Rhonda And Marvin Vinson of Lilburn, Georgia, are living the American dream. Married 15 years, the couple has money in the bank–a little over $60,000–plus a home worth $375,000, stocks and stock options valued around $50,000, more than a quarter of a million dollars in retirement funds, and zero balances on their credit cards. The Vinsons also have three children, 6-year-old twins Kyle and Kamryn, and 8-year-old Sydni.
One of the couple’s biggest concerns is preparing for their children’s future, which includes setting up college funds. “That is one of the areas that we need to jump on the ball and take care of now,” says Marvin, 38, a solutions architect with Oracle.
The couple has been extremely careful with protecting their estate. After 9-11, the couple re-evaluated their estate plan, explains Rhonda, 39. The Vinsons have drafted wills, living wills, durable power of attorney for healthcare, durable power of attorney for property, and a living trust. They currently have a $1.7 million life insurance policy on Marvin and a $250,000 policy on Rhonda. Additionally, Marvin has $450,000 in accidental death insurance and $110,000 in disability insurance.
To make marriage and money work, couples must learn to communicate, compromise, and commit to the process of joint financial management. The Vinsons have done an exceptional job of planning and carrying out their goals. “If you look at where we were 15 years ago and where we are now, it is like night and day,” says Marvin, referring to the numerous credit card and student loan debts they once had. “I use to be more of a spender. But now, with having three kids, I think I have calmed down a lot and have learned a lot as far as saving,” adds Rhonda. Now their only debt is a $104,000 mortgage and a $17,000 car loan.
Marvin is the family’s primary source of income–bringing in $200,000-plus annually–and Rhonda is a full-time, stay-at-home mom. The couple developed the practice of maintaining the same modest lifestyle regardless of changes in the household income–good advice for any family. Although Marvin works for one of the worlds’ largest software companies, the technology industry is frequently subject to shifts that can result in unexpected layoffs and other disruptions, says Danny Freeman, financial adviser at Darda Wealth Management. “By being debt-free, Marvin will give himself the option of being able to weather the storm.” This means should he lose his job, Marvin can take the time to find another job or seek entrepreneurial opportunities.
THE ADVICE
BLACK ENTERPRISE asked Freeman to review the Vinsons’ financial situation. “They currently have about $4,200 in discretionary income each month. This represents an excellent capacity to save and pay off all remaining debt,” he says. Freeman adds that the Vinsons’ debt-to-net worth ratio is 17%, which is excellent.
The following are Freeman’s recommendations to Marvin and Rhonda Vinson:
Pay off remaining debt within the next three years. The Vinsons should continue to make regular payments on the car loan, which has three years left on it. They should also