Regardless of what led them into their own fiscal crises -- accidents, health issues or just bad decisions -- each believes that their personal struggles increase their ability to empathize with their clients. For privacy, we're protecting their identities. But it's not their names that are important -- it's their stories, and the lessons they learned the hard way: Learn to live within your means, pay off your debt, and save, save, save for the emergencies everyone faces.
From Living in His Car to Owning a Home
"At the age of 17, due to an alcohol addiction, I dropped out of college, quit my job, was kicked out of my living arrangement, and moved into the "Crown Victoria Inn" -- aka the backseat of my Ford Crown Victoria. From the ages of 17 to 21 I made not one, but several very bad personal and financial decisions, and then I enlisted in the Wisconsin Army National Guard in hopes that it would turn my life around. It did! But the choices I made during those earlier years greatly impacted my future success. I had trouble finding gainful employment, finding housing, and obtaining any new forms of credit. In fact, it wasn't until this past year that my wife and I were able to obtain a mortgage. When I started working here in 2010 my credit score was a 569 and by March 2013 my score had risen to a 680."
-- R., a credit counselor with Financial Information & Service Center, a Goodwill program
Learning the Wrong Lessons From Dad's Illness
"When I was 16, my father was hospitalized and I had to pay the household bills. Credit cards were the biggest help and a future burden. Eventually he went back to work and started paying down the debt. It was a tough job for a young person, and I didn't do it well, but I did what I could to keep things afloat. Unfortunately, I didn't learn what I needed to. What I did learn was how to leverage good credit to supplement my income once I started to work. I took out credit cards, charged them to the limits, and even with a low, young person's income, I acquired a good amount of debt. A few years later, a friend was working for a consumer credit counseling service and suggested I get help. Not only did I go on a debt management plan, but I was referred to a credit union and refinanced my subprime auto loan from a 25% to a 6% interest rate. After I got out of debt, I applied to work at the credit counseling agency."
-- T., a credit counselor with Consumer Credit Counseling Services
Two Marriages, Two Different Wrong Ways to Deal with Finances
"It took a hard lesson for me to practice what I preach on a daily basis. When I was married, I didn't have to worry about money. I was a stay-at-home mom and anything I wanted I went out and bought. We had a big house, nice cars, and took regular vacations. When I divorced, that was the first time I had to manage my own bills, and I wasn't very good at it. I was getting a nice monthly check from my ex-husband and I went back to work, yet I didn't change my spending behavior.
I dumped the husband, sold everything I had, and moved into a one-bedroom apartment. I enrolled in a debt management plan and am working with the IRS to settle the tax debt. I have two years left before I am completely debt-free, but I have never been happier. I have gotten over having to have 'stuff.' I guess for some people they have to lose everything in order to find out what is really important in life."
-- A., a credit counselor with Apprisen
The Spending Trap
"From 2000 to 2008, I racked up about $15,000 in credit card debt, took out a risky adjustable-rate mortgage, rolled negative equity from one new car into the next (twice!), and used part of my student loan payouts for nonessential expenses. In 2005, I spoke to a credit counselor who recommended a debt management program, but I declined, not wanting to give up the credit cards.
Three years later, I was laid off from a high-paying union job and was forced to liquidate my 401(k) to give myself a 'fresh start,' as I had not made much progress on my debt, and had no emergency savings and no job prospects. After three weeks on unemployment and a brief stint at a temp agency, I responded to an employment ad for ClearPoint Credit Counseling Solutions. After being hired and going through credit counseling training, I realized just how many mistakes I had made over the previous decade."
-- S., a credit counselor with ClearPoint Credit Counseling Solutions
A Little Bad Luck and a Little Bad Judgment
"About a year ago, I was financially fine. My car was paid off; my parents were letting me live in their second home, so my only bills were utilities and my phone. I was a recent college grad working part-time at a bank. But then my car was totaled when it got hit by someone running a stop sign. My insurance check was only $5,500, so I wiped out almost all of my savings, put $12,000 down on a car and borrowed another $5,500 from the dealership. But my insurance company wouldn't pay my medical bills, and the driver's insurance company said I would have to sue them for the money. I had thousands of dollars in medical bills, a new car payment, and needed a crown on one tooth. I took out a loan through the bank where I worked, but two months later my hours were cut.
Once I got a second job, I was working 67 hours a week at two jobs and spending three hours a week at physical therapy. I got rid of my smartphone, got cheaper car insurance, stopped going out, stopped buying things I didn't need, started couponing and only buying things on sale. Then I found a better job as a credit counselor. I still have about a year before I can finally relax, but I have a plan and a time frame. If I would have known what life was going to throw at me, I would have saved more and not bought such an expensive car. But I never gave up, I made sacrifices, and I got help when I needed it."
-- H., a credit counselor at Apprisen
Michele Lerner is a contributing writer for The Motley Fool.