Taking Control

Kyla Acie knows how to save, but she needs to set investment goals for retirement and her child�s education

While Acie has been a good saver and accumulated minimal debts, she admits she has mishandled her credit in the past. There are defaults on her credit report that won’t disappear for another three years, including a roughly $10,000 undergraduate student loan balance that went into collection before she paid it off in 2005. A family tragedy, Acie says, caused her to fall behind. Distraught by her mother’s cancer diagnosis and subsequent death in 2003, she failed to keep up with her student loan payments.

“You don’t always think of things that you need to do, and when you need to do them, when your life drastically changes,” says Acie, who received a bachelor’s degree in arts management in 2002 and an M.B.A. in 2005 from Point Park University in Pittsburgh. Point Park paid for her graduate school education because she worked there at the time.

A $250 delinquency on medical bills that are in Acie’s name has also marred her credit report. Purchasing a home and never missing a payment has raised her credit score to about 600, but it is below the national average of 693. Acie’s former husband was ordered to pay child support, but because he is currently unemployed those payments are just over $100 a month. He also covers Sydney’s health and dental care insurance.

Acie and her daughter reside in a three-bedroom townhouse, which Acie received as part of the divorce settlement. The couple purchased the home in 2007 for $125,000. It has a $115,000 mortgage at a 30-year fixed rate of 6.25%. Including her $1,000 mortgage payment, Acie’s monthly expenses total $2,200. Her net monthly income is around $3,500.

Acie realizes you have to plot your steps today in order to achieve your goals tomorrow. “I know now that it is important to set personal, professional, and financial goals.”

The Advice
Black Enterprise devised an investment plan to help Acie meet her retirement goal and also contribute to her daughter’s college education. Acie has adequate income, moderate living expenses, and no credit card debt. With an aim to retire at age 62, the rates of return that are needed on her retirement accounts are a little more than 8%, says Alfred L. McIntosh, a certified financial planner and the principal of Los Angeles-based McIntosh Capital Advisors Inc. With a little more than 30 years until retirement, Acie is in a position to amass well over $1 million for her nonworking days once she begins contributing regularly to a slightly aggressive investment program as outlined below.

Reallocate cash reserve. As a more immediate concern, Acie should use the $2,000 contest winnings to pay off the $250 medical debt and not wait until it falls off her credit report. Since she has no credit card debt, as long as she continues to pay her bills on time, her credit score will improve. Even though she has $12,000 in a CD she needs to keep at least six months of gross monthly income, or $22,500, in her emergency fund. To achieve this goal, she can use the remainder of the contest

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