Each week on SOAPnet’s new original reality series Bank of Mom and Dad, a twenty-something woman who is drowning in debt must pay the ultimate price by letting her parents move in! With the assistance of money coach Farnoosh Torabi (that's me), Mom and Dad will teach their daughter to rethink her spending habits and transform her relationship with money.
This week we meet 24-year-old beauty queen Sarah Timm, Miss Central Pennsylvania 2009. After years of preparing for and competing in glamorous pageants Sarah racked up more than $20,000 in debt, including a personal loan from her boyfriend Jimmy.
With her pageant days soon behind her, Sarah wants to start fresh by starting her own business coaching aspiring pageant girls. But her financial debt is getting in the way of her career ambitions. How does she begin to reign in spending and pay down her debt?
Here are the main tips from the episode:
Shore Up Cash Under Your Roof. There’s money to be made all under your roof and having a yard sale to bring in a lump sum of cash can come in extremely handy if you have piles of debt like Sarah. With a closet full of evening gowns from previous pageants Sarah was sitting on a gold mine. In just a few hours she managed to sell several of her old dresses and rake in more than $1,000.
Save Big on Fitness. Sarah had three gym memberships and a personal trainer, spending more than $300 a month on her fitness — far too much on her monthly income. Instead, work out at home to free exercise classes available on FitTV and on on-demand exercise channels on your television. You can also find a jogging partner (in Sarah’s case, her boyfriend) and go for free runs in the neighborhood.
Take Personal Loans Seriously. Sarah’s borrowed at least $1,000 from her long-time boyfriend Jimmy and, until I brought it to her attention, she didn’t really consider this to be “debt.” She wasn’t too concerned about returning the money to Jimmy in the near future.
She considered her credit card debt to be more urgent. But as I cautioned to Sarah, money often comes between relationships and loans from friends and family need to be treated responsibly, as if you had borrowed from a bank. I presented Sarah with a basic personal loan contract that she should always use when dealing with loans in excess of a few hundred dollars. Peer-to-peer lending Web site Virgin Money also facilitates loans between friends and family for a starting fee of $99.
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