Drafting A Financial Blueprint

The Starks family hopes to attack their debt with disciplined saving and improved budgeting

When It Came To Managing Their cash flow, William and Julanda Starks were once directionless. Now they have a detailed plan for budgeting their money. Why the big change? “Julanda had been working part time. When she switched to full time this fall, it was an opportunity to see how we could best use the additional income,” says William.

Julanda, 32, works as a grant liaison for a school district in Columbia, South Carolina, and earns a salary of $25,000. William, 33, is employed as an auditor and earns $35,000. Their monthly net income is $4,000 and they average about $2,400 in monthly expenses. At the end of each month, there was about $1,600 in discretionary income that couldn’t be accounted for — at least not until William started tracking household spending using a Microsoft Excel spreadsheet. “We eat out a lot during the week with both of us working. Then we’ll go out on the weekends as a family,” he says. “We were probably spending hundreds a month on entertainment.”

The couple looked for ways to cut back. “I started bringing my lunch to work about four days a week. And when I cut out breakfast at work, I save $35 to $40 a week,” maintains William. Furthermore, since the family’s three vehicles are all paid for, William re-evaluated the high insurance premiums he and Julanda were paying: “We switched to collision only, saving about $150 a month.”

Now that the Starkses have a better sense of where their money is going they are able to set some goals — in writing. Priority No. 1: Pay down debt. The couple owes $42,000 in student loans and about $9,000 on credit cards. “The majority of our debt came from when I was in college. I was only working part time so I just paid the minimums. In the past, we used credit cards for Christmas and vacations. It added up,” William explains.

William and Julanda will need to save all the money they can to achieve goal No. 2: Build college savings for their children, Tiffani-Shae, 8, and Tyler Aaron, 2. Says William, “We’ve been inconsistent. One month we might save $100; another month, $200. I want us to have a set target that we meet all the time.”

The Starkses have $1,500 in a savings account and $1,200 in a checking account. When it comes to their retirement savings, William has $21,000 in a 401(k) with a past employer and $3,000 in his current 401(k). Julanda has just begun contributing to her employer’s 403(b) plan. At some point, the Starkses would like to trade up to a larger house. They owe about $74,000 on their home, which they purchased five years ago for about $80,000. The property has since appreciated to $110,000.

The couple also has plans to go back to school for advanced degrees to increase their earning potential. William wants to get a master’s in accounting, a CPA license, and perhaps an M.B.A. Julanda wants to get her master’s in nursing and become an

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