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Occupation: Digital media sales
Location: Orange County, CA
Salary: $98,000 (but currently less while on maternity leave)
Why she needs a makeover: “I've been living as if things are going to magically become easy when our careers are established, and I've failed to save during my pre-motherhood years," says Ashley. "Now with more demands on my budget, it's time to buckle down like a responsible adult.”
What She Said
“My husband doesn’t even know how to log into our bank account, so I am clearly the spouse heading up our finances.”While her husband may be getting his Ph.D. (in Renaissance lit), Ashley is the household CFO. “My husband doesn’t even know how to log into our bank account, so I am clearly the spouse heading up our finances,” she says. “Nothing would make me feel better than getting professional guidance as I take control of my family's future.”
Ashley makes a comfortable income from her job in media sales and just got promoted. But she’s expecting her second child in March, and since she’s paid in commission, she’s worried about budgeting for her maternity leave. As a Ph.D. candidate, her husband only earns a small stipend. They’ll be making a lot of financial decisions soon on things like childcare, replacing their old cars, life insurance, saving for a house and retirement.
“Nothing would make me feel better than getting professional guidance as I take control of my family's future.”
- Ashley and her husband each have $16,000 in student loans and have $10,000 in credit card debt (paid down from $30,000).
- Ashley has $12,000 in savings, which she wants to put toward replacing the family's vehicles.
- She's started saving for retirement, and has $5,600 in her 401(k).
In Five Years ...
“I would like to save up for a home.”Stephany says: Only a true go-getter could manage a financial makeover in the final days of pregnancy, and Ashley made incredible headway on her goals before the baby arrived! She now has the resources available to pay off her $10,000 credit card balance and still have money saved for emergencies, a possible move and a new car.
She’s prepared to set up essential estate planning documents, including a will and life insurance to help protect her family. She also has a clearer picture of her family’s tax situation, understands how borrowing money for a new car will impact them financially and has found ways to streamline household expenses. All in all, a great transformation!
StephanyPlanning Experience: 9 Years
Best Financial Decision: Setting up retirement savings in my early twenties - time really is money!
Financial Motto: Save big now, spend big later.
- Set up small milestones as a roadmap to saving your emergency fund of $26,000. Since you already have $12,000, you’re halfway there! Reward yourself when you hit landmarks like $15,000 and $20,000 with a nice dinner or a mani-pedi.
- Driving a 20-year-old car is no longer making sense for you, given the cost of gas and your 50-mile roundtrip commute on LA’s busiest freeway. Research used hybrids and other gas-efficient cars, and borrow as little as possible.
- Try out this car payment calculator to figure out the best way to fund your car. I suggest you put away 25% of your inheritance for the new car, after paying your credit cards—best if you can do it without a car loan.