Young, Single, And Free Of Debt

Tiffany Hall is securing her retirement by saving, using smart tax management, and debt-free living

Tiffany Hall reads a lot of articles about people who earn less money than she does, yet seem to be better off financially. “The individuals in those articles had accumulated assets such as homes, rental property, and investments,” explains the 31-year-old contract attorney from Lathrup, Michigan. Now Hall wants advice on how she can acquire assets, stretch her income, and manage what’s left after all her bills are paid.

Hall, who earns $70,260 a year, says she’s lucky to have relatively little debt, namely a $19,800 auto loan on her Lexus RX300 SUV (with three years left to pay). Unlike most people who spend 10 or more of their working years paying back student debt, Hall paid off $8,000 in college loans 18 months after entering the workforce. “I was able to get graduate assistance for law school, so I didn’t have a lot of undergraduate or law school debt,” says the 1996 graduate of Southern Illinois University School of Law who also has a master’s degree in public administration.

An only child from a single parent household, Hall says she owes a lot to her mother who made financial sacrifices on a teacher’s salary so Hall could go to college. “She even had to delay her retirement because she had accumulated so much debt on my behalf over the years,” says Hall. Her mother retired from the Detroit Board of Education in 2001. Looking to give something back, Hall has been living at home for the last five years, paying $400 rent and helping out around the house.

Her immediate goals are to pay off her car note, buy a house, and continue saving for early retirement. In fact, the legal advisor for the U.S. Army TACOM (Tank-automotive and Armaments Command) has taken commendable steps toward building wealth. She has $1,000 each in her savings and checking accounts; $8,500 in a Scudder money market fund; $9,400 in an American Funds account; $3,350 in a SEP-IRA; and $10,400 in her 403(b), to which she contributes 5% of her salary (the maximum is 13% with a dollar-for-dollar matching contribution of up to 3%, and 50 cents to the dollar for the next 2%). Hall also has a little more than $1,000 in a payroll savings account at work (Federal Employee Retirement System), to which $20 is deposited every paycheck.

Hall seems to have what everyone desires these days—job security. She has earned two $10,000 raises in the last two years, noting that government employees are hired at a specific grade and are paid on scale. “Since I’ve hit my target grade every year, I will get only step increases and cost of living increases,” she says. Whereas the average worker changes careers every two to three years, Hall says she loves her job and plans to stay for a while.

THE ADVICE
Hall is a conservative investor and a frugal spender. Her only real luxury is an occasional vacation. When it comes to money management, Hall is averse to debt and market losses. But she should

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