6 Financial Makeovers

Carrie Sloan
Posted

Today, we’re proud to present our first-ever Money Makeovers.

Consider it a LearnVest reality show of sorts: We’ll follow these women for the next eight weeks to record their goals, the progress they make and their struggles along the way.

Here’s how it works: We gave each member free access to the LearnVest My Money Center and to Lauren, a Certified Financial Planner and expert in our Advice Center. You can think of her as their coach and mentor, creating a road map for them to achieve their goals (the Tim Gunn to their Project Runway, if you will).

As the series progresses, they’ll be working hard on their finances in real time. So, cheer them on in the comments and follow along with the instructions for whichever story is closest to your own.

In this “reality show,” there won’t be any backstabbing or tearful confessions. We promise.

Macy, 22

Location:

Cedar Rapids, IA

Occupation:

Marketing Strategist

Goal:

Buy Her Dream Home

Salary:

$36,000

Why She Needs a Makeover:

Macy moved back home after college and has found herself surrounded by all the financial tasks that come with being a new college graduate: student loans and credit card payments, retirement account options and the best part—a paycheck. She knows she needs to figure out how to responsibly allocate her income, but what she really wants is “a loft with large windows and lots of sunlight, in a city, with a farmers’ market and nightlife I could walk to.” She’s hoping saving for her dream loft fits into her “responsible” savings plan.

What Lauren Says:

“Even if you’re not bringing in the big bucks yet, owning a home is absolutely an attainable goal. In fact, having that large goal is likely to motivate Macy to stay on track with other aspects of her financial life—like student loan payments, budgeting and managing her career. The trick will be balancing everything. If she’s serious about that loft, her spending choices today will make a huge difference in whether or not she reaches her goal.” 

Macy’s Homework:

Before diving into her financial goals, it’s important for Macy to have a basic understanding of what financial planning involves:

  1. The fastest way to get up to speed on her looming money tasks is to enroll in LearnVest’s Personal Finance 101 Bootcamp. Going through the bootcamp will help her feel confident that she isn’t missing something important.
  2. Macy described her spending as “yo-yo” spending—and her Financial Inbox reflects this. Since Macy has never had a paycheck (or budget) before, it’s important to start with tracking her expenses. For now, she just needs to keep foldering her transactions—we’ll use that information to create a budget a little later on.
  3. Macy needs to establish a financial system for managing all of her bills, like setting calendar alerts or automatic payments. This will create a great foundation of good habits for paying bills on time, which will be critical when she becomes a homeowner. 

NEXT TIME: We’ll check in to see if Macy has kept up with foldering all of her transactions—and if doing so has had an impact on her yo-yo spending!

Ashley, 29

Location:

New York, NY

Occupation:

Attorney 

Her Money Goal:

Save for a Baby

Salary:

Between $90,000 and $100,000

Why She Needs a Makeover:

She has about $230,000 in student loans from undergrad and law school. She is also the primary supporter of her household for the time being because her husband, who is from the Dominican Republic, is awaiting his green card. They paid for their own wedding, which pretty much wiped out their savings—but they are planning to have a baby and move to Ohio in the next three to five years.

What Lauren Says:

“Having a baby is expensive, and if Ashley and her husband are serious about doing it in the next year, they need to say goodbye to the glory days of taking taxis and attending benefits. Between her student loans and the credit card debt they have left over from the wedding, they’ve got a lot to balance right now—especially since Ashley is the sole earner until Jonathan’s green card comes through.”

Ashley’s Homework:

Ashley’s homework for the next two weeks is to start cutting back on spending:

  1. Ashley got used to the cushy lifestyle of her old law firm—where taxis and working lunches were the norm. Since she changed jobs, she can’t afford that anymore and needs to get serious about changing her spending habits. She should enroll in LearnVest’s Cut Your Costs Bootcamp to find other ways she can cut money drains from her life.
  2. Ashley’s living well beneath her means when it comes to fixed expenses like rent (their two-bedroom apartment is only $1,735 a month) and fixed costs ($138 for two cellphones, $0 for cable), but they’re still not able to save each month. That’s because those previously mentioned money sucks (taxis, lunches) really add up. She needs to create a folder for each of them in her Financial Inbox. That way she can track exactly how much she’s wasting on those conveniences each month.
  3. Ashley and Jonathan already have a joint high-yield savings account with a few hundred dollars in it. They should rename this the “Baby” fund and start depositing in this fund the money they save on taxis and lunches each month. Plus, it’s more fun to take the bus instead of a taxi if you know it’s going toward your future child.

NEXT TIME: Can Ashley break the taxi habit and readjust to taking the subway or bus instead? We’ll check in next time to find out!

