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Twenty-three-year-old Alton Moss JR. is on the right path to building financial wealth. Even though the 2000 grad from North Carolina A&T state university is new to the workforce, he has funded a cash reserve, started to invest in his company’s 401(k) plan, established a Roth IRA, and purchased his first home. Over the last year he has also managed to reduce $9,000 in credit card debt by $3,500.
The Iowa City, Iowa, resident is an engineer looking to move up within the major consumer products company where he works. “I am currently taking graduate courses at the University of Iowa. I hope to change careers and make more money within the first year of getting my M.B.A.,” says Moss. By getting an advanced degree and shifting gears to work in the marketing department, Moss anticipates boosting his salary from $63,000 to about $73,000.
An ambitious investor, Moss is striving to achieve financial independence so that he can enjoy an early retirement at age 47. Since he is a new investor, his assets are still blossoming — about $2,275 in his 401(k), $2,500 in a Roth IRA, $1,500 in a money market fund, and a few shares of Wal-Mart (NYSE: WMT) worth $300. He also has about $8,000 saved in a checking account. Thinking toward the future, Moss is not only concerned about getting a better grip on his own financial affairs but also those of his live-in girlfriend, Catherine Charles, 27, who had accumulated roughly $15,000 in debt. “She has devised a plan for paying back those debts, but I want to make sure she understands the value of money [and controlled spending],” he explains.
Charles is a former teacher who is pursuing a master’s degree in school counseling at the University of Iowa. She works at the university as a class supervisor and has been fortunate enough to qualify for grants and other financial aid to pay for her degree. She also receives a stipend from which she pays about $600 a month toward eliminating her debt as she and Moss prepare for marriage. Charles, who admits she didn’t feel the need to discuss her debt with Moss, says she has trimmed it to $6,000. “We are both supposed to graduate in the spring of next year, and at that point, my debt should be eliminated and his should be lower as well, which is something I think should happen before you get into a marriage.”
In addition to the $5,500 left to pay on Moss’ credit card, he only has $5,500 in equity on a $106,000 two-bedroom condo. He originally paid $1,102 monthly on his mortgage but recently refinanced the loan from an interest rate of 9.25% to 6.63%. He has $9,000 left on his car loan and $5,000 in student loans, which are deferred while he attends graduate school. Luckily, his employer will pay 100% of the cost of his M.B.A. at $1,100 per class.
But Moss understands that there may be weightier debts to be paid if he and Charles