Getting married is a cherished moment, a special day for every bride and groom. But once the honeymoon ends, newlyweds embark on a lifelong challenge of managing their finances as a cohesive unit. Aaron Howard, 32, and Tekeia Auster, 30, of Cincinnati are no different. Married in July, the couple has not only made a commitment to loving each other, but also to achieving financial independence. One of the Howards' primary goals is to reduce their credit card debt, which totals $14,000. Roughly half of that amount was incurred to pay for their wedding. They also want to bolster their cash reserve, which is $2,850. The couple's most sizeable debt is a $77,000, 30-year fixed mortgage on a single-family home that Aaron purchased in July 2002 for $102,000. In addition, Tekeia has $20,000 in student loans. The Howards' immediate financial goal is to move into a new house, which they have priced at about $200,000. The newlyweds are on solid footing to reduce debt because they both have stable jobs and a combined gross income of $78,000. Since 1998, Aaron has been a retirement customer service rep for Fidelity Investments, and Tekeia has been an assistant director of administration with Xavier University for three years. Aaron contributes 5% of his salary to his company 401(k) plan, valued at $63,000, and Tekeia contributes 10% of her salary to her 403(b) plan, worth $25,000. Aaron has another $5,500 stashed in an individual IRA; his wife has $500 in her IRA. Aaron and Tekeia realized the benefit of laying down a foundation for wealth-building years ago. At 19, Aaron worked summer jobs and put money away but spent much of it paying for college. Tekeia has been saving money since collecting her first paycheck after graduate school. During the last three years, the couple has been discussing how to approach their financial future collectively. "How can we budget? How can we save more? How can we reduce debt? And how can we better manage our money?" asks Tekeia. The Advice To assist the Howards, BLACK ENTERPRISE teamed the newlyweds with David A. Hinson, president of Wealth Management Network Inc. in New York. The Howards are a model for young couples thinking about achieving certain financial goals, says Hinson. The Howards are in their early 30s and already they have a net worth of over $100,000. This places the couple in the top 10% of black family wealth and well ahead of the average American household, which has a net worth of $86,100, according to the Consumer Federation of America. Hinson offers the following recommendations: Increase monthly savings. Since Tekeia moved in with Aaron, her only expenses—credit card and student loan payments—add up to $300. Her take-home pay is $1,800 each month, leaving her with a $1,500 surplus. Aaron's net monthly income of $2,000 covers the mortgage and other household expenses, roughly $1,300. Hinson says it is important for the couple to aggressively increase their savings since they will need funds to purchase a larger house. Saving will also ensure their overall financial security. Hinson suggests investing $1,250 of the surplus into a Real Estate Investment Trust and a high-yield bond portfolio while the couple looks for a new home. Their current income will protect any potential depreciation in the value of the fund. Hinson's top picks are: Alphine Realty (AIGYX), which has a current yield of 3.45%; Cohen & Steers (CSRXX), 2.68%; Pimco High Yield Bond (PHYDX), 6.41%; and Pimco Fund (PHIYX), 6.20%. Annually, the Howards should be capable of saving $15,000 together and about $4,000 individually in their IRAs. Hinson suggests the newlyweds add the $2,000 cash winnings from this contest to their IRAs or their cash reserve. Refinance Home to Lower Interest Rate. The Howards have a 6.8%, 30-year fixed rate on their mortgage. If they act now, they can likely refinance at around 5.75% or lower. Hinson recommends they apply for a five-year adjustable rate mortgage because they intend to move into another home in less than five years. He cautions, however, that the Howards will need to make sure that the refinancing savings break even with the refinancing costs within 36 months. Otherwise, they will not receive any economic benefit from achieving a lower interest rate. Do Not Accelerate Repayment of Debt. For the Howards to achieve their short-term goals of buying a new home and starting a family, they need to focus on wealth creation, not debt reduction at the expense of their net worth. To a large degree, the couple's solid credit scores, income, and asset base nullify the impact of their credit card and student loan debt, which are at reasonable interest rates. The down payment on another home will more than likely come from the proceeds after selling the current home. But the couple will need to be able to afford closing, moving, and other costs. Enhance Asset Allocation. The Howards' asset allocation is 75% equity and 25% fixed income in their retirement accounts. While this is a solid mix, Hinson recommends they increase the allocation to 80/20 or 90/10 since they won't need to access this money for 25 years or more. Both Aaron and Tekeia need to monitor their 401(k) and 403(b) investments much more than they are doing now; they should make changes in their portfolio construction. Since Aaron is no longer concerned with funding a wedding, he can go back to contributing 10% of his salary to his retirement account. Buy Disability Insurance Policies. At their age and with no children, the Howards don't need additional life insurance coverage. There is, however, a greater risk of disability than death. They should check out disability coverage to safeguard against any accidents that may disrupt their flow of income or expand the policies they have. Financial Snapshot: Tekeia & Aaron Howard HOUSEHOLD INCOME Gross Income $78,000 ASSETS Â Checking $1,500 Savings 2,850 Loan Receivable 500 IRA 6,000 401(k) 88,000 Value of Home 115,000 Value of Car* 3,500 Total $217,350 LIABILITIES Mortgage $77,000 Student Loans 20,000 Credit Card Debt 14,000 Total $111,000 NET WORTH $106,350 *According to Kelley Blue Book.