Elisabeth, 41

Location:

San Rafael, CA

Occupation:

Fertility Coach

Goal:

Save for Retirement

Salary:

$37,000

Why She Needs a Makeover:

The good news: After many years of working hard, Elisabeth’s cash flow is increasing because her business is growing (from $25,000 to $32,000 to $37,000). The bad news: She has four credit cards to pay off and minimal savings for herself. With retirement not too far in the future, she needs to get started on planning for retirement. Another challenge: Elisabeth has been avoiding dealing with her money for years.

What Lauren Says:

“Now in her 40’s, Elisabeth has finally decided she needs to face her finances head-on. After two decades of money avoidance, that change will not come easily. She’ll have to power through the moments when she feels discouraged or wants to return to her old ways of ignoring her finances. Taking baby steps will help Elisabeth work her way through the money blocks she’s built up over the years so she can start planning better for her future.”

Elisabeth’s Homework:

Over the next two weeks, Elisabeth will be starting out slowly, but we’ll build momentum from small victories. Her homework is:

  1. Money isn’t just about numbers—it’s very emotional. For someone who has been avoiding her money, laying it all out on the table is often the biggest barrier to getting started. After years of unopened statements, knowing what you have (and don’t have) is the most important first step. Elisabeth should link up all her accounts to My Money Center, and dig through her statements to find out other details. This will lead to her knowing her net worth—the starting point for reaching financial goals.
  2. Elisabeth has been using one checking account for both her personal and business expenses—which isn’t ideal. She’s not ready to use two separate accounts yet, but for now she can use the folders in her Financial Inbox to begin separating business and personal expenses. To help keep things clear she should use a different color for each.
  3. Since Elisabeth is working for herself and reinvesting most of her extra cash into her business, coming up with a budget that incorporates her business expenses will help her stay on track for her goals—personally and professionally. She should enroll in the Why A Budget Is Your First Step course, which will help take the edge off budgeting—and hopefully make her feel less intimidated by it.

NEXT TIME: Can Elisabeth paint a clear picture of her financial situation so we can calculate her net worth and begin to map out her budget? We’ll check in next time to find out!

Minling, 29

Location:

Los Angeles, CA

Occupation:

Adventure Philanthropist

Goal:

Pursue Her Dream Career

Salary:

$0

Why She Needs a Makeover:

After making $95,000 a year at a large corporation, Minling left to pursue her dream: joining a start-up called RoadMonkey, which hosts trips combining adventure and philanthropy. As a part owner, her new gig provides equity but no salary for now, so she moved back home. She thinks she can survive on her $30,000 of savings for the next year, after which she hopes to start earning income. She recognizes that drinks with friends and private yoga sessions are out. “I’ll really miss Lululemon,” she confesses. ”My goal is to learn to budget despite my drastically reduced income.”

What Lauren Says:

“Leaving the security of a full-time job with great benefits to join a start-up with no guaranteed income is a huge risk. Minling is fortunate to have a few things working in her favor: the support of her parents, reasonable retirement savings, an investment property and a chunk of change that she can use to cover her living expenses while the start-up gets going. I think it’s great that after putting in nearly a decade of hard work and saving, Minling is cashing in to follow her dreams. But she should give herself deadlines on this adventure. If after a year she still isn’t drawing an income, it’ll be time to start sending out résumés for full-time jobs again.”

Minling’s Homework:

  1. Minling hates budgeting. She doesn’t necessarily need to know exactly where each dollar goes, but she does need a sense of how much she’s spending in total. When she’s setting up her My Money Center, she should create a folder for every fixed expense—and then another one labeled “Everything Else.”
  2. Her fixed expenses are very low due to the fact that she’s moved back in with her parents, but she doesn’t want to count on them for long. She has earmarked about $30,000 to cover her for the next year, which means she has about $2,500 a month for her living expenses. She’ll need to track that “Everything Else” folder very carefully. After all, she’d be broke by the new year if she were to blow through $5,000 each month.
  3. To stretch her savings account, Minling could bring in extra income on the side. As a certified yoga teacher living in Southern California, she should have plenty of opportunities. A good goal would be to pay for her fixed expenses out of her savings account and cover “Everything Else” with money she earns from teaching yoga.

NEXT TIME: We’ll check in next time to find out if Minling is having buyer’s remorse on leaving her stable job or if it’s smooth sailing with her new non-budget budget.

