Reaching For Financial Success


I’m on my expense account for work. I’ve only spent about $300 in six months on clothes,” he says proudly.

He followed financial planner Walt Clark’s advice and put the $2,000 prize money in his Roth IRA. He’s
also putting $250 a month into a small-cap fund, heeding the adviser’s suggestions to diversify his large-cap fund holdings.

Says Beale, “A lot has happened in the last year or so. I’m still battling my urge to be aggressive, to say I want a Mercedes now, not when I’m 80 and retired. But I’ve seen friends lose jobs. I’ve learned you have to be prepared for anything.”

THE ADVICE:
Keep the day job
Stay with the company and attend school part time to reap the benefits of tuition reimbursement and the company car.

Buy, then rent
Buy a more expensive home with a larger mortgage to increase interest deductions, and rent out existing property.

Save and invest
Reduce dining and clothing expenses, saving $600 — $700 a month for cash reserves and debt reduction.

Think small
Shift investments to small- and mid-cap funds, including the contest winnings, which should be added to his Roth IRA.

THE FOLLOW-THROUGH:

  • Beale is still with his company and hasn’t decided whether he’ll start a part- or full-time M.B.A. program.
  • He is now looking for a smaller home with a comparable mortgage, but still plans to rent out the existing property.
  • Beale reduced his spending but chose to invest the savings rather than improve his cash position or debt load.
  • Beale did put the prize money in his Roth IRA, and he’s also putting $250 a month into a small-cap fund.

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