Sylvia King has always been a saver. She lives a simple lifestyle and takes great care to monitor her spending, as it contributes to her financial health. King, 35, also believes that homeownership is the cornerstone for building wealth. She owns two homes: her primary residence, a four-bedroom, three and half-bath home in Landover, Maryland, which she purchased in 2007 for $400,000; and a three-bedroom, two-bath rental property in Greensboro, North Carolina, that she purchased in 2003 for $130,000. King receives $1,050 in rent each month from her tenant.
King’s saving skills proved helpful when she was laid off from her job in June 2007. She was a project manager with Fannie Mae until the company reduced its staff by several hundred. At the time, the economy was starting to sputter, so it took her six months to find her current position as a senior associate at an accounting firm. Her household income, which includes rental property, shrank from $145,000 to $105,000. Now, her mortgage payments make up a total of $3,200 each month, consuming 65% of her income—almost double the amount financial advisers suggest one should set aside for housing.
However, King found a safe haven in her emergency fund. She has more than $30,000 in reserves and nearly $25,000 in retirement savings. King is making an extra effort to manage her money—especially given the economy and widespread job losses. “It’s nerve wracking. I thought Fannie Mae was a sure bet. I didn’t see it coming; I was totally shocked. I had planned to spend my career there. I’m just thankful I had money in reserves. It could have been worse,” says King.
Despite her cash reserve, King, a divorcee and mother of a 6-year-old daughter, Rheanna, feels vulnerable. “The job market is twice as bad as it was last year because there have been so many layoffs.” In addition to her mortgages, she has an $8,000 car loan and $12,000 in credit card debt because she lent money to a relative and a friend.
King is proud of what she has accomplished so far and doesn’t want to lose ground. She has a goal of returning to Barbados, where she grew up. Her job has a global mobility program that could pave the way for her to eventually transfer there. After retirement, she hopes to become an entrepreneur and open a bed and breakfast in Barbados. She hopes her dream comes to fruition by the time she reaches age 50.