CSUMB expert offers financial guidance for 2025

By Mark Muckenfuss 

For people who would like to chart a better financial path in 2025, Cal State Monterey Bay distinguished lecturer Jeffrey Froshman suggests a simple formula. 

“I’ve been teaching for years what’s called the 10/20/70 method,” Froshman said. “When you get paid, 10% is yours to keep. You save it, it's yours to help build up wealth, whether it's a cash backup or retirement. If you do that for five, 10, 20 years it can be a boatload of investment.”

Going to the second figure in the formula, he said, “20% should be used for paying down bad debt.”

Froshman, who has been teaching at CSUMB since 1996 and recently had a lecture room in the Business and Information Technology building named for him, said there is good debt and bad debt. Credit cards are bad debt because of the high interest rates that come with them. Auto loans also qualify as bad debt.

“With a car loan – you’re financing a depreciating asset,” he said, “as opposed to real estate where you’re financing an appreciating asset, hopefully. 

“I consider student loan debt not bad debt,” he continued. “Student loan debt is from improving yourself, hopefully, to get a good job so you can earn more.” 

“The whole purpose of the 20% is to pay as much of that bad debt as possible,” he said. 

But there are strategies to employ in doing that. Froshman considered a hypothetical where there are two credit cards on which you owe money. One has a lower balance. The other has a higher interest rate. 

“Do you pay down the one with the lowest balance or the one with the highest interest rate?” he said. “It’s the lowest balance, so you can eliminate that bill. Also, there’s the whole psychological aspect of paying off that card, the whole feeling of, ‘Now I’ve accomplished something.’” 

Once the 10% and 20% are allotted for, Froshman said, “70% is what you live off of. You have to live within your means.”

As your bad debt disappears, he said, so will some of the restrictions on your lifestyle. 

“With that 20% that’s not in your [debt] budget anymore, you can put more into the 10% or you can buy more shoes,” he said. 

Froshman has other financial tips as well:

Invest in a retirement account. 

“If you have a job, are you maximizing your 401K plan?” he said. “Are you maximizing any matching your company offers? Take advantage of that free money.” 

Consult with a financial advisor. 

Most, he said, will offer a free initial consultation. 

“It’s always good to have an expert opinion on your side,” Froshman said. “By no means should you be bashful about talking to three, four or five of them. This can be priceless as far as getting someone you know you like, and can work with successfully.”

Take it easy in the new year.

“There are so many unknowns that will start happening in the first six months of the next year when the new administration is in place,” he said. 

In particular, he’s concerned about the costs of threatened tariffs being passed on to the consumer.

“I do see some inflationary times ahead,” he said. “I’m not real optimistic that inflation is going to be under 2%. I see it being 3% or higher. 

“So, proceed with caution,” he added. “Continue doing what you're doing but keep your eyes and ears open and understand things can change quickly.”

This is one of three stories focused on advice for the coming year. Check out the other stories and learn about incorporating an effective exercise regimen into your schedule and how to improve your relationships.