Bank of Mom and Dad: Emotional Spending

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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 ... 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.

Ever shop to make yourself feel better because you had a bad day or a fight with a friend? At what point does it become a problem?

For Shameeka Philip, the newest female contributor on Bank of Mom & Dad, the situation became extremely clear when she found herself owing more than $60,000 to creditors.

The main mistake she made was using her entire $40,000 line of credit (money that was supposed to go toward home renovations) mainly for travel, spa trips and shopping sprees. (She also reduced her hours at work so she could travel). The rest of her debt stems from other credit cards and a student loan.

Now, with hopes of having a family one day and settling down, Shameeka needed to repair her financial wreckage and address her out-of-control spending habits once and for all.

Her mother Meshele and stepdad Brian moved in for one week to help their daughter learn her mistakes and open her eyes to smarter financial decisions. Along the way I offered budgeting advice and savings tips like these:

Lower Your Interest Rates. Even in this recession when we’re hearing horror stories about card companies raising rates, there’s still hope for some customers who want to reduce their interest rates in order to better pay down their balances. In Shameeka’s case, her $40,000 line of credit was carrying a whopping 18% interest rate. Her minimum payments each month of $1,265 were barely chipping away at the principal and most was going toward interest.

It would take Shameeka 29 years to fully pay down the debt at that rate. I suspected she could get a lower rate by calling her bank and sure enough, after explaining she was going through some hardships, she managed to convince the powers-that-be to reduce her rate to just 4%. Her minimum payments dropped dramatically, but by keeping her payments at $1,265 she would be free of that debt in a little more than three years. Amazing!

Get the Look for Less. To say that Shameeka has expensive fashion taste is an understatement. She says she is physically drawn to pricey shoes and handbags and her skin tingles at the site of fine leather. With the help of a professional stylist Shameeka learned how to get the look she craves for much less, including $35 jeans that look and feel like the ones she buys for $200 or more.

Seek Therapy. When you hear Shameeka say that she has a shopping addiction, you wonder how deep the problem really is and where it’s rooted. It turns out Shameeka has been having a hard time dealing with her emotional issues stemming from family relationships. With the help of a professional, Shameeka is encouraged to open up her well of emotions and learn how to cope with them in ways besides hitting the mall.

Catch a new episode of Bank of Mom and Dad Wednesdays at 10 p.m. (9 p.m. Central) on SOAPnet.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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