(MONEY Magazine) – Joann Long thought it was a prank at first. At 2:45 p.m. on Dec. 18, 1989, her son Ray Jr. -- then a 14-year-old 10th-grader at Barry Goldwater High in Phoenix -- came pounding on the back door, shouting, ''Let us in! The skinheads are after us!'' When Joann slid open the bolt, Ray and a black schoolmate darted past her to the front window, obviously terrified. Peering over their shoulders, Joann saw about 30 white youths, some carrying baseball bats and many sporting the shaved scalps and paramilitary dress of neo-Nazi ''skinheads,'' advancing on the Longs' three-bedroom stucco home in the mostly white, middle-class neighborhood of Deer Valley. The mob kept yelling, ''We're gonna get you niggers!'' as it searched yard to yard for the teens. Breathlessly, Ray Jr. explained that the gang had ambushed them after he challenged one of the ''skins'' for making fun of a planned rally marking the Rev. Dr. Martin Luther King Jr.'s birthday. After quickly locking the doors and closing the drapes, Joann phoned the police and then her husband Ray, a $41,900-a-year sales manager for the cellular-telecommunications equipment maker Celwave. ''I drove like a bat out of hell,'' recalls Ray, now 45. ''But by the time I got home, the skinheads had been scared off by the police sirens.'' Although no one was hurt, the Longs were deeply shaken. They are not alone: bias crimes are on the rise nationwide. Klanwatch, an arm of the Southern Poverty Law Center in Montgomery, Ala., recorded 291 race- related incidents in 41 states last year, ranging from threats to arson, bombing and even murder (the count includes only crimes where bias is known to be the main motive and thus understates the problem). The total was up 20% from the year before and fully five times higher than in 1986. Five of the 20 murders, the biggest fraction attributed to any single group, were committed by skinheads -- loosely organized gangs with 3,000 members across the country that ape the style and sometimes the racist politics of Great Britain's immigrant-bashing youths of the 1970s. In Arizona, skins have been active in the state's emotional debate on whether to become the 49th state to honor King's Jan. 15 birthday with a holiday. Some skins joined an anti-King rally last January, for example, to celebrate the defeat of the proposal by Arizona's 81%-white electorate two months earlier. For their part, the Longs found that though their son escaped from the mob, the incident left financial scars as well as emotional ones. Specifically, they were so unsettled by the harassment that they felt compelled to move last August, even though the decision left their finances in shambles. They had to spend all their $2,300 savings to buy an $88,000, three-bedroom house in another section of Deer Valley three miles from their old home. And now their $840 monthly mortgage payment alone is 34% higher than their old $625-a-month rent. On the emotional side, they want to repair the fragile sense of belonging that the attack shattered. The Longs have always prided themselves on being black pioneers: they were one of the first African-American families in Deer Valley, and Ray Jr., now 16, and sister Tasha, 18, were among only three dozen blacks in the 2,045-student Barry Goldwater High School. But the family had no desire to contend with racist toughs -- especially since their third child, 12-year-old Reggie, is so profoundly retarded by Down's syndrome that he cannot read, write or even talk. Ray and Joann, 39, worried that Reggie might wander away from home and run into a group of violent skinheads. The Longs now need advice on how to budget, boost savings and provide for . Reggie's future. ''He'll be with Joann and me all our lives,'' says Ray. ''But what happens after we're dead?'' In addition, they need to build a solid base of diversified investments so that if they cannot flee from racism entirely, they at least won't go broke along the way. Ray Long already has much to be proud of. Born the eighth of nine children on a family farm outside Houston, he finished high school and spent four years in the Navy before enrolling at Laney College in Oakland, Calif. in 1968. When his widowed mother fell ill two years later, he headed back to Houston and got a $12,000-a-year job as a moving-company salesman. After his mother's death, Ray married Joann Rogers, a teacher's aide from Brenham, Texas. And in 1975, the couple put $1,000 down and borrowed $18,500 at 8.5% to buy a three-bedroom house in northeast Houston. Ray held a succession of sales jobs for local firms until he was hired by Marlboro, N.J.