For a couple in their early 40s, Dawn and Vince Marine are putting a lot of big expenses behind them.
Their suburban Chicago home, worth $380,000, will be paid off in less than two years, and they've prepaid two years of college tuition for each of their three children, ages 8 to 11.
But like a lot of other couples with children close in age, they're worried that their current income and savings won't be enough to get the children through school without jeopardizing, or at least delaying, retirement.
Their challenge: Keeping up with savings when the children hit their teen years and they have more cash flow from paying off the house, and deciding how to allocate money between retirement and college savings.
"We think we're off to a good start, but it would be nice to have a professional evaluate what we've done and where we can go from here," Vince Marine wrote in requesting a Money Makeover.
After reviewing the couple's finances, Dwight Kellams, an accountant and planner with North Star Financial Consulting in Indianapolis, concurred.
"You guys are in great shape and should feel good about your choices," Kellams told the couple. "We're really just talking about doing some fine-tuning."
That's because of some smart moves the couple have made.
Their contributions to the College Illinois prepaid tuition plan are now worth $66,000, which covers the first two years for Nicholas, 11; Lauren, 10; and Alexander, 8.
And their 15-year mortgage will be paid off in February 2009.
Meanwhile, they've managed to tuck away $95,800 in retirement accounts at work and in Roth individual retirement accounts, and they have $56,600 in nonretirement accounts.
Will it be enough? Kellams thinks so, provided the couple boost their savings as Dawn, a nurse, goes back to work.
She started a new job recently but is not funding a workplace retirement account. The planner said she should get started immediately by diverting 7 percent of her income into the plan with its 2 percent company match.
Vince is contributing 5 percent of pay and receiving a 4 percent match.
By continuing to save about 9 percent of gross income for retirement, the couple should be on track for a relatively comfortable nest egg, the planner said.
The cash they'll be keeping from getting rid of the house payment will help make it easier to boost their retirement savings, and also provide opportunities to increase the money they're putting away for college.
They also need to evaluate their funding game plan for the rest of the college costs and dampen some of the risk in their investments, he said.
To save on child-care costs and to spend more time with the children, Dawn has started working nights about 20 hours per week in a behavioral health facility, after previous jobs in other areas of nursing. Vince, a metal engraver, works full time during the day.
That leaves little room for downtime, especially with travel sports teams and other activities for the children.
Even so, the couple manage to talk regularly about finances and study personal finance information available to do-it-yourself investors.
For the most part, that has led to some good investment decisions.
Their largest holding, accounting for 35 percent of their investments, is a target-date retirement fund invested with low-cost mutual fund provider the Vanguard Group. The fund, the Vanguard Target Retirement 2035, offers exposure to a broad mix of foreign and domestic stocks with a smattering of fixed income to dampen volatility.
With a smaller proportion of their investments they've taken more risk - and been handsomely rewarded.
Investments in a Fidelity real estate fund and a T. Rowe Price Latin America fund have swelled to account for about 10 percent and 7 percent of total assets, and the couple have used the growth in these funds to take profits when they've needed to pay for irregular expenses.
Another sector fund in the health care industry and a large stake in a fund that invests in small-cap stocks round out their top holdings. All have turned in strong performances, but Kellams worries that the run-up in these asset categories is looking a little long in the tooth and said the couple might consider rotating into more broadly diversified funds.
"Your overall asset allocation is more aggressive and has a higher volatility than most people can tolerate," he said. "Real estate has increased far higher and longer than anyone could have predicted. This is one area you should consider reducing."
Because the couple enjoy keeping up with their investments, has excellent 401(k) investment choices and has a higher risk tolerance than most, Kellams recommended rotating out of their target retirement fund and into a broad mix of funds that still has plenty of international and growth-oriented investments, but also some exposure to fixed income.
This way, they can control their gradual shift out of stocks as retirement approaches, rather than having it done for them in the target funds, Kellams said.