Getting Back On Track

payment of $100,800 by the time she’s 18. Adds LaToya, “We want to continue to save and move forward once we have a child.” With proper planning, the Griffins can certainly end up financial winners.

The Advice
Walt Clark, president and CEO of Clark Capital Financial in Columbia, Maryland, consulted with the Griffins to come up with a plan to move them forward.
Pay down wedding costs. The Griffins should use the $2,000 contest winnings to pay down the $11,000 wedding debt. Clark also recommends that they tap their stock mutual funds. With interest rates of 5% and 11%, they should come out ahead paying that debt off. “There are no guarantees that they will have better returns, due to market volatility,” says Clark.

Build an emergency fund. With the recent purchase of the Griffins’ home, they can expect to reap tax benefits associated with owning a home. However, it would be wise to start putting funds into an emergency money market account. Their goal should be to use any refund from their taxes and invest the proceeds into a large-cap stock mutual fund. Over time, this account will accumulate additional returns.

Focus on retirement. Since the Griffins are relatively young, it would behoove them to make every effort to increase their contributions to 15% through their employer-sponsored retirement plans. Currently, LaToya contributes 7% and David 5%. The added benefit of having their employers match their contributions-in David’s case, double-will give them the opportunity to build wealth quickly. “I recommend allocating assets into mid- and large-cap stock funds,” says Clark.

n Increase life insurance. LaToya has a $400,000 policy through her employer. David, however, does not have any insurance. David should obtain a life insurance policy at least as much as LaToya’s, says Clark. If one of them should die, all of their bills will be satisfied, including burial expenses. Generally, if you’re trying to figure out how much life insurance you need, start by adding all current debts and burial expenses. If you have children, include funds for college, and if you plan for one spouse not to work and take care of the children, consider a number for that as well, says Clark. “If the premium is not a concern, I would recommend a variable universal life policy because it builds cash value over time while having the security of a life insurance policy,” says Clark. Variable life is a pure investment policy that gives the policyholder control over his or her investment portfolio. The insured can decide how to invest the cash value portion of the account-whether in stocks, bonds, or money market funds.

Financial Snapshot: LaToya and David Griffin
Hampton, VA