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Challenge One Recap: What are you worth?

September 12, 2012
Personal Finance
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So Think You Can Finance begins — and we meet our contestants:

The first challenge had us learning a lot about our contestants – from the brand of sunglasses Tristan recently purchased for himself (Von Zipper Hammerlock) to the number of albums in Meghan’s record collection (400). We now know what Matt would do if the mob was out to break his kneecaps for cash, heard about Seth’s dreams of opening a coffee shop 10-15 years down the road, and found out Jia’s boyfriend is “beardy.”

 But what did we really learn about their net worth?

Overall, our judges thought that the challenges showed spark, creativity and humor—but they were lacking in the number crunching department. After reading these entries, we’d love to have a beer with all these people, but none truly blew us away on the finance side of things.

But that’s okay! This was just the beginning. We didn’t pick these people because they’re all already pros, we picked them because they have some work to do.

Jia’s challenge showed us that she’s not the materialistic type—as you might expect from a Peace Corps alum. She listed intangibles among her assets, like her excellent education and supportive relationship. But she’s no irresponsible hippie: Jia has a mutual fund, short- and long-term savings accounts, a credit card she uses carefully, she makes smart purchasing decisions and she’s thinking about future liabilities like the cost of caring for her parents in their old age. But what about her own retirement? Our judges marked her down for a lack of a retirement savings account. Also she and her boyfriend sound pretty set on marriage—so where was a mention of their joint future financial plans?

Matt answered our question with a question of his own: “I owe the mob a lot of money in 30 days. How much can I get to them before they break my knee-caps?” Using that framework to calculate his net worth, Matt gave us a rundown of his stuff, including a “dorky gaming PC with a glowing alien skull on it,” and $180 in video games. He also told us about how he paid $1,000 a month to live in a “slum” for a summer job—come on, Matt! There was nothing better on Craigslist? The judges liked his financial set up and current healthy income level, but questioned his lack of savings: both for retirement and to cushion the blows of unreliable freelance work.

Tristan did a good job valuing his possessions—his experience working as a thrift store manager while he’s serving in AmeriCorps helped him out there. He also listed a long-term girlfriend and a lake house as his future goals. But he says he wants to law school down the road: our judges questioned whether he’s really thought about what that entails. For him that would mean racking up more student debt. You see, Tristan already has some debt from his undergraduate degree—something he neglected to mention in this challenge. The judges docked him points for that, too.

It was great to see Meghan beginning to take control of her financial situation. Of all the contestants, she has the highest debt level, and seems to be doing the least to manage her money. It’s good to hear she’s trying to curtail her spending, and that while she wants to buy an apartment someday, she knows that her debt load will have to be lessened first. But the judges wondered—does Meghan understand the consequences of not repaying $250,000 in debt? She didn’t really answer that burning question in her response.

Which brings us to our big winner—Seth! He may have a negative net worth, because of student loan debt, but he’s actively taking control of his situation all the time, as well as setting deadlines for himself to get out of debt. But even Seth didn’t completely ace this challenge: the judges asked if he was biting off more than he can chew by deciding to pay off student loan debt, buy a house and start having kids, while at the same time considering opening his own business. Being ambitious is great, but being realistic is better.

That’s it for Challenge One! Check back next week to see how our contestants do with our next challenge: Savings and the Future.