As for their greatest lesson from participating in the contest: “We have a long way to go to achieve our goal of financial freedom, which for us would mean being debt free except for a mortgage, with the ability to contribute to our children’s adult future and maintain a strong retirement plan. We have changed our ideas about saving and paying down debt. There is no point in aggressively saving when you are deep in debt. The best method is to pay down debt and then focus that newly freed up money on savings.â€
Overall Grade: B
The Brookses have done a good job of reducing debt and focusing on savings, but they should not let market volatility stop them from investing in their IRA. Stocks statistically do well over the long run and with a time horizon of about 30 years; they shouldn’t be turned off by market swings
Advice for Kenric & Christina Brooks
Advice: Delay new home purchase.
How they responded: They realized rushing wasn’t prudent and dealing with debt was a smarter priority. They have decided to wait for that dream house.
Advice: Earmark future earnings from research grants–set aside 50% for debt reduction and 50% for savings.
How they responded: They split a $23,000 grant evenly between savings and debt reduction. They put most of the debt portion toward their car loans and credit card bills, and have since gotten their credit card balance down to about $3,500.
Advice: Pay off debts without tax benefits first. Meet with a tax professional to identify items on which they can and cannot write off interest.
How they responded: They did not meet with a tax professional. “My husband handles the taxes. He is confident in the write-offs we currently take. As my real estate investing business grows, I may seek the guidance of a tax professional. For now, it is at a manageable level,â€ says Christina.
Advice: Pay off car loans in a year.
How they responded: They have paid offÂ $9,889 on the car loan and have designated more than $1,000 a month on the loan, which will be paid off by early next year. However, they changed course to pursue real estate investing. They used those extra dollars to invest in six properties.
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