Millionaires in the Making: The Marchbanks

Millionaires in the Making: The Marchbanks
Matt and Lori have managed to build $300,000 together just a few years out of college, and not by cutting back on life's pleasures.
By Rob Kelley, CNNMoney.com staff writer
September 21 2006: 3:07 PM EDT

NEW YORK (CNNMoney.com) -- If the idea of saving away 25 percent of your paycheck makes you think of a severely cramped lifestyle, meet the Marchbanks of Dallas, Texas.

Matt, who works on real estate and small business lending at a commercial bank, and Lori, an accountant, have a shared financial philosophy that lets them spend confidently - and save diligently.

The couple met in high school and dated throughout college at Texas A&M, marrying two weeks after their 2000 graduation. Now, at the ages of 28 and 27, Matt and Lori have over $300,000 in assets.

"We were both fortunate to get great jobs out of school," says Matt. "Our parents paid for college so we didn't start with any debt."
How they save

The Marchbanks take home a combined salary of $145,000, plus annual bonuses of around $40,000. But a good salary doesn't always mean good savings. With mortgage payments on a beautiful 2000-sq.-foot home, and a confessed preference for nice cars, how does the couple save as much as they do?

"We share a philosophy: we can afford a lot more, but we choose to pay ourselves first," he says. "When we're 55, we want to be the ones to decide if we continue working, or take part-time jobs or just travel. Nothing beats saving when you're young so you can get ahead with the power of compound interest."

Accordingly, Matt and Lori set aside just over 25 percent of their income each month. They both max out their 401(k)s at work, taking advantage of company matches. Each year they have put the maximum possible into their Roth IRAs before hitting the government's income limit last year.

Beyond that, they don't really operate with a strict budget - more like strict values.

They pay off credit cards every month, so their only debt is their mortgage, and Matt says interest rates are a major concern of theirs.

He says he learned his good financial habits from his father, an insurance salesman, and mother, a school teacher.

The couple has over $100,000 in their combined 401(k)s, and $50,000 in Roth IRAs. They have around $100,000 in cash in savings accounts, and $40,000 in home equity.

Matt says the large cash holding is eventually going to be invested - he'd prefer to have only 25 percent in cash as an emergency fund. But he's currently interviewing different investment advisers before putting the bulk of the cash into the market.
How they spend

One of Matt's big indulgences is his golf game, but he often gets to play while entertaining bank clients.

Matt also views negotiating prices as a crucial skill in his financial repertoire. "I almost never take the first price on anything, whether it's haggling or asking for discounts," he says. "I do a lot of negotiating in my job, so I'm more comfortable with it than many people. I'll never pay sticker price for a car, for instance, because to me there's always wiggle room."

Cars are one purchase that Matt feels especially strong about.

"I drive about 25,000 miles a year so I want to drive something I like," he says. "We definitely splurge a little there."

In purchasing Lori's car, one of the couple's biggest expenditures, he negotiated a price below the invoice and a very low interest rate.

Her '05 Acura TL is the only car the couple has bought new. Matt drives a used vehicle - an '03 Infiniti G35 that he bought with low mileage.
The future

What's ahead for the penny-conscious couple? A child, and perhaps a new home.

"We'd like for Lori to stay home for quite a while after the first child, and maybe not go back to work full-time," he says. He says that there is a lot of flexible work in her field, accounting, and that will give the couple more options after they have children.

"I don't expect to be able to save as much after that - maybe just 10 to 15 percent - but that will be fine," he says.

Matt says a new home may be in the works if their current place begins to feel small for a family of three.

"We're definitely thinking about upgrading in the next two to three years, but it all depends on whether interest rates are favorable," he says. "I've got a 5.25 percent rate for 30 years right now."

He'd also like to add some real estate to the family's portfolio, purchasing some land or rentals.

Despite some major financial burdens ahead, don't expect the Marchbanks to give up their saving ways.

"We're really not penny-pinchers," says Matt. "I think we just really think over our financial decisions. We have a strong common focus that moves us toward our goal."

Millionaires in the Making: The Johnsons

Millionaires in the Making: The Johnsons
Matt says he's squandered his money on cars and even a tattoo. But with wife Kristina's discipline, the couple is on their way to financial security.
By Rob Kelley, CNNMoney.com staff writer
October 12 2006: 9:51 AM EDT

NEW YORK (CNNMoney.com) -- Matt Johnson can remember a time when he was barely in control of his money, let alone in command of it.

"At one point in college I spent my last $80 on a tattoo," Matt said. "It just seemed like a great thing to buy at the time."
Matt Johnson was in the habit of buying a brand new car every two years before he met wife Kristina.
Matt Johnson was in the habit of buying a brand new car every two years before he met wife Kristina.

