Military benefits gave Brian McLean, 27, and his wife, Robin, 29, a great head start to reach their primary investment goal: homeownership. But their lack of diversification has left them over-invested in real estate and barely invested in anything else.
In just four years, they have paid off all but about $6,000 on their two-bedroom condo in Hinesville, Georgia. “Growing up we always knew the importance of owning versus renting,” Brian says. “We talk about growing our net worth, and paying off our condo is a beginning for us.”
In the U.S. Army, Brian was deployed to Iraq for a year soon after he and Robin wed in 2006. “I didn’t have any bills over there so my $4,000 monthly pay and living allowance could be saved easily,” says Brian, who, after completing his military duty, returned home with $30,000. The couple used $11,000 of that for the down payment on their $54,000 condo. Over the last four years they’ve been disciplined enough to live mostly on Robin’s $37,000 salary as a customer service team leader at a water treatment company. They’ve applied Brian’s military stipends to their mortgage principal. Their mortgage and association dues come to $560 a month.
Brian now earns $27,000 as a corrections officer for the State of Georgia. The McLeans are expecting their final military lump sum payment of $6,000 this spring and plan to pay off the balance on their condo.
“We will pay it off this month and move on to bigger and better things,” says Brian, who with his wife is looking to upgrade to a single-family home for which they’ve set a budget of $125,000. They plan to rent out their condo and take out a Veterans Affairs loan that requires 3% or less for a down payment.
The McLeans have only $8,400 in savings. They also have $6,600 in student loan debt from Robin’s education at Georgia Southern University that she pays $110 toward each month. They have $7,500 in credit card debt, toward which they pay $220 each month (Brian, $150; Robin, $70). “Our financial challenges deal mostly with debt,” says Brian.
The couple’s long-term goal beyond homeownership is to save $30,000 toward their 5-year-old daughter Autumn’s college education. The State of Georgia currently offers scholarships to residents who attend school in-state, but Robin isn’t depending on one. “You had to get a 3.0 GPA when I graduated, but now the new governor has raised it to 3.7 [for a full scholarship]. So it will be harder for her,” she says.
The couple hasn’t given much thought to retirement planning. Brian just began his job in June and contributes 1% of his salary to his 401(k). Robin has been on her job for five years and had not thought about retirement planning before speaking to the financial planner for this contest. “I could kick myself now for not contributing,” she says. Her job matches up to 5%.
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