What, me worry?

THE SITUATION As a grad student at the University of Chicago, Rebecca Anderson, 32, is working on her master’s of divinity while supporting herself through scholarships, student loans and a part-time job. She rents in Hyde Park and has a new beau. “I’m not feeling the downturn at all,” Anderson says. “My finances are such that I always live way below the radar on this stuff.”
THE SMACKDOWN James Cahn, principal portfolio analyst at Chicago-based Wanger Investment Management (401 N Michigan Ave, 312-245-8000), isn’t so certain Anderson is above the fray. Living on borrowed funds, for example, can be problematic. Student loans are subsidized by the federal government, and subsidies for student loans may get cut. “We’ve already seen the Bush administration take one swipe at that,” Cahn says. “If spending really has to be cut back, we could see a second swipe.” Those loans may also be tough to pay off once Anderson enters the working world—especially “if salaries stay stagnant or fall,” Cahn says.
THE SUGGESTION Cahn encourages Anderson to decrease loan debt by cutting back on living expenses, be wary of employment in the church or nonprofit sectors that depend on donations and, maybe…if she gets serious about her suitor, consider marriage and the potential tax breaks that come with it.

THE SITUATION Todd Hilt, 30, enjoys a lifestyle much different from Anderson’s. He works as project manager in hotel development, makes a comfortable five-figure salary, co-owns a condo in Andersonville with his partner and has a growing portfolio that includes savings, a 401k and some bonds. Hilt recently began playing the stock market. “I don’t want to jinx myself,” he says, “but I’m busier [with work] than ever.”
THE SMACKDOWN Cahn says Hilt is in pretty good shape but offers a few caveats. “He’s in the travel and construction industry, which has gotten hit, and there are likely to be more layoffs in that sector,” Cahn explains. “He’ll probably be able to keep his job, but he can’t expect to get the same sort of raises he’s been getting, because there are a lot of unemployed people out there who know how to do what he does.” Owning a condo is a good thing, Cahn says, but notes that newly gentrified areas like Andersonville can be a tough market in terms of resale value. “It’s probably more susceptible to a decline in prices because prices have risen the most [in that area],” he says. “He might have to stick it out,” and wait to sell until after the economy recovers—whenever that will be.
THE SUGGESTION Hilt may want to invest in index funds and well-diversified mutual funds. “If he’s investing in the stock market because he thinks he’s good at it and he can beat other people, he’s wrong,” Cahn says. “He can’t time the market,” and he shouldn’t invest in the hotel industry because if it goes bust, both his career and his stock will be in the toilet.

THE SITUATION Jamie Ott, 26, is an associate product manager for a hedge-fund-research-software company. She rents a duplex apartment with three roommates in Lakeview, has money in savings, stock in her company and a fully vested 401k that her employer matches at 7 percent. Life is good, she says.
THE SMACKDOWN Cahn says she should be on the lookout for several small bumps along the road. “I think being involved in hedge funds right now might be a little problematic,” he says, noting that hedge funds as a category are suffering from investor withdrawals and poor performance. Cahn says that if her company ends up reducing the size of its hedge-fund unit, Ott may have to move to a different group within the company. A bigger concern, he says, might be the economic stability of her multiple roommates. “What if [one] can’t pay [the rent]?” he asks. “That’s a big deal.”
THE SUGGESTION Ott should keep maxing out that 401k contribution and consider buying a place if she feels ready. “In the long run,” Cahn says, “Chicago real estate will come back.” But if all else fails, he offers up a piece of sage advice everyone should follow: “Marry someone richer.”

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