Teacher needs financial education

Worse, her debts total $104,300. They consist of $67,000 in student loans for her master's degree, $24,200 for her car, $8,000 in CashCall and credit card bills and $5,100 owed to the Internal Revenue Service for back taxes. Baker has been using current income to pay tuition and expenses for her children's private-school education. The oldest, 18, is now in college, while the youngest, 11, is in elementary school.

Ever since her own college days, Baker has found it tough to say no to the easy credit that companies offered her. She filled out credit card applications heedlessly -- "I was, like, where do I sign?"

Since then, she has sought help for her debt through credit counseling services, but not before it damaged her financially. Her credit report shows multiple accounts with long strings of late payments of 60, 90, 120 days and more.

Her credit score is 550, better than Baker thought it would be but "horrible" enough, Field said, to make her a risky borrower and subject to higher interest rates.

Field told her to look for errors in her credit report, and Baker found five accounts she had paid off that were still showing delinquencies. By correcting those errors and paying down her debt, Field said, Baker can begin cleaning up her credit. The planner advised Baker to check her credit report twice a year online at www.freecreditreport.com.

Field also urged Baker to put as many bills as possible on automatic payment plans through her bank to make sure they are paid on time. Her student loans, Macy's card and Target card showed perfect payment records.

"Guard those," Field said. "Just paying everything on time will change your credit score."

Baker's low score means she pays much more than she would otherwise for loans.

One budget buster is her $30,000 Lexus GS300, which costs Baker $659 a month. The car loan carries a 16.9% interest rate, requiring her to pay almost $18,000 in finance charges over the life of the loan. Baker needs to buy a cheaper car and keep her monthly payment below $300, Field said.

Baker also can do a few other things to ease the burden, such as cutting her monthly cellphone bill to $50 or $60 from $250, Field said. But her sons' schooling is her single largest ongoing expense.

Last year, Baker spent $14,890 for her older son, Dwayne, to attend a Louisiana college. She pays $6,420 annually to send her younger son, Bryne, to a private Catholic school.