MP Dunleavey

Uncommon Sense

Women in Red: Accountability -- now!

After six months of setbacks and, well, drifting, the members have been ordered to step up and take responsibility for their personal financial situations.

By MP Dunleavey

Editor's note: Join columnist MP Dunleavey and a group of women as they seek to strip away the myths around money, liberate themselves from debt and find financial sanity. Follow the ongoing quest of the Women in Redevery other Wednesday in Dunleavey's column on MSN Money.

Many of you have been wondering: What's up with the Women in Red? Where do we find ourselves midway through our second year?

Up to our necks, biting our nails, tearing our hair -- since you asked.

Although the first year went well, these past six months have been fraught with financial mishaps and setbacks of every description.

"It makes me wonder if it's disappointing for readers who hope to see greater leaps and bounds," Brice said.

I hope not. The WIR mission statement never said that we all have to be financial superheroes. Yet, like anyone else, we have serious goals we'd like to achieve.

How can we keep making progress, I asked myself, despite the inevitable curveballs life throws? Answer: It was time for us to become more accountable.

A new system

When I mentioned the word "accountability" during the last WIR telephone meeting, a giant silence fell upon our chatty little group, squashing the conversation.

Until now, everyone has been on an honor system of sorts: making progress as best they could, in their own way. Which was nice and comfy -- but not terribly effective when the chips are down. Which they are.

While some of the WIR admitted that the idea of being accountable was mildly terrifying, everyone agreed it would help. Never mind how readers feel about our progress, most of the WIR wish they were making steadier progress toward their goals.

Curveball right and left

Here's the movie trailer version of some of the financial drama that has befallen the valiant members of our group:

  • Anna -- After coming off a long maternity leave and working at 80% of her salary for over a year, Anna realized that while the decision to have her husband provide child care did save them money, it didn't cover the loss of his income. They've had to rely on her savings far more than they expected, a situation not helped by recent house and car repairs.

  • Beth -- Her decision to go back to school to become a massage therapist has been successful in every way except financially. Despite student loans and help from family, Beth and her husband and daughter have been living on about 55% of their previous household income. Kudos to her that their car will be paid off in January, but they have put their retirement savings on hold and bit off about $3,000 to $4,000 in new credit card debt.

  • Brice -- After paying off close to $7,000 worth of debt in 2005, Brice was looking forward to making even more progress in 2006 -- until several of her free-lance jobs were canceled. "When I add up all the money I was supposed to earn -- but didn't -- it comes to about $25,000." Ouch. So while Brice has only added a little to her credit card debt, she hasn't made any progress on her other goals and desperately wants to get back on track.

  • Carole -- Thanks to a nasty ski injury that shredded her knee ligament last March, Carole's plan to buy an apartment had to take a backseat to some serious physical therapy. On the bright side, this setback has allowed her to focus on saving more for her down payment and moving costs. She's also realized that going from renting to owning will not only double her monthly expenses, but will require her to make substantial lifestyle changes to cover those lovely unexpected costs that are the privilege of being a homeowner.

  • MP -- As many of you have figured out, the big curveball in my life is that my husband and I are expecting our first child. To my surprise, pre-natal medical and other maternity-related costs have not been so onerous. However, the expense of getting our house ready and taking care of approximately three kazillion loose ends are killing us (the car needs new tires; our health insurance is going up $200 a month; we never paid the sewer installation bill; the dishwasher is broken, ad infinitum). We did have some short-term savings, but they're gone now.

  • Tricia -- The queen of "slow but steady wins the race," Tricia now wonders if she should have taken things a little slower. In her zeal to pay down her credit cards and sock away some retirement savings these past few years since her divorce, Tricia left herself with no savings cushion. So when the transmission gave out on her son's car, her business partner fell seriously ill this summer (slowing sales at their still-struggling consignment shop), and she had to buy a new mower -- among other financial trials -- she ended up taking out a 2.99% loan of $3,000 from one of her credit cards.

Ah, to be young and solvent

It's not that Lyndsey and Stephanie don't have problems, but they both have enjoyed substantial raises in the last year -- and they both have low overhead (no kids or mortgages; only Stephanie has a car loan).

Still, they are both concerned about the fact that with more money coming in they haven't been making greater strides toward their goals.

Lyndsey hasn't really paid much toward her debt, an ongoing hurdle for her. But she did finally open a short-term savings account this month.

Stephanie has also been saving -- she added $1,800 to her short-term account in the past six months. And she paid off a chunk of her car loan. But rather than using the several thousand dollars she gets in commissions each quarter to start up her long-term savings -- or pay off her student loan -- she's been spending it, she guiltily admits.

How to become accountable

In order to embark on a new system of greater accountability, each of us will now take baby steps toward our greater goals each month. "Small steps lead to great success," says Ginita Wall, founder of another successful group-oriented enterprise called The Money Clubs.