Daina, 25

Location:

New York, NY

Occupation:

Fashion Illustrator

Goal:

Afford the Big City

Salary:

$48,000

Why She Needs a Makeover:

Daina’s student loan debt is standing in the way of living the life she wants in expensive NYC. “When I was 18, I was so excited about college that I followed the advice of my school’s “financial advisor,” who had me apply for private loans. I am now almost $80,000 in debt and completely overwhelmed.” Daina is supposed to re-sign her lease, but the new price is $1,450. She can technically afford only $1,200 based on her salary, but she doesn’t have cash on hand for the deposit on a new place. Another option: Her boyfriend lives in Canada and she’s considered moving there … (Read our recent Money Mics on how moving in with your significant other can affect your finances.)

What Lauren Says:

“Daina is talented—she’s out-earning most of her peers at this stage of the game, but she’s still barely scraping by due to those predatory student loans and a rent payment that is a few hundred dollars above what she can afford. If she could turn back time, she would make different choices with regard to funding her education, but what’s done is done—and at least she pursued something she loves. She knows she has to make drastic changes now, and she’s finally ready to shake off the financial paralysis she’s been stuck in for the past year or two.”

Daina’s Homework:

Daina knows she needs to make some changes, and fast. Her homework gets straight to the point this week:

  1. Daina recently missed a few student loan payments, which will definitely have an impact on her credit score. Missing a payment can cause a drop of up to 100 points or more. It might hurt to see, but she needs to gather up the courage and check her score for free at CreditKarma.com. (They also provide tips for how to improve your score.)
  2. Daina’s days in her $1450 per month apartment are numbered. Based on her salary, she absolutely has to reduce her rent below $1,200—ideally even under $1,000. She may have to share a room or endure an hour-long commute, but it’ll be worth it to get her finances back in order. She’s been considering relocating to Canada to live with her long-term boyfriend, and now may very well be the time—though that would mean getting creative with her career. She has until the end of the month to make a decision on whether or not to resign her apartment lease.
  3. She should enroll in LearnVest’s Take Control Bootcamp to further shake off any powerlessness she’s felt in years past. She needs to educate herself so that she never falls victim to bad financial advice again.

NEXT TIME: We’ll find out what Daina decides about her apartment and where her credit ended up after those missed payments. 

Hannah, 32

Location:

Miami, FL

Occupation:

Marketing

Goal:

Rebuild After Divorce

Salary:

$70,000

Why She Needs a Makeover:

Hannah’s divorce left her in extreme debt with no choice but to file for bankruptcy. ”I am now rebuilding financial stability,” she says. “I receive no child support and went from being a stay-at-home mom to a working mother almost overnight. Prior to my marriage I had stellar credit, but now I’m lucky to get a credit card with a $200 limit! And I have no savings. I need to save for my—and my children’s—future.”

What Lauren Says:

“Even with two master’s degrees, Hannah wasn’t prepared for being married to a ‘financial fraudster,’ as she describes her ex. Now, she’s ready to start with a clean slate and move forward. In many ways she’s starting from ground zero, but she’s moving full speed ahead—she’s already contacted old work contacts and started securing consulting contracts. Rebuilding after a divorce and a bankruptcy always presents challenges, but Hannah is well-equipped to conquer them.”

Hannah’s Homework:

  1. Rebuilding her credit after bankruptcy will take time, but unless she’s applying for a mortgage tomorrow, it’s okay if her credit isn’t perfect yet. Hannah should check her credit score on CreditKarma.com and review LearnVest’s tips on how to raise your credit score. She should set a recurring reminder to check back in on her score monthly—it’s important to stay on top of it after the bankruptcy.
  2. Hannah needs to look into the ways she can cut back her daily expenses as she begins to rebuild her financial life. She should enroll in the Cut Your Costs Bootcamp to find creative tips she may not have thought of yet.
  3. As Hannah starts to find savings in her budget (and as she starts to bring in more income), her first priority will be to open a high-yield savings account and start contributing to an emergency fund. She should aim to save a year of living expenses as a parachute. (Most people should save six to nine months, but the self-employed need to save more because of the variability in their income.)

NEXT TIME: We’ll find out where Hannah’s credit score is and learn what steps she’s taking to cut back her expenses so she can start saving for her emergency fund. 

  • jkim

    Wow. This is totally what I needed to read. I think my situation lines up most with Daina and  Macy, as someone who’s just started her first salaried job as a twenty something in NYC. Thanks for this Learnvest. I can’t wait to read the updates.

  • jkim

    Wow. This is totally what I needed to read. I think my situation lines up most with Daina and  Macy, as someone who’s just started her first salaried job as a twenty something in NYC. Thanks for this Learnvest. I can’t wait to read the updates.

