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Millionaires by choice
Mark and Kristi Johnson say you can do things you love and still save through sensible spending.
November 1, 2005: 1:47 PM EST
By David Ellis, CNN/Money staff writer

NEW YORK (CNN/Money) - They've traveled to Budapest and Prague and have one future college education paid for, but that has not deterred Mark and Kristi Johnson from shooting for millionaire status.

Both employed with International Paper Company in Selma, Ala., the couple says that the key to saving has been spending money wisely.

"We're not to the point that we're depriving ourselves," said Kristi. "What we do is spend money on what really matters to us."

With $281,000 deposited in retirement accounts, $138,000 in stocks and mutual funds, over $80,000 in their checking and savings accounts, a home valued at $283,000 and an annual combined income of $170,000, the Johnsons are well on their way to becoming millionaires.

Starting out

Mark, 32, a mechanical engineer and Kristi, 31, a financial analyst, both began their careers with International Paper after being recruited by the company right out of college.

Originally hailing from Connecticut, Mark graduated from Virginia Tech with his bachelor of science in engineering degree in 1994 and Kristi, an Alabama native, earned a full-ride to Tulane, where she got her bachelor's degree in finance in 1995.

Meeting at work, Mark and Kristi both furthered their education as they both attended Auburn University executive MBA program at night, in Montgomery, Ala. with International Paper footing the bill. Right around the time they graduated with their masters in 1997, the couple began their courtship.

Two years later they were married. But the couple already had a jump on their financial future. Both previously owned homes and both enrolled in their company 401(k) plans shortly after they started with the company.

Shortly after tying the knot, the couple ramped up their savings by maxing out their 401(k)s and opening individual Roth IRAs four years ago. With their employer matching a portion of their contributions to their 401(k), Mark and Kristi have socked away $281,000 between their individual 401(k) and Roth IRA accounts.

They also note that the low cost of living in the region has helped them amass a sizeable savings by their early 30s.

Living in a small town just outside of Montgomery, Ala., the Johnsons are not saddled with high income or property taxes. Their current home, which they bought two years ago, has five bedrooms and three bathrooms -- and it only cost them $267,000.

"We realize how fortunate we are to live down here," said Mark.

Picking and choosing

While the only debt the Johnsons carry is their mortgage, they are not willing to attribute their sizeable nest egg solely to free education, cheap real estate and low Alabama taxes.

It has taken some serious belt-tightening for them to put away that kind of money and still be able to travel around the globe to such far-flung places as the Caribbean and Russia.

From small stuff to big ticket items, Mark and Kristi have tried to save any way they can.

Right now, Mark and Kristi try to live off of the smaller of their two paychecks.

When they put their last home on the market, they sold it themselves, which saved them realtor's fees, which typically range between six and eight percent of a home's selling price.

With nationwide gasoline prices averaging $2.28 a gallon as recently as Tuesday according to AAA, the Johnsons drive to work together even though they have two cars and Kristi starts 45 minutes later than Mark. They estimate that they save $6 a day in gas on their 45-minute commute.

They even wait for a movie to come out on DVD and order water at a restaurant in order to save a few hundreds of dollars a year.

"You may not realize getting iced tea or coke at dinner adds up to several hundred dollars a year," said Mark. "It's the little things."

Building a future

By trimming excess spending from their budget, Mark and Kristi have also been able to diversify their savings, buying stock as well as creating several mutual funds.

While their interest in stock purchases has waned, they still have $25,000 in such stock as Southwest Airlines and Office Max . For them, blue chips equities and growth stocks were the most appealing to them.

Mark and Kristi also make the saving process painless by having $1,800 deducted from their bank account every month and funneled into one of their four mutual funds. Right now, the balance on their two mid- to large-cap funds, their real estate fund and bond fund are valued at $113,000.

But their investment in mutual funds, according to the Johnsons, is earmarked for one thing -- college tuition. Tuition that will pay for at least one child to go to his or her school of choice.

While they don't have any kids yet, the couple hopes to have two children at some point in the near future.

"We wanted to get a college education for at least one child before we started a family," said Kristi. "That's one of our goals -- to be able to provide college for our children without loans or having to work crazy jobs."

If their own financial plans come off without a hitch, Mark and Kristi estimate they will be able reach millionaire status by the time they are 40, travel to New Zealand and China and retire early if possible.

"Those are our goals," said Kristi. "That's why we save like we do and spend like we do."  Top of page

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