what was sitting in cash — about $145,000 — in 10 stocks, including Bank of America, General Electric, Procter & Gamble, and Lowe’s. While the couple still has about $60,000 in cash assets, they plan to invest about $20,000 of that money in the next couple of months.
THE ADVICE: Reposition assets in 401(k).
THE FOLLOW-THROUGH: Marvin has been rebalancing his portfolio — and his strategy is working. His 401(k) balance has ballooned from $260,000 to $350,000.
He adjusted his overall portfolio allocation to reduce his international exposure from 21% to 15%, and he reconstructed his portfolio to an asset allocation that is 75% equities, 18% fixed income, and 7% cash.
September 2005 Winner Veronica Stewart
Veronica Stewart hasn’t deferred her dream of becoming financially self- sufficient through real estate. However, she has delayed buying new properties until now. By year-end she plans to purchase two single-family homes, one as her primary residence and the other as a rental property.
She still calls the four-unit apartment building she owns in Calumet City, just outside of Chicago, home. She rents three of the apartments, adding to her monthly supplemental income. However, she suffered a financial setback last year when one of the units sat empty for six months, significantly cutting into her cash flow.
The past year has been a learning experience for the 32-year-old customer account specialist with telephone carrier SBC Communications Inc. Though she has taken small steps, she has overcome some huge hurdles. “What has improved most is my relationship with money, how I view it,” she says.
Bringing some order to her life has become a top priority. Says Stewart, “the way the financial planner broke it down is that when your finances are out of order, things in your life are out of order.” Stewart says CFP Gwendolyn Kirkland helped her gain a more holistic approach to life and money management that encompassed mind, body, and spirit. “I didn’t get it at first. But now I do.”
“The way the financial planner broke it down is that when your finances are out of order, things in your life are out of order. I didn’t get it at first. But now I do.” — Veronica Stewart
THE ADVICE: Track monthly expenses.
THE FOLLOW-THROUGH: Stewart follows a budget. By keeping up with her expenses, she was able to make some spending adjustments. “Before I didn’t know where extra money was going,” she says.
THE ADVICE: Use a structured approach to reduce debt.
THE FOLLOW-THROUGH: Stewart has been systematically eliminating revolving debts. She paid off the smallest balances, including the Dell account. She still has $32,000 in student loans, but payments have been deferred since she is taking classes. She even got to travel to China to take a business course on her company’s tab.
THE ADVICE: Apply for a lower interest rate on credit cards.
THE FOLLOW-THROUGH: Previously Stewart had credit cards with interest rates around 19% and 21%. “Because of my good payment history, I got those reduced to around 9% and 12%,” she says. “All it took was a phone call.”
THE ADVICE: Exercise discipline.