The Molly Project: Episode 1

Ladies and gentlemen, welcome to my new web series: The Molly Project. Molly is a real person. Molly is her real name. Molly has a financial life. It has serious problems. I decided that she needed a major financial culture shift, and that this blog was the perfect accountability partner. So with Molly's permission, we are going to fix her financial life together, right here on PeteThePlanner Dot Com.

There are some things that you need to know about the Molly project:

• Molly wanted to do this.

• Molly didn't want to use her actual picture. Instead she chose Gennifer Goodwin, her celebrity doppleganger, to be the face of The Molly Project.

• Your situation may not be like Molly's, however Molly's situation will teach you a great deal about your situation.

• You can comment on the Molly Project below, but if you even hint at poking fun at her situation, then you will be blocked from commenting permanently. We're here to learn, not hate.

Molly has several financial goals that she would like to achieve, however her life is burdened with debt. She has an education. And she has some more education. She went well over $50,000 into debt to fund specialized degrees that she's not using. Molly had a family member put up stock as collateral for a bank-loan, that bank loan is due in just five months. She owes over $12k on that loan. The bank setup her payment schedule for that loan. The way that they set it up - it would have been impossible for her to pay back the entire loan based on the payment structure provided. She didn't realize until recently that the "ballon payment" is due in July. The bank may extend the loan, or they may just take the stock from her relative.

Molly is a very wonderful young lady. She is a vibrant, optimistic person that I really like. Her optimism has actually become a financial liability. She just assumes that things will work out. She just assumes that since a bank will loan her money, that things can't be that bad. Things are that bad...for now. They won't be after we fix her situation. Take a look below at the raw data. The Molly Project begins now.

Name: Molly

• Age: 35

• Gross monthly income: approximately $4,739

• Net annual income: roughly $40,000??? (According to Molly) Obviously, this is where we will begin

• She recently got a raise as of 1/3/12 and the past 2 pay periods have included bonus money so she's had trouble calculating the actual figures, but her annual salary is $52,500.

Chase Credit Card (business purposes):

• Balance--$6,874

• $155 minimum payment

• 15.24% APR

Bank of America Credit Card:

• Balance--$17,241

• $352 minimum payment

• 11.55%APR on purchases ($15,495) & balance transfers ($646.52); 24.24% APR on bank cash advances ($598.20)

GAP Credit Card:

• Balance--$102.98

• $25 minimum payment

• 24.99% APR

LOFT Credit Card:

• Balance—$142.88

• $25 minimum payment

• 24.99% APR

Wells Fargo (Car Loan):

• Balance: $5044.27

• $225.84 payment

Missouri Bank (personal loan):

Original loan amount $25,000, Balance--$12,678.16 as of 2/24/12 payment, monthly payment-$458.20, 3.99%APR *matures 7/24/12

Student Loans

• Balance--$31,734.11

• $152.11 minimum payment

• 4.5% APR

Monthly expenses:

• Rent: $550 (includes utilities)

• Car payment: $225.84

• Cell phone: $79.99

• Car & Renter’s Insurance: $83.99

• Groceries:$200

• Gas: $150

• Savings Account (ING Orange): $50

Initial Questions from Molly:

• I receive bonus money with each contract I’m on (roughly 3-5 contracts a year). The amount varies ($500-$5,000) depending on the contract and whether or not I reach certain benchmarks. In any event, I anticipate getting approximately $2,500 in the next 6 months from bonus and was wondering what you’d suggest I put that towards—paying off more debt or savings?

• I have a TIAA Cref account from my former employer with roughly $3,000 in the account that I could move & about $3,000 I can’t touch till retirement. Should I leave the full balance in the Cref account or roll the portion I can touch into something else?

• once the store CC’s are paid off, should I leave those credit lines open (GAP, LOFT)?

• My ING Orange account was something I established a few years ago to auto-deduct a small amount each month to give myself a cushion for unforeseen expenses that pop up. Unfortunately, I keep having to dip into this account (most recently around Christmas) and I barely have $200 in it at this time. Should I keep the account? If so, should I be saving more each month even with so much debt?

• I have a wedding I need to attend out of town this July and I’m concerned about how I can make it happen financially. Is this something I can do at all? I have a free airline ticket and will be most likely sharing the room expense with another couple but am not sure this is something I can swing in the coming 6-9 months. It’s a very close friend and feel compelled to be there but would like your advice.

We will be answering all of these questions, and we will be changing Molly's life. How do I know that I can change her life? What makes me so confident? Because I do it everyday. You just don't normally get to watch this closely. I encourage you to tune into all of the episodes of The Molly Project. Episode 1 was just about getting you up to speed. In Episode 2, we will get to work.