"My philosophy was that as long as all my bills were paid I could spend my money on whatever I wanted,†says Talisha White, a 26-year-old Brooklyn, New York, native. But living that lifestyle led to $4,478 in credit card debt with interest rates ranging from 16% to 19%, and miniscule savings. She has $1,340 between her checking and savings accounts. "I shouldn't be struggling,†admits White, who works as an office assistant for the chief of breast surgery at a local hospital earning $45,500 a year. "I was spending my money within four to five days after getting paid. Any money I set aside would be dipped into, so nothing was ever getting saved because I'd always spend it.†But White has made some headway. She stopped using her credit cards about eight months ago so that she doesn't accumulate more debt. "I've even cut them up,†she says. She recently paid off a Target department store card in August that had a $400 balance. She is currently paying $250 on her HSBC card, which has a balance of $1,600 at 19.9% APR. She is making the minimum payments on her other two cards ($47 and $20), but plans to increase these amounts once she pays off the first card. Even though White loves to travel, she has postponed travel to focus more on saving. "I want to travel and possibly live abroad one day, but I need to get a hold of my finances before I can even think about that,†she says. She also started tracking her spending with Mint.com after getting some guidance from friends and family, financial blogs, and Suze Orman's book, Young, Fabulous and Broke. They all echoed that she needed to first figure out how much money she had coming in and then figure out what she was spending it on. After tracking her bank and credit card transactions, she identified her biggest culprit–eating out. (Continued on next page) In August, she spent $508 on food and dining, $255 on personal care, and withdrew about $300 from the ATM. In just one month she reduced her food budget to $347, personal care to $50, and ATM withdrawals to $228. "Tracking my spending is paying off,†says White, who took it a step further by organizing all bills including due dates on an Excel spreadsheet. "Before I was just guesstimating and I didn't have a clear idea where my money was going, but now all of my expenses are categorized and I'm able to see how much money I'm spending on shopping or other things that I didn't realize my money was going to.†Now she will realize immediate savings by moving into a cheaper apartment. When her lease ended in October she decided to share a two-bedroom apartment with a roommate, saving $300 a month on rent. She plans to live there for six months to save money and then move into her own place by April. The Advice Black Enterprise and Dawn Brown, CFP, a senior financial adviser with Altfest Personal Wealth Management in New York City, offer the following advice: Continue to live with roommates: White was paying $750 in rent and moved into another apartment this month to reduce costs. She plans to put money aside for six months to move into a one-bedroom apartment in Brooklyn at an estimated cost of about $950 per month. Brown advises White extend her stay. "It doesn't add up. Talisha has to consider that she will most likely have to pay a security deposit, first and last month's rent, which adds up to $2,850. Even if she saves the difference she was paying in rent before ($300) that will only give her $1,800 in six months. She'll still be $1,000 short.†Brown suggests that White focus on savings. If she doesn't want to continue living with this roommate, she should find another roommate to keep housing costs as low as possible. (Continued on next page) Pay off credit card debt: White has three credit cards. She has a balance of $1,600 at 19.8% APR; $1,900 at 16%; and $978 on her third card which has a 0% introductory offer which will adjust to 22% in October 2013. She is currently paying $250 on her $1,600 balance. Brown recommends that White use the $2,000 contest winnings to eliminate the debt with the highest interest rate ($1,600). After paying off that card she can use the remaining $400 to apply that to the second debt and reduce that balance to $1,500. She can then apply the $250 on the other card and the savings from paying less rent ($300) to pay off the $1,500 balance in less than three months. By continuing to roll over funds to the next debt, White will be debt-free in a total of five months. Build an emergency fund: White can start building her emergency fund while paying off her credit card debt. Currently she has about $288 left over each month after all bills and expenses are paid. She should aim to create an emergency fund to cover three months of expenses, or $7,200, Brown recommends. After paying off debt, White can use the $550 ($250 from credit card payments plus $300 savings from housing) to continue building her emergency cushion. Although her focus should be on saving, Brown suggests that she open a separate savings account designated to travel. It's better that she have money put away then try to plan for a trip and be tempted to dip into savings or charge it, explains Brown. (Continued on next page) Keep 403(b) contributions at 10%: Since starting to save for retirement in early October, White says she can feel the difference. Her biweekly paychecks are $183 less and she's considering reducing the amount. Brown recommends she stick it out. By saving 10% she can grow her savings to more than $1 million by age 65. Just a 3% decrease can result in $300,000 less in savings. Pay off student loans sooner: White is currently paying $230 a month on her $47,900 student loan balance. She is on a graduated payment plan, which increases her payment by 12.9% every two years. Under this plan, it will take her 20 years to wipe out the debt. Brown calculates that if White increases her payments to $400 a month she can pay off her student loans in 10 years. After funding her emergency account she can apply $175 from the $250 she was paying toward her credit card debt plus the $250 she is currently paying to pay off her student loans earlier. "She is on the right path,†says Brown. "But because she is still finding areas to cut she should revisit her progress in about three months and see how she's doing and make adjustments as necessary.â€