DON'T LET YOUR PAYCHECK LIMIT YOU.

It's your financial strategy that determines how well you build personal wealth

SAM AND CANDACE BELL ARE LIVING THE TYPICAL American dream. They are college-educated with good-paying jobs, a nice home, and three cars. Sam, 33, is a tuition consultant with TIAA-CREF and Candace, 29, is a sales consultant with Novartis, a pharmaceutical company. Together, the couple earns six figures. But more important is their positive net worth--about $300,000.

The Bells' biggest debt is their mortgage on a four-bedroom home in St. Louis. They have $5,000 in finance charges for home furnishings but plan to use their year-end bonuses to pay off the balance. The Bells became debt-adverse and cost-conscious when they married in 1998. The college sweethearts, who met at Clark Atlanta University, created a budget, reduced their credit card debt to zero, and paid cash for items.

While many of their neighbors drive a Lexus, Cadillac, or Mercedes-Benz, the Bells are riding comfortably in a 2001 Buick and the 1993 truck and car (both paid in full) that Sam and Candace had in college. Moreover, when Candace learned last November that she was expecting, they set up a separate savings account (into which they transfer $100 every pay period) to cover daycare, diapers, formula, and other baby costs.

The Bells also are contributing $150 per pay period to a college-education fund. Specifically, they are taking advantage of Tennessee's BEST 529 Savings Plan for College and the Missouri Saving for Tuition Program (MO$T).

The Bells clearly understand and adhere to DOFE Principle No. 4: to measure my personal wealth by net worth, not income. Net worth is not the same as your paycheck or the draw from your business. Rather, it is your current liabilities minus your current assets. A negative net worth means you owe more than you own. It also signals that you will have less to leave behind to your loved ones.

Here are a few things you can do to optimize your net worth:

* Find ways to cut costs. Ways to save money: Carpool, buy generic brands, shop with coupons, go to movie matinees, cut one cable station, or download music from the Net. Better still, stick with one or two credit cards with the lowest interest rates. "People will have 10 to 15 credit cards, especially store cards, which carry the highest interest rates," says Sam. The Bells confess that there was a time when they bought Gucci, Armani, and Hermes; ate at the finest establishments; drank the finest cognac and champagne; and commuted to and from St. Louis to Atlanta daily during their long-distance courtship. "We live more modestly now," says Candace. "If we want to purchase (a big-ticket item), we place it on a 24-hour wait period rather than make a spontaneous decision," adds Sam. "Over 80% of the time we never purchase it."

* Establish wealth goals. You know the drill: set aside 10% to 15% of your income for savings and investments; have a cash reserve worth three to six months' living expenses. As your income increases, instead of buying expensive material goods, allocate more money toward your savings. In addition to their retirement plans at work, the Bells own mutual funds and individual stocks. Sam started investing in REITs (real estate investment trusts) when he graduated from high school in 1985 and entered the Navy. Since the military paid for all of his expenses (e.g., food, clothing, and shelter), he followed the advice of an officer and invested his money (an $850 monthly stipend) during his eight years of service.

* Develop a plan to retire rich. No one wants to postpone retirement because of meager finances. Figure out the annual income you will need to support your lifestyle (factor in such variables as healthcare). Multiply your current income by the rate of inflation (e.g., two times current wages in 25 years). Take into account Social Security and any projected pension. "If we continue to invest in stocks at the same rate, given moderate inflation, we plan to have more than $2 million by the time we retire," says Sam.

* Max out your tax-deferred retirement vehicles. If you have a 401(k) or 403(b) plan, at least contribute the maximum amount your company is willing to match, says Ray Allen, vice president and senior portfolio manager with Bank of America Private Investors in St. Louis. From there, he adds, take a look at a Roth IRA and contribute $2,000 a year to it for as long as you can. Single individuals can't earn more than $110,000). A Both IRA is not deductible, but it provides tax-free income after age 59 1/2.

* Allocate your assets according to age. The longer your time horizon, the more aggressive you can be. "Anyone under age 50 should have 80% of their income invested in the stock market," Allen says. But this doesn't mean you should tie up all of your money in company stock. "Even the best companies tumble--take Lucent Technologies, which went from $65 [a share] to $5 a share." In other words, diversify your holdings. As you get closer to retirement age, shift your portfolio to more fixed-income investments.

DECLARATION OF FINANCIAL EMPOWERMENT

From this day forward, I declare my vigilant and lifelong commitment to financial empowerment. I pledge the following:

1 To save and invest 10% to 15% of my after-tax income

2 To be a proactive and informed investor

3 To be a disciplined and knowledgeable consumer

4 To measure my personal wealth by net worth, not income

5 To engage in sound budget, credit and tax management practices

6 To teach business and financial principles to my children

7 To use a portion of my personal wealth to strengthen my community

8 To support the creation and growth of profitable, competitive black-owned enterprises

9 To maximize my earning power through a commitment to career development, technological literacy and professional excellence

10 To ensure that my wealth is passed on to future generations