What a difference a year makes. Anyone who is seriously committed to getting his or her financial act together can make significant strides by taking advantage of the wisdom of a financial adviser. A brighter financial future is on the horizon for anyone willing to seize the opportunity. BLACK ENTERPRISE's 2003 Financial Fitness Contest winners have improved their prospects for building wealth in a relatively short time. They've designed a well-crafted plan, received encouragement from their adviser, and started to make smart money moves. Here's a look at what happened to four of our winners from last year. The Jacksons are emerging from a very complicated financial situation in fine fashion. For starters, thanks to raises, bonuses, and Kim's overtime, the couple has bolstered their household income from $85,000 to $106,700. They refinanced their home this summer, going from an 8% adjustable-rate mortgage with prepayment penalty to a 7.5% fixed-rate mortgage with no prepayment penalty. With the new mortgage, their payments have increased from $928 a month to $1,012 because they took out cash to put toward the down payment for a new home they are building, which will be finished in February or March of next year. When that happens, they are planning to rent their current home and refinance it to an interest-only mortgage. The Jacksons also refinanced the home equity loan they had taken out to renovate a third house they inherited from Jacqueline's father. The renovation caused a $12,000 shortfall, which they've rectified by using savings and their $2,000 contest winnings to trim some of the debt before they increased the loan amount from $39,000 to $77,000. The Jacksons also went from a 9.5% ARM to a 4.9% Option ARM, which gives them four different payment options to select from each time they make a payment. The Option ARM will help them in the event it takes awhile to find a renter, because it gives them the option of making a lower payment. By refinancing their debt, the Jacksons have gained about $330 more a month to work with, which they are putting toward the down payment of the home they are building. While they are proud to soon be the landlords of two properties, the Jacksons still have challenges. The family has been affected emotionally, as Jacqueline's father passed away this year, and the new house will cost double their current $139,000 home. They've also bought a $24,000 car and a time share in Orlando, Florida, for which they pay $169 a month and have a $7,500 balance. But the couple is optimistic. "We feel as though we're on the right track," says Jacqueline. MARCH WINNERS Jacqueline & Kim Jackson THE ADVICE: Obtain an interest-only mortgage. Interest-only mortgages allow borrowers to pay interest, but no principal, throughout the life of the loan, which is usually 15 years. The result is lower monthly payments. The downside? If the property loses value the Jacksons would have to make up the loss against the original mortgage if they want to sell the property (but they would have to do the same with a traditional mortgage). THE FOLLOW-THROUGH: The Jacksons refinanced the mortgage on their own home and the home equity loan. They plan to refinance their first mortgage again when they rent it out and will get an interest-only mortgage as recommended. THE ADVICE: Use positive cash flow to increase savings. Reducing the mortgage payments will give the couple positive cash flow to increase their savings, not only for an emergency fund and retirement but also for their daughter's college education. THE FOLLOW-THROUGH: The Jacksons are using the extra $330 a month from the refinancing to apply to the down payment on their new house. They also hired a financial planner to assist them with reallocating their retirement plans. Kim has 30% of his holdings in an S&P 500 Class I Fund, 40% in International Small Company Fund, and 30% in Bond Fund-High Income Portfolio Class A. Jacqueline's assets are similarly reallocated. Their retirement plans have grown from $27,611 to over $60,000. Jacqueline's company's stock options are now worth more than $13,000. Kim will open a Roth IRA, to which he will contribute $55 a month. The couple is considering opening a joint mutual fund and have $90 monthly allocated toward their daughter's 529 savings plan. THE ADVICE: Restructure insurance. Get a combination of permanent and term life policies. THE FOLLOW-THROUGH: The Jacksons have purchased $250,000 term and $100,000 permanent life insurance on Jacqueline, and Kim's application is pending for $1 million term and a $100,000 permanent life policy. They plan to increase the amount of permanent life insurance and reduce term coverage annually. THE ADVICE: Draft living will and other legal documents. In order to avoid probate and its inherent financial costs (court costs, legal fees, travel expenses, and time off from work), have an attorney prepare: a pour-over-will, which identifies any assets outside of the trust; a living will, which outlines wishes should you be placed on life support; and a durable power of attorney for healthcare and durable power of attorney for assets, which designate medical and financial decisions for you. THE FOLLOW-THROUGH: Top on the to-do list in the next month or so, is finalizing their will and estate planning documents. MAY WINNER Tiffany Hall Tiffany Hall used to read articles about people who