-based Celwave for $25,000 a year in 1984. Celwave moved the Longs to Phoenix and put Ray in charge of developing accounts in the western half of the U.S. (''Not bad for a black farm boy who never finished college,'' he jokes). But since Houston's housing market was already headed downhill, Ray and Joann rented out their old home rather than sell it at a loss. The strategy worked. The roughly $3,600 annual rent more than covers the $2,400 a year they pay on the mortgage, and the property has doubled in value to about $40,000. In Phoenix, the Longs moved into Deer Valley at the suggestion of one of Ray's white co-workers. All seemed to go well. Tasha became the first black cheerleader in the local Pop Warner Football League. Ray Jr. integrated marching bands as a drummer and won a roomful of softball trophies. Best of all, Reggie entered the district's highly regarded program for the mentally handicapped. As more blacks moved into Deer Valley, though, racial tensions surfaced at Barry Goldwater High. At least two students proclaimed themselves skinheads. And four black youths began dressing in the trademark reds and blues of the Bloods and the Crips, the ghetto-bred Los Angeles street gangs that have been spreading nationwide. The incident involving Ray Jr. began when one of the skinheads gave Tasha a ''Heil, Hitler!'' salute after hearing her mention an upcoming King rally. ''I was shocked,'' she remembers. ''I knew the skinheads were at school, but we'd never had much trouble from them.'' Ray Jr. confronted the white | youth in the schoolyard at lunch. Name-calling swiftly escalated into threats, reinforcements arrived on both sides, and finally security guards hauled the chief antagonists off to assistant principal Wayne Kindall. ''I issued warnings and thought that was the end of it,'' Kindall says. ''But later that day the police called to say Ray Jr. had been chased.'' Ray could identify many of his attackers, and Kindall gave one baldpated white student a two-week suspension the following day. The police subsequently took the same boy into custody briefly but then released him, saying the case was not serious enough to warrant formal charges. ''He had not committed a particularly heinous crime,'' explains Sgt. Kevin Robinson, ''and we didn't think he was a danger to himself or others.'' Galvanized into action, Joann organized a group of 20 black parents that urged the school board to ban organized gangs. The board wouldn't go that far. But in May 1990, it called for a program to encourage sensitivity to minorities (7.2% of the district's 16,000 pupils are either black or Hispanic). A black social worker directs the effort, which has since sponsored five weekend retreats attended by a total of 200 students, parents and staffers. Still, the Longs continued to feel uncomfortable at home -- especially since several of Ray Jr.'s assailants lived less than a block away. ''It scared the hell out of me to hear them hanging out until 2 a.m. in their backyards,'' admits Ray Sr. ''For a while there, I wouldn't even let our kids go to the store.'' So as soon as their lease expired, the Longs put $4,000 down -- $2,300 in savings plus $1,700 from Ray's earnings -- and assumed an $84,000, 9.5% fixed-rate mortgage to buy the home they now inhabit. Moving and closing costs totaled $1,200, and Joann spent another $1,100 on bedroom furniture. Those outlays tightened a family budget that was already stretched by $300- a-month payments on their '83 Toyota, bought used in the spring of 1990, and the $5,400 they had spent in the previous 12 months to travel to Houston and keep up the property there. And Ray will make that budget even tighter if he goes ahead with his plan to buy a second car after his current auto loan is paid off this fall. Already, he can only afford to pay about $25 a month on outstanding charge-card balances of $900, and add a scant $150 in paycheck deductions to the $4,000 in his 401(k). That $4,000, the family's only savings, is spread among stock, fixed-income and government-obligation funds. Considering the Longs' lack of cash, it's fortunate that both Tasha and Ray Jr. have their eyes on inexpensive Glendale Community College near Phoenix, where the tuition is only $650 a year. Tasha plans to enroll this fall, and her brother will be ready to join her in 1992. Racial tension at Goldwater, meanwhile, has mostly dropped out of sight. ''I may overhear the word nigger when I pass some white kids,'' says Ray Jr., ''but it's not directed at me.'' Yet his mother worries her son may be downplaying the situation. ''When I organized the black parents,'' says Joann, ''my kids told me, 'Hey, Ma, the teachers tell us you're causing trouble.' Now my son won't say anything, because he doesn't want me going up to school and raising a ruckus.'' But she hasn't forgotten that day in December 1989. ''As long as we live in this district and pay taxes, I'll watch the schools. We've run as far as we're going to go.''

