Justin and Emily Bergman

I read these stories and the “easy” recommendation of the financial consultant is for the military couple to evaluate the amount of life insurance the couple has purchased. Please keep in mind that if the active duty person dies while on active duty, the dependent spouse will receive a death benefit and be entitled to Tricare health insurance. I believe the dependent would receive $2,000 to $3,000 per month. If some term life insurance is needed, then coverage through USAA is a better deal.

somebody said refinance the Corolla for a shorter term– I think this person’s name was “Moron” if you want to pay off the car faster, then pay it off faster there is no need to incur fees to refinance– My father did not have a car until his first son turned 17, my Dad took the bus to work and Mom drove the family car — does a guy who lives on the Navy base where he works need two cars? Otherwise you are invested in the cars you have now, keep them, make them last 15 years– the guy who suggested buying rental properties is also nuts too, this family can be transferred at any time

I really appreciate that Emily posted to clear up some misconceptions. I think it is great that they sought advice for the inheritance, and as young people have a good start in life. The military offers great options for housing, benefits and other expenditures that in the long run may offset the lack of home equity. On another area of this website a couple was recently profiled who retired from the military in their 40’s with 3 young children and will now earn a pension with health benefits for life. That alone is something most of us will never see.

I think they are doing great for themselves, their family and their country, with a strong faith. Congratulations and good luck to you.

These people have a nice profile. I put together a list of all the profiles dating back to 2002. Check it out at Prime Time Money: http://ptmoney.com/2007/12/19/the-complete-list-of-cnn-moneys-millionaires-in-the-making/

PT
http://ptmoney.com

Stop wasting $670/month on car payments. Do the math. Invest the over $8k per year and get there much faster.

Hi Yadgyu, Harkeyville, TX, It sounds like you have be watching too much midnight Real Estate informercial. How could you say Paying off debt is a trap because most people usually end up getting back into debt. People accumulate debt because they spend more than they make. Is this suggesting that people should create more passive income to overcome their stupidity of overspending? That may not work these days. Many people are trapped with these kind of real estate investment homes now.

Then you mentioned, “Being rich isn’t about being debt-free… , that blew me away. I doubt if you have much real money because you must be paying a lot of payments. The truth is when you don’t have debt, your income accumulates into wealth much quickly. When you are paying payments, you make the banks rich.

I also disagree a bit with Larry of Los Angeles on the car. Most cars depreciate more than $4000 on 50K miles usage. Regardless the car price, the idea is to reduce car payments as much as possible. I tend to believe that the car sellers made up those used car prices on the lot so you get suckered into justifying the new car buys. You can save more than just $4K. If you are wealthy, you buy any car and take a hit on the depreciation. Otherwise, you should minimize your car purchase to buiild your personal wealth.

Congrats from starting early in life, I remember as a young guy in the Navy in the late 80’s I use to put away $25 a month in mutual funds. When I had a chance i would increase that monthly automatic investment. I did six years in the Navy got out started a business and worth over 2mil today. Of course I did not get that worth from $25 a month but that is how I learned the discipline it took not to spend extra money.

Here is my advice.

Autos…I will not comment…I agree with most everyone else.

If your wife can do more for her father then she should try while kids at home.

Since you are a mechanical engineer in training maybe you know some drawing programs and can find a side job in the area you live. It is possible your Father in Law might be able to pick up some CAD jobs for you.

Continue to save and if you do CAD work on the side start a business and fully max a 401K with the money you make.

I agree with one of the posts…you might of made a good move to rent and not buy depending on where the market is in your area.

You all are ok now but I doubt your expenses will continue to stay so low even after you pay off the bad auto debt.

I disagree with a lot of posters that suggested the Bergmans should have bought a used car over a new one. I know that the “Millionaire Next Door” tells you not to buy new vehicles, but they mean so-called new “luxury” vehicles. An Odyssey is far from “luxury”. I would term an Odyssey minivan as a “smart” vehicle and choosing new over 65K old for only $4000 more is what I would call a “smart” buyer. Too many money-smart people are caught-up with the notion of always buying used without assessing the overall picture. The reason used cars have manufacturer’s warranty to about 50K or 60K is because the odds of them breaking down at low miles are negligible. Automobiles past the warranty will begin to fall apart depending on how the owners take care of them. Unless you are buying from a little old lady who drives sparingly, then you never know what you’re getting. I’d hate to have a used minivan break down in the middle of the freeway with kids in tow; it might be outright dangerous. I bought my new Toyota below invoice from an internet car finder two grand more than the same used model with 38K miles but with only 2.9% financing from Toyota. I am not saying that buying new is always smart, but buying used might not always be feasible, at least it wasn’t for the Bergmans.

