Herbert is contemplating what may be inevitable. Right now, all medical expenses are covered through his employer-provided health insurance. He has disability insurance that will pay him about 70% of his nearly $200,000 annual salary. He also has a $350,000 life insurance policy through his company, one that allows him to keep his premium should he ever leave. As a single man with no children, he says he isn’t concerned about losing coverage. In addition to his disability insurance, he will have to rely on his personal savings and disability from the government (Social Security) for his income.
His priority is staying in his home, at least until he is disabled. He wants to pay it off, or come as close to doing so within the next seven to 10 years. Then he plans to sell the property and relocate to a less expensive location such as Texas or Florida and use the proceeds to pay cash for a new home.
He’s searching for a game plan to achieve that goal. He’s been chipping away at his mortgage, making one extra payment a year–but much more will be required.
Although he has no debt outside his mortgage, and has almost $200,000 saved in IRA, money market, and 401(k) accounts, he has a fetish for the fabulous.
“I’ve gone to the store to buy a pair of jeans, but I spend $700 on three pairs of jeans and two shirts,†says Herbert, who thinks nothing of plunking down $800 or $900 for a designer jacket, or $600 for a pair of sunglasses. His greatest obsession is briefcases. “I don’t care about the price. I buy a briefcase every 60 days, and then I have to get shoes and belts,†says Herbert. “I realize that money could be paying on the principle. But that doesn’t give me instant gratification, which I need,†he says honestly.
With the clock ticking, he’s thinking about his later years. “Some people have skydiving on their bucket list. I want to sit back and look at the ocean. I don’t want to owe anybody. I want my home to be paid for.â€
(Continued on next page)