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B.E. gives this year's Financial Fitness Contest winners a check-up

PROVIDING REMEDIES FOR THE FINANCIAL PROBLEMS OF African Americans has been one of the thrusts of our magazine for three decades. As we entered the 21st century, BLACK ENTERPRISE expanded this mission, and challenged our readers to realize their full financial potential through the Black Wealth Initiative, our comprehensive wealth-building campaign. The centerpiece of this financial education and empowerment program is 10 principles about disciplined saving and investing, known as the Declaration of Financial Empowerment (DOFE).

As a means of having readers like you, embrace DOFE, BE developed a Financial Fitness Contest. Since January, we have identified 10 individuals and their families who needed to get their finances whipped into shape. We provided them with an initial one-hour consultation with a financial planner or investment consultant and $2,000 to apply to an investment account.

On the following pages, we share with you the journeys of the first six winners--just how far they have come and how far they have to go.


As with any best-laid plan, training begins at home. Our first contest winner was BE employee Nicole Simpkins. For the 29-year-old account executive, one New Year's resolution was to develop a sound savings and investment plan, which underscores DOFE principle No. 1: to save and invest 10% to 15% of your after-tax dollars.

Winning the contest has made a big difference in her life. "I am definitely saving more now than before the contest. I am getting closer to my goal--to save $10,000 by the end of this year." She had $3,500 on reserve as of September. Simpkins is paying herself first, by depositing $500 each month into her credit union savings account.

Simpkins, who landed a promotion and a 10% pay increase (including commissions), started her investment program with aggressive-growth stocks and mutual funds. But as she grows older, she wants to develop a more balanced portfolio.

The Gen-X investor has also adhered to the advice of David P. Gardner, vice president of investments, with PaineWebber in New York. For starters, she paid off $3,000 of short-term debt using half of her cash prize. "As much as I could pay off, I did. Instead of being satisfied with making the minimum payments due, I wanted to totally pay off my bills," says Simpkins, who has slashed her credit card debt in half.

She also bought shares in Dell (Nasdaq: DEL) and CitiCorp. (NYSE: CITI). She already owned shares in Disney (NYSE: DIS), a gift from her mother. Also, she invested the other half of the $2,000 in contest winnings in Goldman Sachs Internet Toll mutual fund.


* Paid off $3,000 in credit card debt

* Created emergency fund, current value = $3,500

* Bought shares in CitiCorp. and Dell Computers

* Started investment program in growth and aggressive--growth mutual funds


Ten months ago, frequent spending sprees at the local mall were Jennifer Jones' No. 1 pastime. Today, she is a reformed "shopaholic" (although she used $459 out of her $2,000 winnings to purchase a home computer). But Jones has put DOFE principle No. 2 into action: to become a proactive and informed investor.

"I wish I had sat down with a financial planner 10 years ago," says Jones, referring to her consultation with Les Netter, a financial consultant with SolomonSmithBarney in Atlanta. "He broke it down for me that if I don't [structure an aggressive stock and mutual fund portfolio], I won't be able to retire [in 12 years]." Jones will need to save $4,000 a year to have at least a balance of $100,000 by 2011 (assuming a 12% rate of return, the Standard & Poor's 500 average).

Since winning the contest, Jones has been reading about the stock market. She has also crafted a systematic investment strategy. She now invests on a regular basis. About $25 is automatically deducted from each paycheck and deposited into a money market account. Another $30 each pay period is designated for her 401(k) retirement plan, and $75 a month is invested in three mutual funds ($25 each), and an IRA account that Jones opened through American Express Financial Services.

The 44-year-old designer of data circuits at AT&T in Lithonia, Georgia, took advantage of stock options in AT&T Wireless (NYSE: TW). Employees could purchase a minimum of 100 shares (at $29 a share). She used $1,500 of the contest winnings (plus additional funds) to invest in the stock She also owns 24 shares of AT&T Corp. (NYSE: T).

Following Netter's advice, Jones readjusted the holdings within her retirement plan. She invests 20% of her portfolio in AT&T stock, 40% in a Fidelity growth fund, and 40% in a Janus growth fund.

Jones has paid off one credit card and is working diligently to pay more on two remaining cards. She hasn't taken on any new debt since March and has made some major spending cutbacks, including taking her lunch to work. She recently enrolled in a real estate course. Eventually, "I want to invest in residential property. I want to buy homes, remodel them, and sell them," Jones says.

The mother of two sons, ages 23 and 25, Jones is teaching them the lessons of wealth building: The earlier you start, the better it is. They are heeding Mom's advice. The Jones brothers now invest in mutual funds rather than plopping their hard-earned money into traditional bank savings accounts.


