August 18th, 2011

Community Karma: Weathering a Financial Storm

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**This summer, we’re excited to present “Community Karma,”a weekly series featuring people just like you sharing their financial stories, personal money tips, how they over overcame hardships, and more!**

If anybody knows how to weather the storms of financial crisis, it’s Amy Gatliff.

When she was young, her family lived on a school bus while her father built the family home. When the home was livable, they moved in. The house lacked indoor plumbing, so the family had to get creative. “When it came time for a bath, we kids would stand on the side porch steps in our underclothes for Mom to wash us down,” Amy describes.

As an adult, Amy married and had three children. The Gatliffs bought a home in 2002. But soon, a storm started brewing.

Amy’s Storm

In 2003, Amy was forced to stop working due to an on-the-job injury. That same year, her husband was laid off. When he got a new job, he was making $6 less an hour and the family suffered an income drop of $40,000 that year.

Amy knew what she had to do: she had to get a job to help with the family’s expenses. When she did, she found that nearly everything she earned went to daycare costs for her three children. After paying for daycare, Amy’s take-home amount of $100 per month wasn’t enough to close any budget gaps. So she stopped working.

But the expenses kept piling up, from mortgage payments to allergy and asthma medicine for the kids and Amy’s husband. Even though the family managed to keep up with their mortgage payments, other debts became too much and they declared bankruptcy in the Fall of 2005.

Bankruptcy caused the Gatliffs to drastically change the way they lived and managed their money. Along the way, Amy, now 37, learned quite a few lessons as shared in her book, “The Power to Never Give Up.” Here she shares some of her favorite pieces of advice with Credit Karma, in the hope that those going through financial struggles continue to persevere.

How To Survive the Storm

Don’t depend on two incomes. The Gatliffs were used to being a two-income family, so they didn’t bother to budget or put money away into savings. When the layoffs and pay cuts started, it was a struggle they were completely unprepared for. Amy advises to live below your means by not getting used to two incomes and putting money away for a rainy day. If a financial storm comes, you’ll be better prepared.

Expect unexpected budget needs. In other words, have some savings put away. Amy thought that medical expenses were the last thing she would need to worry about at such a young age. She was healthy and her children were healthy; what could go wrong? But when all three of her kids developed allergies and asthma, she realized how expensive the monthly costs were. Budget for the unexpected by setting aside some savings and leaving it untouched.

Look for other opportunities. Finding creative ways to make money can be a big help financially and emotionally when coming out of bankruptcy. Amy found writing. In fact, she received her book contract on the same day her husband was laid off for the third time. Find something—anything—you can do to make a little extra cash on the side to get you out of your crisis quicker.

It’s OK to mourn. When the Gatliffs hit rock-bottom, Amy felt as if she were mourning the loss of a loved one. The process continued as she realized she had to sacrifice a lot of little things to get back on track. Know that it’s all right to mourn your struggles for a little while. Find a friend or family member you can confide in until you’re ready to start working toward getting back on track.

It won’t last forever. Amy and her husband both have credit scores hovering around 700. They were able to purchase a new home in 2007, just two years after their bankruptcy. They’re rebuilding their ailing credit and finances with their new home and healthy financial habits. They’re proving it can be done. If you’re going through a similar situation, know that it takes time, discipline and sacrifice, “Sometimes, we have to change before we see our situation change,” Amy says.

Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

One Comment

  1. Great story of survival and great tips. Things can change so quickly that it is best to be prepared to weather the storm.

    Thank you for your story!

    Tracy

    Tracy LaFlair at 11:17 am on August 29, 2011

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