Kenneth Howard Neal believes that personal and financial success isn’t left to chance. It’s the ability to make events happen.
This past April, Neal, along with 1,000 other workers, had his named literally tossed into a barrel for a lottery drawing for him to become a part-time longshoreman. After a couple of spins, the 35-year-old tax examiner’s name was picked for him to become a member of the San Francisco Local 10 International Longshore and Warehouse Union. “This was a once in a lifetime opportunity given that they only hire every 10 to 15 years.” says Neal.
You may wonder why Neal traded his white-collar environs to toil on the docks. While he is currently bringing in an additional $600 a month working three days a week on the docks, he could see his annual salary rise to more than $80,000 as a full-time longshoreman. That’s more than twice what he earns now with Uncle Sam-$33,000 a year.
His pay increase brings on back-breaking work: Instead of pushing pencils and paper, he will load heavy boxes onto ships, latch containers onto ships, monitor shipments, and drive forklifts, among other tasks.
Right now, Neal’s monthly expenses average about $1,500. Since he doesn’t foresee any dramatic changes in his lifestyle, he can bank on using those bonus dollars to build his nest egg. He currently has about $20,000 in his company’s 401(k) plan, to which he contributes 5% to 7% of his salary. Also, he has $130,000 in equity in a condo.
Having worked for the Internal Revenue Service for more than 12 years, Neal believes that the change is long overdue. “It was time for me to take on another challenge and have a little bit more monetary freedom,” he explains. “So when I’m ready to start a family, I will have the financial means.”
Neal’s ability to turn his part-time work as a longshoreman into a full-time position will be paramount in reaching his financial goals. Such a position would essentially mean a 120% pay increase. To help craft a plan based on current and future earnings, black enterprise had Neal consult with Mark A. Mitchell, a financial planner with AXA Advisors in San Juan Capistrano, California.
- Pay off debt. Before anyone can eliminate debt, that individual needs to look at the source of indebtedness. In Neal’s case, he has about $7,000 in credit card debt at 13% interest. He also has two outstanding loans at $1,500. He should take the income he gets as a part-time longshoreman-roughly an extra $600 a month-and use that money to pay down his credit cards. At the end of 12 to 16 months, he should be debt-free.
- Increase contributions to 401(k) plan. He is contributing around $200 a month to his 401(k); he should increase this amount by an additional $200 until he contributes the maximum amount allowed. Since his yearly tax refund has been around $2,300, he needs to change his tax withholding to reduce the amount of the refund and redirect the funds to his 401(k) so