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The Buchegers: Making their dreams reality

Through careful planning and consistent saving, teachers Paul and Amy Bucheger are well on their way to reaching their financial dreams.

your$ magazine Fall 2009The Buchegers have found the recipe for making their dreams a reality. It’s not a complicated recipe. You just have to know what you want, create a plan to get there, and recognize that there might be detours along the way. “We’re not financial geniuses. Anyone can do it,” says Paul.

Upon meeting the Buchegers, one quickly realizes they are a close-knit family that takes pride in their home, their community, and their schools. Like many Americans, their dreams include paying off the mortgage, sending the children to college, and retiring in comfort.

When Amy and Paul married, they shared a vision for their life that focused on family and community, and they also shared similar financial goals and spending habits—a big advantage for two young teachers just starting out.

“Being on the same page financially is key,” notes Ana Bonjour, a Retirement Savings Consultant at WEA Member Benefits. “There are so many distractions. Reasons to spend are around every corner, making it difficult to stay on course. Philosophical differences about finances can make it even more difficult to achieve long-term goals.”

Amy and Paul have stayed extremely focused. They work together to stick to a budget, and if all goes according to plan, they will be mortgage free, have helped both of their girls pay for college, and be comfortably retired within 15 years.

Here’s how the Buchegers are tackling their big financial goals one at a time.

GOAL: Pay off mortgage early

The Buchegers
Paul and Amy’s original goal was to pay off their mortgage by the time their oldest daughter, Rachel, graduated from high school. Their strategy included making weekly mortgage payments which takes time off the life of the loan and reduces the total amount of interest paid.

When the Buchegers decided to add on a four-season sunroom to their house, they adjusted their mortgage pay-off date in order to pay for the addition. They now plan to have their mortgage paid off by the time their youngest daughter, Hannah, graduates from high school—a three-year difference from their original goal.

What’s right for you?
It’s hard to put a value on the feeling of being mortgage-free, but before you scrape together every dime you have to pay off your mortgage, make sure it’s in your best financial interest to do so.

“Evaluate the interest rates on any debt you may have, as well as the average rate of return on your investments elsewhere,” notes Bonjour. It may not make sense to divert your savings to a mortgage with a 6% interest rate if you have a significant balance on a credit card that’s charging you 18% interest. It’s also important to consider the tax consequences (you lose the mortgage deduction on your federal income taxes) and how a mortgage payment fits into your retirement plans.

Making weekly payments like the Buchegers is a great way to trim time and cost off your loan, but not every mortgage provider offers the option. Bonjour recommends members consult their financial or tax advisor and take advantage of financial resources available through WEA Member Benefits and WEAC.

GOAL: Pay for home improvements

Bucheger familyThe Buchegers
When the idea of adding on a four-season sunroom to their home came up, the Buchegers resisted. Paul and Amy’s practical side said to wait until they retired so they could have the money saved and pay for it all up front, but Paul’s parents encouraged them to build it while they were working and the girls were still at home to enjoy it.

Amy and Paul took the advice, and decided to move up their plans to build their “dream garden room.” They took out a home equity loan, and they have since refinanced their mortgage and rolled their home equity loan into a fixed, 10-year loan at a much lower percentage rate. They also continue to pay their mortgage weekly.

“We want our home be a place not only to live, but a place to relax and find peace,” says Amy. “The sunroom allows us to talk, read, listen to music, birdwatch, and admire our garden. We had to deviate from our original plan, but we don’t regret the decision. We have a great relationship with our credit union’s loan officer. She helped us evaluate our situation and made us feel comfortable with our decision,” says Amy.

What’s right for you?
The appeal of home equity borrowing resides in the low interest rates and the tax deductibility of interest. However, the equity you have in your home also represents a valuable asset and emergency borrowing capacity. When you borrow from your home’s equity, you reduce the equity or ownership you have in your home. Another drawback is the fact that your home is on the line and you could lose your home if you default on your payments. If you are considering a home equity loan, make sure to talk over your situation with a trusted professional.