A monkey off their back

Danielle Rhoades still remembers the taste of debt: peanut butter and jelly sandwiches and tuna fish.

That's mainly what she subsisted on for a year - after living more extravagantly during her first year in New York and racking up a $10,000 balance on her credit card.

Even with a $40,000 annual salary, she could barely afford the $650 minimum monthly payment on her card. In her early 20s, Ms. Rhoades found herself plunged into a place that's become all too familiar for at least 6 million Americans: a deep hole of credit-card debt. [Editor's note: The original version misstated the interest charges on Danielle Rhoades's credit card.]

For that small but growing group of people, Rhoades's story and the other profiles below offer hope. The debt monkey can be tamed and even eliminated by taking basic steps and sticking to a plan. The road is often difficult, but these consumers - debt-free or about to become so - say the rewards more than make up for the hardships.

Feeling the squeeze, Rhoades sought help from a credit-counseling agency. But after a few months, the agency failed to keep its promise to lower her payments because the debt was with a single creditor. By then, her interest rate had hit 24 percent.

So Rhoades gathered the courage to tell her father. In January last year, he let her transfer the balance to a card in his name that offered zero interest for a year. Setting a goal to pay it all off in that year, she drew up a budget. "A debt seems overwhelming until you lay it out on paper," Rhoades says in a phone interview.

Her spreadsheet listed her rent, other fixed expenses, and monthly debt payments; it also spelled out how much she had left for food and other living expenses. "I would carry that chart around and look at it whenever I wanted anything," she recalls.

She often had to live on less than $300 a month. "One month it was negative $80, and [my parents] gave me $200," she says. "They were very generous, but they very much wanted me to feel the pain and remember it."

The winter months were the roughest, because she couldn't afford to dine out or take in a movie. But some aspects were positive: "When you don't have any money to spend, it's amazing how much more time you have.... I took up running; I lost weight; I learned how to knit; I made my Christmas presents.

"By last November, I was almost ecstatic." Her debt had dipped below $2,000. "I was never so proud as the day I paid it off," she adds. "It was March 15 when I actually had my whole paycheck to spend. I took my money and bought a plane ticket to see my boyfriend in England - and I spent it all!"

Still, Rhoades has learned a few lessons from her year as a pauper. She sets a strict limit when shopping for clothes. She doesn't spend money for a social outing more than once a week. And if she gets a new credit card, she insists she'll cap it at $500.

"I'm terrified of being in debt. It was so difficult that I think it's going to always stay with me. I feel like one of those old people who tell you about the Depression - about eating a carrot even though it's too limp."

Vige Barrie recalls the endless phone calls from collectors. They were coming after the $60,000 she owed on more than 10 credit cards. The worst part: She hadn't even been the one saying "Charge it!"

Her husband had made and lost millions of dollars, she says, and during the last few years of their marriage, she let him use her cards because he had declared bankruptcy. "His line was always, 'I'll make another deal and pay this off in one fell swoop,' " she says in a phone interview from Clinton, N.Y., where she works as a media consultant for colleges and nonprofit organizations.

"I felt like I was going to be an indentured servant for my life to those credit cards," Ms. Barrie says. Living in Dallas at the time, she knew that many people were declaring bankruptcy. But she didn't feel right about walking away from the debt. (Since that time - the mid 1990s - the annual national bankruptcy rate has risen from about 1.4 million to 1.6 million.)

Barrie negotiated with some creditors on her own at first. Then a friend recommended the local Consumer Credit Counseling Service. She thought it would be humiliating, but found that the counselors "were very graceful and very caring."

After examining her income, expenses, and debt, "they tell how much you're going to live on, which is vaguely horrifying," Barrie says with a laugh. They also negotiate with creditors to reduce or eliminate finance charges.

For five years, starting in 1996, she made a monthly payment of $1,500 to $2,000. She cut coupons, bought clothes at second-hand stores, and read books and magazines from the library.

