Taking Steps Toward Financial Independence

Our 2003 financial fitness contest winners are reaching their goals with solid fiscal planning

closest relative.
THE FOLLOW-THROUGH: She and mom both have wills, and Hall purchased a life insurance policy that would provide her with $150,000 if something happened to her mother. They have yet to set up trusts.

JUNE WINNERS Eric & Kim Worley
Married life agrees with the Worleys. As planned, their special day took place in September 2003. They even managed to save enough cash to pay for half of the $15,000 shindig and honeymoon cost. Their parents paid the rest.

To say the least, their marriage is off to an eventful start. By October’s end, Kim, 30, was expecting. Eric began graduate school in September, working toward a master’s in education administration so he can land a better position, stop working two jobs, and make more than the $55,000 he earns now.

Although Kim will soon have to start repaying the $50,000 she owes in undergraduate and graduate school loans, their debt picture has greatly improved. Eric recently refinanced the mortgage like the planner suggested. While the reduction from a 7.5% rate to 6.7% didn’t change the monthly payment much, Eric took out money and paid off the remaining $7,000 in old credit card debt that was haunting him. His student loans are in deferment since he’s in grad school, which gives him breathing room. The Worleys also spent $4,000 of the money from their refinancing to remodel the basement to accommodate Eric’s home office and otherwise enhance the space. The bedroom he was using for his office will now go to the baby.

The couple is making strides. Eric paid off his old car, sold it, and used the proceeds to help buy a new $25,000 Chevy Tahoe. “Now that our debt is under control we can focus on saving,” says Eric, 29. They have about $2,000 left from the refinancing, which will go toward building their emergency fund.

“We’re feeling pretty satisfied, she more than I,” says Eric. “I’m anxious to move to the next phase of my career. I don’t want to have to work two jobs.”

THE ADVICE: Consolidate debt. Debt is a priority, consolidate and pay less interest to get out of debt sooner. Consider a home equity loan.
THE FOLLOW-THROUGH: The Worleys opted for refinancing. They didn’t shave much off their mortgage payment, and against the planner’s wishes, they took out money to pay off debt. Getting rid of debt was their top priority.

THE ADVICE: Refinance the mortgage. If there isn’t much equity in the home, refinancing is another option. A lower interest rate could free up some cash to pay down debt. Do not refinance and take out cash to pay off debts because it would increase the mortgage.
THE FOLLOW-THROUGH: The Worleys have $2,000 from the refinancing that they will put toward the emergency fund, and with less debt they are anticipating finally being able to start saving.

THE ADVICE: Step up savings and investments. Build an emergency fund of at least three months’ worth of living expenses.
THE FOLLOW-THROUGH: Building on the money left over from the refinancing, the Worleys are

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