Her 'First Step' Out of Debt Is a Giant Stride
Background: Schleicher is a single professional who works as an associate editor for a news Web site for high school students. The Pennsylvania native lives in the District and earns about $44,000 a year.
Her 2007 New Year's resolutions: Schleicher wanted to pay off $4,500 on her only credit card and build up a savings cushion representing at least three months of her living expenses. She also wanted to accelerate paying off $10,754 in student loans.
Struggles: For most of the challenge, Schleicher struggled to stick to restrictions on at least one budget item -- entertainment. A young single professional, she had a hard time cutting back on going out with friends.
Setbacks: Ah, the best-laid plans. Because Schleicher has limited discretionary income, we decided to focus on just two of her three resolutions -- paying off the credit card and building a cash cushion.
But Schleicher had a major setback. Her trusty 1992 Subaru Loyale, after 155,000 miles and 15 years on the road, finally died. Schleicher had owned the car for nearly 10 years. She tried mightily to save the vehicle. However, two mechanics deemed it dead, or at least not worth the expense of fixing. I agreed.
Here's what I suggested that she do:
¿ Figure out how much she could afford in a car payment every month. The amount couldn't interfere with her debt payments.
¿ Join a credit union. I had been pressing this since the beginning of the challenge because I knew she had an old car. Credit unions typically offer lower auto financing rates than banks or dealers. I also encouraged her to check with her bank for comparison. She did.