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Money Action Plan: Kenny & Valerie

Tuesday, 5 Aug 2008 | 8:27 PM ET
Personal Finance 101
Helping you curb your spending, with CNBC's Carmen Wong Ulrich.

Kenny and Valerie feel like they’re drowning. After trying for years to start a successful business as a financial planner, Kenny now feels like he needs one of his own. With the rising cost of living and Valerie’s decision to quit her job to stay at home with their two small kids, the monthly expenses are starting to take a toll on the family’s livelihood. Throw in a pricey private school that the kids attend – an amenity Kenny and Valerie are unwilling to give up – and a mortgage that’s about to adjust, and this family needs a plan.

Here’s what Carmen mapped out:

There’s no need to short sell the house. Kenny and Valerie’s housing costs are actually some of their more manageable expenses and a short sale won’t actually free up any new money.

The only way to stop living paycheck to paycheck (and keep the kids in the private school) is to gain more income. This means Valerie should consider going back to work, even if it’s part time.

We'll check back with Kenny and Valerie soon after they get back on track.