Laid off & in debt.

Q I was laid off two years ago. My husband has been working overtime trying to make up for the loss [in income]. We need to figure out how to cut our expenses. I prefer to do freelance work rather than go back into the corporate environment, but I've been unsuccessful [so far]. In the meantime we're $30,000 in debt. Any advice?

--T. Samuels

Via the Internet 

A When two-income families lose one stream of income, it always creates a hardship. Tough choices must be made.

First, your "sacrifice" must be to go back to work to help eliminate that $30,000 debt before your family drowns in interest charges. Your preference to do freelance work hasn't produced any income for two years. And since you never said you couldn't get another corporate job, it would appear that you've chosen to avoid corporate America. That was a bad choice. AII that has done is help you accumulate debt.

Next, cut up or lock up your credit cards and refrain from creating any new debt. Pay off all smaller balances in full immediately, then work on high interest-rate balances.

Third, begin cutting costs by suspending the purchase of new clothes and luxury items, look for lower cost phone service, eliminate cable TV, trim leisure activities, and eat out less. Buy food items on sale and conserve energy--you're really looking at a temporary lifestyle change.

Finally, your family needs protection in case you or your husband should fall ill. Make sure you have disability insurance that will pay enough to sustain your obligations. It'll take some work, but things can improve.

--Matthew S. Scott