From debt do you part: Aleas Hammett and her husband, David, are beginning the long, hard process of eliminating the debt that clouds their future - Family Finances - Brief Article

Black Enterprise, Jan, 2002 by Carolyn M. Brown

The couple has saved $200 each in two traditional IRAs. Because their incomes are above the limits of a traditional IRA, they should convert those to Roth IRAs (his and hers), and place $1,000 from the BE contest winnings into each account, The goth IRA allows them tax-free growth potential and tax-free withdrawals of earnings.

With a Roth IRA, the modified adjusted gross income for joint filers is $150,000 as opposed to the $53,000 limit on traditional IRAs. With an income of $108,000, they don't currently qualify for a tax-deductible contribution on their traditional IRA.

Financial Snapshot:
Aleas Hammett

          HOUSEHOLD INCOME

Gross Income            $108,000

              ASSETS

Savings                   $2,500
IRAs                         400
Bonds                      3,000
401(k)                     6,000
Investment Club            4,000
(%) of total assets)

Total                    $15,900

            LIABILITIES

Mortgage                $187,000
Consolidated loan        $70,000
Credit card balance       10,000

Total                   $267,000
Net Worth              -$251,100