To Have and to Hold

Sydney Kamlager is getting married.

That poses a daunting challenge for the 24-year-old art director, who desperately wants to begin her independent adult life on firm financial footing. Her assets are modest and her obligations substantial. And she’s financing part of her wedding herself.

She’s a diligent saver, but a bit unrealistic about what things cost, according to a financial planner and a wedding expert asked to review her case.

Her financial goals: to save for a down payment on a house and for her eventual retirement. Her wedding goals: to put on a 150-person ceremony and reception in the fall of 1998 in Chicago--her family’s and fiance’s hometown--for $8,000. She plans to contribute $2,000, and her parents and fiance, Bill Holder, a 35-year-old composer and sound engineer, will contribute the rest.

The rub: Kamlager has champagne-and-caviar taste and a beer-and-pretzels budget.

After receiving a master’s degree in public policy last spring from Carnegie Mellon University in Pittsburgh, Kamlager was hired to be the community public art director for a Venice-based nonprofit agency, a position paying $28,000 a year. That job also means she will receive $6,000 over a two-year period from a special program offered by her graduate school to reward students who choose to take jobs that may contribute to the public good, rather than higher-paying private-sector employment.

Although her resources were rather modest, Kamlager immediately put an ambitious savings plan into action.

She refinanced her student loans, cutting her monthly payments from $800 to a more manageable $400 before her first installment was due. She began saving $200 a month, dividing the sum evenly among four mutual funds: AARP Growth & Income (five-year average annual return: 17.5%), T. Rowe Price International Stock (12.2%), Strong Short-Term Bond (6.6%) and an individual retirement account invested in Strong Growth (two-year average annual return: 26.1%). In addition, she has $1,500 in a bank savings account.

It’s a commendably auspicious start, but Kamlager could encounter financial roadblocks unless she makes some changes in her spending patterns, said Peg Downey, a fee-only certified financial planner based in Silver Spring, Md. Her main problem is that she hasn’t learned to budget her income.

Kamlager doesn’t yet have complete control over her spending. She currently owes about $1,400 on credit cards, and the interest on that amount adds up fast. She’s been attempting to reduce those bills, and she will succeed for a time, making $150 in payments every month. But then she’ll do something like charge a trip to Chicago to visit her mother and fiance.

“My mother says I sometimes live beyond my means. But it’s hard,� she said. “When I was in school, if I’d want a cashmere sweater, my parents would pay for it. Now they don’t.�

And these days? “I love going to Barneys, but I then stay awake at night thinking about my student loans,� Sydney said.

Actually, Kamlager is fortunate her debt situation isn’t worse. She enjoyed the standard six-month grace period between the time she received her graduate degree and when she had to start repaying her student loans. And her car, an ‘80s-vintage Volvo, is paid for.

All that has allowed her to get such an ambitious savings plan underway, the planner said, but it would be wiser for Kamlager to scale down her savings rate for now, instead making her first priorities to squirrel away funds for her wedding, pay off her high-interest credit card debt and build her emergency savings up to $3,000.

The emergency savings are an especially important component, Downey said, because Kamlager’s budget is extremely tight, and any unexpected expenditure--such as a big car-repair bill--could end up increasing her debt load significantly. Kamlager can aim in earnest for her longer-term goals--the home down payment and retirement savings--after the nuptials take place. And there’s no rush to pay off the low-interest student loans.

A quick look at the numbers illustrates what Downey is talking about:

Kamlager nets $1,632 a month. Her fixed monthly expenses include $400 for her student loans, $500 for rent and $55 in auto insurance payments. If she starts saving $100 a month toward the wedding and continues paying off her credit cards at a rate of $150 a month, she has only a little more than $400 a month to put toward food, gasoline, the phone bill, dry cleaning, entertainment, emergency-fund savings and the care of Pearl, her cat.

In other words, it’s very unlikely Kamlager will be able to both meet her expenses and put away any extra money on top of what she’s saving. Something will have to give.

“I suspect the money you are putting in mutual funds will soon be going instead to student loans. You are going to need the money,� Downey told her.

Downey urged Kamlager to keep a spending diary for the next few months in which she records every expense, from buying a soda to purchasing a wedding dress. At the end of the period, she should go through it and break down the expenditures by category--food, housing, clothing, auto maintenance and travel. Once she knows where her money is going, she can set up a realistic budget.

The planner also encouraged Kamlager to begin putting her wedding savings into a money market account, where she’ll get a better return on it than in bank savings, yet avoid the risk of her other investments.

Downey added that Kamlager’s investment choices are all good and that the only change she would recommend would be to add a fund specializing in mid-sized companies--T. Rowe Price Mid-Cap Growth (two-year average annual return: 29%)--to add a bit more diversity.

But Kamlager should concentrate on budgeting first.

