Reaching the Next Level

B.E. takes a look at the 2008 Financial Fitness contest winners to see if they're closer to a secure financial future

OCTOBER 2008 WINNER | THE HAGEWOOD FAMILY

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(Photo by Sheri O'Neal)

Jarvis and Jelani Hagewood have made several positive changes. The last time we spoke to the Clarksville, Tennessee, couple, they had hit a few bumps in the road. Among them was the fact that they were assisting others financially. Jarvis and Jelani had spent about $8,000 over three years helping family members. They also faced hefty car loan payments totaling $1,800 a month for three cars, one for Jarvis’ mother.

Since appearing in Black Enterprise last October, the couple has committed to paying down their car loans and mortgage. Jarvis and Jelani, ages 35 and 39, are both still in school and on schedule to graduate next year, and fortunately they’ve managed not to accumulate more debt. “We still have no credit card balances and pay the cards in full when we do use them,” says Jelani. After she graduates, Jelani plans to return to the military part time by serving in the National Guard so she can receive benefits such as life insurance, tuition assistance, and retirement.

The Hagewoods have also improved their spending habits by purchasing items in bulk and on sale. “We eat out a lot less and we’ve found ways to cut our energy bills around the house,” says Jelani.

One pressing issue that has been addressed was whether or not to do renovations on their home. The adviser recommended putting renovations on hold and waiting until after graduation in May and increasing salaries before taking on additional debt. He also recommended that they focus on rebuilding savings and paying down auto loans.

Jarvis and Jelani have delayed doing major renovations but needed to make plumbing repairs that affected one of their bathrooms. The project cost $900, which they took from their emergency savings (which has been replenished).

The Advice: Stop spending money on family members. The $500 per month they spend helping others should be put toward their retirement accounts and debt reduction. When giving to friends and family, it’s important to clarify whether it’s a loan or a gift. Without clarity, there can be significant strain on relationships.

The Action: Jarvis and Jelani say they’ve learned to say no over the past year. Family members who were previously unemployed found jobs; others secured better jobs. In addition, Jelani has increased her contributions to her Thrift Savings Plan (the retirement savings plan for federal employees) to 7% to get the maximum match; although Jarvis does not receive a match, he also increased his contributions to 7%. Furthermore, the couple’s investment portfolio has recovered some of its stock market losses.

The Advice: Rebuild the emergency fund: The risk of foreclosure on their new home could increase in the event of a job loss, extended illness or injury, or some other emergency. Jarvis and Jelani should concentrate on getting their emergency fund account up to at least $15,000 over the next 24 to 36 months.

The Action: The couple amassed an additional $14,000, using the $2,000 contest winnings and overtime earnings as well as money they got back from overpayment of their escrow and taxes when they closed on the house. But they put that money into their IRAs and left the original $5,000 in their emergency savings.

The Advice: Get a handle on the car loans. No more than 12% to 15% of net monthly income should go toward total transportation expenses.

The Action: They continue to pay on their three car loans; however, Jarvis’ mother is paying a large portion of the loan for the car she drives, while the Hagewoods pay the insurance and some maintenance. That car will be paid off next September, leaving Jarvis and Jelani with the remaining loans due in 2011 and 2012.

Sheryl Nance-Nash contributed to this article.

This article originally appeared in the December 2009 issue of Black Enterprise magazine.

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