Shelby and Ken Smith

Shelby and Ken Smith

Seattle

Then: Shelby, 32, a King County prosecuting attorney, and Ken, 33, a copier-equipment salesman, enjoyed an income of $110,000 — but carried a debt load of almost $200,000.

Their goal: Get out of debt to save for retirement and college for two kids.

What they've done since: The Smiths' financial picture got more complicated last October, when new baby Olivia joined siblings Cameron, 8, and Sadie, 4. Fortunately, Shelby has been able to use paid maternity leave to stay home for awhile without racking up more debt.

Despite the new addition, the Smiths' cash flow improved with other moves they made. They sold their highly leveraged Central Area fixer-upper, making about $160,000 profit. The sale allowed them to pay off $26,000 in credit-card debt for home remodeling, car loans and a down-payment loan. There was enough left to put 20 percent down on a Ravenna-area house. Though the mortgage payments are higher, their monthly expenses overall are lower because they eliminated the higher-interest debts and paid off debts.

Best tips they got: No more credit-card spending, which means fewer bills each month, and no chance of ending up paying late fees. The couple don't even use a debit card anymore. "That was too easy," Shelby says. "It doesn't even occur to you that you're spending money."

Now they pay cash, and when it's gone, there's no more recreational spending until the next month.

-- Carol Tice