Taking Steps Toward Financial Independence

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

line of credit, which they tapped to pay off Michael’s car loan.

THE ADVICE: Maximize income. Put $150 in Michael’s mutual fund, the T. Rowe Price Capital Appreciation Fund, and $150 in the 529 college savings plan. Michael should bump up his 401(k) contribution to 15% of his salary (or the max). Both should get more aggressive in their investing options.
THE FOLLOW-THROUGH: The couple has bested the planner’s recommendations, increasing their contributions to the 529 plan to $200, instead of $150. Regina has increased her contributions from $80 to $220 a month. Furthermore, Michael receives 1% of his salary in company stock and is eligible for a pension completely paid for by the company.

THE ADVICE: Open up a second 529 plan. The gains are tax-free and the contributions provide a tax deduction to the plan owner. Revisit estate plan.
THE FOLLOW-THROUGH: They opened the second 529 plan and are saving $80 a month for their younger son’s education.

THE ADVICE: Purchase additional life insurance. Buy a minimum of $250,000 and acquire disability insurance.
THE FOLLOW-THROUGH: Michael and Regina have both beefed up their life insurance to $250,000, and are looking into disability insurance.

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