Money Makeover

The Unnoppets( Nop and Sonya and baby Fin) have retirement accounts of $76,000, an emergency fund of $30,000 and $150,000 in real estate equity. The unnoppets currently have a combined income of $90,000. While they have great saving skills, there spending is haphazard, they don't keep a budget. They have $175,000 in medical school loans, carry two mortgages and owe $175,000 on a 7 yr. ARM. Right now Nop is only making $38,000 but when he opens his practice in 2009 he should be making $200,000/year. The couple is worried about how they will handle this increase in income. The couple will need to develop financial discipline now to be prepared for this increase in income. Generally, the more someone makes the more they tend to spend. The couple needs to cultivate good spending habits and save even more once they have a higher income. CNN Money magazine reccommended they take the following action:

• Adopt an investment strategy - right now Sonya compares their investments to picking a horse at the Kuntucky derby ( I think a safer course is required)
• Buy more life insurance - when Nop becomes the primary breadwinner he will need to increase his life insurance to ensure that his family will be taken care of should anything happen to him
• Keep spending smart