Building A Better Future

Expert advice helped our 2004 Financial Fitness Contest Winners create the right foundation to reach their goals

5.6% interest rate to buy a two-unit apartment building for $130,000 and a three-unit building for $187,000. Meanwhile, rental income from the first building Young purchased is still coming in. Together, his properties generate $7,000 in income. And when he finds a second tenant for one of the newer properties, he’ll have even more rental income. It’s not surprising that he hasn’t looked for another full-time job since getting downsized in 2003.

And if that wasn’t good enough, Young’s dj business is booming. The work he enjoys so much brought in about $3,000 last year. This year, it’s been more like $17,000, as he’s added corporate and high school functions and gigs at various clubs to his normal schedule of weekend parties and weddings.

Young’s wife, Stacey, is also a go-getter. In addition to working for the City of Chicago as a business information systems coordinator, she co-owns a Curves fitness club franchise. They are indeed a power couple in the making. “I’m busier now than when I had a full-time job,” says Young with a smile. “The changes in my life have exceeded my expectations. I’ve been very blessed.”

THE ADVICE: Continue acquiring real estate, especially buildings with four units or less.
THE FOLLOW-THROUGH: Mission accomplished.

THE ADVICE: Tackle the first mortgage. Pay it down aggressively.
THE FOLLOW-THROUGH: With the acquisition of two buildings and the $25,000 tab for his 300-guest wedding and honeymoon in St. Lucia. Young didn’t have the financial might to accelerate mortgage payments on his first property.

THE ADVICE: Purchase a primary residence within two to three years.
THE FOLLOW-THROUGH: Young recently closed on a 2,700-square-foot, four-bedroom home in Chicago for $360,000(k), at a 6.5% interest rate.

THE ADVICE: Shore up retirement savings. Though he was off to a fine start with a collective $63,000 in an IRA, 401(k), and mutual fund account, the financial adviser we paired Young with wanted him to set up a variable annuity with a mutual fund option to which he would contribute $500 a month. Young was advised to use the $2,000 contest winnings to start the account.
THE FOLLOW-THROUGH: “I had too much going on. Once we’re settled in the house, I will meet with the planner again,” says Young, who used the contest winnings toward the 5% down payment deal that he received on the three-unit building.

THE ADVICE: Protect his investments. Continue to build an emergency fund as a safety net.
THE FOLLOW-THROUGH: Young had $23,000 in his emergency fund. It is now down to $12,000 after he tapped it to purchase the two most recent buildings and do renovations.

THE ADVICE: Buy insurance for his buildings.
THE FOLLOW-THROUGH: All of Young’s properties are appropriately and sufficiently insured.

THE ADVICE: Create an estate plan.
THE FOLLOW-THROUGH: “That’s on hold for now,” says Young. “Purchasing the buildings consumed my life.” He and Stacey do have life insurance.

September Winner Arthur Vaughn
Divorce is never painless. It’s been a tough couple of years, but Arthur Vaughn is decidedly on the better side of the transition. He can see progress everywhere. He earned a master’s in

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