earned less money than her, but seemed to be better off financially. These days, she likes her own story. For one thing, she paid off her Lexus RX300 SUV six months ago. She had nearly $20,000 left on her loan, and started paying $2,000 a month to help it disappear. By the time she was down to $8,000, Hall charged the balance to a zero-interest credit card and kissed it goodbye. While she still owes $5,000 on that credit card, she incurs no interest until September 2005, by which time there will be so little left that she'll withdraw money from her savings to pay it off. The $125 she pays on the credit card bill is a far cry from the $415 car payment. She took the planner's advice and opened a tax-exempt money market account, to which she applies the difference of what she would have paid -- $290, monthly. Hall is also feeling good about her salary. With the cost of living increases and step raises, the contract attorney's moved up from $70,260 to about $80,000. The jump has given her saving power. Hall increased her contribution to her 403(b) from 5% to 10%, and is putting in a total of $1,000 a month into her money market account. "Having that car paid off is a big thing off my back. I've found that I'm a good saver and I'm pretty much debt free now," she says proudly. Since we last talked to Hall, her mother has changed her mind about wanting to move to a condo and will stay in her own home. Consequently, Hall, 33, is now focused on saving for a home of her own instead of buying her mother's. The fact that she only pays $400 rent to her mother will give her the ability to build funds quickly. "I'm not going to rush; I want to move out in style -- do it right." THE ADVICE: Establish a business, and shelter taxable income. Get a tax ID number and set herself up as a consultant, which will allow her to deduct business-related expenses -- supplies, travel, and entertainment for conferences. She could also take advantage of an existing SEP-IRA. THE FOLLOW-THROUGH: Though she didn't formally set up a business, Hall has pursued different streams of income, such as the mystery shopping the planner suggested, doing everything from test-driving cars, to eating at restaurants, for example. She's also taken a class to become a travel agent and has handled travel bookings, where she splits the commission with an agent who has the required license. THE ADVICE: Increase streams of income. Aim for having five avenues of income outside of the 9-to-5 gig. THE FOLLOW-THROUGH: H all plans to explore freelance legal writing, as she has seen how a few hundred dollars here and there adds up. THE ADVICE: Take over mortgage payments. Put name on deed, take over the house note and taxes, thereby reducing tax liability, as mortgage interest and taxes are deductible. THE FOLLOW-THROUGH: Since her mom is no longer moving, Hall is simply saving for her own home. THE ADVICE: Build up assets. Change to a tax-free money market account and keep the interest earned. Put the $2,000 contest winnings in the tax-free money market account. Reallocate government securities and fixed-income investments in 403(b) plan to more growth-stock vehicles as the market starts to rebound. THE FOLLOW-THROUGH: Hall did open the tax-exempt money market account, put the $2,000 contest winnings in it, and has been steadily adding to it monthly. She has also changed her 403(b) allocation to a variety of large, small, mid-cap, and international stock funds. THE ADVICE: Create an estate plan. Set up wills and trusts for mother and daughter. In the event of an untimely death, the state would automatically assume Hall's assets, not her mother or closest relative. THE FOLLOW-THROUGH: She and mom both have wills, and Hall purchased a life insurance policy that would provide her with $150,000 if something happened to her mother. They have yet to set up trusts. JUNE WINNERS Eric & Kim Worley Married life agrees with the Worleys. As planned, their special day took place in September 2003. They even managed to save enough cash to pay for half of the $15,000 shindig and honeymoon cost. Their parents paid the rest. To say the least, their marriage is off to an eventful start. By October's end, Kim, 30, was expecting. Eric began graduate school in September, working toward a master's in education administration so he can land a better position, stop working two jobs, and make more than the $55,000 he earns now. Although Kim will soon have to start repaying the $50,000 she owes in undergraduate and graduate school loans, their debt picture has greatly improved. Eric recently refinanced the mortgage like the planner suggested. While the reduction from a 7.5% rate to 6.7% didn't change the monthly payment much, Eric took out money and paid off the remaining $7,000 in old credit card debt that was haunting him. His student loans are in deferment since he's in grad school, which gives him breathing room. The Worleys also spent $4,000 of the money from their refinancing to remodel the basement to accommodate Eric's home office and otherwise enhance the space. The bedroom he was using for his office will now go to the baby. The couple is making strides. Eric paid off his old car, sold it, and used the proceeds to help buy a new $25,000 Chevy Tahoe. "Now that our debt is under control we can focus on saving," says Eric, 29. They have about $2,000 left from the refinancing, which will go