…And nephew makes four

The Fosters try to plot the finances of a growing brood

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Where there’s a will there’s a way" best describes Kelvin and Michelle Foster. The new year ushered in some challenges and changes for the Houston-based couple-a new baby girl and a two-story family home. They are also seeking legal guardianship of their 10-year-old nephew, Gary Robertson, whom they’ve been caring for during the past five years. Their daughter, Dominique, is now six months old.

The Fosters are living on one salary of $81,228 (after taxes) for the time being. Michelle decided to give up her job as a paralegal with a prestigious law firm to spend more time with her daughter. (She plans to go back to work this year.) Fortunately, the decision proved to be less of a drain on the family’s cash flow thanks to Kelvin landing a higher-paying job as a senior associate with a Houston financial services company.

Currently, the couple has nearly $30,000 in savings and investments. "We established a debt reduction plan right after we got married [in 1994]," says Kelvin, 28. "The idea was to pay off our debts and use the money to buy a home. But we wanted a professional financial advisor to help with the big picture-determining how much life insurance we needed and calculating the costs of our money today to meet retirement needs tomorrow."

Kelvin has about $7,000 sitting in a 401(k) account at his previous employer, Sybase Inc. This month, he’ll be eligible to start contributing to his current employer’s 401(k) plan and the company’s stock option plan. Michelle has about $7,200 in a defined contribution plan that she can’t touch until retirement or age 65. Together the couple have $8,000 worth of shares in four technology companies: Sybase (Nasdaq: SYBS; through an employee stock plan), America Online (NYSE: AOL), Earthlink (Nasdaq: ELNK) and Mindspring (Nasdaq: MSPG).

The couple has had to ride out the tsunami of tech stocks. "We decided we could assume more risk and be more aggressive investors because of our age," says Kelvin. "So, our initial buys were technology and Internet stocks. Soon after we purchased shares in Earthlink and Mindspring, the market took a dive. But we just stuck it out."

In addition to saving for an early retirement-at age 50-the couple is concerned about saving for Dominique’s and Gary’s college educations. Right now the Fosters have enough cash flow to contribute to their daughter’s college fund. But until the guardianship process is over, the Fosters will have to put off saving for Gary’s college education.

Kelvin is quick to point out, "We have always figured our nephew into our costs and whether we get legal guardianship or not, we will factor him into our future financial plans and goals."

Financial Snapshot:
The Fosters
Household Income (after taxes) $ 81,228*
Household Expenses 68,640
Investment Portfolio 29,200
401(k) 14,200
Savings (bank accounts) 4,000
Stocks 11,000
Debt/Liabilities 157,600
Mortgage 150,000
New Car 7,600
*Assumes prorated 1999 salary

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