Sowing Seeds For Financial Freedom

Our experts helped financial fitness contest winners grow their assets

Diligently tending to your finances can yield big rewards even in a short period of time. That’s a lesson that BLACK ENTERPRISE’s 2005 and 2006 Financial Fitness Contest winners quickly discovered. Even though a few of our contest winners may not have implemented every shred of advice offered by the financial planners, most have realized lasting benefits from the changes they’ve made. By planting the right seeds today, these winners are sure to reap financial rewards for years to come.

Here’s a look at what happened to three recent contest winners.
August 2005 Winner, The Vinsons
Marvin and Rhonda Vinson are further ahead in reaching their financial goals for a sunny retirement — and joining the millionaires club. “We’re making better spending and investing decisions and it’s paying off,” says 39-year-old Marvin. “We’ve been blessed,” adds 40-year-old Rhonda.

The Lilburn, Georgia, couple already had a solid financial foundation with substantial assets and minimal liabilities. In a little over a year, the Vinsons have seen their net worth grow from about $700,000 to $900,000. That growth has come without a change in Marvin’s $200,000-a-year job as a solutions architect at Oracle or Rhonda’s status as a stay-at-home mom. By reducing debt and investing on a regular basis, the couple has been able to increase their wealth.

The couple is still engaging in comprehensive estate planning by developing strategies to protect their assets and safeguard their children’s inheritance. Another of the couple’s biggest concerns: preparing for their children’s college education. The Vinsons have made some headway in establishing college funds. Since their children — 7-year-old twins Kyle and Kamyrn and 10-year-old Sydni — are still in grade school, time is on their side.

THE ADVICE: Pay off remaining debt; invest in a bond fund, which can be liquidated to pay off the mortgage.
THE FOLLOW-THROUGH: The Vinsons are paying off the car loan but not accelerating payments. They didn’t open a bond fund but invested in several mutual funds, including large-cap, technology, international, and mid-cap funds.

THE ADVICE: Open three college savings accounts.
THE FOLLOW-THROUGH: The Vinsons opened 529 plans for all three children, placing the $2,000 contest winnings into these college funds. They have invested a total of $8,000 in the Georgia College Savings Plan, making monthly contributions of $500 for the oldest child and $250 for each twin.

THE ADVICE: Consider setting up a bypass trust. The Vinsons need to give some thought as to how to distribute their estate. Their children could see their inheritance shrink by 30% or more because of estate taxes, which could be reduced through a bypass trust. In addition, any capital appreciation on their assets inside the trust will pass on without estate taxes.
THE FOLLOW-THROUGH: While the Vinsons have wills, living wills, a durable power of attorney for healthcare, and a durable power of attorney for property, the bypass trust is still on their to-do list.

THE ADVICE: Reallocate some funds.
THE FOLLOW-THROUGH: Previously the Vinsons had about $50,000 in individual securities, primarily Marvin’s company stock. At the advice of the planner, the couple has invested much of

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