finance part of Chris’ college education,” White says. This would also free up cash so that Lisa and Wade could sock away money in an emergency savings fund, as they have no savings. However, borrowers considering a home equity loan must proceed with caution; defaulting on the loan could result in the loss of your home.

Stop Lending Money One cause of Lisa and Wade’s monthly money drain was their habit of lending money to family members. Former financial planner Kelvin Boston, host of Moneywise with Kelvin Boston, suggests that couples think about who or what is setting the financial agenda in their household. “Ask yourself: Is it your children? Are you sending money to family members?” Boston says. Lisa says she and Wade have cut back on lending and now give money only on rare occasions.

Learn Your Money Style The Norwoods must also get to the bottom of why they handle money the way they do. “We

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