JUNE 2008 WINNER | THE KNOX FAMILY
Marcel and Judith Knox surprised themselves. â€śI didnâ€™t think we could save like this,â€ť says Marcel. In a little more than a year, they boosted their savings from $28,000 to nearly $90,000 by squirreling away unexpected extras such as $3,000 of the $5,000 in tax refunds they received last year, putting the rest toward miscellaneous expenses. They put the $2,000 contest winnings in their joint money market account. Most of the growth in their savings, however, has come from their tough decision to bank almost all of Judithâ€™s $65,000 salary.
Marcel and Judith, ages 46 and 39, have lived on one income before. Judith was home with their children from July 2001 through September of 2004. The Knoxes continue to make do with their 10-year-old car, and they refuse to pay more than roughly $10 per month for basic cable. They werenâ€™t eating out much before, but now they eat at home more than ever. â€śAnd when we do eat out, itâ€™s nothing expensive,â€ť says Marcel. His $82,000 salary goes toward rent, bills, and other household expenses.
Their savings strategy has paid off. The couple is currently looking to purchase their first home. â€śThe savings has given us a better cushion for a down payment, moving expenses, and furniture,â€ť says Marcel.
While austerity rules in the Knox household, they know itâ€™s important to live life too. â€śYou have to get away from the day-to-day grind,â€ť says Marcel. For the first time in many years the family took a road trip this summer, taking in the National Great Blacks in Wax Museum in Baltimore; the Hampton University Museum, the oldest African American museum in the United States; and Hershey Park in Hershey, Pennsylvania.
The Advice: Prepare for retirement. The couple receives about $4,000 a year in tax refunds. They should adjust their withholdings so they can use the money for retirement savings. In addition, they should explore an S&P 500 index fund in Marcelâ€™s retirement plan.
The Action: Marcel immediately adjusted his withholding. While Marcel and Judith did not purchase an S&P index fund, they did purchase a couple of energy stocks and Citibank shares when the price dropped to just over a dollar.
The Advice: Accelerate the timetable for a home purchase. The Knoxes should begin looking to purchase a home. As soon as they make a purchase, they should shift their focus to retirement savings.
The Action: The Knoxes did quicken their pace toward moving and hope to be in a new home this month.