Name: Gary P. and Stella-Amaka O.
His job : Academic Dean
His job : wedding photographer
Newly weds Gary P. and Stella-Amaka O. are all about geeks and games. The Connecticut couple, who tied the knot last month at a courthouse, are planning a more “formal” wedding ceremony at a Florida mansion with dedicated rooms for Scrabble, human bowling and Pac-Man.
However, when it comes to their finances, Gary, owner of Live long and prosper (the name is a nod to Star Trek) wedding photography, and Stella-Amaka, an academic dean at a high school, say they’re ready to quit acting.
“We think about the big picture (when it comes to money) but the in-between details, no,” Gary said. “We are very forgetful.”
A bit of a bleeding heart, Stella-Amaka only wants spend $200 a month on food for hungry students and other supplies, but it’s more like $300 a month. “I get paid every two weeks, (but) when I get to the end of that second week,” said Stella-Amaka, who earns $89,000 a year. “Looks like my money is disappearing.”
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Gary earns $40,000 after making $100,000 in sales, but Stella-Amaka handles most of the financial burden. Gary is currently focused on investing in and growing his wedding photography business, and he expects it to be able to bring in $400,000 by 2024.
Stella-Amaka supports Gary’s business decision. “It’s part of our deal,” said Stella-Amaka, who is paying the mortgage of about $1,236. In his previous life, Gary worked in information technology, sometimes working two jobs, earning up to $150,000.
The couple want to move to Austin, Texas to be closer to family and take advantage of the area’s social scene and robust real estate market. Plus, a lot of Gary’s core clientele, couples who enjoy themed weddings, are plentiful. Stella-Amaka often buys her clothes at Goodwill, but splurged on a $900 wedding dress found at a bridal store sale that Gary discovered on Facebook for her.
Retirement planning is not the strength of the couple. Stella-Amaka has a pension of about $19,000 and she hasn’t signed up for her school’s 401(k). She also plans to use her pension funds to buy property when they move to Texas, which Gary doesn’t want Stella-Amaka to do.
She has no credit card debt, but she has student loans of around $60,000 to $65,000. Gary has about $5,000 in credit card debt and $30,000 to $40,000 in student loans. His emergency savings account has $4,000.
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Considering the expense, it doesn’t push college on the kids, ages six and eight, but Stella-Amaka is a bit more college-friendly. However, she worries about meeting her financial goals. “We have this big plan, ‘What are the steps we can take…to make ourselves stronger?'” she asked.
Couples, cash and conversations
Nicole Brown Griffin, Founder of Advice at the end of flowering, says the couple have a lot of plans to do in Connecticut before moving to Texas.
Brown-Griffin said married couples should have a monthly “couples cash convo,” Brown-Griffin said. If the couple spends a lot, meeting once a week might be in order, Brown-Griffin said.
“Take a Sunday afternoon, go with any drink they like, wine, beer, hot chocolate, tea, and chop it up,” Brown-Griffin.
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“Sometimes these conversations can get very heated, but we have to understand that the basis is love. We have to talk to each other slowly, calmly and (we can’t) let our emotions take control of us,” Brown-said Griffon . “It’s really us against the world, and we’re working together to achieve our dreams.”
Brown-Griffin also thinks Gary shouldn’t give up his IT career. “He has to make sure he still has his stamp somewhere on the heartbeat of the industry,” Brown-Griffin said. Brown-Griffin informs that Stella-Amaka takes advantage of her employer’s retirement savings programs. Saving for college for the kids is great, but saving for retirement is a priority.
“Students can borrow for college education, but we can’t borrow for retirement,” Brown-Griffin said.
Also, not all kids want to go to college. If money is set aside in a 529 college savings plan and not used for qualifying education expenses, any money withdrawn may be subject to a 10% penalty, a said Brown-Griffin.
Curtis Diaz, President of Great Blue Financial in Tampa, Florida.says a five-point plan using the 70-20-10 rule can help the couple focus on the details of a much-needed budget.
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Seventy percent of their income is spent on living expenses, 20% on investing, and 10% of their income on debt reduction, Diaz says.
For example, if the couple earned $120,000 per year:
1. Evaluate their budget using the 70-20-10 rule
a. 70% of income: daily living expenses
I. $120,000 x 70% = $84,000 annually or $7,000 monthly
b. 20% of income: invest
I. $120,000 x 20% = $24,000 annually or $2,000 monthly
vs. 10% of income: debt reduction
I. $120,000 x 10% = $12,000 annually or $1,000 monthly
2. Keep 3-6 months of saved expenses in a money market account
a. $7,000 x 3 = $21,000 kept in savings
b. $7,000 x 6 = $42,000 kept in savings
3. Save 15% of your income in tax-efficient retirement vehicles
a. $120,000 x 15% = $18,000 annually or $1,500 monthly
b. A financial advisor can help you determine which of the following are most beneficial
I. 401(k) / 403(b)
ii. Individual Retirement Account, IRA, or Roth IRA
4. Save 5% of your income in education savings vehicles
a. $120,000 x 5% = $6,000 annually or $500 monthly
I. 529 college savings plan
1. If you are moving to Texas
a. Texas College Savings Plan
b. Lonestar 529 Package
5. Pay off your debts using one of these two methods:
a. Snowball payment strategy: pay the lowest balances first, then the highest balances
I. Generally more emotionally rewarding as balance sheet debt items will be removed more quickly
b. avalanche payment strategy: repay loans with higher interest rates first, then lower interest rates
I. Typically a faster global payment method