Before Sari Lisch, 36, ended her two-year marriage last year, she had never struggled with debt. With no student loans or mortgage debt hanging over her head, she was able to pay off her credit card in full each month. “I was not someone who spent frivolously, I always knew how much money I had and budgeted,” Lisch told Yahoo Finance.
But after a two-year long custody battle with multiple trials, she found herself drowning in over $50,000 in legal fees. From the income she makes as a full-time graphic designer, she’s doing what she can to chip away at the debt while raising her 2-year-old son alone in New York City.
“I’ve had to really re-evaluate where I spend my money and which categories can be tightened up in expenses, where I’m going to cut,” said Lisch. The biggest chunks of her budget include rent, daycare, food, and the monthly $500 to $700 she spends on Amtrak tickets to transfer her son to his father’s house outside the city.
Turning to online resources for help, she came across Lauren Greutman’s money-saving blog for tips on how to live within her means. A reformed spendaholic, Greutman has become a resource for busy moms looking to reach financial freedom for their families.
From Greutman’s blog, Lisch learned how to prep low-cost meals, make extra money selling things on eBay, and even started a side job coaching people on how to plan nutritious meals. But even after all that, Lisch wasn’t satisfied. At the rate she was going, it would still take a decade to pay down her debt.
So to help her take it one step further, Yahoo Finance coordinated a meeting between Greutman and Lisch. Here in our New York studios, Lisch brought all of her financial documents, including bank and credit card statements, for Greutman to audit her spending situation.
It was an eye-opening exercise for Lisch, who left with a solid plan on how to get debt-free faster. Below are some of Greutman’s top recommendations.
Move out of Manhattan
Because Lisch had to find a home quickly after the divorce, she ended up in an apartment that costs her over 50% of her take-home pay each month. But this one decision is affecting every other spending category in her life, says Greutman. From childcare to groceries, moving out of the city, which is ranked #1 for the highest cost of living in the US, would reduce costs significantly. And with the money she spends on Amtrak — up to $8,500 a year — she could buy a car and drive her son to her ex-husband’s house.
Stop using credit cards
Much to Lisch’s surprise, 70% of her credit card spending was on clothes. After losing a lot of weight, she did admit to buying a few new outfits, but says she thought she was staying within her monthly shopping budget of $100.
“People think that by using credit cards and earning points, they’re actually doing better,” says Greutman. “But even if you’re paying it off in full every month, research shows that using cash helps you spend significantly less each month.”
Beware of overspending online
For online shopping, Greutman always recommends two things. First, set your passwords aside and don’t save them automatically onto your computer because one-click shopping can get you in trouble very quickly. Second, she advises putting your money on a prepaid debit card. That way, if you’re going to spend $100 on Amazon each month, you’ll know when you’ve reached your limit.
Consider doing more freelance work
Adding to the nutritional coaching Lisch is already doing, Greutman recommends that she pick up one or two quick graphic design side-gigs each week. “If you can just pick up $500 worth of jobs each month, you can pay down an extra $6,000 of your debt this year.” Greutman recommends sites like upwork.com, which are perfect for graphic designers and web developers to increase their income.
“Paying down my divorce debt in two years sounds amazing. Lauren brought up a lot of points I never thought about,” said Lisch. “Going forward, I am going to implement cash for clothing and for play money, and I am willing to relocate.”