Money Action Plan: Monday, Aug. 11

With so many demands on our money today, just staying afloat can seem like an Olympic challenge. That’s where Carmen comes in. Below are the two Money Action Plans she laid out for two different families on Monday’s show. Need a plan of your own? Email Carmen here and you could be next.

John, NJ

John and his wife both worked in the mortgage industry but lost their jobs when the market turned south. While his wife found work relatively quickly, John had a harder time. With the bills piling up, the family felt they had no choice but to turn to John’s nest egg as a last resort. Now, finally back to work, John is trying to stay optimistic but admits he doesn’t see a “magic answer.”

With a deficit of nearly $2000 a month and no real savings, Carmen advised John to free up some equity by selling his home. It’s not what anyone wants to hear, she said, but it’s the most practical way to get back above water. If he sells his home, lives sparingly and builds up some cash savings, Carmen’s sure John will be back in control of his money.

Kim, WA

Like John, Kim was doing well for herself as a real estate agent until the demand dried up. She’s now bringing home only half of what she was earning last year, and she’s watching her savings dwindle when she should be saving for retirement. But she doesn't want to sell her home and it's a priority to keep her daughter in the same school district.

Carmen told Kim to consider the upside to selling her home. While she’d likely lose the $60,000 down payment, she’d get her housing costs down from the 51% of her income they currently take up to a more manageable and "recession proof" 30%. She's eating up too much in terms of expenses. With the real estate market still an unknown, it’s better to be safe than sorry by assuming her income won’t rebound in the near future. “If you sell, you can save,” Carmen said.

Watch the video to see the complete money action plans.