This month’s money makeover

This month’s makeover Who: Michelle Nicholson, 38, and Mike Nicholson, 33Dependents: A preschooler and a child on the wayAnnual income: $104,000Goals: To get out of debt and create stronger financial futureAssets: $14,000 in 401(k) retirement account; $10,000 from a car saleDebts: $21,000 owed on credit cards Recommendations: The Nicholsons need to whittle their debt and rebuild their credit after losing their house last year in a short sale. They must stop spending more than they earn. The planner recommends they trim their grocery and entertainment bills by nearly 30% and try to boost their earnings by working more. The Nicholsons should use a recent windfall from a car sale to create an emergency savings account. They should also temporarily stop contributing to Mike’s 401(k) account and reallocate his retirement savings from stocks into lower-risk bonds and money funds. That way they will have reserves they can tap in a financial emergency. Once out of debt, they should save at least 10% of their gross income.About the planner: Stephan Goyette is a certified financial planner with Goyette Financial Planning in Thousand Oaks