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.
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.
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."
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