* Paid off balance of one credit card

* Started saving approximately $300 a month

* Invested $2,900 in employee stock options

* Opened an IRA account invested in mutual funds

* Readjusted asset allocation mix to meet retirement goals


Since winning our Financial Fitness Contest, Laurie A. Henry, a 33-year-old University of Pennsylvania employee, has been following DOFE principle No. 3: to be a disciplined and knowledgeable consumer. She has whittled down her liabilities, attacking her smallest debts first. Her situation improved after she received a promotion to a new position and a 10% salary increase.

Since March, "I have paid off two store credit cards and one Visa. I am tackling my credit cards one by one and paying more than the minimum amount due," says Henry, who adds that her new car note is only $60 more than what she was paying 10 months ago. (She also purchased a new car using money from her savings plus $500 of her winnings toward the down payment.)

Even before sitting down with Lyndall C. Medearis Jr., a financial planner with AXA Advisors L.L.C. in Washington, D.C., Henry was on a tight budget and a debt-repayment plan. She had realized that being a smart consumer is an important part of being a savvy investor. She continues to use a spreadsheet to track all of her monthly expenses.

"I have always been conservative in terms of spending. But the financial planner helped me to determine how I should invest my money." She adds that "since the initial consultation, I have started educating myself about the market. I have been reading about and following [various] mutual funds and stocks. I am also looking at starting an investment club [over the next few months]."

Henry used the remaining $1,500 of her contest winnings to open a money market account. She is systematically investing in three mutual funds: Alliance Premier Growth, Alliance Growth and Income, and Alliance Technology. "I invest $75 a month (or $25 each) into the mutual funds through automatic withdrawals from my checking account, and a little more than $100 into the money market account," says Henry.

She has also increased the contributions to her 403(b) retirement plan--the maximum amount allowed is 20% of her gross salary. She has $17,000 in her account--a variable annuity--and she recently adjusted asset allocation within the plan. "Before, I had 20% of my [holdings] in low-risk investments and 80% in riskier investments." Now, she has 90% invested in aggressive-growth stock mutual funds.


* Paid off two store credit cards and a Visa account, reducing debt by $1,100

* Opened a money market account and is practicing dollar-cost averaging

* Increased contributions to 401(k) retirement plan

* Invested $1,500 in equity mutual funds


There have been some major changes for Sondra Helenese. For one, the former legal assistant recently found work in marketing. In keeping with most people of her generation--she's 23--Helenese is switching careers. Instead of a career in law, she is now pursuing a position in sales and marketing, and considering obtaining an M.B.A.

Experts always maintain that it's not the size of your paycheck, but your assets minus your liabilities that determines your net worth--which is the key to DOFE principle No. 4: to measure [your] personal wealth by net worth, not income. Helenese is starting to embrace this valuable lesson. "Ever since the contest, I have been more engrossed in [reading] information on investing in the stock market," she says. "I read books, go online, and subscribe to financial magazines. I keep abreast of what is going on nationally and internationally, [so that] I can make better-educated investment decisions."

Because she was on her job for less than a year, Helenese wasn't eligible to participate in her company's 401(k) plan. Not having a full-time gig has thwarted her plans for establishing an emergency fund, as advised by Darwin Davis Jr., a financial advisor with AXA Advisors L.L.C., in White Plains, New York.

She did, however, manage to pay off all of her short-term debt: $1,100 in credit card balances. She is still paying on her student loans, a total of about $29,000. Although she still hasn't invested her $2,000 contest winnings, Helenese intends to put $1,500 in mutual funds (including $500 in an IRA) and use $500 to buy shares of an individual stock. If she adheres to Davis' advice, she'll invest 50% in technology-laden mutual funds and 50% in large-cap funds. "I have been looking at the pharmaceutical industry, fiber optics communications, and real cutting-edge technology companies," she says.

By no means a slacker, Helenese has worked part-time in retail stores since high school. "I wish someone had told me back then that you should take money out of every paycheck--at least $10--and save it." With more than 30 years until retirement, she has time on her side to establish wealth goals to help reach a hassle-free retirement.


* Paid off about $1,100 in credit card debt

* Curtailed spending on unnecessary items

* Plans to invest $2,000 in mutual funds and open an IRA account

* Brushed up on investment education


Phillip and Jamie Lomax didn't waste any time implementing DOFE principle No. 5: to engage in sound budget, credit and tax management. Since winning the contest, the couple has been sticking to a realistic budget. For starters, they have curtailed such money wasters as dining out and entertainment.

Following the advice of Mark Mitchell, a financial advisor with AXA Advisors L.L.C., in San Juan Capistrano, California, Phillip is no longer solely responsible for the family's finances. "We felt like the less hands in the mix, the better. Now that [Jamie] has taken an active role, we can see an improvement, especially with creating and following our budget," says Phillip, who sees his wife on weekends. (He is stationed at Point Mugu in Oxnard, California; she resides at their home in San Diego along with their 8-year-old daughter, Chyanne, and 5-year-old son, Trey.)

