— dollars & sense
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In debt and looking to save?
Here’s how the experts advise
one young professional.
we're supposed to start
saving and investing our money as early as possi
ble. That’s not news. But how we’re supposed to
save—with the student loans, the credit cards, the
dinners out—that would be a revelation. Like
many of us, Kelli needs to be enlightened. At 25,
she works as an account representative at a staffing
firm in Boston and is struggling to manage her
monthly expenses, much less plan for the future.
Knowing what to tackle first—the mounting cred
it card debt or the 401(k) contribution?—is a puzzle
that everyone has to figure out. “And the sooner you
take control of your finances, the better off you’re
going to be,” says Bob Frick, senior editor at
Kiplingers Personal Finance magazine. In this finan
cial makeover, Frick and Jason Adamic, a financial
consultant at Merrill Lynch, give Kelli all the advice
she needs to get out of debt and into the money.
GETTING EVEN First, a look at Kelli’s portfo
lio: She earns $27,000 a year plus $10,000 in
bonuses. She owes $3,500 on two credit cards, a
beastly $60,000 in student loans, and has approxi
mately $1,650 in monthly expenses (from electric
bills to Banana Republic buys). At the end of the
month, there’s nothing left to invest in savings.
“First and foremost, Kelli needs to tighten her
belt and pay off the credit cards,” Frick says. “You
don’t want to be working for the credit card com
www.experience.com
BY LAURA SWEENEY
ILLUSTRATION BY BRIAN RASZKA
pany.” Moreover, if she is paying only the mini
mum amount due each month, the debt is proba
bly mounting thanks to interest rate charges. Frick
recommends a six-month plan for eliminating the
credit card debt. Where’s the money going to come
from? Kelli’s generous $300 monthly allowance for
clothes is the obvious sacrifice—even if she only
cuts it in half she can make a big dent in her bills.
She can then wipe out the remaining balance with
a chunk of her bonus. For those of us with even
higher balances on the plastic, a longer-term plan