Happy New Year! In 2014, Marketplace Money will follow a few listeners from around the country who’ve resolved to make over their personal finance lives. We’ll be checking up on their financial New Year’s resolutions periodically throughout the year and see if they’re achieving their goals!
Name: Melissa, 39 and Joshua, 27
Family: Daughter, 14 months old
Location: Oakland, Calif.
Resolutions: “Break that paycheck-to-paycheck mentality. We’re starting to make money, we’re becoming more financially secure, but we’re still living like our paychecks are going to evaporate into dust if we don’t spend our money.”
“We don’t know what to do with our extra income. Do we pay off old debt?” Their combined student loan debt is at $70,000 at 6.3 percent interest, and they also have $7,000 credit card debt that is heading into collections. “Do we start our daughter’s college savings account? We’re not quite sure what to do.”
“We could probably, if we really scrimped, could get $300-400 in savings.” They also have zero retirement savings.
Carmen Says: “We all want to give our kids a great education. The trouble is, when you give an education to a child at the expense of your needs, your kid is going to end up depending on you. And that is actually a situation that several million people are finding themselves in now where they’re taking care of aging parents … one of the biggest gifts you can give a child is to make sure that you are financially stable, so they can start their adult life without that added burden.”
Carmen’s next suggestion, head to NFCC.org and find a non-profit credit counselor. “Find a non-profit credit counselor. What you don’t want to do is you don’t want to head over to things called debt repair or something like that.”
Carmen’s resolution prescription: “You’ve got about $300 to play with. I would put $100 a month in cash savings account, so that will keep your head above water, and you won’t have to borrow any more if the car breaks down. Two: start taking another 100 to 150 to start paying off that debt. If you have any money left over, go ahead and put some of that money in a pre-tax, your employer’s savings accounts, 401k’s. But that credit card debt, it may be a little while before you can save for retirement in a full way.”
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