is a money market fund (say, with a mutual fund company like Vanguard or a brokerage firm like Charles Schwab & Co.) or in a bank money market account.
Such a cushion, though, is only part of a plan that every couple needs to develop to ensure a bright financial future. When it comes to planning, and making decisions for the future, Clarence and Sharon Addison of Ellenwood, Georgia, seem to have covered all the bases.
They’ve been married for eight years and have two daughters, Chelsea, 6, and Paige, 4. Clarence, a dentist, opened his own practice in Atlanta three years ago, and also works with a group dental practice. Sharon, an ex-banker, now manages her husband’s practice and also attends school.
Because the Addisons are heavily reliant on Clarence’s dentistry income, the couple has gone to great lengths to protect the family in the event something happens to Clarence, 34. They’ve already purchased savings bonds and established accounts to fully fund their daughters’ college education. He has personal disability insurance and professional insurance coverage, and maintains a universal life policy with a death benefit for his survivors.
Sharon, 33, is a dedicated bargain shopper. She calls herself the “cautious, frugal” one; Clarence says he prefers “the finer things in life,” like upscale cars and nice clothes, though he prefers not to pay top dollar. Because their philosophies toward money are different, the pair often make concessions to accommodate one another. “Clarence doesn’t want to see me worried about finances, so he’s actually compromised a lot for me,” Sharon says. A few years ago, Clarence had his heart set on getting a new car–a Mercedes Benz in the $40,000-$45,000 range.
After a series of discussions, however, Sharon was able to convince him to forgo the Mercedes. Instead, the couple purchased two cars for the same money–a $25,000 Lexus 400 for him, and an $18,000 Lexus 300, which she drives. And they used the equity in their home to buy the cars, so the payments are effectively tax deductible.
“Her approval is very important to me,” says “So I would have never bought the Mercedes if she wasn’t happy. In the end, we made the right decision–or rather, she made the right decision for me,” he adds with a chuckle. The Addisons have sidestepped a lot of debt woes by paying off their credit card balances each month. When they want to make big-ticket purchases–like the new bedroom set Sharon recently bought–they save up for these items and pay cash. By living Within their means, they’ve also been able to aggressively pay off Clarence’s student loans. His college debts once approached six figures, but the balance due on the loans is now around $11,000, a sum they plan to pay off within a year.
The Addisons say they live comfortably on their $100,000-plus annual income. “But it wasn’t always like this,” Sharon says. “It took hard work, sacrifice and a lot of planning.”
Woodhouse, the family law attorney, says that in the end it’s the ability to