“Money isn’t an enemy you must struggle against but a tool you can use for yourself,� Downey told her. “Spending is all about making trade-offs and choices. If you want to save for your wedding, you might not be able to visit Europe with your mother and father this summer.�

The same might be said of wedding costs, said Alan Fields, co-author of the book “Bridal Bargains: Secrets to Throwing a Fantastic Wedding on a Realistic Budget.�

Fields pronounced Kamlager’s goal of an $8,000 wedding “challenging.� Nuptials these days now average $19,000, and expenses are higher in major metropolitan areas such as Chicago and Los Angeles.

Kamlager points out that for her, a wedding isn’t simply a financial matter, it’s also a philosophical one. “I just can’t see spending gobs of money on one day. But I don’t want the wedding to be tacky, either.�

Fields agreed. “A wedding is an expression of who you are. I don’t see anything wrong with a $7,000 or $8,000 wedding, but people often have a picture of one wedding when their budget is something else.�

Kamlager, for instance.

She was thinking about an open bar and a menu with seafood--perhaps paella and shrimp gumbo. Her fiance had his eye on a suburban reception site that charges roughly $50 to $75 per person for site rental and dinner. The couple plan to invite between 125 and 150 people. A conservative estimate for the dinner and bar tab alone, then, would put Kamlager about 50% over budget. And she hasn’t even thought about the costs of flowers, invitations, music and many of the other extras that make weddings so expensive, Fields said.

“Oh, my God,� Kamlager responded. “I had no idea.�

Fields’ suggestions: Forget the pricey site and consider places that allow brides to use their own caterers. He recommended city government-owned sites, which can rent for as little as $50 an hour.

Time of day is a factor too. It can be cheaper to rent reception sites during the morning and afternoon, and food costs can be dramatically less then too, because guests won’t expect as much food or liquor earlier in the day.

“In the afternoon, you can get away with such budget-conscious choices as cheese plates, fruit, crackers and vegetables, as well as a simple wine and beer bar, with champagne only available for the wedding toast,� Fields said.

As for the food: “Seafood is very expensive. Strike it from your list,� he advised.

Other ways to stretch the wedding budget: Hire a professional photographer only for the actual ceremony and the wedding-party portraits. During the reception, let the guests snap away with disposable cameras.

Decorate with seasonal flowers.

Use the talents of friends and family members. For example, Kamlager’s stepfather is an artist who could be enlisted to design her invitations.

Originally, Kamlager had hoped to save money by wearing her mother’s wedding dress, but it was too “funky� a style, she said. Still, she should resist any temptation to splurge on an expensive designer gown. If she doesn’t want to go to a dressmaker, she could consider less expensive bridal designs such as those by Jessica McClintock, Mon Cheri or Eden. Another option would be to buy a used dress at a consignment shop, where gowns often retail for less than half their original cost.

Naturally, all this budgeting won’t be easy. But it should pay off in the end.

“I have goals, goals, goals,� Kamlager agreed with a laugh.

Helaine Olen, a Los Angeles-based freelance writer, is a regular contributor to The Times. She can be reached on the Internet at [email protected]

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This Week’s Make-Over

* Investor: Sydney Kamlager

* Age: 24

* Occupation: Community public art director

* Gross annual income: $28,000

* Financial goals: Save for wedding; begin putting away money for retirement and a down payment on a home.

Current Portfolio

* Mutual funds

$350 in Strong Growth in IRA

$350 in T. Rowe Price International Stock

$350 in AARP Growth & Income

$350 in Strong Short-Term Bond

* Cash

$1,500 in a bank savings account

* Debt

$1,400 on credit cards

$50,000 in student loans

Recommendations

* Learn to make a budget and stick to it. Start by keeping a notebook that tracks all expenses.

* Decide how much money to spend on the wedding and stick to that amount.

* Top priorities should be paying off credit card debt, building emergency fund to $3,000 and saving for the wedding. Mutual fund contributions should be scaled back for the time being to facilitate meeting those immediate goals. Some of what’s now in the stock and bond mutual funds can be considered part of her emergency reserve. Wedding savings should go into a separate account, perhaps a money market account.

* Current mutual fund choices are good, but a mid-cap fund would add diversity to the mix. After wedding expenses are paid, she may want to consider adding T. Rowe Price Mid-Cap Growth ([800] 638-5660).

Meet the Planner

Peg Downey is a fee-only certified financial planner and registered investment advisor. She is founding partner of Money Plans, a Silver Spring, Md.-based financial planning firm. She is a past chairwoman of the National Assn. of Personal Financial Advisors and specializes in advising women, unmarried couples and the terminally ill.

Meet the Authors

Denise and Alan Fields are longtime consumer advocates and the authors of money management books on a variety of topics, including “Bridal Bargains: Secrets to Throwing a Fantastic Wedding on a Realistic Budget� and “Bridal Gown Guide.