On The Road To Financial Fitness

By Carolyn M. Brown

college fund,” says Arlene.

First on Laura Johnson’s agenda after winning the contest last December was ridding herself of debt. She used her $2,000 contest winnings to help pay off $7,000 in credit card balances. The $10,000 car note is also gone. “We continued to double up payments on our credit card debt to get them down,” says the retired 59-year-old school administrator in Richmond, California.

Laura and her husband, Art, also refinanced their $200,000 mortgage from 7.5% to 6.5%. The point difference allowed the couple to better shore up their savings. They now have $20,000 socked away compared to $8,000 a year ago. She still has about $6,000 in her checking account, plus the undeveloped land in Clear Lake, California worth $20,000.

Johnson’s retirement household income has remained unchanged at $60,000 (or $5,000 a month from her pension), but she did gross an additional $20,000 from her consultancy business. She has yet to consult a tax professional about writing off some of her expenses, but that is on this year’s agenda.

As with many investors, Johnson experienced a reduction in her retirement account; her 403(b) is down in value to $119,000 from more than $134,500. “I am trying to wait to see what happens,” she says. “I really don’t need that money to live on at this particular time. I am still looking to hold on for the long term and try to take advantage of the market upswing.” As time passes, Johnson plans to reassess her asset allocation mix and consider moving some of the money into more fixed-income vehicles.

When it comes to protecting their assets, Laura and Art have been less diligent. Because they both have children from previous marriages, it is critical that the couple adopt DOFE principle No. 10: To ensure that my wealth is passed on to future generations.

Mark A. Mitchell, who has also worked with previous contest winners, including the Talleys, emphasized the importance of creating an estate plan, including wills and trusts, to keep their assets out of probate. He also recommended that they get long-term illness insurance in the event either of them becomes severely ill or impaired. Laura says she is starting to take steps in that direction.

All of our contest winners have fully grasped the concept that accumulating wealth has little to do with the size of one’s paycheck. It has everything to do with how well you use your hard-earned dollars. The idea is to pay yourself first. Make saving and investing part of your daily life.

For more information on DOFE or to sign up for the 2003 Financial Fitness Contest, go to blackenterprise.com. You can also call 877-WEALTHY to get a complete list of all 10 DOFE principles, your free Wealth Building Kit, and details on our contest.

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