Making In response to alumnae requests,
the Quarterly has planned a series
of articles on making your money
Money
work harder. In this issue, financial
planner Eleanor Hotchkiss Blayney
’73 presents a basic financial plan
for 1997 alumna Faizun Kamal. In
Work
upcoming articles, we will feature
more alumna-to-alumna advice on
saving, credit and loans, and han-
dling unexpected financial events.
Financial Basics By Mieke H. Bo Man n
Get a money makeover
Young Professional
Faizun Kamal ’97
24 www.alumnae.mtholyoke.edu
MonEy. It frames our daily lives and shapes the way we live, work, and play.
Women, traditionally skilled in stretching a household dollar, now often face
the complex responsibilities of securing a mortgage, planning for retirement,
handling savings and investments, and running sizable households. For young
professionals, and retirees living on modest pensions, making ends meet in an
increasingly pricey world poses a considerable challenge.
Studentloansandcredit-carddebtaretopsonthelistof Foundation for Success
“thingstogetridof”formanyyoungprofessionals.Buying “Faizunhasjustabouteverythingittakestobefinanciallyand
ahouseisoftentheprimaryfinancialgoal.Howtodothese personallysuccessful,”saysBlayney,whoisbasedinMcLean,
thingssimultaneouslyusuallyinvolvesabitmoreworkthan Virginia,andinterviewedKamalatlengthbyphone.“Shehas
forgoingthedailylatteorbringingyourlunchtowork— intelligence,discipline,agoodsenseofwherehermoneygoes
althoughthosearegoodfirststeps.Whatfollowsisthestory eachmonth,andawell-articulatedvisionforherfuture.Thisis
ofonealumna’sfinancialgoals,andrecommendationsfroma ayoungwomanwhowillundoubtedlyachievehergoals.”
professionalplanner,alsoanalumna,onhowtogetthere. Shealsohasahugeheart:Kamalhasstartedabusiness
venturetoimportclothingandhouseholditemsmadeby
Making a Dollar Holler womeninhernativeBangladesh,andthenreturnthepro-
FaizunKamal’97leadsafull,ifuncluttered,life.TheBaltimore ceedstohelpeducateandprovidenutritionforthecraft
residentlivesaloneinaone-bedroomapartment,risesearly women’schildren.ButKamal’sfirstpriorityistoeliminateher
tomeditate,worksfull-timeasaprogramofficeratJHPIEGO, owndebtandimprovehercreditscoresoshe’llqualifyfora
aninternationalhealthcareorganizationaffiliatedwithJohns homemortgage.Evidenceofherdeterminationisthefactthat
HopkinsUniversity,andalsoisgoingtoHopkinspart-timeto shehaspaiddown$5,000indebtinthepastyear.
getherMBA.
AlthoughKamallivesfrugally—fewclothes,nogymmem- assets and Liabilities
bership,nohairdresserornailsplurges—shehas$19,000in WhileKamalcurrentlyhasanegativenetworthofapproxi-
credit-carddebt,someofwhichisbeingpaidoffatarate mately$7,500—thevalueofherretirementfundandauto-
of30percent.Adedicatedshopper?Hardly.Unlikemany mobileminushercarandstudentloans,andcredit-card
otheryoungprofessionals,Kamal,borninBangladesh,lacksa debt—herlong-termfinancialoutlookispromising.“Onceher
spendthriftsensibility.“Mymothercouldmakeadollarhol- humancapitalisfactoredin,namely,herearningpotentialasa
ler!”shesaysofherpragmaticupbringing,andKamalhasa resultofhereducation,internationalexperience,andtremen-
prettygoodunderstandingofwhatsheneedstodotogether dousambition,thefinancialpictureisconsiderablybrighter,”
financiallifeontrack. saysBlayney.
Butherpastfinancialsupportofafriendhasleftherpay- Kamalmakesbetween$45,000and$60,000annually.She
ingoffconsiderabledebtwhileatthesametimehopingto wouldliketocontinueinherpresentposition,sinceitaffords
buyahouse.Whatsheneedsarespecificstrategiestoreach her$5,600inannualtuitionreimbursementthatsheputsto
Gene Sweeney, Jr.
hergoals,saysfinancialplannerEleanorHotchkissBlayney goodusewithherMBAclasses.Onacash-flowbasis,notes
’73(eleanor.blayney@theharris.com; www.sbsinc.com),manag- Blayney,sheismakingendsmeet,althoughthereisnoroom
ingdirectoratSullivan,Bruyette,Speros&Blayney,asub- foranyunexpectedexpenses.Kamal’soneindulgenceisbuy-
sidiaryoftheHarrisPrivateBank,andsheagreedtoprovide ingbooks,acostsheoffsetsbyusingadiscountcard.
thatblueprint.