"Because [my wife] is more aware of how much money is in our bank account and how much is contributed to our investments, this has made her more aware of how much we are able to spend, [and in turn], how much we are able to save."

The young couple--he's 30 and she's 29--invested half their $2,000 prize, placing $500 in their mutual fund account. They used another $500 to purchase about eight more shares of Home Depot (NYSE: HD), which they had previously purchased through a Dividend Reinvestment Program (DRIP). The remaining $1,000 went toward eliminating their credit card debt--now at a zero balance.

Since the initial consultation with Mitchell, Jamie, a project support analyst for Sempra Energy Information Services (a unit of utility firm Sempra Energy), has contributed 15% of her $32,000 gross salary.

A petty officer first class and aviation electronics technician in the U.S. Navy, Phillip has a defined benefit retirement plan that will pay him 50% of his base pay after 20 years of service in the armed forces. He now plans to open a Both IRA. "The financial planner pointed out that the advantage of an IRA is to [supplement] my retirement income from the military and to protect [that supplemental] money from taxes while gaining interest and providing a more stable return," he adds.

Phillip continues to contribute $50 a month to the Millennium Investment Club, a group he formed with 10 other active duty members of the military, and two civilians. The club's portfolio is currently valued at $7,000. Their holdings include: Philip Morris Cos. (NYSE: MO), Nokia Corp. (NYSE: NOK), Cott Industries (Nasdaq: COTT), and LifePoint (AMEX: LFP).

The Lomaxes were off to a good financial start prior to our contest. Besides buying shares of Home Depot, they invested $100 a month in an equity-growth mutual fund.


* Paid off $2,300 in credit card debt--zero balance

* Invested S500 of contest price in Home Depot via a DRIP (dividend reinvestment plan)

* Jamie "maxed out" her 401(k) plan at 15% of her $32,000 salary

* Phillip opened Roth IRA


The Rev. Anre Faush and his wife, LaSharn, are on a mission to create a financial legacy for their four children, Christopher, 12; Jasmine, 9; Ashlee, 7; and Christen, 6. While it has been only a few months since they won the contest, the 30-something couple is taking to heart DOFE principle No. 6: teach business and financial principles to your children.

The younger Faushes are now exposed to their parent's investment plans and the family's finances. They're also getting a lesson on the importance of earmarking allowances and cash gifts toward a savings account. This Christmas, the younger Faushes may even get the gift of stock.

To help jump-start their children's college education, the Rev. Faush and his wife used their $2,000 contest winnings to invest in two IRA mutual fund accounts (sort of his and hers). They invested half of the money in Putnam Equity Growth fund (which they had prior to the contest), and the other half was invested in Putnam Opportunity Fund, an aggressive growth fund.

The couple also opened a Roth IRA, as suggested by James Walton, a registered financial advisor and managing partner with Birmingham-based Financial Solutions Network. For educational purposes, funds can be withdrawn from a Roth IRA penalty-free.

The Faushes have $50 a month automatically withdrawn from their checking account to be deposited into the IRAs. They are also investing $100 a month in a money market account.

The couple has made great strides in reducing their debt by nearly 50%. He now owes $1,000 on a car loan for his minivan and she owes $1,600 on her credit card balances and more than $3,000 in student loans. They have also done a better job of monitoring their spending and trying to identify additional dollars, not an easy task since LaSharn left her job to return to college full-time.

For these contest winners--and others--to reach their financial goals, they must adopt all 10 of the DOFE principles. They should also monitor their portfolios constantly and make adjustments when necessary. Changing family situations, such as marriage, divorce, a six-figure college education for children, aging parents' needs, or career moves can put a damper on anyone's finances. As our contest winners are learning, the best way to handle change is to prepare for it through planning, discipline, and, ultimately, perseverance--the qualities needed to ensure your ongoing financial health.

You alone must take the steps to change the financial direction of your life. Wealth equals options and opportunities. Don't wait for the right time to start investing, or you might just run out of time. Now is the best time to implement your personal wealth-creation plan. Start by mapping out your short-term and long term goals, mastering your money, and building a solid portfolio. Of course the earlier you get started, the better your chances of meeting your financial targets. But whatever stage of life you're in, you can achieve your financial goals by faithfully adhering to a master plan.


* Slashed their previous $3,800 credit card debt in half

* Started $100 automatic monthly deposits into money market account

* Invested $2,000 winnings in equity growth and aggressive growth mutual funds

* Opened Roth IRA account to jump-start their children's education fund


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

For more information on DOFE, or to sign up for the 2001 Financial Fitness Contest, go to You can also call 877-WEALTHY to get a complete list of all 10 DOFE principles, your free Wealth Building Kit, and details on our contest.
COPYRIGHT 2000 Earl G. Graves Publishing Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2000, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Black Enterprise
Geographic Code:1USA
Date:Nov 1, 2000
Previous Article:ON THE MOVE.
Next Article:Gaining the Competitive Edge.

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