The Aroras: Millionaires in the Making
Sid and Divya took their honeymoon nine months late to make sure it didn't dent their budget...one sign they have their priorities in order.
NEW YORK (CNNMoney.com) -- Sid and Divya Arora recently returned from a beautiful honeymoon in Hawaii, taking a leisurely cruise through the islands. Only thing is, they waited nine months after they got married to take the trip.
"When we got married, our priority was buying a home," says Divya. "So we just decided we'd put off the honeymoon for a while."
Shared discipline on finances - and a little bit of delayed gratification - have gone a long way for the Aroras, based in West Chester, Pennsylvania, who have saved over $200,000 in assets as they reach their late 20s.
How they save
Sid, 28, moved to the United States when he was 17 and says money was something he kept a close eye on.
"I come from a middle-class background in India where money was a big concern," he says. "In India, it was more about saving money to make sure you could cover your basic utility bills."
He attended the University of Michigan, majoring in computer science. His parents had just moved to Ann Arbor, Michigan and they found that Sid qualified for a big chunk financial aid. So his school loans totaled only about $5,000.
Sid began his career as a software programmer at Intel five years ago, and immediately started contributing to his 401(k). His family had seen their investments plummet during March 2000's dot-com bust, so he was careful to invest his savings in a variety of diversified funds.
Before he met Divya, he used money he had earned at Intel to purchase a home in Arizona, which he would sell three years later for a $130,000 profit.
"I thought about holding onto it as a rental home, but I wanted to sell it at the top of the market," he says.
He met Divya in Punjab, India two years ago and the two hit it off and got engaged. They married in November 2005 in New Jersey, and moved to Pennsylvania to look for a home soon after. He took a job with a technology consulting firm doing programming. Now in his second year with the company, he will soon be eligible for 401(k) matching.
Divya had completed five years of education to become a dentist in India, and worked for a year at a dentistry practice there, but found out that she'd need to take two more years of school in the United States to practice.
So the two knew it would be some time before they'd be able to live with the luxury of two incomes in their household. Until 2009, when Divya begins working full-time as a dentist, the couple will live off of Sid's salary.
Their current priority is their mortgage on their new home and setting aside $800 to $1,000 a month for savings. Sid automatically deducts $500 each month from his paycheck that goes straight to a savings account.
Sid is aiming to make two extra of his biweekly mortgage payments each year, part of the reason the couple have already built up $50,000 in equity in their home after less than a year. The payments total $1,700 a month, and the couple have about $200,000 left on their mortgage. He aims to have the 30-year fixed-rate mortgage paid off in 24 years.
"Every month we plan out our spending, and base our savings around that," says Divya. "We usually save more than $500, and never less than that."
How they spend
On the spending side, the two pride themselves on moderation and long-term thinking. That moderation starts with some very simple things: eating home lunches, not smoking and not drinking.
Sid and Divya believe that small expenses that build up can undermine a budget. They also look out for basics like paying all their bills on time, and using low-interest credit cards.
And their monthly planning session gives them some good perspective about big upcoming expenses ahead. They catalogue all of their upcoming expenses for the month, and use this planning session to determine their savings rate as well.
One expense that the couple is putting on credit is their honeymoon trip to Honolulu, a splurge for which they dropped $5,000 on the flight and cruise.
Other than the debt from the Hawaii trip, the couple has no other credit-card debt.
Another big purchase was Sid's Acura RSX, which he bought new in Arizona in his first year at Intel.
The biggest expense ahead for the couple is Divya's dental school education. In order to become certified to practice in the United States, she needs two years more school (which will bring her dentistry education to a lengthy seven years.) This will cost the couple $120,000, and they won't be able to make a big dent in that until she begins work in several years.
Because it will be difficult for Divya to work while completing her degree, the couple plan to pay off the low-interest student loans after she graduates and begins working full-time.
The couple have big plans ahead, and not just the European vacation they're arranging.
They're planning to continue making extra mortgage payments in order to pay their home off after just 20 years.
Divya plans to complete her dental degree and eventually specialize in endodontics, the treatment of root canals.
Their biggest plans are for middle age, however. Sid would like to be able to leave full-time work, and spend the bulk of his time traveling and being with his family. Divya isn't quite ready to drop out so early after her long education - she says she'll practice dentristy for 25 to 30 years before thinking about working part-time.
As for now, the couple is taking it day to day, they say. But with their constant attention and dedication to the future, their millionaire dreams can't be too far away.
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