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Sunday, February 25, 2007 - Page updated at 12:00 AM

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Marker | Get out of debt and get a better job

Special to The Seattle Times

Top priorities


1

Get a better-paying job

2

Stay on budget

3

Pay down debt

Craig Marker, 37, rents in downtown Bellevue and has a temporary job working as a product manager for T-Mobile. He has racked up a $36,000 debt on five credit cards, some with interest rates as high as 29 percent, thanks to a relationship breakup and career-driven moves to San Diego and back.

What he has

Marker's main asset is a Ford Escape, bought in mid-2006, just before gas prices spiked. It's worth $20,000, but he owes $24,000 on it. His 2006 income was $67,200.

With credit-card payments of $689 a month and a $388 monthly car bill, it's been hard to save. Marker has $200 in a savings account, $300 in an IRA, and he's invested $940 in individual stocks through a ShareBuilder account.

What he wants

Get out of debt so he can buy a house. He's also hoping to find better-paying work, a move certified financial planner Nathan Ricks of Mercer Advisors in Bellevue says is the best move he can make in the long run.

What he needs

Career shift: Marker wants to study to become a project manager but hasn't had time to pick a program. Getting the training he needs should be Marker's top priority, Ricks says. Project managers in Seattle earn an average salary of $83,000, a substantial increase over Marker's current income. Incurring student-loan debt shouldn't scare Marker off because it's a worthwhile investment in his future earning power.

In the meantime, he's updated his résumé on the tech-industry networking Web site LinkedIn in the hope of snaring a better job.

Tighten the belt: Ricks laid out a budget for Marker that limits his spending on eating out, clothing, entertainment and other discretionary items. If he can stick to it, Marker will have an extra $1,050 a month or more to pay down credit-card debt.

To cut expenses more, Marker is exploring selling his car and buying one that's cheaper to operate. This year, he moved to cheaper digs in Issaquah, which is saving $100 a month.

Stop making risky investments: Marker has way too little savings to be investing in the high-risk world of individual stocks. The $250 a month Marker recently began putting into ShareBuilder should go instead toward paying off the credit cards.

"You don't invest in something where you might get a 10 percent return when you're paying 29 percent interest," Ricks says.

Build reserves: Marker has too little cash on hand to protect himself against incurring more credit-card debt if unexpected financial problems crop up. This is especially true because his T-Mobile contract is slated to end in April. Ricks recommends Marker transfer his ShareBuilder balance to his savings account to start accumulating three months' expenses.

Tackle credit cards: The first step is to ask for lower rates on two high-interest cards with small balances. If he can't lower the rates, he should find cheaper cards and transfer those balances.

Even without any interest-rate breaks, Ricks calculates it should take just two years to pay off all the cards. The key is to pay extra principal on the highest-interest cards first.

Although Marker's eager to buy property, Ricks strongly recommends dealing with the credit-card debt first.

"This debt is like a cancer," he says. "First you need to do chemotherapy and get well."

What he thinks

Impressed with how soon he can knock out his debt, Marker got into gear right away. He plans to meet with a career counselor at Bellevue Community College, and he got his Capital One card interest rate slashed from 28.15 percent to 16.9 percent.

"I'm building my spending around paying off this debt," he says. "Two years from now, it's going to be a very different world."

Copyright © The Seattle Times Company

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