Polish credit. Williams credit sources are currently 597, 598, and 639. Her scores are low due to closing all her credit cards, a short credit history, and errors on her credit report. She currently has a dispute pending with the three credit bureaus. “Getting a credit card would help her score if she uses it properly,†says Baker. Williams should get a card with a $500 to $1,000 limit and pay her bill in full monthly, he adds. She should also look into secured credit cards, but make sure the card issuer reports her payments to all three credit bureaus. Williams should check her credit report annually at www.annualcreditreport.com to ensure all her information is accurate. Inaccuracies should be submitted in writing to the credit report company. Sample dispute letters can be found at www.ftc.gov.
Prepare for the future. After Williams builds her emergency savings over the next couple of years she can begin to explore investing outside of work. She was thinking of individual stocks, but, “mutual funds with various asset classes would serve her better,†says Baker. Given Williams’s age, Baker recommends she invest 29% of her investment funds into large-cap stocks, 9% in midcaps, 6% in small-caps, 6% in real estate, 3% in alternatives, 16% in international stocks, and 31% in fixed income. In the meantime, her Thrift Savings Plan is 100% invested in a G fund that is entirely government treasuries. These funds place a higher priority on the stability and preservation of your money than on the opportunity to potentially achieve greater long-term growth. Williams should place her monies into the other equity options such as S, C, and I funds to expose her to increased volatility.
To address her concerns about financial security as a single woman, Baker says she should sit down with her human resources department to be sure she is making good choices in her benefits.
Unfortunately, as far as retiring at 55, it’s unrealistic given her current savings, says Baker, “Unless real estate really takes off and she’s making an additional $10,000 to $15,000 a year.â€