The smartest thing I read in this article is that Justin is getting a degree in mechanical engineering on the Navy’s dime–that is SMART–his earning potential should dramatically increase with that completed–even within the Navy which would bring in higher salary and probably better duty post options—
I did not see any mention of child care costs–and wondered how 800 a month for her salary would cover child care for two children unless it is subsidized in some way…
Perhaps she could look for higher paying job if possible–one with some type of company sponsored pension…
and I don’t know what the gov’t play for disability is–if he has to buy a policy but that should be considered when he is primary breadwinner in this family.

Carrying debt is a bad idea (excluding a house). I agree with the first comment in that everyone should make paying off their debt a priority. I would pay off all debt except for your house BEFORE you even begin to invest. Do the math… and then figure in risks on top of that.

“Being rich isn’t about being debt-free. Being rich is about having a passive income to pay for 100% of your housing and maybe for transportation. A portion of the money that you earn from working can then be reinvested to increase your pasiive income. Eventually it will not matter that you are in debt because you will have the money to pay the debt down over time, have money to invest, and have money to have fun with!”

I agree that being rich isn’t just about being debt free…When I consider whether someone is wealthy, it is best to look at their actual net worth.

I concur with Michael from Eldersburg, Maryland about his theory on the depreciation of automobiles. I would only buy a brand new vehicle if I had money to throw away. Peace!

“If I inherited $50,000 I would pay off all of my debts first– so I would technically be “debt free.” ” - Posted By Amy Pittsburgh, PA

That is a bad idea.

Paying off debt is a trap because most people usually end up getting back into debt. They should have used this money to invest in some properties that they could make a nice rental income off of. This would enable them to have extra money to pay the debt down and to finance their life style.

Being rich isn’t about being debt-free. Being rich is about having a passive income to pay for 100% of your housing and maybe for transportation. A portion of the money that you earn from working can then be reinvested to increase your pasiive income. Eventually it will not matter that you are in debt because you will have the money to pay the debt down over time, have money to invest, and have money to have fun with!

It’s simply INSANE how much money people pour into costly, rapidly depreciating automobiles!

Think about how much this couple could save if they put that $860 a month into investments, OR if they devoted that money to buying a house… an APPECIATING asset.

Maybe I missed something, too. Why would anyone attempt to resell two (now-used) vehicles for even cheaper (Read: older) vehicles, risking plenty of years of maintenance instead of reasonable dependability? Furthermore, does anyone who owns a home realize that it can’t be spent? I hear the word refinance;home-equity loan/line of credit;etc. Tell me who in his (her) right mind would refinance the entire amount of the family homestead ? This would be necessary to live on the money it would procure, unless one can repay loans at will during retirement. In that case, why refinance at all?

Thanks for serving!

The description of the plan does not include the totally predictable, absolutely inevitable, unavoidable career Navy move. Buying a house isn’t necessarily a good idea when you know you WILL move so avoiding is ok. Best also plan to be single-income for awhile after a move. I doubt that getting job is any easier than it used to be for a Navy wife.

But education, knowlege and discipline to save put these folks miles ahead.

The couple could do better. I think they should pay off all their debt, smallest to largest so they can gain traction and then start investing their money. There is something about being out of debt that lets you breathe better and in this case invest better. The emergency fund needs to grow to at least 4 months of expenses in case of a job lay off. The current route will take them longer to become millionaires.

