Financial guidance for a friend of mine

The credit card bills?

What seems to be issue here though?

It looks like she may just have a spending problem and need to tighten her belt a bit?

1. Pay off the credit card
2. Keep making payments on the student loans and the car. Being upside down on a car doesn't really matter if she keeps it. It's theoritical worth is irrelevant as long as she's not trying to sell it. 3. As more cash flow becomes available as the debts are paid off increase the retirement contributions. That can be through 401k, regular IRA, or Roth. That's a bridge she can cross when she gets there.

All in all she's not really in a terrible spot. Only real bad mark, imo, is the credit cards. Get that taken care of and she should be fine.

When you say “has owned” her house, is she paying a mortgage or does she own outright?

What is her age?

Not a much she can do with the Camry except drive it to 250k miles and start sending a little extra to try and get back on the right side of the loan.

Start contributing to a Roth if possible.

Assuming credit cards have higher interest rates, pay towards those first.

Learn to live lean for a few years, cut the cord on cable, eat at home, pack leftovers to work. Identify where the majority of the money is going and see what can be cut back on.

quote:

---

Where would you start if you were her?

---

She needs the debt snowball - Dave Ramsey.

She is saving 8% per year (4 + 4).

Needs to add 7% more savings to get to 15%. If she is a bit cautious, buy Vanguard Wellington (65% stock, 35% bond).

Wellington YTD return is 14.5, 3 year is 9.2, 5 year is 11.