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Getting Out of Debt

Saving Her Way to Financial Freedom

Saving in an emergency fund and living below your means can pay off in the long run.

THEN: Cindy Campbell (pictured at left) appeared in Kiplinger’s twice—first in November 2007, when she shared her strategies for getting out of $7,000 in credit card debt from college and then saving to buy a house at age 25. In 11 Tips to Be a Better Saver, Campbell talked about the importance of building an emergency fund—a lifesaver when she lost her job in 2009 and was out of work for six months. The emergency fund also gave her the freedom to take 16 weeks of unpaid maternity leave after her daughter, Aniyah, was born in 2011.

See Also: The Get-Out-of-Debt Quiz

NOW: Campbell, 36, still lives in the same house and celebrated her sixth anniversary as a legal assistant for a nonprofit in Washington, D.C. And she continues to follow her rules for living the good life: “Living below your means, saving, having an emergency fund, and having little or no credit card debt is the way to go,” she says.

Campbell pays off her credit card bill in full every month. An avid traveler, she has planned trips to Jamaica, the Bahamas and Miami for herself and Aniyah without landing in debt. To save for vacations ahead of time, she earmarks a little money from every paycheck for a “play account.” She starts to plan six months to a year in advance, jumping in to buy tickets when airfares are low. She monitors hotel prices online and reads reviews before making a decision, and she tends to find the best rental car rates through Hotwire. Before traveling to Miami last year, she paid $70 for a discount entertainment card. “I probably did $200 worth of activities in Miami,” she says. “You can preplan your day to get the biggest bang for your buck.”

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Campbell recently completed a major home-improvement project. She used YouTube videos to learn how to do most of the work on her own, with the aid of friends and family—including Aniyah, who helped paint her bedroom pink.

Campbell saves for retirement in her 403(b) plan and benefits from her employer’s contributions. After Aniyah started school and her child-care expenses decreased, Campbell was able to boost her own contribution.

Right now she’s aiming to replenish her emergency fund, which she tapped last year when she had to replace her 2005 Honda Accord. To help her do so, she plans to refinance her mortgage, which will cut her monthly payments by about $200.

Campbell’s longer-term goal is to teach Aniyah how to reach her own goals. “I’ll give her an allowance and let her know things are not free, but you can save to buy them,” she says.

See Also: Proven Tactics to Overcome Big Debts