Carlesa A. Washington

Mix It Up by Learning a New Trade

Carlesa A. Washington used some of her savings to enroll in bartending school. She brought in some extra cash by working at private parties and expects to earn $400 before taxes each weekend from a job at a nightclub.
Carlesa A. Washington used some of her savings to enroll in bartending school. She brought in some extra cash by working at private parties and expects to earn $400 before taxes each weekend from a job at a nightclub. (By Nikki Kahn -- The Washington Post)

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Sunday, August 5, 2007

Age:24

Background: Washington is single. She is a recent graduate of Howard University and works as a concierge, helping new apartment residents settle in. She lives in the District with her mother.

New Year's resolution: She wanted to pay off old debts, including one that had been in default for so long that the credit card company sold it to a collections company, which is still hounding her for repayment.

Progress thus far: Washington has thrown herself into this challenge. Seven months into the process, she's paid off more than $1,565 in delinquent debt. Even when she was hit with a federal and local tax of $1,780, she cut her expenses, got a part-time job and paid that off, too. (The unexpected tax bite came after a former employer failed to withhold enough taxes from her pay as she had indicated on her W-4 form.)

Her last debt, an old Visa account, is down to $3,725 from a high of $4,800.

New developments: Washington's income rose $2,000, to $34,000.

Her bartending course has paid off handsomely. In addition to the $2,400 she made bartending at private parties, she estimates she will make an extra $400 before taxes each weekend from a nightclub job.

I was happy to see Washington had purchased a ledger to keep track of the cash she's earning from bartending so that she can pay federal and local taxes on the income.

"If you are honest, you do this," she said. "Some bartenders don't report every penny, but I plan to just to be on the safe side. Every time I get tips, I write it down."

Next step: Like her fellow Challengers, Washington should take all the extra money she's making and apply it to her credit card debt. Since she's living with her mother and doesn't have rent or major expenses, she can afford to save less and concentrate on getting out of debt.

Washington hasn't been as conscientious as she might be. With a little more breathing room, she has slipped back into some old habits.

Once she paid off some of her delinquent accounts, she didn't take the monthly amount she was applying to the past-due bills and direct it to the remaining credit card balance, as I had instructed her to do.

She'll have to be especially careful with the money from part-time bartending. "You make fast money and a lot of it in cash, and that can be a problem," she said.

Since she isn't sure where the money is going, I've sent her back to keeping a spending diary where she records every penny she spends. There's several hundred dollars a month from her regular paycheck that she can't trace.

"I'm just shocked," she said.

It happens all the time. Once someone finishes paying off a car loan, for instance, that money often disappears in untracked spending. It is always best to take the payment you were once making and save it or use it to reduce another debt.


© 2007 The Washington Post Company

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