Taking steps toward financial independence: our 2003 financial fitness contest winners are reaching their goals with solid fiscal planning

Black Enterprise, Dec, 2004 by Sheryl Nance-Nash

* THE FOLLOW-THROUGH

Since her mom is no longer moving, Halt is simply saving for her own home.

THE ADVICE

Build Up assets

Change to a tax-free money market account and keep the interest earned. Put the $2,000 contest winnings in the tax-free money market account. Reallocate government securities and fixed-income investments in 403(b) plan to more growth-stock vehicles as the market starts to rebound.

* THE FOLLOW-THROUGH

Hall did open the tax-exempt money market account, put the $2,000 contest winnings in it. and has been steadily adding to it monthly. She has also changed her 403(b) allocation to a variety of large, small, mid-cap, and international stock funds.

THE ADVICE

Create an estate plan

Set up wills and trusts for mother and daughter. In the event of an untimely death the state would automatically assume Hall's assets, not her mother or closest relative,

* THE FOLLOW-THROUGH

She and mom both have wills, and Hall purchased a life insurance policy that would provide her with $150,000 if something happened to her mother. They have vet to set up trusts.

WINNERS

Eric & Kim Worley

THE ADVICE

Consolidate debt.

Debt is a priority, consolidate and pay less interest to get out of debt sooner. Consider a home equity loan.

* THE FOLLOW-THROUGH

The Worleys opted for refinancing. They didn't shave much off their mortgage payment, and against the planner's wishes, they took out money to pay off debt. Getting rid of debt was their top priority.

THE ADVICE

Refinance the mortgage

If there isn't much equity in the home, refinancing is another option. A lower interest rate could free up some cash to pay down debt. Do not refinance and take out cash to pay off debts because it would increase the mortgage.

* THE FOLLOW-THROUGH

The Worleys have $2,000 from the refinancing that they will put toward the emergency fund, and with less debt they are anticipating finally being able to start saving.

THE ADVICE

Step up savings and investments

Build an emergency fund of at least three months' worth of living expenses.

* THE FOLLOW-THROUGH

Building on the money left over from the refinancing, the Worleys are in a better position to save for an emergency.

THE ADVICE

Revisit life insurance policy

Eric should eliminate the $50 a month he pays on a $150,000 variable life insurance policy. Instead, Kim should get $250,000 in term insurance.

* THE FOLLOW-THROUGH

They have not made any changes to their insurance yet. Eric says he's not sure what he wants to purchase, but will make a decision soon. With the wedding, grad school, two jobs, remodeling, and a baby on the way, they've been preoccupied.

WINNERS

Michael & Regina Haney

THE ADVICE

Make lifestyle changes

Cut back on expenses. Reconsider spending strategies, such as Regina's choice to lease cars. Each time she leases a new car it costs $1,000 to make the swan.

* THE FOLLOW-THROUGH

The Haney's have furnished much of their house, so they've stopped shelling out big bucks for household items. Regina still has four years to go on her lease, so she can't make a change just yet.