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Week of January 4th, 2008 • Previous Question | Archive

Ms. Sabella has managed MainStay Balanced Fund since its inception in 1989. She is a Managing Director and has been with NYLIM since 2000. Prior to that, she worked at Towneley Capital Management, Inc. for 22 years. Ms. Sabella is a member of the Financial Planning Association, Financial Women's Association, and the CFA Institute. She holds a B.B.A. from Baruch College, is a Certified Financial Planner, and is a Chartered Retirement Planning Counselor.

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Q:I am 35 years old and recently got married. My husband and I went from renting an apartment to owning a home and now find ourselves living paycheck to paycheck. I feel very overwhelmed by it all. How can we gain control of our finances?

A: First of all, I have to say that your question brought me back to the first purchase of my first home in 1983. I borrowed from my 401(k) for the down payment and started asking myself how I was going to pay that loan and a mortgage too. So don't panic, you are not alone. According to recent survey conducted by CareerBuilder.com, four-in-ten workers (41%) say they too live paycheck to paycheck. Owning a home is a step in the right direction towards building a solid foundation. Unlike renting, your monthly "payments" are going towards building equity in your own home and that's important. The key to gaining control is watch your spending and minimize your expenses

Start by keeping a journal, writing down all of your expenses will enable you take an objective look at how much you're spending on a daily, weekly, and monthly basis. Divide that list into necessities and luxuries. Put off buying new furniture or doing home renovations unless absolutely necessary, stay in rather than dine out, and give up your premium coffee (even saving approximately $3.00 a day for a year can add up — to $1,080 to be exact.

You may also want to consider putting away your credit cards for now. If you find yourself concerned over current debt, then the concept of "buy now and pay later" will only compound the situation further. Make smart financial decisions now and you will soon find yourself in a better financial position later. (By the way, I did pay back the loan, sold that home and bought another one in 1995 and I am happy to say that many of the above suggestions helped me attain financial stability.)

This article is intended to provide general information only and is not intended to provide investment advice or any recommendation to buy, sell or hold securities. The content of this article is not appropriate for the purposes of making a decision to carry out a transaction or trade, nor does it provide any form of advice (investment, tax, legal) amounting to investment advice or make any recommendations regarding particular financial instruments, securities, investments or products. Any information herein has no regard to the specific investment objectives, financial situation, or particular needs of any specific investor, and investments discussed may not be suitable for all investors. Neither NYLIM nor New York life will be liable for any errors or inaccuracies in such content or any actions taken in reliance thereon. As a registered investment advisor, NYLIM may render investment advice for compensation only as permitted under applicable US and state law.

Questions will usually be answered within the next bi-weekly posting of Ask Joan. If a question is particularly involved, or the answer depends on the specific circumstances, it may be possible to give only a very general answer. In these cases, you will be advised to seek more specific advice.

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Q:I am 35 years old and recently got married. My husband and I went from renting an apartment to owning a home and now find ourselves living paycheck to paycheck. I feel very overwhelmed by it all. How can we gain control of our finances?

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