I agree with most of the financial planner’s advice, except his advice on their life insurance policy being to low and his advice to delay paying off the Corolla. While 400K is about 100K short of the half million that they should have in life insurance, the financial planner must remember that this is a Navy family. The Navy offers pretty generous life insurance policies. Thus, this family probably has coverage up to at least 600K. This amount should be sufficient until their net worth increases a bit more. The other problem that I found with the financial planner’s advice is that he suggested that once they pay off the Mini-van, that they divert those funds to their Roth IRA’s. It is important that the Mother in this family starts her own Roth IRA fund, but she does not need to max it out just yet. They should probably be putting about equal amounts of money into their individual IRA’s. Its just extremely important that the wife get her own retirement fund. However, to get back to the Corolla, they need to pay it off as soon as possible. Cars are depreciating assetts that should be payed off as soon as possible. Besides these two issues, I found the financial planner’s advice to be pretty good. One more thing. The financial planner should be more congratulatory of this family. They are pretty young, and they are doing an excellent job managing their money.

Wow! I had no idea that my husband had submitted us for this. I’ve read the comments, and appreciate everyone’s ideas, but thought I would clear some things up. The $12,000 was not a student loan, it was a debt consolidation loan that I brought into our marriage. At a 14% APR, it was a good pay-off. Justin was previously married, and brought with him a horrible credit report and a lot of debt. I worked our first year of marriage, and we paid that off. To address those who suggested that we cut out the tithing, that is an absolute no. Our faith requires us to tithe 10% to our church, and the blessings that have come from that are worth far more than the 10%. The mini-van. Yes, a splurge, but when planning to have 4-5 children, quickly (I’m an infertility patient and run the possiblity of multiple births), this was our only option for vehicles that could fit 2+ car seats and a booster. We wanted to buy used and pay cash, but the Honda Odyssey is VERY difficult to find used, and the ONE that we found, with 65K miles and 3 years old wasn’t worth saving $4000 over the price new.

Thanks again to all those who posted comments, and to those who said “good job at a young age.” We appreicate it, but millionaire or not, I feel at mid-20’s we’re doing okay, and will keep going with those finanical endeavors that will keep us safe and happy in the future.

I agree with some of the financial planners advice. However, the main priority should be to pay off the minivan and Corolla as soon as possible, while also increasing their emergency fund. Only 2,500 in emergency funds is way to low. Pay off the cars and increase their emergency fund savings first. Look for a credit card that pays a percentage of purchases into the 529 plans or gives cash back. Next time skip the new cars and buy a two or three year old which has been certified to 100k miles by the dealer. They can save 40 - 60% over new and have over 60% life left in the vehicle.

Great idea that they’re renting for now given the national housing bubble imploding around them. Many of the other “millionaires” will be in for a huge shock now that their equity is vanishing before their eyes. Even homes in the most desirable areas of the country are about 10-20% overvalued.

Well, at least this is a refreshing change from the people that somehow are millionaires in the making because they got lucky and flipped their house. I think they spent too much on the van (they should have bought something smaller and more affordable so as not to have any payments), but it is interesting to note that the “expert” seems to expect this van to last 17 years (it could, but it is better to figure on 10-12). If they continued to save 440/mo they would have 52K+ in 10 years which will probably be less than the cost to replace that van (I have a 1999 Odyssey and the price has increased some 40% from what I paid).

I also love the advice about putting your raises towards savings. Does inflation not exist in these “experts” world? My personal rate of inflation is about 2x the “official” inflation (I believe this official rate generally applies only to those that take home 4-5x their expenses, and quite frankly that excludes 99% of us). So the raises don’t cover inflation, and hence most need to spend that wage increase or reduce lifestyle.

As you can guess, I have little use for “experts” because they tend to miss critical factors and have no real consequences, unlike the person they are advising.

There are a couple of points that I would change if I was the couple.

First, Stop paying down the debt so fast. It is likely that they are losing money by paying debt off instead of investing it. 12k a year is a lot of money for cars, and the new car was quite a splurge, but after the 8 months are up on the other loan, they should refinance the Corolla for a shorter term. No car should ever be financed for more than 3 years, even if it is a Corolla, the best car on the road.

And by the way: Real wealth in this country isn’t created by people buying their houses. They still have to live in them, so the value of that is mostly worthless to them, not to mention that most of those people who pay their loans off early just waste the extra money each month. Real wealth is created by investing in mostly indexed investments over the long term, and that’s what this couple is doing. That’s what you need to focus on.

Also, instead of selling the mutual fund, and generating more taxes, I would just contribute new investment cash to a money market fund instead of changing the asset mix so fast. I myself am not too worried by risk, and given a high risk tolerance, it is possible that owning a mutual fund for the house downpayment is a wise decision, as long as they are willing to base their housing decision on how their mutual fund does. They might be able to afford more house in the future because of it.

