After meeting with Natasha and Zak, I realize that the first step in our journey is likely to be the most difficult. In order for them to pay off their credit cards, build an emergency fund, and eventually be able to afford a potentially higher rent in a different area, stabilizing and improving their cash flow will be vital — either increasing cash inflow (making more) or lowering cash outflow (spending less).
At least for now, spending less is the most viable option, but will also be far from easy. I have asked the family to fill out what they believe they spend on certain items each month (i.e. groceries, commuting, entertainment, etc). The next step is to understand how much they actually spend in these areas.
Experience suggests that they really spend more than they realize. Proving this to themselves will be crucial as they consider lifestyle adjustments in the future. But tracking your spending is often tedious and, as you see the dollar amounts increase, it can be frightening.
I gave a small notebook to Natasha and Zak and asked them to take a couple of minutes each day to jot down what they purchased. After a couple of weeks, we can consolidate that raw data along with their bank and credit card activity (of which there is hopefully none) and begin tracing their spending history. It's going to be hard to maintain focus and discipline during this time so I hope they call me at any time if they need some encouragement.
Next, I'll introduce some tools to help track and understand their spending so we can identify areas to cut down in the future.