Engineering A Solid Future

Alton Moss and Catherine Charles are learning that a blueprint for financial success starts with common goals and full disclosure

marry. “I’m very aware that [unresolved] financial situations in a relationship can destroy a marriage,” he says. (See archived story “The Wedding Bell…Greens?” at

To help Moss stay on track and construct a financial plan that will help him meet his investment goals, BLACK ENTERPRISE had him consult with Mark A. Mitchell, a registered financial representative with AXA Advisors in San Juan Capistrano, California. The following are Mitchell’s recommendations:

Commit to the Same Goals.
At first glance it appears that Moss and Charles have philosophical differences regarding finances. They both must be willing to commit to the same quality of life and have a coordinated approach to managing their money. This means analyzing and categorizing their expenditures, determining which are necessary and which are discretionary. They must make smarter purchases, taking into account what they buy and how they pay for it. They must limit purchases with store credit cards that charge up to 24% interest. If Moss remains the major financial contributor in the relationship, he may end up paying off her debt as well as his own, which will hinder his ability to accumulate wealth. He has defined his financial goals and the time horizon by which he wants to achieve them (retirement at age 47), she should do the same.

Start Contributing Again to his 401(k).
Moss started out contributing the maximum allowed — about $875 a month — to his 401(k). But after a couple of months, he stopped to focus on saving money for his condo. Now that he owns the condo, he needs to begin a systematic plan for investing and stick with it if he ever hopes to achieve his early retirement goals. Mitchell advises that he maximize his qualified retirement plan by contributing the limit allowed again, which will also lower his tax bill.

Invest in Growth Mutual Funds.
It is important that Moss have the right asset mix and the right categories when it comes to his investments. A general recommendation, based on his age, would be to establish a well-managed portfolio of blue chip growth-oriented stocks outside of his 401(k). To that end, the $2,000 in contest winnings should be placed in Moss’ Roth IRA. Mitchell says the objective is to provide capital appreciation, so it’s not a bad thing if two or more of the five funds he currently holds in his Roth have similar fund objectives. But, because of the various market cycles, he must make sure his is best protected by having a diversified portfolio or varied asset mix including aggressive growth and fixed-income investments.

Use Home Equity Line to Pay Off Debt.
Moss can relax a bit because his student loan was deferred when he went back to school. His other major debt is the $9,000 car loan on his 1996 Honda Accord at a rate of 9.25% along with the $5,500 in credit card debt at 15.5% interest. Since he refinanced his $106,000 mortgage at 6.63% interest, his monthly payment dropped from $1,102 to $850. (The total of the new mortgage is $110,000.)

Pages: 1 2 3