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For the past few years, Tisca Dorsey has been doing the right thing—becoming a well-informed and educated investor. In 1999, Dorsey started schooling herself about money management. Now looking to grow her assets, she has been researching various mutual funds and stocks.
Dorsey knows she needs to begin investing because she has already, a purchased a home in Lorton, Virginia, and has managed to save well over six months worth of living expenses, to the tune of $17,000 in cash reserves. The 34-year-old procurement technician at Computer Science Corp. has a gross annual salary just over $65,000, and her take-home pay is about $3,600 a month. Her monthly living expenses add up to about $1,600, leaving her a $2,000 surplus each month.
“I reached my goal of being able to pay all of my bills with one paycheck and getting rid of credit card debt,” says Dorsey, who had a total of six credit cards at one time. “But once I basically achieved that, I wasn’t sure what to do with the surplus of money I had.”
Overwhelmed by the many different sources of investment information, Dorsey hasn’t been quite sure where or with whom to invest her discretionary income. Deciding how to choose the right stock, mutual fund, or even a money market account is also a challenge. Like many green investors, she is frustrated because of her lack of familiarity with investing, so she has pretty much sat on her money, which includes about $4,000 in stocks, $10,000 in an IRA (money rolled over from a 401(k) with a previous employer), and $1,500 in her current company’s stock fund account. She also has another $2,500 in a general savings account.
As far as her liabilities are concerned, Dorsey owes about $124,000 on a condominium she purchased for $100,000 three and a half years ago (it is currently valued at $200,000, partly due to new construction in her area). Last April, she refinanced (from a rate of 7.875% to 5.875%) and took cash out to pay off the car note on a 1999 Honda Civic. But to her dismay, the car was totaled in an accident five months after she eliminated the debt. Dorsey then financed $17,000 toward the purchase of a 2000 Acura TL. She also owes about $22,000 in student loan debt and $2,800 in credit card debt.
While she is anxious to start investing, Dorsey is finding that investment information simple enough for her to grasp is difficult to come by. Another challenge she faces is surrounding herself with savvy investors from whom she can learn. “I don’t have friends who are trying to do the same thing or have done it,” she says. “That would help.”
Dorsey has longed to talk with a financial adviser about her options. To help her navigate the maze of investment information, BLACK ENTERPRISE had her consult with Walt L. Clark, president of Clark Capital Financial (www.clarkcapital.net) in Columbia, Maryland. The following are his recommendations:
Consolidate and pay off debt. Dorsey has 10 different student loans