Horne’s estimated payments from the closing documents say she will pay $1,000 per month now on mortgage, maintenance, and insurance for her new co-op–a few hundred dollars more than she was paying in rent. “Now I feel like I need to earn more money because I am going to be paying more,†Horne says.
Her next goal is to learn how to invest in stocks and start the process of building an investment portfolio. Currently, Horne’s only investment account is her employer’s pension retirement account. As a teacher in New York state, Horne is required to contribute to the state’s retirement plan and has amassed $9,000 during her eight years on the job. Her contribution to the plan is 3%.
Horne’s debt is made up of a revolving credit card balance of less than $200 and a student loan balance of $1,400. The new homeowner had plans of paying off those accounts this year but now realizes that may not happen with the home purchase.
The Advice
Black Enterprise and advisers Dawn Brown, a senior financial adviser at Altfest Personal Wealth Management, and Harrine Freeman, CEO of H.E. Freeman Enterprises, agree that Horne needs to create a budget and effectively manage her new expenses before making any major purchases or paying off the remainder of her debt.
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