toward building their emergency fund. "We're feeling pretty satisfied, she more than I," says Eric. "I'm anxious to move to the next phase of my career. I don't want to have to work two jobs." THE ADVICE: Consolidate debt. Debt is a priority, consolidate and pay less interest to get out of debt sooner. Consider a home equity loan. THE FOLLOW-THROUGH: The Worleys opted for refinancing. They didn't shave much off their mortgage payment, and against the planner's wishes, they took out money to pay off debt. Getting rid of debt was their top priority. THE ADVICE: Refinance the mortgage. If there isn't much equity in the home, refinancing is another option. A lower interest rate could free up some cash to pay down debt. Do not refinance and take out cash to pay off debts because it would increase the mortgage. THE FOLLOW-THROUGH: The Worleys have $2,000 from the refinancing that they will put toward the emergency fund, and with less debt they are anticipating finally being able to start saving. THE ADVICE: Step up savings and investments. Build an emergency fund of at least three months' worth of living expenses. THE FOLLOW-THROUGH: Building on the money left over from the refinancing, the Worleys are in a better position to save for an emergency. THE ADVICE: Revisit life insurance policy. Eric should eliminate the $50 a month he pays on a $150,000 variable life insurance policy. Instead, Kim should get $250,000 in term insurance. THE FOLLOW-THROUGH: They have not made any changes to their insurance yet. Eric says he's not sure what he wants to purchase, but will make a decision soon. With the wedding, grad school, two jobs, remodeling, and a baby on the way, they've been preoccupied. OCTOBER WINNERS Michael & Regina Haney Michael Haney isn't letting go of his dream of being debt free at 40, having half a million dollars by age 50, and $1 million by 60. And why should he? He's willing to take action. In February of this year, he landed a new job as treasury manager for a company that manufactures, develops, and sells specialty healthcare products. His salary jumped from $40,000 to $60,000. With wife Regina's salary of $35,000, their household income is fast approaching six figures. That extra income has given them the wherewithal to make positive changes. The couple has been able to dramatically cut their spending for big-ticket items, now that much of their house is furnished. The Haneys took out a home equity line of credit and used the money to pay off Michael's 1996 Lexus. They got an interest rate of just over 4% and the interest is tax deductible. Though they still have $7,000 in credit card debt between them, with Michael's salary increase, they've been attacking it aggressively. Their savings have improved too. He is putting 10% of his $60,000 salary into his 401(k). Regina has increased contributions to her 401(k) from $80 a month to $220. The couple not only opened a second 529, plan to which they are contributing $80 a month, but they've increased contributions to the first 529 plan from $100 to $200 a month. "I don't think all of this would have been possible without the extra income," says Michael. As for keeping their finances separate, they still have separate accounts, but now dual signatures are required, and each of them knows the ins and outs of the other's accounts. "We know what we're responsible for. There's accountability. I don't think we need more than that," says Michael. For now, they are concentrating on paying off credit card debt and saving, saving, saving. Says Michael, "We have a plan; it's feasible. All I need now is the cooperation of the financial markets." THE ADVICE: Make lifestyle changes. Cut back on expenses. Reconsider spending strategies, such as Regina's choice to lease cars. Each time she leases a new car it costs $1,000 to make the swap. THE FOLLOW-THROUGH: The Haney's have furnished much of their house, so they've stopped shelling out big bucks for household items. Regina still has four years to go on her lease, so she can't make a change just yet. THE ADVICE: Pay off debt. Consolidate the $6,000 car loan, credit card debt, and student loan. THE FOLLOW-THROUGH: They took out a $20,000 home equity line of credit, which they tapped to pay off Michael's car loan. THE ADVICE: Maximize income. Put $150 in Michael's mutual fund, the T. Rowe Price Capital Appreciation Fund, and $150 in the 529 college savings plan. Michael should bump up his 401(k) contribution to 15% of his salary (or the max). Both should get more aggressive in their investing options. THE FOLLOW-THROUGH: The couple has bested the planner's recommendations, increasing their contributions to the 529 plan to $200, instead of $150. Regina has increased her contributions from $80 to $220 a month. Furthermore, Michael receives 1% of his salary in company stock and is eligible for a pension completely paid for by the company. THE ADVICE: Open up a second 529 plan. The gains are tax-free and the contributions provide a tax deduction to the plan owner. Revisit estate plan. THE FOLLOW-THROUGH: They opened the second 529 plan and are saving $80 a month for their younger son's education. THE ADVICE: Purchase additional life insurance. Buy a minimum of $250,000 and acquire disability insurance. THE FOLLOW-THROUGH: Michael and Regina have both beefed up their life insurance to $250,000, and are looking into disability insurance.