Embracing Financial Responsibility

Embracing Financial Responsibility

M’kisha Shell gets it now. As a single mom, she understands that it’s her responsibility to develop a financial plan for herself and her 5-year-old daughter, Kayla.

The 26-year-old from Jamaica, New York, recently graduated with a bachelor’s of science in business administration from York College. For the last four years she’s worked as a customer service representative for an electrical manufacturing company, where she now earns around $33,000. Shell participates in her company-sponsored 401(k) plan and after three years has accumulated $7,900. She has $500 in savings bonds and contributes $50 a month to her daughter’s 529 college savings plan. But she has no savings to speak of and only $750 in a checking account. Meanwhile, she has $5,000 in student loans and $4,000 in credit card debt.

Credit cards have proven to be Shell’s undoing, especially when it comes to spending for her daughter. “I would buy not one or two, but three or four dresses at a time for her,” says Shell. The credit cards have also been used for everyday items like groceries when there have been gaps in her income. “You think you’ll pay it right back, but you don’t. It all starts to add up,” she laments.

While she works to control her spending, Shell is confident that she will find a resolution. She is also looking to find ways to add to her income to help pay day care expenses, which cost $375 a month.

Shell lives at home with her mom and younger sister but pitches in financially for food, cable, and the house phone. Those expenses, coupled with credit card payments, student loan repayment, and cell phone bills, stretch thin the $1,400 a month she takes home.

But the spirited Shell is not one to despair. She and her mother have talked about buying a home and running a home-based day care center in the Carolinas within the next three years. For that reason, Shell has delayed plans to flee the nest. “It seems stupid to pay $1,000 a month in rent for an apartment when I could use that money toward saving for the business,” says Shell. She estimates they will need at least $10,000 to $20,000 to get their business off the ground.

However, the first order of business for Shell is getting her debt under control. “Being debt-free is a priority,” she says. In the fall, when Kayla begins first grade, child care expenses will drop to $75 to $100 a month, netting her a savings of close to $300. She plans to save that money for the business, an emergency fund, and an IRA.

Says Shell, “The next 12 to 18 months will be tough, but I have a game plan. I’m expecting great things.”

The Advice
To assist Shell with her strategy, we called on Vicki Brackens, a financial planner with MetLife in Syracuse, New York.

Brackens was struck by Shell’s dedication to her daughter’s well-being and her desire for financial freedom. Shell’s drive , says Brackens, increases the likelihood of her eventual success. But getting