NEVER TO LATE TO BUILD A NEST EGG.

The Beasleys are getting a crash course on investing for retirement

WILLIAM AND BRENDA BEASLEY PRACTICALLY GREW UP in the military--serving active duty for over 15 years. Brenda, 34, (who was unavailable for our photo shoot) entered the Navy after graduating from high school; William, 36, joined the Marines after almost completing three years of college. The husband and wife team have been together 14 years,

"When we got married, we were struggling to make ends meet." says William, explaining why they waited until now to seek out financial guidance, "We had our first child. We were low-ranking [military personnel]. so we weren't getting paid much [around $2,000 a month combined). It was hard for the three of us to survive out in California." While the Beasley's income increased as they moved up t he ranks, there was another mouth to feed when Brenda gave birth to their second child three years later,

Today, the couple makes a combined $75,000. William, a staff sergeant, and Brenda, a yeoman first class, have both set their sights on retiring from the service and entering the civilian workforce in four years. In fact, William is currently working on obtaining his master's degree in education so that he can become an elementary school teacher. "Now we are at a point where we feel more comfortable setting aside money and not having to worry [about touching it]," he says.

To date, their biggest liability is the $170,000 mortgage on the one-family home they purchased in January, in Virginia Beach, Virginia. Also, two of the three vehicles they own are paid for but a $13,000 loan is outstanding on his truck.

While the Beasleys are getting a late start on investing, it is never too late to begin squirreling away money for the later years of life. Between them, they have about $7,000 in savings and no retirement funds outside of their pensions. They each expect to receive 50% of their base salary as a pension upon retiring from the military. The couple plans to use that money to pay for their daughters' Tejada and Tejaeda, 13 and 10. respectively, college education,

Using the $2,000 financial fitness contest prize, the couple wants to open a Both IRA, which they can contribute to regularly. After years of procrastinating. the Beasleys are ready to sit down and seriously talk shop about creating and following a budget, controlling their spending, and mapping out a financial plan tot their golden years.

THE ADVICE

To help the Beasleys make the transition from military to civilian life, BLACK ENTERPRISE had the couple consult with Larry E. Folmar, principal of the Folmar Financial Group Inc,, in Southfield, Michigan, He says the couple has done a "decent" job of minimizing credit card debt and maintaining cash flow. However, although the ear note and mortgage are understandable. there is a lavish expense of $5,000 a year on clothing that must be curtailed. Folmar also identified an extra $500 of disposable income that could be put to better use. His recommendations are as follows:

* Change tax-withholding status. The couple is overplaying income taxes by approximately $2,000) a year. Meaning, they are giving Uncle Sam all interest-free loan. Ideally, at the end of the year, you don't want to owe the IRS or vice versa. Folmar suggest they change their wage withholding allowance from zero (married status) to two. This would save them about $106 a month.

* Pay off credit card balance. They have a $1,500 debt at 12.5% interest that they are paying $100 a month toward. Out of their $7,000 savings, which is earning 1.5%, they should pay off that debt. Consequently, this would increase their cash flow by $100.

* Get new life insurance policy. When the Beasleys purchased their home, they bought a term-life insurance policy to ensure that money would be available to pay off the mortgage in event of either's death. However, they have the most expensive type of insurance because it has a premium refund rider. They are paying about $88 a month for a $170,000 30-year term policy. They would be better off getting cheaper term coverage that does not have this rider attached to it. At their age, they can purchase a 20-year term policy for about $23 a month. This would be another $65 a month in savings, which in 30 years at 8% interest equals nearly $97,000.

* Invest newfound cash savings. The Beasleys need to convert some of their savings into investments. Currently, William is saving $800 a month at 1.5% in a regular savings account, which means he isn't really earning anything. He should begin contributing $300 a month into a money market mutual fund account (which pays 4% on average) for their short-term emergency cash reserves. He should then invest the remaining $500 in a tax-free 529 College Savings Plan. The couple should each open Roth IRAs using the $2,000 from BLACK ENTERPRISE and then begin regularly contributing their surplus cash flow of $271 per month (saving from the IRS, insurance policy, etc.) into a growth mutual fund such as Alliance Growth Fund A (AGRFX) and an international mutual fund such as American Funds New Perspective (ANWPX) to start.

By following the advice, the Beasleys will be on their way to retiring nicely in the future. They plan to settle down in Atlanta in about seven years, which means they'll get the maximum pension benefits for serving more than 20 years in the armed forces while they'll only be in their mid-40s. And Folmar says the real estate market should improve so that they'll be able to sell their Virginia home for more than $200,000 and a tidy profit.

Financial
Snaphots:
William &
Brenda
Beasley

        HOUSEHOLD INCOME
Gross Income       $75,000

           ASSETS
Savings            $ 7,000
Pension (est.)      30,000

TOTAL              $37,000

         LIABILITIES
Mortgage          $170.000
Car Loan            13,000
Credit Cards         1,500

TOTAL             $184,500

NET WORTH        -$147,500