NEW YORK (MONEY Magazine) - A diligent saver and eager student of investing at 31, Art Zalla has a good grip on the big picture. He and his wife Susan, 32, have healthy savings, no credit-card debt, and a modest mortgage on their Syracuse, N.Y. home.

The couple live for well under Art's $90,000 engineer's salary, and Susan will return to full-time teaching soon. Art knows that with the right moves, they'll be able to afford college for Farrah, 2, and baby Alexza, and fund a retirement of travel and golf.

Art and Susan Zalla are thinking about college for daughters Farrah and Alexza.

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So what's the problem? Zalla has heeded all manner of advice, from Suze Orman's books to local brokers' tips to financial seminars at the office.

The upside: $190,000 in retirement savings. The downside: a lot of investments that worked out better for the broker who sold them.

There's the tech-stock tip that lost $4,000, the lackluster rental property, and the high-cost variable annuity and mutual funds. Plus the couple have no money in bonds.

To clean up their portfolio and set it on a surer path, certified financial planner Timothy M. Hayes of Rochester, N.Y. offers three simple moves for the Zallas: Sell the individual stocks that Art holds in his tax-sheltered accounts in favor of mutual funds; add fixed income; and dump the high-cost mutual funds.

Art holds about $32,000 spread over seven stocks in his 401(k) and IRA, plus another $26,000 in employer stock. But when you buy stocks in tax-sheltered accounts, Hayes explains, you can't write off any losses.

Art should sell the individual issues and pare back his employer's stock to less than $19,000, or 10 percent of his investable assets. The proceeds from those sales should go into the stable-value fund in Art's 401(k) (think of it as a cross between a bond fund and a high-yielding CD) and into a bond fund in his IRA.

Given their ages, Art says, he was comfortable not holding bonds. But Hayes likes the stability they offer. People look at stocks' high historical rate of return and figure that's what they want, but Hayes says: "The whole notion of a high concentration of equities is predicated on staying the course. Problem is, when stocks go down, people often don't stay the course."

To get to an 80-20 mix of stocks and bonds, Hayes recommends that Art change the way he directs his 401(k) contributions. Starting now, he should put 25 percent of his money into the stable-value fund and 40 percent into Vanguard Windsor (VWNDX (Research), which looks for undervalued stocks.

He should split the rest between his plan's small-cap and international stock index funds. As for the past mistakes, Hayes suggests replacing the high-cost funds but leaving the annuity alone; it can be expensive to escape because of surrender fees. "Just put it behind you,"Hayes advises.

Finally, Hayes recommends that as soon as they can afford it, the couple open 529 college savings accounts for their children. New York offers a low-cost, well-run Vanguard plan and a state tax deduction of up to $10,000. "This feels much less confusing," Art says of Hayes' strategy. "It's going to be a lot easier to track and see where I'm going." See MONEY's list of best 529s.

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