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EPISODE 48 - Financial Priorities (Karen)

NAMES: Karen
AGES: 40
ANNUAL INCOME: $42,000
DEBT ACCUMULATED: $13,271 + $157,000 mortgage

GOAL: Make Bailey her financial priority

Karen claimed her priority was her 9-year old daughter Bailey but, with a $13,271 debt and shopping addiction, her words didn’t match her actions. She was facing a housing crisis, and a 2nd bankruptcy, and Bailey’s future was going to be the price paid.

Alison's Plan

Karen was on the verge of derailing financially. I gave her a plan to get her back on track.

  • Binge on a Budget Cut spending by $2010 monthly, and pay down debt by doubling up on debt payments.
  • Make your banking work for you by saying 'no' to pay day loans and 'yes' to using your debit card as a tool to track spending
  • Make a decision on the house she was responsible for but didn’t live in.
  • Put Bailey first financially, which meant giving her an allowance, cutting off handouts to the ex-husband and starting an educational savings account.

OUTCOME

Now Karen has got her priorities straight. She’s cut down on spending by more than $1,800 a month, cut out pay down loans and is keeping track of what she buys with the help of her debit card. She and her family are making a plan for the future of her house. Best of all, Bailey has taken centre stage – Karen is giving her a weekly allowance, which Bailey is tracking, and she’s started an education savings account. If Karen sticks to my plan, she’ll be free of debt in four years and Bailey will be able to draw on $30,000 in her education fund by the time she’s ready for college.

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