Posted: Dec. 30, 2009 |(0) Comments

Credit card debt, missed payments on monthly bills and a record number of bankruptcy filings created a bleak financial picture for Americans in 2009.

But as many of her fellow consumers wondered how they were ever going to get out of the financial hole, Wauwatosa resident Julie Mercer was well on her way to becoming debt-free.

Over the years, Mercer had racked up about $25,000 in debt. But as the economy tanked, she realized she needed to take care of her debt or risk falling into a much bigger trap.

"I decided I had enough of the creeping credit card debt and monthly payments," she said. "With the uneasiness of the economy and as a single parent, I needed to put a backup plan together just in case I would lose my job, like many others I know."

Sisters lend support

She found a support system in her family, namely her three sisters who also decided 2009 was the year to get their finances in order.

"We always thought we were smart financially," sister Jennifer Cramer said. "But we've come to realize there's so much more."

Being so close, they've been able to talk honestly about their financial situations and give each other strength.

"You don't talk to friends about finances, but with family you can be 100 percent open about where you're at," Cramer said. "Sometimes you need to out yourself."

They all read a book by financial guru and radio show host Dave Ramsey, which pushes "pay by cash" spending habits. Mercer took his tips and integrated them into her own variation of the plan. One year later, she has reduced her debt to $6,000.

"I'm so close to getting everything paid off," she said.

When her debt disappears, she hardly expects to loosen the reins on her spending. In 2010, she hopes to start building a savings equivalent to one year of her salary and planning for retirement.

Debts add up over time

Mercer has reflected on how she got so far into debt and said there was no specific area of spending that caused her problems.

"It wasn't any one big expense; things accumulated over time," she said. "I'm not an extreme shopper."

A few years ago, she was unemployed for a stint and supported herself, daughter Jada and Jada's father, who was not able to work for some time. Add in surgery-related medical bills, full-time day care once Mercer did find a job, home repairs and some credit card debt, and the costs piled up.

"I realized, I don't have anyone to fall back on," she said. "I needed to make a pretty aggressive plan and stick with it."

Her first step was saving $1,000 so she could feel a sense of accomplishment early on. Then she removed all her credit cards from her wallet and started paying cash for every purchase - a practice that really forced her to pay attention to her shopping habits.

"You have to think about what you're buying," Mercer said. "You can't just go and whimsically make purchases. I pay cash for it, or I don't buy it."

She refinanced her house to decrease her monthly mortgage payment and started paying off bills. Mercer chooses to pay off the lowest bill first to get a quicker sense of gratification and momentum.

It also has helped that Jada, now 6, is in school full time rather than day care.

Mercer has heightened coupon clipping to an art form.

"I have learned so much this past year, including there are tons of free or very inexpensive things around town on any given day. Treat a coupon like money and you can easily feed yourself and a 6-year-old for $10 or less each week," she said.

Keeping goal in mind helps

Some unexpected expenditures did pop up this year. However, using her new mind-set, Mercer handled them differently than she previously would have. For instance, her clothes dryer broke down. Instead of buying a new one, she found a used dryer in good condition for $50.

And even though she has made remarkable progress this year, there are still moments of weakness, she said. While checking out the prices of a new dryer, she found a leather sectional couch, a purchase she had been contemplating for years.

Instead of running up to the service counter, she made a call to Cramer, who "talked her off the ledge."

"She reminded me of how close I was to achieving my goal, and if I wanted that couch bad enough, that I should start saving for it so I don't have to put it on a credit card," Mercer said. "Without my support system, I might be enjoying my new couch, but hating myself for taking a big setback in my overall plan."

AT A GLANCE

Wauwatosa resident Julie Mercer and her sisters got together this holiday season and talked about some of the best deals they've gotten by taking advantage of coupons or promotions.

• Ride the bus: Using MegaBus.com - you can take a bus to Chicago for $1.50 one way

• Look for coupons on product packaging: Tombstone Pizza had a rebate for money toward a gas/electric bill. Mercer sent in 12 UPCs for $15 off her We Energies bill.

• Look for online coupons: There are coupon codes out there on the Internet for free shipping or a percentage off.

• Alternative dinner and a movie plans: Redbox has DVD rental machines at many grocery stores. Rentals cost $1 per night. Sign up for text alerts and the first Monday of the month you will receive a code for a free rental that day.

• Use social media sites: Have a favorite company or brand? Sign up to follow it on Facebook or Twitter. As fans, people can get coupons and freebies.

• Get rewarded for shopping: Many retailers and gas stations offer reward programs that provide exclusive coupons and gift certificates after spending so much money. Just make sure to use the ones that don't charge for membership.

• Let companies know how they're doing: Many times if you write a company a letter - good, bad or otherwise - they will send you coupons for free products.