Winston says she is starting to feel more optimistic. She passed the bar in October, and her new job will make her more marketable to higher-paying government or large law firm jobs. Sheâ€™s not sure where sheâ€™ll eventually settle professionally, but sheâ€™s attracted to the flexibility that government offers.
The Advice: Take control of finances. Winstonâ€™s basic expenses exceed her take-home pay by at least $1,656 every month. They included a $450 car note and a $600 monthly credit card bill. Winston should seek a part-time job or look for other ways to earn extra cash.
The Action: Winston got a part-time job paying $14 an hour (working 15 hours a week), and later got a better part-time job paying $18 an hour (working 30 hours a week). She then landed a summer job paying $45,000, which she used to pay her tuition and pay down her credit cards.
The Advice: Chip away at debt. Some of the funds in Winstonâ€™s money market account could be used to pay off her American Express card. After graduation, she should revisit her financial plan and develop a budget to pay off credit card debt, her car loan, and then her school loans.
The Action: Winston created a budget and now sticks to it. She renegotiated her credit cards and reduced her balance from $20,000 to $4,000 by using much of her summer job earnings. In addition, she paid off her car loan and applied the $2,000 contest winnings toward debt. She is considering seeking a position in public interest work, which offers school loan repayment assistance.
The Advice: Maximize existing savings. Winston should place the $1,500 she lent to a friend and any other unexpected sums of money in her money market account. She should review the gift IRA her grandparents gave her to see if she can improve the returns. She should also work toward building an emergency fund that would cover six to nine months of expenses.
The Action: Winston used the loan repayment to pay down debt. She reviewed the gift IRA and improved her returns by about three-quarters of a percent. She didnâ€™t increase her savings much because she relocated, but now that she has a tenant sheâ€™ll be able to save since sheâ€™s living rent free with relatives in Denver.