  • http://www.facebook.com/jessie.brodsky Jessie Brodsky

    I’m really excited to keep up with this! I’m especially excited to read about Minling’s journey! I work full time (not making quite the $90K Minling was making, but it’s a good job) and I’m now in school in the rest of my time in masters program for business that is almost entirely online. I dream of one day beginning my own start up and find Minling’s story inspiring!

    • Anonymous

      Jessie, totally agreed! Excited to see this unfold!

  • sofia

    yes! definitely following Macy’s story. young 20 somethings wanting to plan for buying real estate is something that only gets coverage when a trust fund kid buys up a tower in manhattan. thanks learnvest for spotlighting a different version!

    • Alexzandria85

      I am in the same boat right now…20 something and saving for my first home. Looking forward to following Macy too.

      • http://blog.laurenandelissa.com Lauren Lyons Cole

        I’m excited to hear so many young women are focusing on big financial goals! I hope Macy’s story helps point you in the right direction. Thanks for following the journey!

      • http://blog.laurenandelissa.com Lauren Lyons Cole

        I’m excited to hear so many young women are focusing on big financial goals! I hope Macy’s story helps point you in the right direction. Thanks for following the journey!

  • sofia

    yes! definitely following Macy’s story. young 20 somethings wanting to plan for buying real estate is something that only gets coverage when a trust fund kid buys up a tower in manhattan. thanks learnvest for spotlighting a different version!

  • EL

    this is the best website… I love this idea. 

  • JS

    This is a great idea! I love that you’re featuring women at different stages in their lives – who I can really relate to. I look forward to reading this every week. Good luck to all of you women!

    • Marie

      Agreed. It will be so interesting to read about all of these women. There are a couple that I identify with more in terms of the financial challenges I am facing, but I am curious to see what happens with the other people, too. A really great idea!

  • Woodwigs25

    This will be interesting to follow, especially Daina.  If she moves to Canada, she’ll be working under the table, unless she can marry her Candian boyfriend and get a work visa.  If she does get work as an illegal,  she’ll also not be paying into her furture SS $ there or here.

    • http://blog.laurenandelissa.com Lauren Lyons Cole

      Thanks for your interest in the stories! I promise Daina will not be working under the table if she moves to Canada–I definitely would not recommend that! Stay tuned to find out what she decides…

      • Kab12342000

        What would you recommend then, if not to work under the table, how to put food on THAT TABLE?

  • TT

    Love this idea! I can’t wait to hear about what happens!!

  • http://neatfreakwannabe.blogspot.com Jenna

    Great job pulling together such a diverse group of women!  It’ll be fun to watch their successes through these journeys!

    • Kab12342000

      Diverse??  Are you kidding me?  See my comment about being 52 and needing advise, hence, why I joined LearnVest.  I think that this is geared for women under 40, well let me tell you, women of all ages should be viewed.

  • http://twitter.com/CreditKarma CreditKarma

    This is so great! Wonderful job, ladies! I can’t wait to follow these stories for the next couple of months. Especially Macy. My husband and I are currently trying to figure out how/when we could buy a place in SF.
    -Bethy @CreditKarma

  • http://twitter.com/CreditKarma CreditKarma

    This is so great! Wonderful job, ladies! I can’t wait to follow these stories for the next couple of months. Especially Macy. My husband and I are currently trying to figure out how/when we could buy a place in SF.
    -Bethy @CreditKarma

  • mkKitty

    great idea, looking forward to the followups!

  • http://www.facebook.com/profile.php?id=202604198 Flor Ruiz

    This is brilliant!  I can’t wait to see how Daina’s story unfolds.  I’m in a similar situation as her.  :)

    • Guest

      Ditto, but in Chicago.  Definitely not moving to Canada anytime soon so I hope she makes it work.  Would love to be in NYC and want to see her make it work!

    • Guest

      Ditto, but in Chicago.  Definitely not moving to Canada anytime soon so I hope she makes it work.  Would love to be in NYC and want to see her make it work!

  • http://absolutlyfit.blogspot.com Laura

    I’m really excited about this feature too, but also really confused about one of the stories (and it happens to be the one I most relate to). Ashley’s story says she pays $1750/month for a two bedroom. That can’t be right. Is it $2750, maybe? $1750 barely gets you a livable studio. Unless the location is wrong and she lives in an outer borough?

    I’m really excited to see how she deals with taxis/lunches – I have a job with similar norms and have just “sucked it up” as an expense I need to pay even though I don’t want to!

    • http://blog.laurenandelissa.com Lauren Lyons Cole

      Hi Laura. So glad you’re excited–and that you are able to relate to Ashley’s story! When I first saw Ashley’s rent I was shocked too (and assumed she lived in an outer borough), so I can relate. But they do indeed live in Manhattan–just a few blocks from 125th St. She and Jonathan found a great deal, that is for sure!