MountHolyokeAlumnaeQuarterly|Fall2006 25
payoffherhigh-interestdebt.Sheshouldimmediatelyadjust
Faizun kamal’s Current Monthly expenses herwithholdingtoincreasehertake-homepay,andusethe
.
Rent.....................................................................$700 excesstopaydownherdebt.
Utilities..................................................................... 50 n Kamalmentionedthatherfatheriswillingtogivehersome
Food....................................................................... 150 moneytohelpwithhercredit-cardbalances.Sheisreluctant
.
Carpayment ........................................................... 206 toacceptthisofferbecauseshewantstobefinanciallyauton-
Carinsurance.......................................................... 225 omousandresponsible.Shemight,however,considerabona-
Gas........................................................................... 50 fideloanfromherfather,onwhichshewouldmakeregular
.
Cellphone ................................................................ 80 interestandprincipalpayments,justassheisdoingwithher
.
Catfoodandsupplies ................................................ 30 carloan.Thedifference,ofcourse,wouldbethattheinterest
.
Books.......................................................................20 ratecouldbefarlower,evenifitissetatthenormalmarket
Personal(toiletries)................................................... 30 ratebetweenunrelatedparties.Ifhecouldlendher,say,
.
Credit-cardpayments............................................. 465 $2,000,theloanmightbestructuredat6percent,amortized
Anything left over at the end of the month, Kamal applies to her highest-interest credit card. overfiveyears.Themonthlypaymentforsuchaloanwould
beapproximately$39.Shecouldthenusetheborrowedfunds
topayoffthehigh-interestChasecard.ThenKamalneeds
Recommendations toaggressivelyattackherMBNAcredit-cardbalance.Ifshe
AfterreviewingKamal’sfinancialsituation,Blayneymadethese weretopayapproximately$425eachmonthtoMBNA(this
recommendations: istheamountshewaspayingmonthlytobothChaseand
n Sheshouldsignupforheremployer’sdisabilityprogram.Since MBNAminusthe$39shewillnowbepayingtoherfather)
herearningspotentialisherbiggestasset,sheneedstoprotect herMBNAcardwouldbeatazerobalanceinabout4.5years,
thisagainstanyaccidentorillnessthatmightpreventherfrom assumingnofurtherpurchasesaremadeonthecard.Better
working. still,however,wouldbeifFaizunweretoaddsomeofthe
n Shecurrentlycontributes$250amonthtoherretirementplan, extracashshewillhaveasaresultoflowerwithholdingsto
butdoesnotknowifJohnsHopkinsmakesamatchingcontri- herMBNApayment.Byadding$250tothemonthlypay-
bution.Sheneedstofindthisout,andcontributeasmuchasis ment,bringingitupto$625,herMBNAcardwouldbepaid
neededtogetthefullmatch.Shealsoneedstoinvestigatewhat offinthreeyearsandsevenmonths.
arecurring$10.26chargerepresentseverypayperiod.Isthis n ThereisapossibilityKamalmightfindanothercreditcard
eyeordentalinsurancecoverage? thathasalowerratethanherMBNAcard(whichcharges10
n Sheshouldconsiderbuyingrenter’sinsurance.Whileshehas percent),andtransferherbalancethere.However,thismay
veryfewpersonalpossessions,thecostofthisinsuranceisfar resultinanotherblackmarkonhercreditscore,sincefre-
belowthereplacementcostoftheseitems. quentbalancetransfersfromonecreditcompanytoanotheris
n ThecostofKamal’sautoinsuranceappearsexcessive.Itturns generallyviewednegatively.
outthatsheisratedan“inexperienceddriver”becauseshe n IfKamalcanaggressivelypaydownhercarddebtbypaying
onlygotherlicenselastyear.Afterthreeyearsofdriving considerablymorethantheminimumrequired,hercredit
experienceandnoaccidents,thisrating scoreshouldincreasetothepointwhereshecanconsidera
Blayney
shouldgoaway.Herpolicyshowsnodis- homepurchaseandmortgage.Withoutanincreaseinhersal-
countforanti-lockbrakes,nora“goodstu- ary,shecouldconsiderapurchaseofapproximately$200,000
dentdiscount.”Kamalshouldinvestigate with$10,000down.Thismaylimithertoasmallcondointhe
whethersheiseligibleforthese.Ifpos- Baltimorearea,butitisimportantthatshegetherstartasa
sible,sheshouldalsomakeherpremium homeowner,bothforpersonalandfinancialreasons.Asher
paymentseverysixmonths,ratherthan salaryincreases—whichitundoubtedlywill—shecanbuy
monthly,avoidinga$4surchargeeach morehouse.
