Mark and Jessica Stone
Then: Renters in February 2008, the Stones wanted to buy their first home and save for their retirement. That was a stretch on Mark's $68,000 public teacher's salary (now $69,000) with two children at home and another child on the way. The planner recommended that they buy through a short sale or foreclosure and that Jessica increase her monthly income from teaching dance to children to $1,000 from $300. She urged them to continue living very frugally.
Now: Jessica, 32, gave birth to the couple's third child, and the family bought a town home in Huntington Beach through a short sale for $294,500. Their low income qualified them for an affordable loan from the state. The Stones cut back their spending even further, paid off their credit card debt and built up an emergency reserve of $10,000. Jessica has stopped teaching dance but plans to resume doing so eventually.
New habits: Mark, 33, gave up his cellphone and began carpooling to work. They rely on friends at church to help out with child care for their kids. They halved their monthly tithe to their church and cut out most movie-going. They spend their free time at parks and the beach. Jessica does many errands on foot. Every month, they put $25 a month into a college savings plan for each child. The Stones also save $100 for their retirement.
"It seemed like it worked out perfectly for us," Mark Stone said. "We feel pretty blessed."
-- Ann Marsh
Then: Hawks, 48, had made as much as $400,000 a year as a franchise consultant but was laid off shortly before her money makeover in June 2007. The single mother didn't have time to attend to her finances. She didn't open bank statements and couldn't say whether her bank account contained $10,000 or $100,000. She had lost 16 years of appreciation in one $100,000 retirement account by not managing it.
With only $180,000 saved, she needed much more to retire. The planner urged her to go back to full-time employment for the benefits and matching 401(k) contributions. The planner also wanted her to stop renting an expensive home and buy a smaller place.
Now: Hawks traded freelance income for a reliable salary with a large company. She retained a planner to help negotiate a return to full-time employment at an annual income of $200,000. That package contains all the benefits the makeover planner wanted her to have, including a 401(k) match.
To maintain stability for her son, Hawks did not take the planner's advice to move and stayed in her home.
New habits: Hawks keeps track of her finances regularly. She outsources some work to an accountant because of her busy schedule.
"I now have a sense of what is where," Hawks said. The makeover "has been a catalyst for some really positive change."
-- Ann Marsh
Then: In June, Medina, 26, was aggressively saving $800 a month for retirement but only had $1,700 in regular savings. That wasn't enough to achieve his goal of buying a first home, especially with $1,100 in credit card debt. The planner advised him to redirect his retirement savings temporarily and build up $15,000 for a down payment. The planner also told him not to buy a home for more than $350,000. She urged the rookie Los Angeles police officer and Iraq veteran to apply his experience in strategic planning to his finances.
Now: Medina took the planner's advice to heart. He canceled plans for a trip to Italy with his girlfriend and diverted his retirement saving toward the house fund. He worked overtime hours and paid off his credit card debt. Adding in a $5,000 signing bonus, Medina saved $17,000 quickly.
Less than six months after his makeover, he bought a three-bedroom home for $352,000. It has become the unofficial home base for his extended family. More than 20 people celebrated New Year's Eve there. The home also enabled Medina to adopt two rescue dogs.
Medina is building his savings account back up and hopes to take advantage of the depressed real estate market by buying a second investment property before the end of the year.
New habits: Medina approaches saving as if it were a game and tries to see how much he can avoid spending every day. He brings his lunch to work. He cooks at home and bought an energy-saving refrigerator. He's uprooting non-native plants at his home and replacing them with water-sparing natives.
Instead of going to Italy, Medina and his girlfriend took a trip up the coast to Monterey. He has invited two friends to live with him to help cover the mortgage payment.
"If I wanted to accomplish my goals, I had to be very strict," Medina said. "I like saving money now. I clip coupons when I buy groceries, which is kind of fun."
-- Ann Marsh
Then: In October 2007, Sausser was at a breaking point. His expenses exceeded his income by about $3,000 a month. The payments on $35,000 in credit card debt were hard to sustain. He was unsure whether he should stay in his Van Nuys home or pursue his dream of moving with his partner to Palm Springs.
An AIDS survivor, Sausser, 47, never expected that he'd live to see retirement. He has struggled with high medical bills for almost 20 years.
The planner told Sausser that he needed to stop increasing his debt. She urged him to sell the Van Nuys home and move to a smaller, more affordable place in the desert. She recommended that he negotiate with credit card companies to bring down his debt and that he give away one or two of his five pets. She also wanted him to stop spending large sums of money to renovate his home.
Now: Sausser and his partner, Rodrigo Rodarte, realized their dream of moving to the desert, but not on the terms the planner prescribed. The housing market dropped too far to sell the Van Nuys home, so Sausser rented it out. Still, he loses $800 a month overall on the rental.
But he has cut expenses elsewhere so they no longer exceed his income. Sausser managed to consolidate and restructure $18,000 of his credit debt with zero interest. He stopped spending to renovate the house. He is in the process of modifying his mortgage to bring the monthly payments down. He did not take the planner's advice to give away any of his pets.
New habits: Sausser and Rodarte, also an AIDS survivor, buy their clothes at a thrift store. They spend some of their free time volunteering at a local gay and lesbian film festival. Sausser feels much healthier in the clean air of the desert, where he can see mountains every day.
"What was most helpful was looking at the big picture of where I stood," Sausser said. "It gave us the impetus to move forward no matter what."
-- Ann Marsh
Then: In August, Baker was struggling to keep up with payments on $104,000 in debt on her annual income of $111,000. Although it was largely in low-interest student loans, the special education teacher's debt load included $5,500 owed for federal taxes and $2,400 for a loan at a 99.25% interest rate.
