Setting Goals Together

Setting Goals Together

Robert and Tajuana Callaway admit that there were times when their financial beliefs collided and nearly derailed their hopes of making their dreams come true.

The Callaways, who both hold administrative jobs at educational institutions, found that the differences in their approaches to saving and investing became more noticeable after Robert finished his doctorate degree in higher education administration and the couple moved to Elyria, Ohio.

“We had different philosophies about money,” Robert, 42, explains. “Mine was basically to save for the future, and Tajuana’s was to save a little but also spend now. We decided not to let the tensions fester underneath. So we sought the advice of a financial adviser, who we found through American Express.”

Having a mediator who could help them itemize their expenses and advise them on how to channel their income for greater long-term gains was the first step toward developing a household strategy to manage their finances. In the beginning, Tajuana, 42, had her doubts about taking advice because she felt no one could tell her where her money should go or how to spend it. Their adviser changed her mind.

“We were told to log every penny we spent for three months, even down to the amount we spend on toothpaste. The report showed that we were wasting around $800 every month on everything from interest on credit cards to dinners at restaurants and the constant, unnecessary shopping,” says Tajuana. “I realized things had to change.”

With that realization, the Callaways began turning their financial situation around by committing themselves to Declaration of Financial Empowerment principle No. 3: to commit to a program of retirement planning and investing.

The couple meets with their financial adviser, Patty Quinonez of Ameriprise Financial Services Inc., twice a year, with additional consultations, if needed, to discuss any major decisions. The Callaways have a total annual household income of $125,000, and they faithfully put 10% of their salary toward saving and investing. They currently have accumulated $40,000 in their IRA accounts, while Tajuana has $58,000 in her 401(k) account and Robert has $52,000 in his. They hope the plan they’ve implemented will enable them to retire comfortably at age 65.

In 1999, they used a $10,000 deposit to purchase a three-bedroom home for $148,000. Today the property’s market value is about $180,000. The Callaways took out a home equity line of credit for $15,000 in 2001 and used it to pay off $4,000 in credit card debts and make home improvements. In 2003, they refinanced their mortgage, lowering the interest rate from 6.75% to 6.2% and decreasing their monthly mortgage payment by $300. Refinancing also allowed them to pay off the home equity line of credit.

Although they’ve done a good job of setting up a foundation to build future wealth, the Callaways know they still have things to work on. For example, credit card debt they hoped to erase in 2004 has instead increased to $3,000 because as their children have aged and family has expanded, costs have increased.

As the Callaways continue to