$34,000 in debt, wants to start a business

(MONEY Magazine) -- We spoke to five families who face challenges that could keep them from meeting their financial goals. With a few tweaks to their game plan, they can get back on course. Here, Heyward's story -- and the recommended financial fixes.

Michele Heyward has a big heart. When friends or family struggle financially, she is always there to help with a mortgage or car payment or clothes for the kids. Recently she has been spending more than $1,800 a month on others.

"You can't take money with you," she says. "It feels really good to help people out."

The trouble is, those added expenses have put Heyward in a tough spot, even though she pulls in $112,000 a year as a construction engineer for URS Corp. (URS, Fortune 500) (She travels full-time, and about a third of her earnings is from unused per diem expenses.)

Send your questions to The Help Desk

She has $15,000 in credit card debt, on top of $19,000 in student loans. She'd also like to start her own business as an engineering consultant. "It's risky, but more rewarding than working for somebody else," Heyward says.

Adding to her poor balance sheet: a house in Pittsburgh that may not be worth more than her $83,000 mortgage.

Her finances

• Income: $112,000
• Assets: $70,000 in a 401(k); $2,000 in cash
• Goals: Start her own consulting business, retire at 59

The problem

Bottom line: Heyward's generosity has her living beyond her means, says financial planner Laura Scharr-Bykowsky of Columbia, S.C. "If you are trying to rescue someone who is drowning and you're not a good swimmer, you're both going to go down," she says.

The advice

Learn to just say no. Heyward has already followed Scharr-Bykowsky's recommendation to let her family and friends know things will be different in 2012. "I know there has to be a limit," she says.

About 70% of the resulting savings should be put toward her high-interest credit cards and 30% to building up her cash reserves. Within a year she can be debt-free and also have an emergency fund of some $10,000. She should continue to fund her 401(k), which offers a 6% match.

Diversify the portfolio. Heyward's portfolio is too concentrated in large U.S. stocks, especially because she works for a large company. She should add some mid- and small-cap equities.

Ditch the home. The Pittsburgh property should be sold as soon as Heyward can do it without having to spend money to close the deal. That's fine: "I'm tired of getting calls from tenants about repairs," she says.

Supercharge savings. Since Heyward has no business plan yet, Scharr-Bykowsky recommends that she amass at least three years' worth of living expenses, or some $120,000, before starting her own business. She can keep the money in a short-term bond fund to maximize return.

Heyward says that she'll start consulting part-time before quitting her day job, so two years of living expenses may be enough. "I want my name on the door," she says, "and to be in control of my own destiny."

MONEY magazine is researching an article on ways to reduce the financial pain of college. We're looking for families that can talk about new and creative ways that they're raising cash for college and cutting costs while they're there. Sound like you? Tell us your story and you might even get your picture in the magazine! E-mail Beth_Braverman@moneymail.com