SECURITY BEGINS AT HOME

Enough theory. Here’s how three local families are planning for the future.

Investing Now Means Choices Later On



CARY AND TRACI PAULETTE OF RICHARDSON

He: age 34, general manager, ExecuTrain

She: age 32, CEO of the Paulette household

Children: Alexandria, 8; Jenna, 7; Madison, 4; Garrett, 2

His 1995 Salary: $110,000 (before taxes)

Net Worth: $200,000-plus

Investments: About $150,000 in blue chip stocks. Before coming to ExecuTrain, Cary worked for a Fortune 500 medical device company, Boston Scientific Corporation. He wisely purchased company stocks through their employee stock purchasing program. During his 10 years with Boston Scientific, the company grew from a $20 million to a billion-dollar corporation. They also have $45,000 in a company-sponsored 401(k), $12,000 in savings, $32,000 in home equity, a million-dollar life insurance policy on Cary, and a $12,000 stock investment with a broker for their children’s college education.

Liabilities: $83,000 home mortgage, 15-year note Cary plans to pay off in 10 years, $1,000 per month for two autos, a Suburban and a Montera, each on a three-year lease program. (Cary can deduct some of his car expenses and since time is so precious, they’d rather change cars every three years than hassle with repairs.)

Retirement Plans: age 60 for both Cary and Traci. “My goal is to be age 60 and have choices in my life.” says Cary. “Not to be put out to pasture. To get there, we have done some planning.”



MONTHLY BUDGET:

Mortgage: $1,000 (includes property taxes and insurance)

Food, Home: $600

Food, Out: $350 (includes a baby sitter for Cary and Traci’s nights out)

Clothing: $250. “We don’t think it’s beneath our dignity to find clothing bargains,” says Traci. “I stay at home and don’t need a tremendous wardrobe. We shop Marshalls and discount stores. It’s great to find a Tommy Hilfiger for $25 or a Polo for $20.”

Tuition: $700

Savings: $ 1,000-$2,000 (some extra for mortgage)

Insurance: auto, $210; life, $83.

Health Insurance: through ExecuTrain

Utilities: $220

Taxes, Reserve: $280

Vacations: $300. They own a camper and spend two weeks camping every summer in Colorado. Cary and Traci try to take one week a year by themselves when Cary s mother baby-sits-they use hotel coupons and frequent flyer miles. Traci’s parents own a ranch in Oklahoma where they also vacation.

Health Club: $36

Grooming: $150

Mise: $100 for video rental, movies for the kids; $100 for toys, books; $80 for an independent contractor housekeeper; $800 for horne furnishings/maintenance

TOTAL EXPENSES: $7,259



WHEN CARY SIGNED ON WITH ExecuTrain, the Paulettes felt they were coming home for good. Because the Eastern real estate market dipped, they took a $50,000 loss on their home that forced them to buy a smaller, four-bedroom fixer-upper in Richardson. They got a good deal-$105,000 and they put 20 percent down. With sweat equity and contractors, they fixed up the house and it’s now worth at least $1.15,000. Cary and Traci will pay the house off and keep it as rental property. The $1,200 rental income will go for college tuition. Cary and Trad may eventually move to the Park Cities or Northwood Hills. But they will still put their children in private schools, as they do now.

The girls attend Providence Christian School. Tuition is about $8|000 a year for both. But Cary and Traci love what the girls are getting.

“Providence’s Christian philosophy is that parents are responsible to support the education of the school,” says Cary. “It’s not all up to the teachers. Our [first and second grade] girls come home with an hour’s worth of homework.”

Cary, the optimist, says he’s never been happier. Traci sees light at the end of the diaper tunnel {baby Garrett is 2). Both are ambitious-Cary loves his company and his work. Traci loves managing the family and being home with her children, which they agreed she’d do back when they were college students. Both try to instill a work ethic and savings sense in their children. For example, the children have certain simple duties-bed-making, cleaning up their rooms. They are paid for extra work on what the Paillettes’ friends dub the “commission program.”-On a recent weekend, they worked in the yard with dad earning 50 cents for each bag of leaves they filled.

“Maybe we don’t spend money the way other people do,” says Cary, “but still, I am raising little capitalists! “

No lime to Spend So They Save

JAN AND JOHN GREER OF PRESTON HOLLOW

He: age 30, investment banker

She: age 29, independent mortgage banker

His 1995 Salary: $105,000

Her 1995 Salary: $160,000 ($75,000 base plus commissions)

Net Worth: $500,000

Investments: 401(k) for each, $200,000; investments, $115,000

Assets: $30,000 in automobiles; equity in $250,000 home (about $50,000); $50,000 in savings

Liabilities: Other than home mortgage, none. They pay off all credit card debt within 30 days.

Retirement Plans: John wants to call it quits at 55 and work for himself as an investment consultant. Jan wants to have two or three children and return to work when they are grown.



They married in February 1994 and bought their Preston Hollow home one month prior to the wedding for $225,000. Since Jan’s salary was fattened by her incredible commissions last year, the couple plans living expenses on her base salary and regards the commissions as gravy to save. Both contribute the maximum to their company-sponsored 401(k)s;Jan s employer matches her8 percent contribution with 4 percent.



