Surname: Tariq and Courtney P.*
Jobs: Courtney is an attorney and Tariq is a government contractor and disabled veteran.
Salary: $45,000 and about $80,000 if you work
Goals: Buy a house and save for retirement
Courtney P* is a lawyer who later thrived in her profession. The 40-year-old tried to get into law school for a decade before finally being accepted. As a new attorney, she earns a salary of $45,000 and works in the areas of criminal defense, business and family law.
Her husband, Tarik*, 40, is a disabled veteran and government contractor. His salary varies from zero when work has dried up to over $80,000.
Georgia residents want to buy a home once the incandescent real estate market cools and save for retirement. But they don’t have any retirement plans. “I want something other than Social Security to live on,” Courtney says.
As a couple, Tariq and Courtney are both frugal and fabulous: They drive their cars “until the wheels fall off,” said Courtney, who married Tariq eight years ago. And will dine at the Cracker Barrel.
However, the DINK (Double-Income-No-Kids) will be splurging on cruises to the Caribbean, flights to Sydney, Australia and hopping to Hawaii for vacations. The lovers invested in monthly couples massages at their favorite Buckhead Atlanta spa to help pass Courtney’s rigorous law school. They subscribe to the Hello Fresh meal delivery service ($70 a week) and spend $500 a month on groceries.
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A disabled veteran, Tariq receives a monthly income that he uses to pay the $2,300 rent on her four bedroom, three and a half bath home with a bonus room. Courtney uses the extra income she earns as a choral pianist — $8,000 a year — to pay for her $400 car tickets. And luckily, they don’t have any credit card debt.
Courtney spends $56 a month on health care; the government takes over Tariqs because of his military service. Her student loans are about $300,000. The couple has made extra money in the past by buying tax liens, a yield of about 20 percent. Courtney does contract work and helps needy patients go to rehab and earns $30 an hour.
Due to Tariq’s inconsistent income, the couple has learned to live on a single income for backup, which has saved them more than $50,000.
Even with this significant amount of savings, they are reluctant to buy a home in the post-pandemic real estate market. Home prices in Atlanta rose 18.8 percent year-over-year and sold for an average price of $404,000, according to Redfin.com.
“You’re going to overspend for what you’re getting now,” Tariq said.
Both Tariq and Courtney are open about waiting to save up enough to buy a house loan if needed. “You want to own something and not live your whole life in something that someone else owns,” he said.
Courtney and Tariq are like many Americans who need more retirement savings. According to PriceWaterhouseCoopers, 25 percent of US adults have no retirement savings and only 36 percent feel their retirement savings are on track. The accounting firm estimates that the median retirement savings account for people ages 55 to 64 is $120,000, offering just under $1,000 a month for 15 years.
Neal Hansen, financial advisor at Net Worth Advisory Group, says someone who starts retirement planning late should save at least 15 to 20 percent of their salary each year. Hansen is a fan of using an employer-sponsored plan like 401(k) and using Employer Match.
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“Most employer plans have the option to automatically increase or increase payroll contributions each year. On top of that, some plans even allow you to credit some or all of your bonus to the account,” said Hansen.
If a spouse doesn’t have an employer plan, consider saving in a Roth IRA at a discount brokerage firm like Vanguard, Fidelity or Schwab, he said.
Hansen also said late savers might need to retire later or work part-time in retirement to meet spending needs. Retirement calculators such as Retirement Planner Calculator (dinkytown.net) and Retirement Calculator | Your retirement plan | Charles Schwab can help with the planning, he said.
To reduce student loan debt, borrowers have several options such as: For example, working in a job that provides student loan repayment assistance, said Andrew Pentis, one of Student Loan Hero’s certified student loan advisors and college finance expert. Additionally, a borrower with a good credit history may consider refinancing personal student loans at a lower interest rate. Look for the best price.
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Another way to manage the monthly bill is to enter an income-based repayment plan that caps payments based on your income, Pentis said. If figuring out the best way to repay student loan balances is overwhelming, some nonprofits offer student loan repayment counseling, but make sure they’re certified, Pentis said.
Home is where the heart is
The Neighborhood Assistance Corporation of America is a nonprofit organization dedicated to promoting economic justice and helping people obtain desirable mortgages. Members (as customers are known) can obtain mortgages with no down payment, closing costs or fees at a below market rate. NACA does not look at credit scores.
Instead, it looks at the payments prospective homeowners have received over the past year. The agency advises potential homeowners until they can move into their own home.
“We’re doing this right,” said Bruce Marks, CEO and Founder of NACA. “It’s character-based lending.”
Editor’s Note: *Names have been changed.
Natalie P. McNeal is the author of The Frugalista Files: How One Woman Came Out of Debt Without Giving Up the Fabulous Life.
