First, She’s Got to Climb That Mountain of Debt

Growing up in Connecticut, Eileen Zyko watched movies on television almost every day. She saw it as preparation for a future career as a famous actress.

After earning a degree in art history and film at Vassar College, she moved to New York to pursue an acting career. She took graduate courses in the subject at the New School for Social Research, racking up tens of thousands of dollars in student loans in the process.

She appeared occasionally in off-off-Broadway plays at night while working day jobs that ranged from art gallery aide to production assistant for the Comedy Central cable TV network.

It was a struggle, and Zyko decided that although she enjoyed acting, she didn’t like being a starving artist. Perhaps, she thought, she’d have better luck working behind the scenes.

Two years ago, Zyko, now 26, moved to Hollywood, hoping to begin a career as a producer. She moved in and out of a series of entry-level jobs until she landed her present position in January, as an executive assistant to the president of Virgin Records America, where she earns $35,000 a year.

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If Zyko’s career direction appeared somewhat uncertain, her finances were on a steady upward trajectory--into debt, that is. She faces a mountain of obligations--student loans, credit card charges and loans from her family. Altogether she owes $64,000--and that doesn’t include a $386 monthly payment for her leased 1996 Ford Mustang.

“I feel like I woke up one morning in all this debt, and I had no idea how I had gotten there,” Zyko said. “I want to be debt-free and have an IRA and be able to go on vacations. My problem is, I don’t know where to start.”

Kathleen Stepp, a fee-only certified financial planner based in Overland Park, Kan., said Zyko should start by addressing her debt, and that she should be able to eliminate the most onerous portion of it within five years. That would be the $16,000 she owes on high-interest credit cards, a painful reminder of a period when Zyko was without a job or health insurance and incurred a number of medical bills.

Four low-interest student loans totaling $38,000 make up the bulk of Zyko’s debt. Her monthly obligation on those adds up to more than $400, but her sister has temporarily assumed payments on one of those loans, at about $100 a month. She also owes her mother $10,000, a bill that will come due only “if I ever have the resources to pay her back,” Zyko said ruefully.

Zyko believes her student loan burden has hindered her career ambitions. “It didn’t allow me to do some of the creative things I would have done,” she said. “I’ve really needed to stick to office environments.

“I wanted to continue acting, but I couldn’t afford to wait tables in restaurants for years while waiting for a break. The debt weighed on me.”

Zyko isn’t alone in her student loan burden. College costs have outpaced inflation for a number of years, and for many people, loans are the only answer.

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USA Group, a student loan guarantor, reports that the average college graduate leaves school almost $10,000 in debt. The average graduate student, it says, leaves with double that debt.

The question for Zyko now is how to go about getting out from under it.

She has few assets besides the $1,000 she has set aside in a savings account for emergencies. Her grandmother, who died in 1996, left her a $1,000 low-yield certificate of deposit that matures at the end of this year. But the money is controlled by Zyko’s parents, who see it as part of a hope chest for their daughter and are insistent that it not be used for any other purpose.

Stepp disagrees with the parents on that, arguing that the inheritance could be better used to pay down some of Zyko’s debt. Failing that, Stepp would at least like to see the money invested differently.

“At her age, there’s no way the money should be placed in a CD. It won’t produce enough income to help her out. I’d rather see it in a stock market growth mutual fund,” the planner said.

Otherwise, Zyko has been doing what she can to try to correct her financial situation. She’s cracked down on her everyday spending in the last year and no longer takes vacations or buys clothes. She has recently taken on freelance work reading screenplays. That $200 a month helps pay her bills.

Zyko is currently earmarking $350 a month toward her credit card bills. Stepp said she would like to see Zyko boost that to $500, which she believes is possible with some judicious juggling and cost-cutting.

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At $350 a month, it would take Zyko seven years to pay off her credit card debt, assuming a 15% interest rate. If she could raise the payment by $150 per month, the planner explained, she could clear that debt in four years.

“You’re on the right track,” Stepp reassured Zyko. “You’re not racking up any more debt. You know there are certain things to do, and you’re doing them. But there is no magic I can tell you that is going to change things. It will take discipline.”

Stepp said Zyko should attempt to consolidate her credit card debts. She’s paying low introductory interest rates on her two cards, but that’s a temporary arrangement. Zyko recently applied for a debt-consolidation loan at her employer’s credit union, since the interest would be significantly less, but she got a thumbs-down because her debt-to-income ratio was too high.

Stepp urged Zyko to try again in a few months. Or perhaps, as she pays off more of her balances, she could get a new credit card with a lower interest rate, the planner said.

Stepp also suggested that Zyko make an appointment with the Consumer Credit Counseling Service of Los Angeles, a nonprofit agency that Stepp believes might be able to advise Zyko on her debt situation. (The service can be reached at [800] 750-2227.) The group is also known for negotiating easier repayment schedules with clients’ creditors, but it’s worth noting that taking that route can harm your credit rating.

As for the oppressive student loans, Stepp believes that Zyko should pay only the minimum required until her consumer debt is erased. “Any extra money she has should go to the high-interest credit card debt,” Stepp said.

