Where does all that cash really go?

Jane

A single mom with two sons in college and expenses that outstrip her income by a good $1,500, 52-year-old Jane is our most financially challenged member.

• Debt: Not great. Her credit card debt is minimal, but the interest rate is high: 18%.

In addition, she has a $26,000 personal loan to pay off by the end of 2008 (the loan is due in full then). A brave convert to financial sanity, Jane knows she will either have to refinance her condo or sell it to get back in the black.

• Retirement: So-so. Jane is job hunting as we speak. Her goal: A better-paying position that will cover her expenses and help her beef up her struggling retirement account.

• Savings: Eek. Jane didn't have a savings plan when she joined, and she still doesn't. Despite her shortfall (see below), she needs to sock away something to cover unexpected expenses.

• How's that budget going? Better. Jane knows that even though her boyfriend is moving in with her this month and will share the household expenses, it's not a magic bullet. She still will be $300 short each month.

On the big-step-forward front, Jane tracked her expenses and has started to plug some holes (eating out, gifts for friends, helping her sons). She is shooting to cut her grocery bill by at least $200 a month and cut her cable bill by $30. Go, Jane!

• Jane's challenge: While Jane's can-do spirit is inspiring, she is still a long way from TTFC (Taking Total Financial Control). She has Money Plus on her computer and will use it to get a grip on her spending.

Jane

	Spring '06	Fall '06	Spring '07	Fall '07 ($)	$ Chg.	Change (%)
Consumer debt				28,000
Education debt				0
Retirement savings				15,008
Other savings				2,000
Home equity				54,000
Net worth				$43,008

Numbers shown only for the time since joining the Women in Red.

Kimber

A 28-year-old single mom, Kimber joined the group last spring with $29,000 in debt, and I don't think I've ever seen someone make as much financial progress in such a short time. Now, Kimber needs to sustain that momentum.

• Debt: Sticking to her plan, Kimber used a $10,000 medical settlement to pay off her car loan and her credit card. "I have no consumer debt!" she reported with pride.

The bad news: Kimber has lingering medical bills that went into collections, and she hopes to settle those in the coming year for half of what she owes. That's not only a questionable ethical move, but it will leave a big black mark on her credit for the next seven years.

• Retirement: On track! Kimber is contributing the max to her 401(k).

• Savings: Iffy. She's putting money into a Sharebuilder investment account to buy individual stocks. That's great, but she has no other emergency fund. Using her emergency fund to buy stocks could force her to sell at a significant loss if she needs the money in a hurry.

• How's that budget going? Great! Kimber recognized that she needed to cut her overhead, so she moved to a shared house, slashing her rent to $400 from $900.

• Kimber's challenge: While she is on top of her expenses, she isn't handling the extra cash from her rent reduction wisely. With an 18-month-old -- and a longer commute taking a toll on the car -- Kimber needs to be set aside funds for life's little emergencies where she can access them easily.

Kimber

	Spring '06	Fall '06	Spring '07 ($)	Fall '07 ($)	Change ($)	Change (%)
Consumer debt			11,200	0	-11,200	-100.0
Medical debt			10,000	10,000	0	0
Education debt			8,000	9,100	1,100	13.8
Retirement savings			6,887	8,400	1,513	22
Other savings			0	600	600	N/A
Home equity			0	0	0	N/A
Net worth			-$22,313	-$10,100	-$12,213	N/A

Numbers shown only for the time since joining the Women in Red.

Tricia

The one WIR member who has remained from the last class, Tricia, just started a new job at a local college and feels she has embarked on the "It's Time for Me" part of life.

The only trouble: While her kids are gradually leaving the nest, they haven't cut the purse strings yet. Her oldest son is getting his own apartment. Her daughter will start college in two years (and needs a car, Mom, by the way, OK?). Her middle son is transferring to a new college and may need help with expenses.

• Debt: Pretty good. After a slight slip earlier in the year, Tricia has paid down $1,000 and is still plugging away. She's carrying the debt at 0% interest, so she's not rushing to pay it off.

• Retirement: Slow but steady. She is weighing whether to roll over her previous retirement account or start a new 401(k) at her new job.

• Savings: Because she can purchase life insurance through her new job, Tricia was able to cash in two policies for about $6,000. She put $4,000 into savings, will invest $1,000 in home repairs and use $1,000 as a cushion in her checking account.

• How's that budget going? Tricia's new job presents a challenge. Instead of a flat salary, she is being paid an hourly rate. "If I work 30 hours a week, I will make what I used to," she says.

Thus far, she's not sure how steady her work schedule will be. Plus, she's used to paying her bills based on a weekly paycheck, not a biweekly one. Tricia also needs to save about $2,700 for the 10-week summer session, when she will work fewer hours.

• Tricia's challenge: Tricia has a good handle on her expenses; she's an Excel spreadsheet addict. The question is whether she can make the adjustment to a somewhat erratic income stream without suffering too many bumps -- and not only cover expenses but keep saving.

Tricia

	Spring '06 ($)	Fall '06 ($)	Spring '07 ($)	Fall '07 ($)	Change ($)	Change (%)
Credit card debt	1,900	4,900	4,900	3,300	1,400	73.7
Car loan	11,569	10,485	9,110	7,500	-4,069	-35.2
Education debt	0	0	0	0	0	N/A
Retirement savings	15,008	13,530	14,800	21,000	5,992	39.9
Other savings	0	429	2,800	4,000	4,000	N/A
Home equity	41,400	52,219	56,407	57,000	15,600	37.7
Net worth	$42,939	$50,793	$59,997	$71,200	$28,261	65.8%

Published Oct. 31, 2007

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