Dave Ramsey Demands Major Lifestyle Changes From Two Families

June 18, 2009— -- The economic recession has changed the lives of millions of Americans, but adapting to a new financial situation can be easier said than done. For two families, pay cuts and unemployment mean making behavioral and lifestyle changes that aren't easy.

Brad Wiggins, 53, an attorney, father of seven and grandfather of two who lives in Santa Clara, Calif., has taken a substantial income hit -- 62 percent.

"When the pay cut came, we were in shock," he said. "We really didn't know how we were going to make it. It took us a while to adjust."

Despite making significant household budget cuts, Brad and his wife Anita are still almost $1,700 a month over budget, with little savings left to live on. Brad said "it sure feels like" his finances are running his life, and his wife agreed.

"Our new grandbaby was born; I so wanted to get just, like, little blankets and, you know, just fill my cart up to take things and go get my daughter a new outfit or, you know, things that she would like," said Anita Wiggins, choking up. "And I wasn't able to do that."

The Bell family of Houston, Texas, has also seen their lifestyle change due to the recession. Latavious Bell, a computer engineer, has been out of work for two months.

"I'm still waiting, still calling," he said. "I mean, the jobs are just not there now."

The family still has the teaching salary of Latavious's wife Tawayna to rely on, as well as some savings, but with their household income down 75 percent, Tawanya has serious concerns about their spending habits.

And while she has cut back when it comes to the couple's two children, Latavious has found that to be difficult.

"I say no, but Daddy says yes," Tawayna said.

"It's kind of like this dream, to be able to provide for the family," Latavious said. "Anything they wanted. And that makes me feel that I haven't done what I needed to do, as, as a man, to provide for my family, you know. "

When asked if he had gone beyond providing for his children to spoiling them, he said, "They deserve to be spoiled," but admitted that "I'm still in the spoiling mode, and reality is right here. Something has to change."

Financial advisor Dave Ramsey agreed to give both families a financial check-up, and they agreed to abide by his advice and make some drastic lifestyle changes.

Dave Ramsey's Expert Advice for the Wiggins Family

Refinance Mortgage

"The first thing I saw when I looked at your numbers was the refinance is necessary," he told the Wiggins family. "If you can refinance that first mortgage and get the overall payment down, we will get this thing where you can breathe a little bit more."

Work Together to Increase Household Income

"We've also got to work on getting the household income up," Ramsey said. "We are trying to eat. We are trying to pay bills. We are trying to stay balanced. And so, Anita, that means you. Anything anybody in this family can do to bring in some money is a great idea. Everybody put their shoulder to the wheel and push this thing and you can get past this rough spot."

Anita Wiggins said she wasn't sure how to get back into the job market after spending time taking care of her children.

"Basically, I've been a mom," she said. "I don't have a resume, that's, you know. I mean, I can do carpool, I can cook, I can do a million things at once as far as, you know, I can answer phones, but you know, my computer skills aren't great."

But she said, despite her hesitation, she's worried about her family and willing to look for work. "I'll absolutely go out and look."

Cut Costs

Ramsey said, despite the cuts the family had already made to their expenses, "if we are trying to balance a budget, you've got to win death by 1,000 cuts. That means that all of those little cuts matter. No gift giving. I'm not suggesting you never give again, that you never pay a kid's rent again, that you never help out again with seven kids. But in this window, every dollar, every nickel that we can squeeze out of this, matters."

For Anita Wiggins, the thought of not sending gifts to her children and grandchildren was tough to swallow.

"It makes me sad to have it not be a possibility," she said, but agreed that it was necessary.

Dave Ramsey's Expert Advice for the Bell Family

Find Free Summer Fun

For the Bell family, Ramsey said it was important for them to discuss the situation with their children and introduce the word "no" to their vocabulary.

"The kids are the hardest place to cut because they are so sweet and they've got those big eyes and they look at you," he said, but added children don't need gifts to have fun. "I mean, it's amazing what a kid can turn into a game if you let them. It's we parents that have decided that we have to spend a bunch of money for something to be fun ... find a couple of free things that you can do that are entertaining for the kids without the normal spending process that they've become accustomed to."

Establish Job Search With Deadlines

"Latavious ... we've really got to address this career issue," he said. "You've got to slice the ego down. I know you are looking for a job, but I mean, you are going to look for a job. And you are going to lay a deadline out there: if I haven't landed the big job, I'm going to start picking up little jobs. All kinds of things. Whether it's stuff in your field or it's just some part-time contract work, all the way down to delivering pizzas and parking cars, do it. You should not be relaxed. You should be in gear. "

"The stuff he was saying was definitely me to 100 percent," Bell said. "Kind of cocky ... and kind of nonchalant about getting a job. Not really aggressive with it, and that shouldn't be."

Better Budgeting: No Shopping or Eating Out

"Lastly, there's some cuts that you guys can make, and this is very, very important that you do this," Ramsey said. "I mean $400 for ATM and it goes where? We don't know!"

Ramsey also said the family must cut back on eating out at fast food restaurants up to seven times a week, which costs them approximately $220 weekly.

"That's something we could down on," Tawayna said, and her husband agreed.

"Deal with the kids on that, OK?" he joked.

"I gave you some tough suggestions but they are very, very doable, and it is going to be better for you in the long run," Ramsey said. "Hey, adults devise a plan and follow it. Children do what feels good. It's time to be grown ups. You can do this and you'll be glad you did."