month.Thereisalsoapossibilitythatshe n Forher403(b)retirement-fundallocation,Kamalshouldkeep
isbeingchargedhigherratesasaresultof itsimple,long-term,andgrowth-oriented.Iwouldrecom-
asuboptimalcreditscore.(Someinsurance menda70–80percentequityallocation(50percentUSand
companiesdothis.)Anystepstakentoimproveherscore theremainderininternationalequityfunds),withthebal-
mayreduceherpremiums. anceinahigh-gradebondfund.
n Kamal’swithholdingforfederaltaxesis60percenthigher
thanitneedstobe;sheisalsooverwithholdingforstate Kamalwasthrilledwiththereviewprocess.“HavingEleanor
Lise Metzger
taxes.Whilemanytaxpayersthinkitisgreattogetarefund, reviewmyfinancialpicturehasbeeninvaluable,”shesaid.
itisusuallyabigmistake.InKamal’scase,sheislending “Hersuggestionsaresimpleanddirect.”Kamalhasalready
$3,200interest-freetothegovernment,whilestrugglingto filledoutthepaperworktoadjustherwithholdingforfederal
andstatetaxes,whichproducesimmediateresults.Sheplansto
signupfordisabilityinsuranceatwork.Findingbettercredit-
cardratesanddeterminingthefundallocationinherretire-
sEvEn stEps
mentaccountwilltakeabitofresearch.Buttheexercisehas to funding
givenKamalhope. YouR dREaMs
“Itisironicthatthosewhoneedfinancialhelpusuallydo
nothaveresourcestogetsuchhelp,”shesays.“Sothiswas By Lili a. vasileff ’77
serendipitous.Iwillcontinuetoaggressivelymonitormysitu-
ationuntilIgettotheplaceIwanttobe.Thanks,Eleanor.” 1. Find your passion and do
it well.
For more information about Faizun Kamal’s clothing and accesso- n Jumpstart your career.
ries from Bangladesh, contact her at Faizunk@yahoo.com. n Uncover opportunities.
n Make your pitch.
n Mark your territory.
How to EducatE n expand your network.
YouRsElf about MonEY
2. invest in yourself first and foremost.
WeB SiteS
www.wfn.com
n Pay yourself first.
www.smartmoney.com
n Ratchet up your savings and
www.money.cnn.com
n Do it with discipline.
www.bankrate.com
n Save at least 10 percent of your net income.
www.troweprice.com (includes calculators for
3. Max out your retirement savings.
investment, education, and retirement planning)
n invest the max.
BookS n Max out your employer’s contributions.
Smart and Simple Financial Strategies for Busy
People, by Jane Bryant Quinn, Simon & Schuster, 4. Get out of debt.
2006. n elect “plastic surgery” by cutting up those
On Your Own: A Widow’s Passage to Emotional credit cards!
& Financial Well-Being, by alexandra armstrong n Lower your rates.
and Mary Donahue, Dearborn, 2000. (although n tackle those balances.
written for widows, advice is applicable to any
woman seeking financial independence) 5. invest smarter.
CaBLe teLeviSion n Do your homework.
Nightly Business Report, PBS n Understand the risk-reward relationship in
investing.
RaDio
n Get professional help if needed.
Marketplace on nPR
neWSPaPeRS 6. Spring for a spending plan.
Wall Street Journal n Cover the fixed costs first.
MaGazineS n target some realistic goals.
Fortune n Pick a prize to splurge on and make it real
Money —put a price tag on it and buy it!
Kiplinger’s Personal Finance n Stay on track with your spending plan.
Barron’s n Realize that a spending plan is about making
good choices.
7. Delete the “Prince Charming action hero” from
Web extra your thinking.
n Be successful in your own right.
William W. Good Photography
this May, alumnae financial-planning profes- n Be independent financially.
sionals offered a “back-to-class” session during n Share and share alike!
reunion on financial planning for young alumnae.
you can download the forty-five minute video, Lili A. Vasileff is a Connecticut-based certified
chock full of practical advice, from our Web site at financial planner and registered investment
alumnae.mtholyoke.edu/reunions/2006/index.php. advisor. Her Web site is divorcematters.com.
MountHolyokeAlumnaeQuarterly|Fall2006 27