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Money Makeover: “Can we afford to have a baby?"

FINANCIAL ROADBLOCK: "We can't get on top of our debt."

MONEY-SMART SOLUTION: Conquer your cards, paying off the highest interest–rate card first.
Breanne and Larry each brought debt to the relationship: She had $15,000 in student loans (that's now down to $13,000), and he had $2,000 in credit card debt and a $20,000 car loan (they ultimately sold that car in order to purchase their house). Together, they have four credit cards with a total debt of more than $6,000; they currently put about $400 a month toward paying them off. "I think we would be a lot less stressed if we paid off our debt," says Larry. "Things are tight already, and if we had a kid, we would have to watch every dime we spent." Adds Breanne: "If we take the plunge and start a family now, I'm afraid we'll be pinching pennies for years to come."

To reduce their debt as quickly as possible, Ulrich suggests that Breanne and Larry make it a priority to pay down the credit card with the highest interest rate, while paying only the minimum on the other cards. The couple should also transfer the balances on the two retail cards they have — both of which have interest rates of over 20 percent! — to their credit card with the lowest interest rate. "This will put all the debt at close to 11 percent interest, which will save Breanne and Larry at least $20 a month in interest payments," says Ulrich. Once all the balances are transferred, they should cancel those retail cards. Finally, Breanne and Larry should make a pledge to each other to stop using their credit cards until they're paid off. If they need to make a purchase, they should pay for it in cash.

FINANCIAL ROADBLOCK: "We live from paycheck to paycheck — and we can't seem to save a dime."

MONEY-SMART SOLUTION: Scrimp to start an emergency-cash cushion.
The Stones' goal: to have three to six months of living expenses set aside for emergencies and a future baby fund. But it's hard for the couple to curb their spending. "There's hidden money everywhere," says Ulrich. "You just have to look for it." Breanne and Larry should tally all their expenses and receipts over the course of one month, Ulrich says. This should include everything from a 99-cent coffee to a tank of gas. By looking at their spending in black-and-white, they'll see places where they can make cuts and immediately set aside that found money in a savings account. "Say they're spending $35 a month on ATM fees," says Ulrich. "If they just hit the ATM less often and resolved to stick to their bank branch ATM — or even shop for a new bank that has lower fees and is more convenient for them to get to — they'd be that much better off each month," she says.

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