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Trade Paperback
204 pages
Jan 2004
Bethany House Publishers

A Woman's Guide to Family Finances

by Ellie Kay

Review  |   Author Bio  |  Read an Excerpt


Meet the Bensons

I’ll admit it. We’re not normal.

But I think “normal” is overrated anyway.

I mean, a normal family doesn’t have seven kids.

A normal dad doesn’t have a bumper sticker on his Ford Escort that says, “My other car is an F–117 Stealth Fighter Jet.”

A normal mom doesn’t have to replace two garage doors in a year because she keeps backing into them.

A normal mom doesn’t appear on a Satellite Media Tour covering fifteen cities in the morning and then cook Hamburger Helper at night.

I think the only family that may be slightly more abnormal than the Kays are the Osbournes. But we won’t go there.

My kids tell me that I’m the most “abby normal” mom that they know, evidenced by something I did last summer. Although it wasn’t horror flick material, my husband, Bob, found it quite horrifying.

I had two basic goals that I wanted to accomplish by the time I was forty years old—and time was running out. They were: (1) have twins, and (2) go skydiving. Since Bob refused to help me with the former, I decided to take care of the latter myself.

The annual bookseller’s convention was in Atlanta, Georgia, and I decided to take the plunge after the main events were over. When I told my husband, Mr. Fighter Pilot himself, his response was: “You can’t do that! It’s too dangerous!”


He’s the one who lost hydraulics in his F–117 jet and had to rely on a parachute to stop him on the runway last month—only one second away from a disaster! And he’s telling me skydiving is too dangerous?

My girl friend Vicki couldn’t be talked into jumping, but she reluctantly agreed to accompany me on the adventure and to call Bob if the chute didn’t open.

People asked me if I was scared over the prospect of climbing up to the ten-thousand-foot altitude to freefall back to earth, and I said, “No, I’m not.”

If the truth be told, there was one moment when I had the wee-wee scared outta me. It wasn’t when my instructor began strapping me to him in the airplane, which indicated we were two minutes from jumping—that was a moment full of anticipation! It wasn’t when we opened the door and jumped, doing somersaults in the air—that was invigorating! It wasn’t even when we were freefalling and giving the thumbs-up sign to the other instructor who was making the video—that was too fun for words! And it wasn’t when we finally pulled our chute and the jerking motion carried us back up into the air—that was death-defying!

No, the only time I got scared was when we were peacefully floating to the ground and I was admiring the view. I should have been suspicious when my instructor told me his name was Mr. Jack Hammer, but it truly was his name. He was about forty-five years old, had his hair in a single braid that went down to his waist, and was the veteran of about three thousand jumps. This instructor was pointing out the landmarks, showing me his mobile home, the target where we would land, and the road we traveled.

He spoke into my ear. “Do you like this adventure?”

Yes! This is amazing!

He replied, “Do you think you’d like to come back, and will you tell all your friends about us?”

I thought that he was just doing a good job of marketing the skydiving school as I answered, Sure! I’ll tell all my friends about this!

“Do you think your friends would actually come skydiving?”

I don’t know, but I’ll sure tell them.

His next words made my blood run cold. “Are your friends as pretty as you are? Because you’re real pretty!”

This guy was strapped to my back at five thousand feet, and he’s telling me that he thinks I’m pretty? YIKES! My response stopped him dead in his tracks.

Yep, my husband, the Stealth Fighter Pilot, thinks I’m pretty, too! Did you know that his jet is so accurate it could drop a bomb in the corner of your mobile home?

Jack immediately “backed off” (so to speak), and I didn’t have any more trouble out of him! I suppose Jack the Hammer was just acting like a “normal” guy. But if that’s normal, I’m glad I’m not.

* * *

Now I’d like to introduce you to the “normal” American family, whom we’ll call the “Bensons.”

Here’s the lowdown on the typical American family:

  • They are married with children—two, to be exact.

  • They live in a modest three-bedroom, two-bath home with a yard and a lazy cat.

  • They don’t have a household budget.

  • They have an annual income of $43,000.

