Aiming For Financial Readiness

Maj. Frank Davis needs improved fiscal maneuvers to secure his family's future

loan and scholarship opportunities that are only available to those in the military. Prior to leaving for Iraq, Davis should work with his wife to build a file of information that outlines all the available education funding options through the military so she has the information at her fingertips. His daughters should borrow the maximum amount available to fund their education and their parents should agree to fund three to four years of principal and interest payments on the debt for the girls.

“This way, the couple will have an additional four years to build assets while the girls are in college,” says Hinson. If they save $1,100 a month over the next 10 years and achieve a net 8% return on that money, they will have enough to cover 100% of in-state education for one child, says Hinson.

Strive to earn more stripes before retirement. Based on a conservative analysis of retirement income, if Davis retires as a lieutenant colonel, his annual retirement income will be approximately $57,000, or approximately 67% of his current base income. This compares favorably to retiring as a major, where his expected retirement income is 59% of his current base income. To achieve this senior-level rank, Davis needs to develop a plan composed of relationship development/management and work performance.

“Frank should determine who the key two or three people are that will impact his confirmation as lieutenant colonel. He should assess his relationships with them and work to enhance those relationships, look at the performance and credentials of those confirmed as lieutenant colonel, and figure out what he needs to do to compete,” suggests Hinson.

Plan for future business now. It will take time to prepare for the launch of Davis’ security company. He should begin to study business with a focus on understanding how other companies in his industry became
successful. He should study the Pentagon procurement system and minority programs such as 8A and begin crafting a business plan.

“The Davises will do well because Frank is a disciplined man,” says Hinson. “His military training and discipline will propel them forward and help them reach their goals.”

Financial Snapshot: Frank & Priscilla Davis

HOUSEHOLD INCOME

Gross Income $84,000

ASSETS

Market value of home $175,000
Checking account 1,200
Savings account 5,200
ShareBuilder account 550
Mutual funds 8,200
Mutual funds for children 3,200
Savings account for children 700
Education IRA 1,700
IRA (Priscilla) 2,800
IRA (Frank) 2,717
1997 Mitsubishi 3000 GT* 10,000
1998 Chevy Tahoe* 12,000
2004 Jeep Grand Cherokee* 33,000
Total $256,267

LIABILITIES

Mortgage $168,500
98 Chevy Tahoe 10,100
2004 Jeep Grand Cherokee 20,900
Frank’s personal loan 30,000
Credit cards 20,000
Total $249,500
NET WORTH $6,767

*According to Kelley Blue Book.

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