MONTHLY BUDGET:

Mortgage: $1,100, first; $225, second lien (which kept them from paying Private Mortgage Insurance and gave them more interest deductions)

Food, Home: $200

Food, Out: $600

Clothing: approximately $250

Insurance: $400 (house, cars, life; both get health insurance through work)

Utilities: $150

Property Taxes: $335

Fun/Vacations; $835

Misc. Health Club: $50

Jan’s Grooming: $150-$200

Maid: $100

Golden Retriever, Buster: $85 (food, veterinary fees, flea pills, etc.)

TOTAL EXPENSES: $4,530



JAN AND JOHN ARE LIGHT YEARS AHEAD OF most couples their age-which they realize. But John has planned it this way. He is a careful consumer and analyzes all major purchases for the best deals and savings potential. Take their new Land Rover-it’s already paid off.

“It took John four months to research buying that car,” says Jan. “And it wasn’t really ’new’-it was a used car with 30,000 miles. But it came loaded and in fabulous shape.”

TheGreers paid $24,000 for the Rover; new ones list for more than $40,000. John knew that the 10.5 percent interest rate and financing of a new car jack up the costs, and neither of them can deduct their cars. So he paid it off. The couple also has a 7-year-old Honda.

Jan is not a big shopper. She works so hard during the week, she says, the last place she wants to be on weekends is at a noisy, crowded mall. She orders clothes from Neimans, Harold’s, Lord & Taylor, and Ann Taylor catalogues. She always tries to buy on sale. She doesn’t buy a lot of furniture for the house, either. This couple’s only financial vices may be Jan’s costlier cosmetics and their many first-rate vacations. “We get away three, maybe four times a year,” says Jan. “Then we do lots of weekend trips around Texas. “

But the travels and accelerated savings will stop once Jan gets pregnant, which she plans to do in two to five years. In the meantime, this couple stashes away money as fast as they earn it because they know that once little ones enter the picture, it will be much harder to save.

“I’ve already warned him,” Jan says to her husband, “When I’m home on maternity leave, I am going to spend a lot of money and buy some furniture for this house ! Right now, I’m making money. But I’m so busy working I just have no time to spend it!”



College and Cars

BRAD AND UNA BAI LEY OF PLANO

He: age 51, accountant

She: age 46, nurse

Children: Para, 22; Paul, 20

His 1995 Salary: $44,000 ($32,000 from accounting and $12,000 from Brad’s coin-operated kiddie ride business)

Her 1995 Salary: $42,000

Net Worth: $200,000

Investments: 401(k) for each-Brad’s, $25,000, Tina’s, $25,000; IRAs: $18,000

Savings: $5,000

Assets: Equity in $100,000 home ($45,000); coin kiddie rides, $50,000; four cars, $36,000-all four cars are paid off; Brad and Tina abhor consumer interest and debt that cannot be deducted. They do not charge if the balance cannot be paid off in 30 days.

Retirement Plans: As soon as they get the kids out of college, the Baileys will accelerate savings for retirement. With luck and good returns, Brad thinks they may be caught up by age 65.

Brad started saving up for his two chil-dren’s college tuition when they were infants; every month he put away $20 or $100, whatever he could manage. He had $15,000 ready to go when the kids were old enough. Unfortunately, he had that money in a regular savings account (banks were paying higher interest rates back in the ’80s) and college got more expensive. Brad’s well-intended plans couldn’t keep up with inflation.

Paul goes to UTA-$10,000 per year plus living expenses. Pam, an Aggie, graduates this spring. She plans on one year of graduate school. A&M also costs about $ 10,000 per year. Even though both the kids received partial academic scholarships of $1,800 per semester, Brad and Tina say the college bills are enormous, more than they expected to pay.



MONTHLY BUDGET:

Mortgage: $860

Food: $500

Gas for Four Cars: $200

Insurance on Four Cars: $300

Vacations: none

Clothing: minimal, $100-Tina wears a nurse’s uniform; Brad wears jeans and a shirt everyday.

Health Insurance: $500

Gifts for the Kids: $150 (for Christmas, birthdays)

College: $50 for Tina’s education to obtain a master’s degree in nursing and approximately $2,100 for the children. (“If they need something extra, like a special course or supplies or when Pam needed a laptop, I send along extra funds,” says Brad.)

TOTAL EXPENSES: $4,760



BRAD HAD EACH CHILD OPEN UP A CHECK-ing/money market fund at college. He sends a monthly deposit and each child has to budget the month’s expenses, including paying their tuition from that check. The kids come home for holidays.

“We’ve had our surprises but we’ve worked through them,” agrees Tina. “With all of us in school, except for Brad, there’s really no spare time to think about doing anything else, taking a vacation, whatever. We pretty much like to stay home when we can. “

One thing is for sure: Brad has already shared his financial “don’t do what I dids” with his two children, making them promise to start aggressive investment savings as soon as they land jobs after college.

“I don’t care if they are earning a dime an hour,” says Brad.” I want them to save it and invest it to make more. It looks doubtful that Social Security is going to be here for us-I’d be amazed if it’ll be there at all for our kids.”

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