He was also in the habit of buying a brand new car every two years, going through four cars between 1997 and 2003.

"But Kristina has really helped me change because she approaches money in such an organized way," he said.

Matt met future wife Kristina in their sophomore year at Maryland's Villa Julie College, and they got engaged soon after graduation in 1998. Kristina was an accounting major, and applied some fiscal discipline to Matt's previously free-spending ways.

Now married, Kristina takes care of all the budgeting and bills, and Matt handles the investing.

"We rein each other in," said Matt. "I have a thing for cars, and she has a weakness for shoes and clothes. But we do a good job of keeping each other grounded."

"I don't think we've ever had a serious argument about money," he said. "Well, maybe once we had to have a talk about cars."

The couple has also managed to stash away $200,000 and built up over $120,000 in home equity - and they're both just 30 years old.
How they save

It doesn't hurt that Matt and Kristina take home a combined $147,000 a year - but that alone doesn't keep their finances in good shape.

"We're big believers in doing paycheck deductions - don't even let that savings money into your bank account," said Matt. "It's the whole idea of not even seeing the money."

They both began contributing to their 401(k)s as soon as they began working. Matt became well-acquainted with the culture of saving while working in the 401(k) division at T. Rowe Price as a communications consultant. And Kristina built her budgeting skills while working as an accountant, spending five years doing auditing work for Bank of America.

Currently, Matt puts 10 percent of his income towards his 401(k) - with a plan of increasing his contribution one percentage point each year - and Kristina contributes five percent at her current job at Bay National Bank.

They're still trying to figure out how to invest $65,000 that they have in cash. Some of it they are slating for home improvements on their new home in Parkton, north of Baltimore, and some will go towards a diversified investment portfolio.

And they've kept their regular expenses to a minimum, starting off their marriage living in an affordable apartment while looking for a townhouse. Rather than renew the lease, the couple moved in with Kristina's parents for several months while they continued the home search. ("We probably wouldn't repeat that decision," said an older and wiser Matt.)

He describes Kristina as a "total coupon freak," and says the couple save 15 to 20 percent off their grocery bills most weeks.

With the birth of Nicholas earlier this year, the couple put $1,000 into a 529 college savings, and decided to allot one percent of Matt's paycheck this year, with a plan to increase that amount each year.

Both of their jobs offer annual bonuses, but the couple are putting those toward paying off their mortgage.
How they spend

Kristina says the adjustment between Matt's formerly free-spending ways and her budget-balancing accountant side wasn't as hard as it might seem.

"We didn't live together before we got married, so we definitely went through an adjustment period," said Kristina. "But we agreed when we got married that we didn't want to live life extravagantly, although we do enjoy traveling and going out to dinner with friends sometimes."

When the couple jumped and bought a townhouse near Baltimore in 2000, they made sure they weren't maxing out their budget.

"We paid $156,000 for the house - which felt like a lot of money at the time - but then we sold it in 2005 for $308,000," said Matt. "It's the best investment we didn't know we were making."

They found their new house one year ago, while Kristina was several months pregnant. They were just casually looking for homes, sending pictures back and forth online, waiting for the right combination of house, neighborhood and school system.

When Matt found it, the couple made the biggest long-term investment of their life, putting $50,000 down on it and took out a mortgage for $500,000.

They are currently paying about $3200 a month, but are hoping to pay the mortgage down as quickly as possible by steps like applying their bonuses to it.

"Had we not been as fiscally conservative over the years, there's no way we would've been able to do this," said Matt. "We did sell high, but we also had to buy high."

The couple also kept credit card expenditures to a minimum, while not forsaking plastic completely. "We've never paid a finance fee on a credit card," said Kristina.

They do put cards to work for them, however. "We use a Marriott credit card, and we haven't paid for a hotel room in five years," said Matt. "We're going to Las Vegas in early November, and we're doing it on my flight points and her hotel points."

And to satisfy their travel itch, they've vacationed in Italy, Hawaii, Mexico and England.

Matt's car habit has been happily curtailed, and he professes happiness at driving (and frequently sharing) a 2003 Toyota Highlander that they bought new. And Kristina drives a '98 Acura Integra. The cars are completely paid off.

When Kristina returned to work after giving birth to Nicholas, the couple also confronted the reality of day-care payments, to the tune of $1,000 a month.

"It's definitely worth the flexibility, but it does hurt the pocketbook," said Matt. "But the provider is top-notch and we knew if we were going to spend the money, we were going to do it right."
The future

The future is full of options for the couple, and that's just the way they've planned it.

Both of them want to keep indulging their passion for travel, and Kristina is thinking about opening her own business some day.

"I used to dance ballet, and someday I'd love to open my own dance studio," she said.

