Each month, from now through October, Black Enterprise will feature a winner of our Financial Fitness Contest. Altogether, 10 individuals and their families, people who seek to whip their finances into shape, will be selected. We provide them with an initial consultation with a financial planner or investment consultant; $2,000 to apply to an investment account; and a profile in this feature, which will be updated periodically. Our first winner is an employee of this magazine: Classified Sales Associate Nicole Simpkins. Below, we reveal her aspirations and those of her husband, Kevin, and the first steps of a plan to achieve them.
For Nicole Simpkins, marriage has not only been a personal adjustment but a financial one. Roughly a year ago, the 28-year-old got hitched to Kevin, a 40-year-old sous-chef. The union has meant that the New York City couple, who have a household income of $68,000, had to learn to jointly organize their finances. “At first, we put our money together to pay bills and take care of our obligations,” says Nicole. “We thought we would be able to save more money that way, but it didn’t work out.”
The first hurdle was paying off their wedding expenses, which totaled $19,000. To do so, they took out a personal loan of $3,000. They also have $7,000 in credit card debt, some of which accrued from financing their nuptials. Another challenge: Nicole’s $19,500 in student loans.
To pare down debt, the Simpkinses now separate their monthly bills, which come to $1,300. Kevin pays for rent, utilities and cable, while Nicole handles credit cards, food and transportation. This strategy has enabled her to sock away $200 each pay period. “These days, I treat savings like a bill,” she maintains.
The Simpkinses’ goal is to increase their savings so that they can own a home. Within two to three years, Nicole hopes to have enough cash for a $10,000 down payment. And they would like to put extra funds in place so that they can start a family within three to five years. They have yet to begin an investment plan, but the couple received a prophetic anniversary gift from Nicole’s mother: two shares of Disney stock. Says Nicole, “I define wealth as being able to afford how you want to live and not to let money worries hold you back.”
In order for the Simpkinses to start their wealth-building program, BE arranged for them to have their initial consultation with David P. Gardner, vice president of investments, PaineWebber, in New York. He suggested:
Establish an emergency fund. Gardner says the Simpkinses should have between three to six months of living expenses for contingencies.
Reduce debt. “I think that they are going to have be disciplined on a monthly basis,” asserts Gardner. “They are going to have make sacrifices so that they can increase their debt payments. I advised them to cut back on trips, gifts and entertainment.”
Invest in mutual funds. Gardner suggests that the Simpkinses start their investment program with mutual funds to gain diversification and