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The girl: Tiffany

Age: 25

Job: Nonprofit

Where she calls home: The Midwest

Her sitch: In June 2008, Tiffany owed $14,611.47. She's managed to chip away at the balance by using gift money, tax refunds and watching her spending, but she still owes close to $8,000, and she's not sure what else to do.

"I don't have any real system," she says. "I tried fun Excel spreadsheets and advice from friends, but nothing really panned out. In the end, I just kept throwing any money I could at it, from $50 to $200, as often as I could. But I'm hoping to move in the upcoming months, so I won't be able to set much aside to pay off the debt. Help!"


How'd she rack it up? Tiffany lives in a college town and has had trouble committing to long leases, so she's moved five times in as many years. "Every time I moved, I would put extraneous costs on the credit card, telling myself I'd pay it off right away," she says. "But one new thing always leads to another when you move into a new place." On her expense list: paint, shower curtains, rugs, cleaning supplies and lots of takeout food. "It always caught me off guard when it added up," she says.

The glitch: Tiffany has plans to move to New York City in May, where she'll look for another nonprofit job. Currently she works for a women's transitional home and brings home about $1,750 a month after taxes. She expects to make $35,000 to $45,000 in a similar position in New York. "What I make now is barely anything, and in general the pay isn't great for nonprofit work," she says. "Having a salary that can just wipe the debt away is unlikely. What do I do?"

The expert's take: First of all, the fact that Tiffany has shaved more than $6,000 from her balance in less than two years is fantastic. But her plan to move to the Big Apple with $8,000 still hanging over her head raises the eyebrow of Boston financial planner Cheryl Costa. "I would suggest she look long and hard at whether she can afford the move to New York," Costa says. "Does she have an appreciation for how much it will cost her to live there? If she makes this move, it may take forever to pay down her debt."

In other words, Tiffany needs to rethink her priorities. New York isn't nearly as fun when you're eating rice and beans and struggling to pay your astronomical rent. Costa's suggestion: Make a deal with herself that she can only move after the debt's nixed -- or substantially reduced.

What the debt calculator says: According to the debt calculator at Mint.com, even if she regularly put $200 a month toward her remaining balances, it would take Tiffany 4.2 years -- and cost her $1,830 in interest -- to pay down her debt. Instead, Costa offered her these five tips...

Tiffany's 5-Step Plan to Getting Back In The Black:

1. Pester her card issuers. Call and ask about a reduced interest rate. And be persistent. "She can't just give up if the first person she talks to doesn't lower her rate," Costa says. "She needs to be prepared to work her way up the chain of command." (Especially now that everyone and their brother is trying to do this.)

2. Transfer her highest-interest balances. About $3,200 of Tiffany's debt is sitting at 10.24 percent, and another $3,900 is hanging out at 15.24 percent. But she also has an Amex card with an interest rate of 3.99 percent. Even with transfer fees, it may be worthwhile to move balances to her Amex card, if that rate is going to last a while. (Oh, and charging anything new? Use the Amex, please.)

3. If she can't transfer... Then by all means, tackle the highest-interest debt first. Make the minimum payments on the other cards, and then throw all her excess cash at the one charging 15.24.

4. Consider a second job. Nonprofit work isn't known for its six-figure salaries. If Tiffany's serious about being debt-free, a shift at Starbucks (devoted to paying off her plastic) would help.

5. Ask family. If Tiffany's parents have cash languishing in money markets or savings accounts, it's unlikely that they're earning more than 1.5 percent. "Maybe they could lend Tiffany the money at a rate that would still be a good deal for them, but would help Tiffany save hundreds in interest charges," Costa says. She could even formalize the loan through a service like Virgin Money.


Got a money conundrum you can't solve? Tell us, and Lemondrop could put a financial adviser to work for you -- for free!

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Kate Ashford is a freelance journalist who writes about personal finance and health (and other things). Without online shopping, she wouldn't own anything. Her work has appeared in Money, Health and Glamour. For more, check out HerTwoCents.com




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