With all the details of their financial life, it's baby Nicholas that's taking their attention now. "Having the baby around, you definitely refocus what you spend money on, and how you want to spend your life," said Kristina. "We're thinking about money, but also about finding time for Matt and I to just hang out."

The Martins: Millionaires in the Making

The Martins: Millionaires in the Making
Jeff and Jet enjoy the world while planning for the future.
By Christian Zappone, CNNMoney.com staff writer
December 26 2006: 5:17 PM EST

NEW YORK (CNNMoney.com) - For most of us retirement comes at the end of our career. But for Jeff Martin, 34, retirement from the Army is just over the horizon. Martin is five years away from being able to leave the Army with a pension of half his current monthly income, which today is $4,256.

Jeff, a native of Carrollton, Ohio, joined the Army out of high school in 1990 and has been promoted up to the rank of Warrant Officer. He works as a Legal Administrator, similar to a law office manager in the civilian world.
budapest.03.jpg
The Martins on vacation in Budapest.

His wife Getriz Martin, 31, who goes by the name Jet, just started work as a civilian nurse in a position the couple expects to gross $5,500 per month. Jet takes home an additional $300 per month as an Army Reservist.

Now stationed at Fort Lewis, Washington, the couple has lived around the country and the world, including Washington DC, Georgia, Korea, Kansas City - Jet's hometown where the couple met - Colorado, Italy and Washington State. Jeff also served in Afghanistan while stationed in Europe.

Jeff is not sure what line of work he'd like to pursue when he leaves the Army. He could even reenlist. But he and Jet talk about the possibility of retiring in their 50s.

They have amassed $240,000 in savings and investments, taking advantage of plans offered to members of the armed services. "I really enjoy the thrill of watching my money grow, sometimes ever so slowly, but knowing that I have been doing this for 15 years in the Army," said Jeff.

Real estate has also helped. They bought and lived in a house in Colorado Springs in 2002 when they were stationed there. They now rent it, with the help of a property manager. The $945 the couple takes in on rent, after the management fee, is actually less than the $1,243 the Martins pay on its monthly mortgage. "The difference in depreciation and interest eases our taxes," Jeff said.

The Martins are looking for another home in Washington State. In addition to Jeff's base salary, he receives $1,684 per month in the form of a tax-free housing allowance. "We try to leverage the housing allowance to the best of our ability."
Taking advantage of benefits

Both husband and wife have taken advantage of the education funding offered by allowing the Army to pay for 75% of their tuition. Jeff got his BS in Management and his Masters in Computer Resources and Information Management. Jet is attending classes part time to get her Bachelors of Science in Nursing.

Another advantage the Martins enjoy is the Thrift Savings Plan, a benefit offered to government employees and military members. The plan works like a simplified, government run 401(k) that allows members to divert portions of their income into six types of mutual funds.

Jeff diverts 25% of his income into his TSP account nearly reaching the IRS cap of $15,000 a year. Military personnel aren't entitled to the same matching program civilian employees like Jet are. Since Jet worked as a nurse in a clinic while they were stationed in Italy, her TSP and vacation will carry over to the new job she's just begun at a hospital on base. The couple plans to max out Jet's TSP as well.
Enjoying life

Although the Martins are rigorous about their savings, they don't live a Spartan existence. They love to travel and vacationed in London, Paris, Prague and Budapest while they were stationed in Europe.

They own three cars. A 2000 Miata paid for in cash as a "bit of a reward to ourselves" that "gives us something fun for day trips on the weekends to the islands and coastal areas of Washington State." A 2005 Acura TL for which Jeff pays $1,000 a month and is on track to pay off by the end of the year - 2 years ahead of schedule. And he still owns the first car he ever bought new - a '96 Chevy Cavalier Z24.

"I feel good that we are making the right choices along the way to at least position ourselves for a retirement where we don't outlive our money."

Jeff is considering becoming a teacher or a financial planner after the military. In the course of his job, Jeff has occasion to speak with young privates who are just getting their first paycheck. Often, they have little financial sense, so Jeff offers them some pointers about saving and investing. "I enjoy seeing them get excited about saving and showing them that it doesn't take much if you start early."

"You should be able to have some fun with your money," Jeff says, especially since many soldiers today get deployed in highly stressful environments for long periods. At the same time, he believes people should "show some discipline and position [themselves] for a future that includes not working in your retirement years."

Jeff wants other soldiers to know "you can start as a private and by being patient and taking a disciplined approach you can save tremendous amounts of money over your career." After all, he did and the Martins will be enjoying it for years to come.

CORRECTION: An earlier version of the story stated Jeff Martin would receive a pension amounting to 50% of his current monthy income of $5,940. In fact, Martin's monthly income is $4,256 - he also receives $1,684 each month in housing allowance, but that amount is not included in the pension calculation.

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