  • They owe about $8,000 in credit card debt.

  • They have two car payments.

  • They have a thirty-year mortgage.

  • Their savings account has less than $500 in it.

  • They have no long-term retirement account.

  • They love their kids and want them to go to college.

  • They are wondering, “Where did all the dough go?”

But the really amazing thing about the Bensons is where they think they will be one day. The Bensons believe that one day they are going to earn more money through raises, a better job, or profit sharing. They hope they will receive an inheritance or stop paying child support. They figure that someday there will be no more tuition payments and that childcare costs will go away when the kids are in school—thus cutting down on their monthly expenses. Then they’ll finally have some breathing room. They also believe:

  • One day they will no longer have a mortgage payment.
  • One day they’ll have their credit cards paid off.
  • One day they’ll have a nice savings account.
  • One day they’ll get a couple of IRAs.
  • One day they will be able to send their kids to college and still have a retirement for their golden years.

But they have no plan! They think it will “just work out.” One day, that is. One fine day.


The hard fact about the Bensons is that if they continue the way they are now, with no real plan, they will:

  • Pay five times as much on their house as it is worth.

  • Increase their credit card debt.

  • Never get out of consumer debt.

  • They will get a second mortgage on their home to pay for their kids’ college expenses.

  • They will never acquire enough savings to retire comfortably.

  • They will always have car payments.

  • They will never realize their financial goals.

The Bensons are not really living what we imagine to be the American dream, are they? Unfortunately, they represent the typical family.

But your family doesn’t have to be the same way.

You may be typical, as well. You may see a lot of your own family in the Bensons’ realities and in their dreams. But you don’t have to share their destiny. You don’t have to be normal—being normal is overrated, remember? You can be different. You can find financial freedom. But it won’t just happen. You can begin to chart a different course by answering the following question: What are you willing to do today in order to make your family’s financial dreams come true in the future?

I’m not talking about get-rich-quick schemes or money-making pyramids. I’m not talking “business opportunities” or Internet scams. The question is: What are you willing to do to help your family become above average in a below average world? This little book that you are holding in your hands contains the keys to financial freedom. No, you won’t be a millionaire and retire at forty. But you can learn how to get out of debt. You may not learn the nuances of investing in a bull market or how to maximize your real-estate investments—this isn’t that kind of a book. But you can learn how to be in a position to help your kids through college without borrowing on our future. You can teach those kids by your example that you don’t have to live paycheck to paycheck. You can give them a brighter financial future than what you had when you got married.

But you have to make the decision that your family will not be like the Bensons.

Will you rise to the challenge?

I hope so.

Families are in desperate need of a safeguard for their financial future. There are some basics that every family needs in a crisis as well as for future security. The following won’t solve every financial crisis or problem, but it is a good start to securing your family’s financial future. Some of these are easy to take care of, while others will have to be worked through carefully with your spouse and family as you read through this book. Here, then, are five areas that comprise your family’s basic needs:

1. An Emergency Savings Account

This account is not an investment account; it doesn’t include IRAs, 401(k)s, or CDs. Its purpose is not growth but safety. These are funds that you can access in the event that you or your spouse is laid off or you have an emergency home repair or unexpected medical bills. The best way to build this account is to establish a family budget (see chapter 4, “The $50,000 Money Pyramid”) and have this money automatically transferred into an account every month until there is at least three months’ worth of living expenses in it for a dual income or six months’ worth if you are a single-income family.

2. Life Insurance

This is one of the easy ones that you can do for your family. It is important for you to see to it that your husband has enough insurance if he is the primary income provider in the home. But you will also need adequate coverage on yourself. When it comes to the primary provider, you will need enough coverage so that the financial dependents could invest the payout and live modestly on the proceeds. So figure a sum that would allow them to live comfortably assuming a 10 to 12 percent annual rate of return. Be sure you figure in social security benefits for dependents and any life insurance you or your spouse may already have provided at work. The two main types of policies are “whole life” and “term,” with term providing the most coverage at the least cost. You can research the best policy for your needs at (1-800-972-1104) or Or try (1-800-394-9006) and (1-800-444-8376). These insurance agencies will provide comparative quotes on term policies that will meet your needs, and they will provide a credit rating for each insurer. This is a free source of information—you should never have to pay to get a life insurance quote!