Bottom line: Invest more, pay down debt less, and automate the payment on good loans to save the hassle of dealing with it every month.

I disagree with Stephan that “real wealth” is created for most Americans by owning their own home and gradually paying off their mortgage. Real wealth is created by making good money and investing it wisely. Since people who own homes by definition make a good income, they obviously will become wealthy from their house that acts like a forced savings plan. However, disciplined renters who invest money into the stock market can often do just as well. In most parts of the country housing simply tracks inflation, has huge transaction fees and maintenance costs, and is non-liquid. Not to mention that most places in the US have been losing value over that last two years so there is a good chance this family would be upside down on their mortgage had they been able to afford one a couple of years ago (not exactly sure about Connecticut). In addition, since they are a military family, real estate would most likely be the worst investment they could make since they probably need to move frequently. I think investing their monthly cash flow savings from renting in mutual funds is a good idea until they feel that they are likely to stay put for at least a five years.

The word “Millionaire” sounds very good but I am not sure if it is calculated in today’s money or as the number $1,000,000 at the time they reach it. We should remember that the value of one million today may be equivalent to two million or more in 30 years from know. By the same token, a status of millionaire from years for example 1955-60 is probably equivalent to at least $3,000,000-aire today and the million of today was worth only about $300,000 then. My comments do not mean that I am against saving for retirement. I am doing this too. I only want to emphasize that we should pay close attention to the real meaning of numbers and this goes particularly to experts who give financial advice to people.

I disagree that owning a house should be a prerequisite to being a millionaire-in-the-making. That caveat would knock me out and at a young 37, I’m already more than three-quarters of the way there. I don’t own a house because career choices have made moves every three years a necessity. I’d be burning equity faster than I’d be earning it if I bought and sold at that clip. For me, renting a small house is much cheaper than owning and allows me to pack away savings. Interest on my investments more than pays my rent on a small house. Owning personal real estate is most certainly a way to gain wealth, but it’s naive to think that renters are foolish when it comes to finances. More than a few of us are millionaires-in-the-making, too.

This is a young couple and they may have made some mistakes, but that is how you learn, and they have a good attitude and I think they will be just fine. I’m sure they’ll be millionaires, here’s why. It is a fact that tithing works. I know it’s hard to explain, but here’s a few things that’s happend to me. About 6 years ago my wife and I decided to tithe 10% on gross pay and 3% offering, a total of 13% to our church. Since then we’ve paid off our house, paid for a new GMC Yukon, and have virtually no credit card debt. We have a few things on 0% for 12 months, but plan on paying it off before it’s due. We like to use the banks money at 0% and we only buy on credit card if we have the money in savings or checking already earning interest. I cannot explain it but I have more money now than I’ve ever had and everytime I pay tithe it seems my checking and savings balances continue to grow. So at the age of 33 my networth is approaching $400K with very little debt. And my house is only about $115,K of that. From the statistics I think my networth is well into the top 10% of people in their 30’s and I’m only 33, I have 6 more years to go. So my advice is tithe and let God do the rest. Read Malachi 3:10. You have to give because you want to out of love, not because it is the right thing to do. Trust me, it works! There are so many other things I could tell you about why it works!

The way you describe this couple, anybody can be a “millionaire” by 65. But by the time they retire, will that be enough? Will SS still exist? What will the inflation rate be between now and then? I had a net worth of 0 about ten years ago and due to aggressive saving and investing, now have a net worth of right at 1M at the age of 60 and will probably retire with close to 2M and that is going to be barely enough to support my present life-style which is not extravagant. My wife’s vehicle is 11 years old, Mine is 8, my mortgage is $700/mo., I live in a rural area where everything is cheaper. How can people think that the magic word “millionaire” means that they are rich. Are they still watching Gilligan’s Island? My son was worth over a million by his 30th birthday and he doesn’t even have a college degree!

I say congratulations to this couple and thank you for serving our country. I think some people are overly-critical with some of these comments.

Millionaires in the Making isn’t always about someone becoming a millionaire overnight by flipping houses (in fact, I’d like to see CNNMoney profile now some of the past Millionaires in the Making who had most of their net worth tied up in real estate in especially hot markets like FL or CA). Sure the car payments right now are a big chunk of their salaries but provided they keep the cars for 8 - 10 years, I think they are good purchases since they should minimize car repair expenses (smart to buy a Honda and Toyota).

