Turning 30: Jennifer Battle

Jennifer Battle , who turned 30 this month, is a project manager in facilities repair with D.C. public schools and a new homeowner. She bought a house last year in the Capitol View neighborhood in Northeast Washington. Battle, who earns $64,000, paid $240,000 for the property, which is now worth more than $270,000. She bought the house with a $192,000 five-year, interest-only adjustable-rate mortgage and a $48,000 15-year balloon loan at 8.25 percent. (A balloon mortgage requires a large payment at the end of the loan term.)

She has $10,000 in a 401(k) from a previous job, but she isn't currently saving for retirement. She would have had a pension in her previous job with the state of Maryland, but she left before she could qualify. D.C. public schools has contributed about $4,000 to her defined-contribution plan, but that money isn't vested -- meaning it isn't hers for the taking -- unless she stays in the job five years. So far, she's up to three years, and she's wondering whether she should make a career change.

Instead of saving for retirement, Battle has been spending on her house, using her tax refund last year to put in new windows, which she expects will lower utility bills this year. She wants to remodel her kitchen. And she'd like to buy another car. She also has student loans to repay and $11,000 in debt on two credit cards, one with a 3 percent interest rate and the other with a 12 percent rate. She is paying off both cards but focusing on clearing the higher-interest-rate debt first.

What our experts recommend:

Don't leave that job yet, said Salisbury. "Five-year vesting on pensions and [defined-contribution] plans is a modest price to pay for owning the money. Jennifer should tough out the current job until she has vested and then consider her next move."

Both Salisbury and Diekvoss are concerned about Battle's rate of savings for retirement. Based on where she is -- and if she retires at age 60, as she hopes -- she would come up $1.55 million short at retirement, assuming she receives neither a pension nor Social Security benefits, according to Diekvoss.

"Jennifer is older than she thinks in terms of the power of early savings," said Salisbury, who added that she should start saving 20 percent of her income for retirement.

Having a budget and tracking it with a computer program, as Battle does, are positive steps, Salisbury said. But she should "modify her budget so that savings are set aside on an automatic basis" before any other nonessential expenditure, he said.

"At a minimum, she needs to build an emergency fund, rather than being in a position where her credit cards are her emergency fund."

As for those credit cards, Salisbury said she should pay them off as soon as possible so she does not spend so much on interest payments. That might mean postponing the new kitchen and car, he said, but it's worth it.

Diekvoss said Battle should consider refinancing her house. If it is appraised at $300,000 or more, she could consolidate both of her loans into one mortgage with a lower, fixed rate. In the D.C. area, a 30-year, fixed-rate mortgage could be found for as low as 6 percent, he said. On a loan of $240,000, that would make her payments about $1,450 -- not much less than she is paying now, he said. "But it would allow her to pay down her principal quicker."