Ayanna Johnson moved into a less-costly apartment and switched the timing of her monthly rent payment in order to meet her savings goal.
Johnson, 32, director of community life at Chicago Theological Seminary, wants to save enough to make a down payment on a home.
“I realized I could not save an appreciably larger amount of money in a reasonable period of time without making a move,” she said. “I was in a two-bedroom apartment and I decided I didn’t need that much space while I focus on my goal.”
Johnson also decided to pay her rent mid-month so that she wouldn’t be tempted to pay most of her bills at the end of the month.
She made her decisions after beta-testing an online budgeting aide at Smarteys.com (pronounced Smart-eez), a start-up company based in Hyde Park.
The budget tool, called Paycheck Manager, helps young people pay their bills and pay off debts based on their take-home pay. Paycheck Manager launches to the public in mid-August for $10 a month.
Paycheck Manager lets users place weighted values on their priorities while keeping their debt-payoff or bill payments in mind.
Jason Williams, a University of Chicago Booth School of Business MBA graduate, would seem to hold a coveted job as an Apple computer operations manager.
Yet Williams, 30, a June MBA grad, is busy finding the smartest ways to pay off his $50,000-plus student debt while planning an occasional treat, including a vacation.
“I needed advice on how to look at my money and tame that debt, but most of the online tools were impersonal and some were tinged with commercial-product recommendations,” he said. Williams found his solution with another Smarteys.com tool, called Cash Pile Manager, which offers students and young professionals a personalized way to pay off their debts and, ultimately, handle their money wisely throughout their lives. The free tool requires a user’s e-mail address.
He discovered another plus — he cut a quarter-point off of his interest rate by choosing direct debit for his loan repayments.
Williams aims to pay off his student debt in 8œ years — a year and a half earlier than the standard 10-year term for graduate loans.
Williams appreciated non-money tips, too. He read on Smarteys’ blog that telling friends about his financial goals — much like a smoker telling friends he is trying to quit — kept him accountable in meeting his savings goals.
“I have the blog RSS’d as a feed,” he said.
Smarteys is run by two women who met while pursuing their MBAs at the Booth School — Charisse Conanan and Adrissha Wimberly.
Conanan fashioned her first financial-advice venture five years ago when she worked on JPMorgan Chase’s Mid-Cap Value Fund’s portfolio management team in Manhattan.
She realized that she and other millennials at Chase could build financial models and make recommendations on sophisticated portfolios but couldn’t handle their personal budgets.
“There wasn’t a solution to help young people who live in cities and want to have fun while doing positive things with their money,” said Conanan, 31.
Armed with an undergraduate degree in 2002 from Yale University and a Chartered Financial Analyst designation, Conanan won Chase’s backing to host seminars to help her coworkers learn money management.
She learned that more intimate, personal settings worked better than seminars.
Then she took the plunge toward entrepreneurship. She enrolled at Booth in 2008 to get her MBA and to start a company to help people get smart about their money.
Conanan had deeply personal motivations, too.
Her parents in her native Long Island each took a second job to help pay Conanan’s way through Yale. They made too much money for Conanan to receive financial aid, but not enough to pay for her undergraduate studies. They also refinanced their mortgage.
Conanan worked through college and every summer, and still left Yale with $50,000 in loans. She decided to empower herself, even though she still felt pressured to make a salary large enough to pay back the loans and stop relying on her parents and their sacrifices.
“I learned when I went to college that my mother had gotten burned by a financial adviser in the early 1980s, and she had vowed to educate herself about making wise decisions about building wealth,” Conanan said.
Her mother, Barbara, a nurse and director of Lutheran Family Health Center’s Community Medicine Program for the homeless and underserved, had grown up in Harlem, the eldest of six children. She became the first in her family to go to college and grad school.
“Money is an emotional thing,” the younger Conanan said. “Yet anyone, given the right advice, can be a ‘smartey’ about money. That’s how we wanted to define our company.”
Conanan and Wimberly decided on the name “Smarteys” to define their brand, and latched onto the philosophies of Richard H. Thaler, known as the father of behavioral economics — the study of how thinking and emotions influence people’s money-management decisions.
“Smarteys.com strives to strip away mathematical calculations and show people specific effects of their spending and saving based on their paychecks,” Conanan said. “If people allocate wisely into four ‘buckets’ — income, debt, bills and savings — they can use the rest for guilt-free spending.”
Brad Schaffnit, a private wealth advisor at Schaffnit Wealth Management Group in Downers Grove, said the key to Smarteys’ success is its software tools’ ability to guide users in tactically reducing their debts.
Speaking of Paycheck Manager, he said, “Kids whose parents have been paying the bill are now living downtown and getting $1,000 to $1,200 paychecks every two weeks.
“If rent is $900 a month with a roommate, how are they going to make that work?” he said. “The website does a great job of driving home their responsibilities and crafting a strategy to accomplish their goals.”