BOX: THE ADVICE

The Problems: Rebuilding savings, improving money management and providing for the future of their retarded son Reggie

The Solutions: Sell the Houston home, pay charge cards, write wills and set up a trust.

Asked by MONEY to advise the Longs, certified financial planner Philip Johnson and attorney Donald Peters, both of Phoenix, made the following recommendations: Raise cash and start saving. Johnson urged the Longs to put their Houston house up for sale. If they can get $40,000 for it, which seems reasonable, they would net about $17,000 after paying the mortgage balance, closing costs and taxes. They should put $10,000 of that money into Ray's credit union account as an emergency reserve. The rest should be invested in a growth mutual fund for long-term savings. Johnson recommended Phoenix Growth (4.75% load; 800-243-4361), up 16.04% in the three years to April 30. Cut your debt and spending. The Longs should immediately pay off their $900 credit-card charges and avoid running up such balances in the future, said Johnson. He also cautioned against buying a second car when their auto loan is retired this fall. ''Put those $300-a-month payments into savings instead,'' he advised, ''and continue to make do with one car -- at least until you've sold your house.'' Set up a trust for Reggie. Peters advised the Longs to write wills establishing an irrevocable trust for Joann and Reggie. They can fund the / trust by making it the sole beneficiary of Ray's company-provided $100,000 term life insurance, so that if Ray dies, the trust will help support his widow and retarded son. Should Ray outlive his wife, the trust will kick in at his death to provide for Reggie. The parents will need to appoint a trustee to manage the money, but many banks and financial institutions provide such a service for fees of about 1% of invested assets a year ($1,000 a year, in this case). The Longs should pay an attorney who specializes in estate planning about $600 to draft wills setting up the trust. They will also need to name a guardian, possibly a relative from the Houston area, to care for Reggie after they die. Several months after the advice session, Ray said he and Joann planned to put their Houston home on the market and had already cut their spending. But they had chosen not to set up a trust because it seemed too expensive, and instead had written wills using a $15 do-it-yourself will-making kit they bought at a bookstore. ''Our assets will be evenly distributed among the kids,'' said Ray. ''A sister and brother-in-law of Joann's will serve as executors, and we're going to ask them if they'd be willing to serve as Reggie's guardians and look after his welfare.''

BOX: Price of flight

Pushed into buying a new house prematurely by threats of racist violence, the Longs find themselves house-broke. Their only savings now: Ray's $4,000 in a 401(k) at work.

INCOME Ray's salary $41,900 Rent on Houston home 3,680 Withdrawal from savings 2,300 Other 940 TOTAL $48,820

OUTGO Rent and mortgage $9,220 Taxes 6,870 Food and clothes 6,440 Out-of-pocket moving costs 6,300 Houston property upkeep 5,400 Auto loan and other car expenses 4,900 Utilities 3,300 Recreation 3,200 401(k) contributions 1,800 Insurance 890 Miscellaneous 500 TOTAL $48,820 ASSETS Houses $128,000 Personal property 8,000 Ray's 401(k) 4,000 Checking account 150 TOTAL $140,150

LIABILITIES Mortgages $98,000 Car loan 2,200 Credit-card balances 900 TOTAL $101,100

NET WORTH $39,050