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Maxed Out 2008-07-30 08:00:26

Maxed Out: Like Mother's Poor Money Habits, Like Daughter


This episode of Maxed Out is about Karen and Caitlin, a mother and daughter pair who are struggling to save for Caitlin's college education because they're living beyond their means. Karen has no savings and too much debt (about $20,000 and growing) to help save for college, and Caitlin is copying her mom's bad money habits. Caitlin has spent every penny of her income from her Summer part-time job on eating out and wants to start culinary school in just one year.

Karen is worried that Caitlin will go through a life of stress over money like she has and knows that her old habits are quickly becoming Caitlin's new ones. Financial guru Allison Griffiths thinks they need some behavioral modifications; find out what they are when you read more.

Initially, Allison suggests that Caitlin work for a year or two before going to college to save up money for tuition. That's not a possibility, because they would lose the $800 in child support they receive each month if Caitlin isn't in school. Karen has a big shopping habit and is careless about paying bills on time, and those two weaknesses put her about $450 in the red each month. Karen justifies shopping by only spending money on deals, and says that she can't spend $100 on anything but will spend $20 five times.

Allison has them drastically cut their expensive cell phone bill, tells Karen to make sure she pays all her bills on time and cut out her frivolous shopping, and instructs them to eat breakfast at home, pack a lunch, and eat dinner at home two or three nights each week. In order to start Caitlin's college fund, Allison has Caitlin deposit half of every paycheck to a separate savings account and asks Karen to contribute all of the child support. With Allison's help, they have cut expenses by $900 a month and will have $10,000 saved by Caitlin's first semester.

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