Budgeting For A Future

For Deshawn James, raising two teenage daughters as a single mother is more than a notion. Their needs and wants never go away. “They are money pits,” she says lovingly. Her own issues with sticking to a budget sometimes make matters worse.

“I can be an impulsive spender. If I see something I want, I usually get it,” says the 37-year-old James.

When you earn $25,000 in a full-time administrative position, such spending habits can be costly. Fast food lunches during the week add up, as do monthly family dinners at nice restaurants. “I know there’s some cutting to be done,” says James. “If I had myself on a strict budget, I think I could do more. We make do, but I don’t want [to struggle] any more.”

Much to her credit, James used most of her life savings and borrowed from her annuity to buy a three-bedroom house in Detroit two years ago. But she’s done little to prepare for her retirement and there’s no college fund for her daughters Skyra, 16, and Brittany, 15. She’s ready for change because she wants more for her family.

Recently, James started a part-time job that should add $10,000 in annual income to her salary at Cafcomp Systems, an employee benefits services firm in Detroit. Twelve years ago, when she started at the company as a receptionist, the job was a godsend. It ended her dependence on public assistance and allowed her to telecommute as she raised her children. James’ income has been bolstered by $363 a month in Social Security benefits for Skyra (her father was murdered by robbers in 1992), and $348 a month in child support payments for Brittany.

Eternally optimistic, James believes that her future may lie in a career as a registered nurse. She qualifies for grants that enable her to take a couple of classes each semester. James hopes to graduate from the two-year nursing program at Oakland Community College in Southfield, Michigan, by the time she’s 40.

Although she hasn’t saved much money, James hasn’t created much debt either. She has less than $2,500 in debt other than her $99,600 mortgage. Her goals include saving for retirement and traveling for fun — something she hasn’t been able to do often. James is also determined to send her daughters to college. “There’s nothing saved, but those girls are going,” she vows.

We helped James plan for her financial future by turning to Gail Perry-Mason, first vice president of Financial Services at Fahnestock and Co., in Grosse Pointe Farms, Michigan.

“I think it’s tough to raise two teen girls alone no matter how much you make, so she’s really done an excellent job with what she has,” says Perry-Mason. She lauds James most for purchasing a home, given her income. However, Perry-Mason’s concern is that James hasn’t done enough to protect her income. She has no disability insurance. She is the sole breadwinner, so if anything happened to prevent her from working, the financial impact could be devastating. If James’ employer doesn’t