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NEW YORK (MainStreet) —Paying off your debt can be a lot like losing weight. It's a complete mind game and often a frustratingly Sisyphean process. If you don't agree, you should listen to Natalie Warwick's story*. At 38, Warwick has been there, done that. From seeing poverty in the eye to running a successful bookkeeping business, hers is one inspiring tale you won't want to miss.

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In 1995 as a young, creative yet idealistic teacher, Warwick and her then musician-boyfriend were just starting off their life together. "I worked as an arts educator. I did after school art programs for kids and I loved it," she said. "It was a great job but just didn't pay very well. My ex-boyfriend was a musician who made a decent amount of money back then." Their two girls were born in 1996 and 1998 at which time Natalie took a short break from work to care for her daughters. But things weren't going too well between the couple and by 2000, Natalie and her boyfriend broke things off.

She was now a single mom with two kids and a low paying job. At that time, she made $1400 a month, and her rent was $1200. "It was the cheapest deal, a one bedroom house in suburban Oakland," she said. "I got my friend to make bunk beds for my kids in the closet."

Up until then, she had used her credit cards sparingly. She confessed that they spent a lot of money, sometimes for dumb things, but they rarely charged their credit cards. But now, that changed. She had the benefit of subsidized child and health care. But there were also other expenses like car insurance and occasional car repairs, groceries and other kids' expenses. "After I became a single mom, I was left with so little at the end of the month that I had no option but to put expenses on my credit card," she said. "My kids' father was not in great shape himself and was not able to contribute anything at that time. That was when my struggle with debt really began."

In her first four years of being single, she had added $17,000 to her credit card putting down only the minimum each month. Half of her expenses she believes were genuine and she could not have done anything about them. But the other half she said could have been much less. She remembered that her most foolish expenses were when she was the poorest. "We would go four days in a row eating just Mac and Cheese for dinner and on the fifth day I would say, 'What the heck?' and we would go out and eat at a restaurant," she said. "I would suddenly have an urge to take my daughter shopping, and I would go to the store instead of the thrift shop."

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"I think this is a very common mistake," said Ariadne Horstman, a private client specialist at Sensiba San Filippo Financial Advisers LLC. "People don't realize how much they are spending. They don't realize how tough it's going to be to get out of a bad money situation. It's difficult, but it's important that people learn to live within their means."

In 2004, Natalie got the opportunity to move in with friends in another, cheaper neighborhood. Her rent dropped to $700 per month, but unfortunately her car insurance doubled. "It's funny how the poor suffer," she said. "I had moved just four blocks away, but because the new place was in a bad neighborhood, my car insurance nearly doubled. But I had to keep the car."

The money freed up from the rent was good but still not good enough. Apart from paying more on car insurance, she had to put up money in deposits. So she kept charging her card for things like groceries. She remembered that back in the day, she would shop for groceries using a calculator, just to stay in budget.

Soon, while on one hand she tried to scale down expenses, on the other she was looking at ways to increase her income. She went back to college and got her degree in humanities. While she got grants for tuition, she had to spend on books and material. Again, she swiped her credit card. After all this, however, a degree in humanities didn't get her a high paying job.

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"It was early 2005 and I was at the bottom," she said. "I had to either find a way out or lean on my family's net worth. I really didn't want to do the latter. That's when I took this course that teaches you about the psychology of money. It was a four-month course, and the group met once a month. The instructor helped us explore our relationship with money. We had to answer questions like, 'When did you earn your first money? What did you do with it? Did you talk money at home as kids?' and so on. A lot of us in the group were deeply affected and these questions made us introspect."

This was really the turning point in Warwick's life. life. "Until now I was an artist, activist and social worker," Warwick said. "In my mind, money was the root of evil and I had the idea that if I had enough money for myself, it meant that I was taking it from someone else who needed it. And because of that, I had landed myself in debt and was depriving my children a good upbringing."

While the course helped her become more aware of her relationship with money, Warwick realized that its teachings were difficult to put to practice. She had to work hard to kick old habits, and it took two years before she could get her spending on track. "I would still spend brashly sometimes," Warwick said. "Like once I put down $700 to send my daughters to summer camp. When I think about it now, I think I could have saved that money." With a little help from her sister, she also learned the bookkeeping business and started doing small jobs in that area.

In 2006, her bookkeeping business started building good traction. She decided to completely give up on her career as an arts educator and focus on being a bookkeeper. She moved to Santa Rosa, Calif. At about the same time, the kids' father started contributing as well. He gave her $300 a month toward child support, which gradually went up to $500 by 2009. "My sister told me to start creating cushions," Warwick said. "So I started putting away all the child support money into a separate account that I use for important expenses. I started building a fund for emergencies like car repairs so I don't have to draw on my credit card for those expenses. Today, I have about $900 in there."

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"Creating an emergency fund is the most basic principle of financial planning," Horstman said. "We tell our clients to always keep six to twelve months' expenses in cash before they can even think of spending, so I think this must have been an important step for Natalie."

Today, Warwick has a growing business that helps her make $4,000 to $5,000 a month. Yet, her battles are not over. Her credit card debt is very volatile. In 2010 she had managed to pay down some money and bring it down to $19,000, but soon after she needed some major dental work which she put on her card, shooting her total debt up to $24,000. Today, with all the interest, her debt stands at $27,000, but she has stopped charging it completely.

"Today, I am not out of debt by any means," she said. "My situation is somewhat fragile, but it is much more stable than before and I can pay my bills. I have my emergency cushions which I don't touch. I have good control over my spending. I am strict with my budget to the extent that I review my finances every three days. I never charge my card and even if I do, I pay it off in full. And of course, I continue to put whatever I can toward paying off my outstanding credit card dues."

Today, as a bookkeeper, she helps keep track of other people's money. "The core message I like to give is to understand your relationship with money, the way you think about money," Warwick said. "There were times when as a single mom I did not earn enough and did not live within my means. I could only overcome all that when I went into the deeper psychology of it all."

"One of the biggest mistakes that people make is that they let their emotions override logic," Horstman said. "Secondly, they don't plan and manage their finances. I have seen clients who earn substantially well but are always stressed about not having enough. That's because they don't plan in a systematic way. Everyone should follow some basic mantras – keep money aside for emergencies, don't accumulate high cost debts or if you already have, focus on paying them off. And lastly, start saving early. It will go a long way in building a healthy financial future."

*Name changed to protect identity --Written by Deepa Venkatraghvan for MainStreet--