3. A Will

Here’s another easy one. Bob and I have had a will ever since we were married due to the nature of his high-risk profession (and now, my high-risk hobbies!). The main section of this critical document will assign a guardian for your children. When we were in our childbearing years, we would call the guardians for our children and announce: “Guess what? We’re pregnant—again.” These dear friends would always reply, “We are praying for your health and safety!” Seriously, what could be more important? You don’t want the state making decisions for you, which is what would happen if you do not have a will. In many states, the surviving spouse gets only one-third to one-half of the assets that were in your sole name. Your kids get the rest, and if they are minors, a court administrator will handle their money until they become adults! A simple will costs only $200 to $500 and is free for military members at the base’s Judge Advocate’s office. Do-it-yourself software packages are also available, and many communities offer inexpensive “How to Write a Will” classes, taught by a qualified attorney. Also, make sure that the beneficiary designations on your 401(k) plan, your IRAs, life insurance, and bank accounts are up-to-date.

4. A Retirement Account

The Bensons did not participate in these accounts that were offered at their places of employment. You would be surprised at how many people do not take advantage of these terrific tax-deferred accounts, which include 401(k) and 403(b) plans. Now is the time to start one of these or an IRA and Keogh (more on these in chapter 6, “Paper or Plastic?”).

5. A Good Credit Rating

If you have to let your utility bills go unpaid for a couple of weeks to pay your credit card and mortgage payments on time, then do it! Of course, that isn’t optimum—but one affects your credit rating and the other doesn’t. (For more information on what affects your credit rating, see chapter 7.) Healthy finances need a good credit rating. “As a result of taking a three-week honeymoon, I paid my credit cards a week late,” says Loretta Nolan, a financial planner in Old Greenwich, Connecticut. “It went on my credit report, and I had to explain it the next time I applied for a mortgage” (Parade Magazine, June 10, 2001). For a copy of your credit report, call one of the three national credit bureaus: Experian (1-888-397-3742); Trans Union Corp (1-800-888-4213); or Equifax (1-800-685-1111). There’s a nominal charge, depending upon where you live, but it is worth it. The “Debt Diet” chapter, later in this book, will help tremendously in this critical area.

6. A College Fund for Those Babies!

Some families have just about finished paying for their kids’ college expenses, when they suddenly find themselves helping to raise their grandchildren! Whether you’re trying to help your children or your grandchildren through college, there are strategic ways to select an account with low fees and a good selection of investments, plus a tax break. One of the best buys today is a Qualified State Tuition Plan, which was approved by Congress in 1997. These are sometimes called 529 Plans, after the section of the Internal Revenue Code that permits them. The contributions to a plan like this will be tax-deferred and could even be tax-deductible from your state income tax if you are a resident of that state. When the money is withdrawn for college, it is only taxed at the student’s income tax rate. Check on the plan for your state; the one in New York will let you start an account with as little as $25 and will allow several people to contribute to it (hint: parents and grandparents). Some of these plans are better than others, so be sure to find the one that is right for you. Up to $100,000 can be contributed per student (let’s see ... that’s up to half a million dollars for the five Kay kids that are still at home). If the child does not go to college, the money can be designated for another beneficiary or removed at a 10 percent penalty.

7. An Internet Connection

I thought I’d end with another easy one—one that you probably already have. As simple as it may sound, Internet access is one of the best financial moves you can make for your family because it allows you to research virtually any financial topic with a few clicks. In the chapter “Room by Room Savings,” you’ll find that this is a fabulous way to save on the essentials, and in “Movin’ On Up” you’ll see how easy it is to research mortgage rates and reduce your monthly expenses in that way. Of course, you’ll want to safeguard your children with a family-friendly filter to limit what they have access to, but used wisely, the Internet is a fabulous tool.