"You learn what you can and cannot do without ... and things become less important," she recalls. "When I went out to dinner with friends, I'd order a cup of soup, and I know they thought it was pitiful, but for me ... the real issue was not eating food but getting together with friends."

After starting a second job, she met with her counselor and sped up her payments. The agency was a buoy of support she would recommend to anyone, she says.

Fortunately, Barrie had always kept one card up to date. Now she has an additional card and pays both in full every month. If she doesn't, she knows what could happen, and says emphatically, "I never want to go there again."

Thousands of young adults could tell a story much like Paul Canady's: "I got my first credit card by filling out an application at the university center, because they were giving away free T-shirts. I didn't think I'd actually get the credit card, and lo and behold, not only did I get it, but it also came with a $2,000 limit.... In retrospect, that's just absolutely ridiculous.

"I tried to be responsible, but it led to a lot of impulse buys - a lot of gas for road trips. And when that one was almost maxed out, there was another credit-card offer, another T-shirt....

"The only word for it is a trap. The next thing you know, the minimum [required payment] is less than what they're charging you in interest each month.... It can be really depressing and scary, being 22 years old and realizing you are in way over your head."

That's where Mr. Canady was six years ago - tethered to multiple credit-card companies by the $15,000 he owed. About a year out of college, he looked up credit-counseling agencies online and got himself into a debt-management plan.

"It took me a while to really ... stop and think, OK, how much do I have to spend on a new suit for work?" Canady says in a phone interview. "There was this sort of awakening of, 'I have to do better at this,' but ... it didn't happen overnight. There were still plenty of months where I'd spend too much in one area and be pinching pennies to do laundry."

A few years into it, Canady mustered the discipline to pay for Christmas presents entirely in cash. "I spent less on gifts, but I didn't spend more than I had."

He says his biggest mistake was not disclosing his debts before getting married a year ago. His wife had neglected to mention several thousand dollars of her own debt, too. Once they got past the fight that erupted when they found out, they started working together to erase the red ink as fast as they could.

Now working as a youth minister in Washington, D.C., Canady says he's just 18 months shy of having it all paid off. "I've got all the credit-card statements that say zero balance. I'm thinking about framing them in a montage or something, to say it's possible to get out."

Owing roughly $100,000 was not Susan's biggest problem. Underlying her distress was the shame of not being able to support herself and her daughter, despite having a doctorate and nursing and medical degrees.

"I was a mess," says Susan (not her real name) in a phone interview from Los Angeles. "I borrowed money - from individuals and from student loans - with no idea how I'd pay them back."

The debt and the shame drove her into drug use and isolation. When she was on the verge of suicide, her therapist - whom she hadn't paid for a year - insisted she attend a Debtors Anonymous meeting. "I went to DA and I was amazed, because there were people there who were telling my story," Susan says. "I took some very simple steps: I started writing my money down - what I spent, what I brought in.... And bit by bit, my life changed."

The first challenge was to stop incurring any new debt. "I remember somebody giving me a quarter to put in the parking meter so I could attend another meeting.... I stopped using my gas card, and people gave me money for gas ... and for food.... I had been humbled enough to be able to accept help with the right attitude."

The meetings also gave Susan the strength to face the credit-card companies and negotiate terms to pay them back. Now, 12 years later, she's paid off her credit cards, and she's been using only debit cards since joining DA. She owns her car outright and is steadily paying down her student loans (which were the bulk of her debt) and a few personal loans. She won't guess how long it will take to finish, but says the major transformation is that obsessive worry was long ago replaced by confidence.

"My credit rating is golden.... It's really quite a miracle!" Susan says. "I also have a profound belief in a higher power, which was never there. It is basically a spiritual program, and that's what we come to rely on."

Susan continues to attend DA meetings, to assure people that their lives can be transformed, and to maintain her own vigilance. "A lot of people stop going to meetings after they suddenly find themselves in much better financial condition... and then they're back a year later saying, 'I don't know what happened.' "

• Part one ran Aug. 16.