Her debts kept her from saving for retirement, buying the home she rents from her mother and returning to college for a doctorate in education. Baker also was paying nearly $15,000 a year to send her older son to college out of state and $6,420 to send her younger son to private Catholic school.
The planner urged her to limit college support, getting her older son to work and take out loans, and to send her younger son to public school. The planner also urged Baker to prioritize debt repayments, work to bring up her very low 550 credit score, hold off her college plans and wait to buy her mother's home until she proved she could make a budget and stick to it every month.
Now: Baker, 39, has put some needed changes into place. She paid off the high-interest loan, reduced her IRS debt to $4,900 and cut her total debt to $99,000. She also contacted creditors to bring her credit score up to 615.
She shared her financial situation with her sons. Although she still sends her younger son to private school, she has dropped the amount she pays for her older son, who has moved home and goes to a local community college. He now works part-time and pays the rest of his expenses himself.
Baker has saved $2,000 toward her goal of $15,000, which the planner said she needed before buying her mother's home.
New habits: Baker, who used to pay little attention to her finances, now sticks to a budget. She and her sons recently held a garage sale to pay for college books. The family takes bottles and cans to the recycling center, and once used the money they received to celebrate the younger boy's positive school progress reports with dinner at a restaurant. Baker no longer uses her credit cards.
"I'm a much more disciplined person," Baker said. "I basically budget so there is no money that is not accounted for."
-- Ann Marsh
Then: Golightly, 46, dreamed of quitting his day job as a public relations specialist for a Southern California aerospace company and becoming a Hollywood screenwriter. When he wasn't working, he spent about 20 hours a week writing works such as movie scripts and short stories.
But in November 2007, Golightly wasn't sure whether he could afford the change. The planners told him not to quit his day job. They recommended that he work for 20 more years to secure his retirement. They also advised him to re-balance his portfolio to get the most out of his savings.
Now: Instead of heading for the bright lights, Golightly stayed at work. But layoffs are looming and he is cutting back his expenses, preparing for the worst. Meanwhile, he's still writing. Although he's not planning to forgo full-time work any time soon, he has partnered with another writer to pen a sitcom, and he recently optioned one of his screenplays to a producer for a nominal fee.
New habits: Golightly refinanced the $215,000 mortgage on his Long Beach condominium into a 30-year fixed loan at a 4.625% interest rate. The move saved him $250 a month. He also canceled his cable service as well as subscriptions to literary magazines he rarely read. He switched from high-priced Italian coffee to a grocery store brand. Altogether, Golightly has shaved about $500 in monthly expenses, or $6,000 annually.
He also has followed much of the planners' advice. He re-balanced his investment portfolio to include more small company and international stocks. He increased his contributions to his 401(k) and stopped plowing so much of his money into his company's stock. Even though his retirement accounts have lost close to 40% over the last year, Golightly feels more confident about his investments.
"I'm in it for the long haul," he said.
-- Kelly Barron
Judy and Steve Haibach
Then: Judy, 56, a nurse, and Steve, 57, a Southern California Gas Co. technician, became middle-class millionaires through a lifetime of scrimping and saving. In March 2008, they were wondering how to best invest the $1.7 million they had squirreled away in savings and whether they could realize their dream of retiring early to a new home in Northern California. The planner said the Haibachs could retire and had enough money to last their lifetimes, provided that they diversified their portfolio and didn't move money in and out of the stock market.
Now: The plummeting stock market almost halved the nearly $900,000 in their 401(k) accounts. Another bit of bad luck: Two days before he planned to file for retirement, Steve slipped off a ladder while trimming trees, shattering his heel. The accident put him on disability for nearly nine months and delayed his retirement indefinitely.
New habits: Steve intends to return to work as soon as his doctors give him the OK, although he plans to retire sometime this year. The stock market decline has forced the couple to revise their goals. They decided not to buy a home in Northern California. Instead, they will redo the kitchen in their Moorpark home and stay put.
Nervous about declines in their savings, they pulled the remaining $500,000 in their retirement accounts out of the stock market and put it in a money market account. They also refinanced their home loan and started paying an extra $1,000 a month on it.
The Haibachs have since reinvested their retirement money in the stock market, but they missed some of the recent gains.
"We swore we'd never do that again," Judy said about their panicked decision to pull money out of the market.
-- Kelly Barron
Then: After a painful divorce that wiped him out financially, Drake, 31, found himself piling on debt. By January 2008, he was spending $2,000 more a month than he earned, splurging on $100 seafood restaurant meals and weekend trips in his gas-guzzling truck. By living beyond his means, Drake added nearly $54,000 of debt on six different credit cards, a bank loan and borrowings from his 401(k).
The planner said Drake needed to slash expenses by $3,000 monthly and plow his money into reducing his credit card debt while slowly chipping away at his remaining borrowings.
Now: Drake has changed many of the bad habits that got him into financial trouble. He's reduced his credit card debt and is working on paying down his bank loan and 401(k) borrowings. He'll need to stay on top of his budget even more in the coming months because he and his new wife, Jodi, are expecting their first child in June.
New habits: Drake cut his expenses by forgoing dinners out and weekend getaways. He and his wife closely monitor their spending, clipping coupons for the grocery store and swearing off frivolous purchases. A boost in his pay also helped reduce debt. He earned nearly $15,000 in commissions over the last year as a product manager at a microfiche storage and furniture company in Whittier. His credit card debt has shrunk from $29,000 to about $12,000. Meanwhile, he has paid down his $16,000 bank loan to $9,000 and his 401(k) borrowings from $9,000 to $6,400.
"If I don't have the cash, I don't spend the money," he said.
-- Kelly Barron