The planner also suggested that Zyko, who pays $575 a month rent for a one-bedroom apartment in Beachwood Canyon, cut expenses by taking in a roommate.

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Zyko resisted that idea. “I’ve never lived by myself,” she said. “I am really liking it.”

Zyko was more amenable, though, to Stepp’s recommendation that, to cut her transportation expenses, she buy a used car when the lease on the Mustang ends. Zyko actually would prefer to buy the Mustang, but she is aware that financing the $14,000 cost might be difficult if not impossible.

“Getting that car was probably the stupidest decision I ever made in my life,” she said.

As for saving in her company’s 401(k) plan, which Zyko has only thought about doing, or opening an individual retirement account, Stepp advised that until her financial picture improves, she put the idea of saving for retirement on hold. Stepp fears that Zyko wouldn’t be able to meet her living expenses without turning to credit cards again if more money were subtracted from her paycheck. “I don’t say this very often but, in your case,” Stepp said, “I wouldn’t even worry about retirement planning at work. Put as much money as fast as you can to paying down that debt, concentrating on the Visas.”

One other little thing: “Be real nice to your mother and sister.”

To get her finances truly in line, though, Zyko also needs to address her career needs.

Enter Toni Bernay, a clinical psychologist and executive coach based in Beverly Hills.

Bernay said that if Zyko does indeed want a career in film, working for a record company won’t help much--unless she wants to produce soundtracks.

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But Zyko said she loves her new job: “This is the most comfortable work environment I’ve ever been in. I really like this place. I’m incredibly happy here.”

In that case, Bernay suggested, Zyko should reexamine her goals. The career coach recommended that, in beginning to formulate a new game plan, Zyko undergo a personality assessment to gauge her strengths and weaknesses.

This is something that anyone can do at low cost. Inexpensive career counseling is available from a number of sources, and there are other means, such as books--”Do What You Are: Discover the Perfect Career for You Through the Secrets of Personality Type,” by Paul D. Tieger and Barbara Barron-Tieger (Little, Brown & Co.), is a good one--and the World Wide Web site https://www.careerpath.com, which contains an extensive section on self-assessment.

“You need to have visions and strategies and plans. You need to start with the end in mind. You need to be strategic, not opportunistic,” Bernay told Zyko.

Zyko could also take classes at UCLA Extension or the American Film Institute as a way of exploring options in the entertainment business, Bernay said. These classes usually cost several hundred dollars apiece, but Zyko’s company picks up the costs of continuing education.

Bernay further suggested that Zyko use her connections to conduct information interviews with entertainment industry professionals about their job responsibilities. This could not only help Zyko sort out what she wants to do, but also introduce her to people who could become valuable contacts.

“A lot of people are willing to give you time,” Bernay explained, “especially women in the film industry. They are interested in bringing more women up in the entertainment community.”

Within a few weeks of hearing Bernay’s advice, Zyko had settled on a new long-term career goal, one that combines her past ambitions and present experience: film or TV music supervisor. People in these positions supervise everything musical in a film, from arranging soundtracks to hiring musicians to creating background music and original scores.

“I love music; I always have,” Zyko said. “The job suits my intellect, interests and energy level. It’s something I could be good at.”

Deva Anderson, a music supervisor whose credits include the forthcoming Jonathan Demme film “Beloved,” said that in her current job, Zyko can indeed learn many of the skills she’ll need to succeed in the field. A record company position provides a great way for someone to meet music supervisors, and having such contacts could help Zyko get a leg up in a highly competitive industry, Anderson said.

“What’s most important about this field is developing good relationships and learning the basics,” she added.

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Zyko took all the career advice to heart and said she plans to make the most of her position with Virgin and that she’ll be registering later this year for a UCLA Extension class.

“By staying in her current job,” Bernay agreed, “Zyko can work down her debt, and yet she’s not trading security for intellectual death.”

“I know I have a lot to learn,” Zyko said. “Everything both Kathy and Toni say sounds good and right. I do have artistic dreams and passions, but I am also trying to be safe and smart.”

Helaine Olen and Denise Hamilton are regular contributors to The Times. Olen can be reached by e-mail at holen@latimes.com. To be considered for a published Money Make-Over, send your name, age, phone number, income, assets and financial goals to Money Make-Over, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. Questions or comments can be left at (213) 237-7288. We cannot respond to all inquiries.

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This Week’s Make-Over

Investor: Eileen Zyko

Age: 26

Occupation: Executive assistant for record company

Gross annual income: About $35,000 from job, plus $2,500 in freelance work

Financial goals: Ease debt load

Current Portfolio

Cash: $1,000 in bank savings account

, $1,000 in certificate of deposit

Debts: $16,000 on two Visa cards, $38,000 in student loans, $10,000 in loan from family member

Recommendations

Try to consolidate credit card debt to lower interest owed, either through a credit union loan or, if possible, transferring balances to a lower-interest-rate credit card.

When lease expires this summer on 1996 Mustang, buy a cheaper used car.

To cut housing expenses, consider getting a roommate.

Do not contribute to company’s 401(k) or try to open an individual retirement account until financial situation stabilizes.