Financial blueprint.

The Greenlees hammer out plans for education and retirement

After spending five years remodeling their Milwaukee home, Jesse and Carla Greenlee are now renovating their finances. Prior to this year, the couple's financial plan vaguely resembled one that could accomplish their short-term goal of completing a $15,000 face-lift on their home--never mind their lofty long-term goals.

Jesse, 36, and Carla, 34, have figured out that they need $6,000 a month to carry them through 35 years of retirement, if they retire at age 50.

In addition, they need to save another $96,000 over the next 18 years to finance their one-year-old son Jalen's college tuition at a four-year institution. To achieve this, they recently established a new financial plan that should pave a smooth road to their destination--as long as they keep their liabilities to a minimum. They are already off to a good start. Jesse's promotion last year raised his annual salary by $9,000.

In 1992, they purchased their foreclosed home for just $4,000, and now repay only $240 a month on a $21,000 home improvement loan. In addition, their credit card debt is manageable at $2,600. Carla's student loan balance is just $4,600, and Jesse's 50% employee discount for daycare costs translates into $87.50 a month for Jalen at a local Y.

Several months ago, they realized the $600 a month they were socking away in a traditional savings account was not nearly enough to meet their objectives, admits Jesse, who works as the housing project director for the YMCA of Metropolitan Milwaukee.

As a retirement plan processor for Emjay Corp., a subsidiary of Wells Fargo Bank, Carla was constantly reminded that planning for the future is paramount. After taking a critical look at their monthly income and expenses, they found an idle $1,300 that could be earmarked for additional savings or investment purposes.

While Jesse puts 12% of his annual salary into his company's retirement plan, Carla continues to invest 3% of her salary in her 401(k) account and now allocates $100 a month to her IRA account, which was rolled over from a previous job. Self-professed amateur investors, the two established money market and growth mutual funds to help them maximize their income in a low-risk environment and to complement their $15,000 Roth IRA, which was started as Jalen's college fund. "I think it's our lack of knowledge of investing that makes us conservative" Jesse asserts. "We plan to ride this year out and see how things go and then next year get more aggressive."

RELATED ARTICLE: Experts Advice

FINANCIAL ADVISOR: Harvest Tucker, financial professional for AXA Advisors L.L.C. in Milwaukee, Wisconsin.

Tucker's Recommendations:

The Greenlees have reasonable expectations for their golden years, To retire at or around age 50, Tucker recommends they maintain their current level of income in order to support a prosperous post-retirement lifestyle. In addition to their social security and pension benefits, a mix of money market and mutual funds will help round out their income stream after they stop working.

Use money market funds. The Greenlees increased the $600 a month that they were depositing in a traditional savings account to $975 and redirected that to a Zurich Money Market fund (KMMXX) with a 6.23% yield. This will be the chief source of funds for completing their home improvements,

Invest for growth Tucker advises the Greenlees to invest in growth mutual funds--separate from those they own as part of their employee retirement or life insurance programs. They agreed to invest $520 monthly between the Alliance Premiere Growth fund (APGAX) and the MFS Research fund (MFRBX)--$400 for retirement and $120 for Jalen's tuition.

Go variable. Unlike a term life insurance policy, a variable life policy is permanent, provides better coverage, and builds cash value in separate, mutual fund-like accounts. Jesse canceled his $100,000 term policy from American Family and purchased a $275,000 Equitable Incentive Life Insurance plan. Having done so, he avoids the pitfalls of having to get a new policy when his old one expires in 10 years at an age where he'd appear a bit riskier to insurance companies.

Combined Gross Income       $ 73,891

Savings and Investments

Savings Account             $ 1,400
Money Market Fund             3,000
Mutual Funds                  2,000
Roth IRA                     20,506
Carla's IRA                     688
Carla's 401(k)                5,017
Jesse's YMCA
Retirement Plan               1,599

Life Insurance

Jesse's variable life       275,000
Carla's variable life       100,000

Debt/Liabilities

Credit card balances           2,600
Car loans outstanding          7,245
Student loans                  4,600
Home improvement               2,880

--C.A.