We reached out to experts on debt and assisting indebted individuals to ask them—how did our contestants do on the first challenge? Suzanne Cramer, a Certified Personal Finance Counselor® for CareOne Debt Relief Services, Leslie Tayne, of The Law Offices of Leslie H. Tayne P.C., a law firm dedicated to debt management, debt resolution and bankruptcy avoidance, and Kevin Gallegos of Freedom Financial Network, had the following recommendations and advice:
Matt, my advice to you is to start thinking about your goals and calculating what you will need in order to achieve them. For example, you mentioned a place of your own (will you be renting or purchasing said place?). If you are going to purchase, you should begin to save for the down payment. If renting, the amount you will need will be less, but you must still determine how much you would need for a security deposit.
Jia, I admire your positive outlook on life and your financial situation. From what you have described it appears you are doing what you love and the intrinsic value in that is sometimes worth more than a six-figure paycheck. From what you have told us so far your only debt is a credit card that is used to “cover” you when things are tight. This is a good strategy but only works when the balance is paid in full when the bill comes. Otherwise you may fall victim to high interest rates that snowball as you accrue more debt, thus more interest.
Seth, first, don’t be so hard on yourself. How could you have money put away for retirement, you just finished school and got married! It’s great that you are thinking about future needs but right now you need to get your footing stable. You just got married, moved into a new place and now is the time to start letting the dust settle […] then start saving. Put as much away as possible and limit spending as much as possible with the goal to put everything extra that is not needed for bills away for the future. That future could be just a few years away in terms of buying your first place but nonetheless, save save save! Pay down as much debt as possible to limit liabilities and possible negativities on your credit. It is important to get your finances in order before you get a home and you start planning to have a child!
Tristan, start a law school fund and place whatever monies come your way into that fund. If you eventually decide not to go, what a savings account you’ll have for other goals. I suggest managing debt as you go forward and making sure that your goals don’t become liabilities financially and that you don’t spend more than you earn.
Meghan says she wants to pay down her credit card debt, start saving for retirement, and pay off her college debt – all the right things. Yet she is stuck because she’s a bit overwhelmed by it all. Her response so far is to stay in a state of denial. It’s easier (for the moment) to just “hope to get out of the red and figure it out.”
She made a mistake on missing out on transferring her 401(k). We don’t know how much it was initially, but however much it was—$1 or $1,000—she gave that money away. Most people don’t ever want to give away money. Getting in the habit of not doing so will pay off big-time in years to come.
Meghan would do well to adjust her attitude on her degree and career opportunities! She says she will likely need to “toil in low-paying creative jobs” her whole life. A little research will show her that liberal arts and “creative” degrees have plenty of marketability. The reality is that she has a degree from a well-known, excellent university and a creative mind. It’s up to her to create a life she loves, doing work she loves.
When trying to pay off debt, an individual must focus on needs vs. wants. It is time to start living within her means. Tough love. Sorry, Meghan!
Suzanne is a Certified Personal Finance Counselor® for CareOne Debt Relief Services and is a Social Media Specialist. Suzanne supports the CareOne Community Ask the Expert forums as a coach and writes for A Straight Talk on Debt. You can also follow Suzanne on Twitter @CareOneWorks where she shares the latest debt industry news, and tips to keep your finances in check.
Leslie H. Tayne, Esq.
These comments have been provided by Leslie H. Tayne, Esq., founder and managing director of The Law Offices of Leslie H. Tayne P.C., a law firm dedicated to debt management, debt resolution and bankruptcy avoidance that is based in Melville, NY, White Plains, NY and Mount Kisco, NY. Leslie is a regularly sought out media source and speaker who provides valuable insight and strategies regarding all areas of debt including business, credit, mortgage and student loan. She can be reached at firstname.lastname@example.org. For more information, visit www.attorney-newyork.com.
Kevin Gallegos, Vice President of Phoenix Operations, Freedom Financial Network: Before joining the firm in 2005, Kevin held the position of enrollment sales supervisor for Nationwide Financial Solutions in Tempe, Ariz. He also has served as a business analyst and customer service manager for Chela Education Financing, and customer service manager for Southwest Student Services Corporation, both in Gilbert, Ariz. At Bank One Corporation (formerly Valley National Bank) in Phoenix, he held management and supervisory positions in customer service and transaction processing.