Gift-giving time pressures those paying off debt - Holly Lesmeister

By Kara McGuire, Star Tribune

Last update: September 8, 2007 - 9:18 PM

Since meeting with financial adviser Echo Huang in August, 30-year-old Holly Lesmeister's checking account balance has grown from $50 to about $600. She's more conscious of her finances and has reduced her clothes and food spending each by $100 a month. But she still needs to cut out $50 more in both categories to stay on her budget, and Huang suggests she start making lunch at her Minneapolis apartment to bring to her graphic design job and switch to a different grocery store (she shops at Kowalski's).

Huang is pleased with Lesmeister's progress. Compared with her old ways, her new spending is a "great improvement," says Huang, a certified financial planner with the Advocate Group.

One thing she really wants to see soon is Lesmeister transferring $50 monthly to a high-interest online savings account. Otherwise, she may get used to her higher checking account balance and feel the urge to spend the money.

But Lesmeister won't begin to pay down her student loan debt aggressively until after Christmas, even though the longer she waits, the longer it will take for her to buy her own condo. Instead, she'll use half the $600 in her checking account for the holidays. She'll open a savings account with $50, as suggested.

Fortunately, her family decided long ago to limit gift spending to $20 per person.

After spending $160 on gifts for eight people, she figures she'll spend another $140 on food, wine and parties. But no new outfits this year. "I have to force myself to get creative with clothes I already have ... or check out some second-hand stores," she says. She also won't hop on an airplane as she usually does to visit friends on the West Coast for a week. Minnesota in the winter is a tough sell, but she figures they can come visit her for a change.

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