  • Anna is planning to sit down with her husband to go over their expenses so they stop dipping into savings -- and use her upcoming raise to rebuild their long-term savings from about $5,000 to $10,000 in the next few months. This month she plans to open a new savings account for short-term savings.

  • Beth aims to keep their expenses steady and not incur more debt until she's working full time again in the spring.

  • Brice calculated that she needs to save $41.66 a week for the next six months to get that $1,000 emergency cushion in place. Long term, she also needs to find ways to steady her income.

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  • Carole needs to calculate what her expenses really look like when she buys her apartment so she can stop worrying that her entire life needs to change. This would free her up to restore her retirement contributions (in order to build her down payment, she dropped her 403(b) savings from $1,000 a month to $100).

  • My husband and I need to rebuild our short-term savings and increase our retirement contributions.

  • Lyndsey plans to be more aggressive paying down her debt. This month she's not only opened her first savings account, she's putting $35 a week into it.

  • This month Stephanie decided to be religious in tracking her expenses. "I feel like I need to start fresh," she says. This will help her make wiser choices about spending and saving, especially paying down her debt.

Second, as you'll see from the charts below, each woman will keep a financial tally of her progress as well. You can check our progress on the Women in Red profile page.

Group power

Ginita Wall, who is also the co-author of "More Than Money, It's Your Life," says that in her experience with the Money Clubs, having people pledge to be accountable to their own personal goals -- in a group setting -- is one of the most powerful ways to make progress.

What you don't want, and what the WIR have been suffering from perhaps, is what Wall calls "the tour group mentality." This happens when people rely on the group leader to take them somewhere, "and they surrender all their own ideas and problem-solving skills."

But now we've all agreed: The tour bus stops here.

 
Women In Red Scorecard     

6 months ago

Today

$ Change

% Change

Anna

Consumer debt

$ -

$ -

$ -

0%

Education debt

$ -

$ -

$ -

0%

Retirement Savings

$ 61,724

$ 66,284

$ 4,560

7.4%

Other Savings

$ 7,350

$ 4,988

$ (2,362)

-32.1%

Overall Change

$ 69,074

$ 71,272

$ 2,198

3.2%

Beth

Consumer debt

$ 11,850

$ 13,427

$ 1,577

13.3%

Education debt

$ -

$ -

$ -

0%

Retirement Savings

$ 70,252

$ 70,990

$ 738

1.1%

Other Savings

$ -

$ -

$ -

0.0%

Overall Change

$ 58,402

$ 57,563

$ (839)

-1.4%

Brice

Consumer debt

$ 11,458

$ 11,700

$ 242

2.1%

Education debt

$ 6,500

$ 6,000

$ (500)

-7.7%

Retirement Savings

$ 7,000

$ 7,000

$ -

0.0%

Other Savings

$ -

$ -

$ -

0.0%

Overall Change

$ (10,958)

$ (10,700)

$ 258

-2.4%

Carole

Consumer debt

$ -

$ -

$ -

0.0%

Education debt

$ -

$ -

$ -

0.0%

Retirement Savings

$ 109,450

$ 110,000

$ 550

0.5%

Other Savings

$ 40,000

$ 45,000

$ 5,000

12.5%

Overall Change

$ 149,450

$ 155,000

$ 5,550

3.7%

Lyndsey

Consumer debt

$ 11,000

$ 9,800

$ (1,200)

-10.9%

Education debt

$ -

$ -

$ -

0.0%

Retirement Savings

$ 10,824

$ 12,592

$ 1,768

16.3%

Other Savings

$ -

$ 70

$ 70

NA

Overall Change

$ (176)

$ 2,862

$ 3,038

NA

MP

Consumer debt

$ 10,782

$ 4,400

$ (6,382)

-59.2%

Education debt

$ -

$ -

$ -

0.0%

Retirement Savings

$ 9,869

$ 10,912

$ 1,043

10.6%

Other Savings

$ -

$ 1,300

$ 1,300

NA

Overall Change

$ (913)

$ 7,812

$ 8,725

NA

Stephanie

Consumer debt

$ 12,000

$ 9,180

$ (2,820)

-23.5%

Education debt

$ 10,850

$ 10,075

$ (775)

-7.1%

Retirement Savings

$ 9,378

$ 10,903

$ 1,525

16.3%

Other Savings

$ 2,000

$ 3,800

$ 1,800

90.0%

Overall Change

$ (11,472)

$ (4,552)

$ 6,920

NA

Tricia

Consumer debt

$ 1,900

$ 4,900

$ 3,000

157.9%

Education debt

$ -

$ -

$ -

0.0%

Retirement Savings

$ 15,008

$ 13,530

$ (1,478)

-9.8%

Other Savings

$ -

$ 429

$ 429

NA

Overall Change

$ 13,108

$ 9,059

$ (4,049)

-30.9%

Published Sept. 18, 2006

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