Also, unless they want to live in a very undesirable section of New Haven, I think it makes sense to rent since housing costs in CT are probably three times higher than GA. Plus he is provided a housing allowance (including utilities) that is deducted tax-free and the on-base rent is probably cheaper than market rate, so in effect they have no housing expenses.

Remember - slow and steady wins the race and it’s not how much you make but how much you save. Best of luck Justin and Emily.

I’m not sure what his pension will be should he retire at 20 years service. It will be 50% of his base pay at the time. Let’s assume that is 50% of 60K a year, pretty conservative, I would think. The cash equivalent of that pension at 5% interest is 600K. I would think that counts towards millionaire status, leaving 400K less current savings to accumulate between now and then.

Good that they are doing better than many at their age… but by the time they are millionaires, a million dollars will not buy much with real inflation at 8% a year.

I applaud Justin and Emily! Most people, especially young people, wouldn’t know what to do with an inheritance, and would probably spend it most unwisely! They’ve made great decisions and are focusing on their children’s futures. I wish more folks would be that way! Putting your money to work for you is the only way to ensure a stable future! Great job guys!!!

The new car situation was a bad move. They aren’t spending much on gas, so they must live close to where they work/play. A better decision for the inheritance would’ve been to pay off his Toyota loan outright. Then buy her a used vehicle. The remaining money use to max his and her Roths.

They are saving too much to the 529s and not enough to the Roths. The mutual fund $ should be their emergency fund in a Vanguard Prime MM account. They should have nothing in mutual funds or stocks other than what is in their Roths/529s.

Paying off the student loans was a mistake. That could’ve been invested and earned higher rates than the loans were.

A millionaire in 25 years? That’s equivalent to about $480,000 now assuming a relatively tame 3% a year inflation. It seems the term “millionaire” will continue to keep it ever dulling luster even though now a million is not what it was 20 years ago.

Rule of thumb: Vehicle= depreciating asset. Especially for a family with one work at home parent. Ask Warren Buffet where he lives and what he drives; Sensible. I also suggest used vehicles. I do realize sometimes the deals for new may make it an ok buy. Student loans and mortage have tax advantages; Rent and car loans do not. Good job on doing what should be done, however I mirror most comments thus far; not over the top.

It appears the Bergmans had some outstanding debts before receiving their inheritance and the subsquent sale of their house. Both have given them a reprieve and a chance to start afresh. As Jeremy (Tallahasse) said, the most important thing is recognizing the need to start. Becoming a millionaire is a state of mind. The patience that is required to save and the diligence needed to curb bad spending habits can both be boring and extremely trying. I agree with Stephan (Littleton, Co) that they need to keep their cars longer, and buy used from hereon. I don’t necessarily agree that they need to own a home to make their $million, but it won’t hurt if they do not over-extend themselves. I have friends who were also in the military, as the Bergmans. They started their savings plan also at that same age. Twenty years later, they are working on their next million, house value not included. Who knows what a million dollars can buy in 25 years? But having one sure beats the alternative.

I would not spend $21,000 on a vehicle, especially when you only take home $70,000 a year. They should have purchased a reliable, safe, and USED vehicle with cash from their inheritance, or payed off their current vehicles with the inheritance money (if they still were running well) and bought no vehicle! Remember, we are not trying to impress people, we are trying to save and invest for what is important, and to me, a vehicle is not important! Especially when there are a lot of cheaper vehicles out there that run just as well and are just as safe!

If I inherited $50,000 I would pay off all of my debts first– so I would technically be “debt free.” I would fully fund an emergency fund of 3-6 months. I would open up IRA accounts and deposit some invested money into those accounts, as well as invest some of the money into two different 529 plans for the children. The rest would go into savings for a house. They are doing the right thing with their money, however buying that car was a big no-no!!

Then I would sit down and do a monthly budget. The key to being a millionaire is to become debt-free and stay that way by saving your money, and not paying the banks!

For the guy who said that 10% is a lot to tithe to a church, the word tithing is a derivative of a word that means 10 so most churches who have an established tithe and not just a “give what you want” policy encourage 10%.

