If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.
Also, please leave constructive comments, questions, and so forth. Simply telling someone what a mess they have, how they have made poor decisions, and so forth is not helpful. There is a way to say, "That was a mistake, but here's what you can do to correct it" that both acknowledges the problem and offers a solution. It's this sort of feedback that this series is intended to solicit.
Next in the series is FMF reader EM. She answered my questions (in red below) as follows:
Please tell us a bit about yourself.
I’ve been an avid reader of FMF for a while now and absolutely love anything about finance/personal finance. After reading so many reader profiles, I’m always amazed at how successful some people are at my age (or even younger!) and thus it has made me somewhat hesitant to “air my dirty laundry.” But, I am at a point in my life where I am open to feedback and suggestions so that hopefully someone opens my eyes to strategies that I may have overlooked.
A little about me - I’m a 28-year-old single mom to an awesome 7 month old daughter. I live in a metro area and currently am renting a 1-bd apartment. I graduated with a business degree in Finance and started my professional career as a Consultant but now mostly work as a Data/Business Analyst. Unfortunately, all of my immediate family is back up north, so now that I am a mother, it poses a new challenge not having that type of support around but the little one and I are making it.
I too grew up in a single parent household and learned early on that I wanted to make sure that I not only got a good education but applied it to a career that would make me self-sufficient and independent. I didn’t learn too much about savings, investing, debt, etc. but around the age of 18 became somewhat obsessed with learning as much as possible about every aspect of Finance – so much so that I changed my major sophomore year of college. I feel like I am armed with so many tools but at times can’t apply them due to other constraints, which is a frustration of mine. And being someone who is immersed in personal finance, I feel guilty that I am not in a better financial position at this point in my life.
Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).
I currently make $63,257 (such an odd number, I know) before taxes and other deductions, which has the potential to change first quarter of the year when raises are released. I also have the potential to receive quarterly bonuses in the range of $300-400 (after taxes) and I received an annual bonus which came to around $4,200 (after taxes) last year – not sure what it will be this year. I previously mentioned that I’m a single mom, so I am the sole provider/income earner and do not currently receive any child support.
A breakdown of my assets, income, expenses is below:
- 401K: 1200
- Car Note: 595.88
- Credit Card 1: 178
- Cell: 49.55
- Student Loan: 166.04
- Line of Credit: 85 (will be paid off in March)
- Power: 65 (varies month to month but on average is around 60-70)
- Water/Sewer: 50 (varies month to month but on average is around 45-55)
- Daycare: 240
- Tolls: 25
- Credit Card 2: 37
- Credit Card 3: 36
- Medical Bill: about 35 (added to 100 from an HSA, will be paid off in March)
- Rent: 1004
- Cable: 130 (I recently changed my service, so I estimate this is what the monthly bill will be after taxes)
- Car Insurance: 164.83
- IOU (Personal Loan): 100 (will be paid off in March)
- Gas: 360
- Food/Misc (Incl. Baby): 400
What are the current financial issues you're facing (saving, paying off debt, etc.)?
Rent is an expense that makes me cringe every time I write the check. I’m well aware of other apartment complexes offering lower rent, however, I would definitely have to sacrifice safety, accessibility and peace of mind – things I’m not willing to put at stake, especially with a little one. It’s definitely more than what I want to pay for a one bedroom, however, my financial situation has definitely changed having become a mom doing everything on my own.
Also, I really want to get rid of at least two of my credit card balances. Being off from work for about 7 weeks during maternity leave almost cut my monthly pay in half, not to mention the accompanying medical/hospital bills and baby expenses, which ate up a lot of my discretionary income plus some (hence the increase in credit card usage). I estimate that my tax refund will be around 3900 and plan to use it to pay off: credit card 2, credit card 3, personal loan, line of credit and pay for some auto repairs and set aside at least 1000 for moving expenses/deposit, etc. (current lease ends this summer).
Eventually, I would like to get my savings up to par and plan to use some of my annual bonus to fund it so that this year, any unexpected expenses won’t cause me to break out a credit card to cover.
What are your plans for the future (retire early, build your career, etc.)?
Fund my daughter’s college savings plan, continue to pay off credit card debts and then put more towards savings and future expenses. Career wise, I’m not necessarily “happy” with what I am doing now, but I haven’t really had the time to map out a new plan. Hopefully this year I can sit down and properly assess where I would like my career to go and then the steps to get there.
What's your best piece(s) of financial advice and/or your general philosophy on personal finances?
It’s pretty cliché in the personal finance arena, but definitely to “spend less than you earn”. At one point I went from making $45k per year down to $10 per hour with no benefits, yet I never missed a bill payment and even significantly reduced some of my debts. I was forced to “cut the fat” and curtail frivolous spending. It also challenged me to find sources of entertainment and ventures out with friends that wouldn’t break the bank. It’s amazing what you can achieve when there’s proper planning and some wiggle room.