Budget Plan Put Brakes on Overspending

Deena Williams had it backward: Rather than have her finances dictate her lifestyle, she let her lifestyle dictate her finances.

The result was not pretty. True, the 28-year-old already owned a condominium in Westchester, but shopping expeditions and nights out with friends had pushed her credit card debt past $5,000 and left her with insufficient savings. Predictable but infrequent expenses such as car insurance bills would bring on a crisis because of her spotty approach to managing her personal finances.

When she was “restructured� out of her $45,000-a-year job last January, she realized she needed to change her ways.

To help Williams live within her means, Manhattan Beach fee-only financial planner Timothy Wallender had two primary suggestions: 1) Get rid of all but one credit card, to be used only for emergencies, and 2) draw up an annual budget to determine how much she could spend each week, then withdraw that amount in cash weekly and make it last the full seven days.

“That budget suggestion was exactly what I needed,� said Williams, who now earns a salary in the same ballpark as a business planner for a media company. “I added up all the expenses I would have, including ‘gotchas’ such as car registration and insurance, and divided by 52. Then I knew how much I could spend, and bills weren’t such a headache.�

But she admits that resisting the temptation to overspend has not been easy and that she continued charging until October, when she resolved to do as Wallender advised. She reports that she hasn’t charged anything since then--not even holiday gifts--but that her credit card balance, although lower than before, is around $4,000.

She says she’ll start saving for retirement again when she becomes eligible to participate in her company’s 401(k) plan.

In the meantime, Williams has been directing her attention to the stock market. Her $50-per-month investment club contributions have bought her shares in winners such as Amgen, Intel and Home Depot.

“Things are much better now� than they were in February, she said. “I’ve got a job that I love, and I feel a lot less stress about my finances.