I agree with most here that these people are hardly making any grand steps and have ended up with less money than they have had handed to them(the inheritance, reenlistment bonus, and $25 equity from the house).

Why is it that most of these articles are about people who have either had a lot of money handed to them, either through a significant increase in home equity or an inheritance) and people who are living off dual incomes. The true challenge is to learn to live off what you are currently earning and still save–especially for one-income families.

Plus: For being 25 to 27 years old, they have made a very good start. I wish I had done some of these things at 25.

Minus: It seems as though they have a minimal track record on saving _income_ besides the modest TSP balance, and consistently saving income is the common theme of wealth accumulators. As previous posters had mentioned, they could have done better with the two cash inflows. Regarding the Honda Odyssey: ‘Half of all _millionaires_ have spent less than $25k for their current car, and have never spent >$30k for any car that they have ever owned’ - ‘Millionaire Next Door’ - “that’s why they’re millionaires”. A couple with this net worth probably shouldn’t spend as much or more on a car than the average millionaire, IMO. Five-year financing on the 05 Corolla is also not very good. I paid cash for my used but reliable 94 Corolla wagon, and will only get another after this one turns to dust. Other posters here also have good points on the long-term advantage of buying over renting.

I don’t see the couple being millionaires just because he has a TSP account and will recieve pension after 20 years in the military. One of the keys to faster financial build up is acquiring property to build Equity. Also, an additional source of income on top of maxing out BOTH Roth accounts will do the job.

Once they hit 41 and he has his military pension - and lifetime medical care(I think) - they both should look into freelance work.

I tripled my pay by going from an IT job for a company to going self-employed. That also opens up the ability to sock away 45k each year - or 90k if they both do it - into an individual 401k. That will require some very high billing rates - but if they both apply themselves over the next 10 years getting skills that are in demand and learning about the power of going solo - a million by 50 will be an easy goal to hit.

While this couple’s discipline of saving is commendable based on their salary especially at their age, they could have made better choices with expenditures.

$820 cars + $300 tithe = $1120 per month, Now that would make a nice nest egg instead.

Why did they purchase new model cars?

I disagree with the previous comment that you have to be a homeowner to be featured. This couple owned their home before they moved and made a profit - it’s not always feasible for a military family to own their home especially when moving every few years.

Making car payments and paying credit card bills won’t make a millionaire. If they continue to save and invest more aggressively they will get there.

This is what they should do. get rid of the new car and take a loss and buy a used car for $6,000. Scrap the college fund - instead put the money towards savings and look at their savings investment account as both a college savings plan, a nest egg, and an emergency fund. shoot for $100,000 as fast as possible - maybe 5 years. Buy real estate and fix it up and try to increase it’s value by 10% in 2 years.

If they did all of this they would free of car debt, using the college “fund money” as their own personal net worth - which makes borrowing easier, saving thousands of dollars a year in taxes by owning - and set up to buy a second property as income. Then they would be millionaires in the making. right now they’re doing what every finaciall planner tells you to do - who are usually not millionaires and who usually stear you away from real estate because that is money that doesn’t go into their pockets for commission.

I’m in agreement with the others. I would argue that this couple is statistically more likely to have a lifetime of debt as opposed to a 7 figure nest egg. The track record I see developing is living beyond their means and that’s addictive. Ask the rest of America!! My prediction, is they retire at 70 with $500K nest egg and owning their own small home on their current path. They’d have to change alot to hit $1,000,000 in the next 40 years.

This couple should reconsider the $300/mo Tithe. That comes out to $3,600.00/year - and would better make a nice boost to their house down payment savings fund or Roth IRA. I doubt their church will take care of them in times of trouble or in their retirement.

You are way too optimistic. The dollar is plummeting. Inflation is skyrocketing if you look at the cost of education and healthcare.

We paid cash for a new 2000 Nissan Sentra, a 2000 Toyota Echo and rent a 2-bedroom apartment. I plan to work till I am unemployable or die. With savings of a little more than 1m euros, I worry about keeping my head above water. Forget about using the dollar for long term financial planning, use euros.