      • http://absolutlyfit.blogspot.com Laura

        Perhaps my $2650 one bedroom converted to a two isn’t such a good deal after all :)

        Also – I just noticed that Minling is from RoadMonkey. LOVE that company and am dying to go on one of their trips! Just want to add my cheers to her for building a company that has a very bright future.

        • http://blog.laurenandelissa.com Lauren Lyons Cole

          Yeah, maybe Ashley can do a follow up post on how she found her place!  And, I totally agree–RoadMonkey is awesome. I definitely plan to go on one of their trips at some point!

      • http://absolutlyfit.blogspot.com Laura

        Perhaps my $2650 one bedroom converted to a two isn’t such a good deal after all :)

        Also – I just noticed that Minling is from RoadMonkey. LOVE that company and am dying to go on one of their trips! Just want to add my cheers to her for building a company that has a very bright future.

    • Joiya

      Geeze, where in the world do you live? I thought paying anything over $850 for a one bedroom was ridiculous. I live in Florida. I pay like $530 for rent for a cute one bedroom apartment, ya’ll need to come down here!

  • Adele

    This is fantastic! I relate to Elizabeth & Hannah and am very eager to get my financial life in order. It helps to know I’m not alone in this. Looking forward to see how things unfold, and am already inspired to take steps alongside these ladies.

  • http://senseofcents.blogspot.com/ Michelle

    I love this! A lot of these are very relate-able.

  • http://www.mangomoney.com Mango Money

    I love this idea! This is like reality television, minus the cheesy lines and drama. I can’t wait to see how it all goes. Good luck, ladies, and thanks so much for sharing your stories with us!

  • Schmelzenbachmcrill

    This is not realistic at all. I am in my early twenties, and much like Macy, my friends and I have recently graduated from college to find our “first jobs.” And I do not know a single friend of mine, who got a job paying “$36,000″ or more. Most of my friends are still living at home with their parents because the job market is crazy, and employers can offer terrible jobs to young graduates for nearly no pay! I’m way under the poverty line. How are my husband and I supposed to use these examples when we have a combined income of about $23,000 before taxes? That’s where real budgeting and money mindedness come in. Not saving for a trip to the Bahammas, or finding a cute office decoration for under $10, but learning how to make it!

    Why don’t you address that instead? With the economy being the way it is I am sure an article helping people with my income would much more helpful than “Where to find cute clothing items for under $50.” It might not be trendy enough for you, but it sure would help some people out.

    • Alicia

      I totally agree with you. I’m a 26 (soon to be 27) year old single mother of one living on a $40,000 a year salary. It may sound like I’m doing okay, but I live in California where everything is RIDICULOUSLY expensive. As much as I like LearnVest, I find many of their articles and tips hard to relate to as well.

  • Joiya

    Wow, my student loans look like a piece of cake now. I only have $14000 or so to pay on those plus another $3500 on a car loan, and these people have $250,000 and $80,000 in loans? And they are paying a ridiculous amount o money on their rent? First of all, I think they should find cheaper places to live. You should not pay more for just a room than you have to. A room is a room no matter how much it costs, or where it is. That extra $500 a month you could save on rent could do a lot!

  • Kab12342000

    What about doing makeovers on women who are older than 41?  I am 52 and I am currently doing one on myself.  And I’m lucky I started now, as my new financial planner informed me just last week, IF I kept going as I am now, I will not have ANY retirement money at age 72…huh?  My projected life span is 83-85…! That spun my head around and scared me.  Yes, it’s good for young people to get it, I wish I had, but there are a lot of woment 40 and up, who don’t and wish they did!

  • Mrs. Smith

    When is the next round of makeovers? I want to find out how I can be a candidate! I am employed full time with a good income but my husband is a student, and we are expecting our second child in March. With 70% of my compensation being sales commission, maternity leave is going to throw us for a loop. At a time when there many important budget decisions to make (childcare, needing to replace two vehicles, buying life insurance, saving for a house, etc.), I really need help prioritizing. 

    Make us over LearnVest!

  • Mrs. Smith

    When is the next round of makeovers? I want to find out how I can be a candidate! I am employed full time with a good income but my husband is a student, and we are expecting our second child in March. With 70% of my compensation being sales commission, maternity leave is going to throw us for a loop. At a time when there many important budget decisions to make (childcare, needing to replace two vehicles, buying life insurance, saving for a house, etc.), I really need help prioritizing. 

    Make us over LearnVest!