Financial BLACK Fitness ENTERPRISE Contest Winner #6 Anre & LaSharn Faush.THE REV. ANRE ANRE Agency of Natural Resources and Energy FAUSH AND HIS WIFE, LASHARN, ARE JUST short of praying for a miracle. In six years they hope to send their 12-year-old son, Christopher, to college. His sisters, Jasmine, 9, Ashlee, 7, and Christen chris·ten tr.v. chris·tened, chris·ten·ing, chris·tens 1. a. To baptize into a Christian church. b. To give a name to at baptism. 2. a. , 6, will follow after him. In order for each of their children to attend a four-year state college, the Faushes must amass $40,000 per child (not including rising tuition rates). That is a tall order, since the young couple--he's go and she's 31 -- are just starting to build an education fund. Late last year, they put aside $600 in an education IRA Education IRA A savings plan for higher education. Parents and guardians are allowed to make nondeductible contributions to an education IRA for a child under the age of 18. . "We want our kids to have an opportunity to go to college. We realize we started late, but we need help in how we can go about changing our lifestyle and exploring what options we have in financing their education," says Faush, who also is a senior claims adjustor with Hartford Insurance Co. in Birmingham, Alabama Birmingham (pronounced [ˈbɝmɪŋˌhæm]) is the largest city in the U.S. state of Alabama and is the county seat of Jefferson County. . Faush is not unlike most people. He finds having to balance paying everyday expenses against financing long-term goals Long-term goals Financial goals expected to be accomplished in five years or longer. a bit overwhelming. Along with financing their children's education, the Faushes have the challenge of also funding their retirement. And a key part of Faush's plan is not only to leave a legacy for his children but also to pass on a solid financial education as well. Combined, the couple have a little more than $20,000 in savings and investments. This includes $3,000 in a money market, account they consider their emergency fund. They have about $300 in a checking account, which is, essentially, the money they live off. Currently, they have $50 in a savings account Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: . Faush has $15,000 in a 401(k) plan and his wife has $2,000 in another plan from her former employer. The couple also own eight shares (employee stock options) of American Financial Group, valued at about $250. Since LaSharn quit her job about a year ago to attend college full-time, the family has been living on one salary, reducing its household income by $18,000. That situation isn't likely to change. LaSharn has two more years before she completes her undergraduate degree “First degree” redirects here. For the BBC television series, see First Degree. An undergraduate degree (sometimes called a first degree or simply a degree at the University of Alabama at Birmingham UAB began in 1936 as the Birmingham Extension Center of the University of Alabama. Because of the rapid growth of the Birmingham area, it was decided that an extension program for students who had difficulties which prevented them from studying in Tuscaloosa was needed. . In addition to his gross salary of $42.000, Faush receives a yearly stipend of about $13,000 from the church. The Faushes are not over-burdened with debt. He still owes $3,000 on a loan for the family car, a Plymouth Voyager The Plymouth Voyager and Plymouth Grand Voyager were minivans marketed by DaimlerChrysler (they were sold by the Chrysler Corporation until 1998). The Voyager was originally a full-size van from 1974 to 1983, but the name was used again for a minivan in 1984. minivan. (He also drives a company car.) Two years ago, she started working with a consumer credit counseling Credit counseling (known in the United Kingdom as debt counselling) is a process offering education to consumers about how to avoid incurring debts that cannot be repaid. This process is actually more debt counseling than a function of credit education. agency to consolidate her credit card debt--a balance of $4,891. She currently has a single bill of $178 per month with $2,049.81 left to pay off. She expects to be debt-free by 2001. While LaSharn won't have to worry about paying back her student loans until she graduates, she has borrowed close to $3,000. "I don't want our kids to have to take on loans to pay for college, but they may not have a choice," she says. "We are hoping they will get scholarships and that we will be able to offset some of their costs with our savings." The Faushes have begun to sit down with their children to talk about the importance of beginning to invest at an early age. Not only are they on a mission to create a financial legacy for their children, they also want to impart business principles to them. "We want to teach them how to secure their financial future." THE ADVICE To get the Faush family on the right track, Black Enterprise arranged for them to consult with James Walton, a registered financial advisor and managing partner with Birmingham-based Financial Solutions Network, which represents Franklin Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . The following are Walton's recommendations: * Adjust his tax exemption at work. Faush's company is withholding too much money from his paycheck; for the past three years, the couple has gotten back $2,000 annually in tax refunds. By adjusting his tax exemptions, Faush can increase his net income by an additional $166 per month. He should use that money to invest in a Roth IRA Roth IRA An individual retirement plan that bears many similarities to the Traditional IRA. Contributions are never deductible, and qualified distributions are tax-free. A qualified distribution is one that is taken at least five years after the taxpayer established his/her first to supplement his retirement savings. * Monitor their spending habits. His income is $3,500 a month, while their monthly expenditures add up to $2,500. This leaves $1,000 unaccounted for. Therefore, the couple need to monitor their spending over the next 60 days. Once they see where the money is going, they need to concentrate on paying off their debts. After eliminating the debt, they can use the $413 a month they are currently spending to pay down the credit card debt Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. and auto loan to shore up the family's savings and investments. * Build a college education fund. The Faushes need to save $500 per month per child in order to finance tuition costs at a four-year state university. Since they have six years before their oldest child enters college, they should take the $2,000 they receive from this contest and invest it in an aggressive growth mutual fund Aggressive growth mutual fund A mutual fund designed for maximum capital appreciation that places its money in companies with high growth rates. , such as the Putnam Opportunity Fund. Anre & LaSharn Fausch TOTAL INCOME $55,000 ASSETS Checking $300 Savings 50 Money market 3,000 401(k) 17,000 Employee stock options 250 Education IRA 600 TOTAL $21,200 LIABILITIES Credit cards (combined) $3,800 Student loans 3,000 Auto loan 3,000 TOTAL $9,800 NET WORTH $11,400 RELATED ARTICLE: 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 Earning power Earnings before interest and taxes (EBIT) divided by total assets. earning power 1. The earnings that an asset could produce under optimal conditions. For example, AT&T may currently be earning $2. through a commitment to career development, technological literacy and professional excellence 10 To ensure that my wealth is passed on to future generations |
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