Kudos to the Bergmans! It’s nice to read about a young couple doing well. As an Air Force Officer, I see a lot of young troops just blowing their money with no plan. However, I think they could’ve done better. Especially with the inheritance and bonus. Here’s what I recommend to them now (no sense in trying to undo what can’t be undone - the $21,000+ car was a really bad idea):

1A. Sell both cars and pay cash for used ones. You can find a good Ford Taurus for $3K…or,
1B. Stop funding college and IRA’s and pay off the cars.
2. Have about $5k - $10k in savings for an emergency fund. We have a lot of benefits in the military that most people aren’t familiar with so must of us don’t need 3 to 6 months worth of living expenses. The emergency fund would be for things like car repairs, having to fly home for a death, etc.
3. Max out their Roth IRA’s.
4. Move the $15k in mutual funds into a money market account. Don’t take a risk with short term purchases.
5. Save more for a house downpayment. Since they’ll be moved around a lot, the more they can put down the more they’ll make on a sale. Also, since some places they’ll go will have high costs of living, even with the housing allowance, but putting more down it’ll make the monthly payments more reasonable. Their goal should be that by the time he retires from the Navy, they should have a nice enough profit from the sale of their last house to purchase one with 70% to 100% of a down payment.
6. Start funding the kids college. Remember, you can get a loan for anything, except retirement. Their goal should be to take care of themselves first so they don’t become a burden to their children. Save what you can and when it’s time for them to go to school, you can say “We have X amount saved. You can go to Community College/State School and have it all paid for or go to Duke for 1 year and then you’re on your own.”
7. Anything left over goes to the TSP.

I think this couple seems financially responsible given how tempting it would be to blow through $50k. Although this couple was lucky enough to receive a windfall it is their principles that will lead them to financial success.

That being said, two comments… 10% seems like an awful lot to tithe to a church. To each their own I guess. Also, I would not recommend paying off student loans earlier than you are required to do so. Their other loans likely have higher rates and the terms are less flexible.

Congratulations to this young family. They are in better shape than I was at 25 - that’s for sure. One gripe I have with the expert’s advice, is with the college savings. Its been a topic of conversations before, but there is a big difference in the cost of private college and public college. The advice always seem directed towards the more expensive private college option. They will have more than 50% covered with their current allocation if the kids go to public college. They should focus on maxing out their IRA’s and bulking up their savings.

First thought- why would you spend over $21,000 on a new car if you’re only making $70,000 in household income?

I think that in order to make it in the Millionaires in the Making section the individuals really need to own their homes and not rent. Everyone knows that real wealth is created for most Americans by owning their own home and gradually paying off their mortgage. In addition, car payments are just wasted money which is almost a $1000 / month or $12,000 / year which is almost 20% of their income which is redicious. I would recommend they keep their cars for the next 10 - 15 years and then buy used next time. This couple really needs to work on getting a down payment towards a house provided they can get some guarantee that they will be in their current location for the next 3 - 5 years. The couple has a great savings attidute but really needs to work on reducing big purchases (i.e. new cars) and saving towards a home since that really will make their chances of hitting millionaire status better.

This was a pretty bland feature. They are living within their means and don’t have any odd circumstances or drama. The experts advice to “save more” is obvious, and more than likely impossible given their income and commitments. Is simply reaching millionaire status in 25 years going to mean much more than a decent savings? Boring…..

How is a family that has received $50K in an inheritance and $25K from the sale of their home, and now has less than that amount and no home, on track to be a millionaire? Why does the planner think someone who puts $21K down on a new car and still has years of car payments to make will all of the sudden start saving that car payment in a few years instead of buying another new car?

I’m not putting this family down (I’m very thankful they are serving our country and I’m sure they will do just fine financially). But without some kind of track record it appears anyone who makes $70K and meets with a financial planner is a Millionaire in the Making.

I’m confused. They received a $50K inheritance, a $12K reenlist bonus, have $40k saved, and are millionaires in the making? What’d I miss?

“Justin pays $230 a month for a used 2005 Toyota Corolla, which he plans to pay off in almost four years”

He should have paid off the Corolla.

And bought a new minivan CASH instead of putting $21K down

Good job so far. The biggest battle at your age is recognizing the importance of starting - which you have done. My wife and I are very similar in age. IMO, the Odyssey was probably out of your price range with vehicles. Once you get that paid off though, there will be a nice chunk of change to put into investments and increase lifestyle a little if you want. I think the military career will treat you well with the pension. Keep up the good work!