Putting a Family's Finances to the Test
Banks have undergone stress tests; now it's a Michigan family's turn.
April 29, 2009 — -- As big U.S. banks undergo financial stress tests, many American families are surely wondering how they would hold up to such a test.
They've seen many of their neighbors fall victim to foreclosure, bankruptcy or some other financial calamity. They want to be sure the same does not happen to them.
With that in mind, ABCNews.com decided to put one middle-class family's finances to the test by offering a no-cost financial checkup.
Steven and Vickie Randel of Royal Oak, Mich., agreed to participate, hoping to gain a second opinion on their family finances and advice on changes they might make.
In many ways, the Randels are ideal candidates for a financial stress test. They hold down good, middle-class jobs, but living outside of Detroit puts them at the geographic center of the nation's economic downturn.
The Randels do not work for automakers, but both of their jobs are tied closely to the fortunes of the U.S. automotive business. The possibility of job loss is a major concern.
"We're both working now, but that could change tomorrow around here," explained Steven Randel, 54, a senior cost estimator for a marketing services company. Vickie Randel, 49, is a project accountant for a company that provides training services to industries, including automotive. Both companies rely on the U.S. automakers for a good share of business, which explains Steven and Vickie's job worries.
Steven's annual salary is $59,000; Vickie's is $53,000.
The Randel family finances feature several strengths, but there are also weaknesses that need to be addressed.
The family's financial strengths include a strong head start on saving for college for two sons, ages 16 and 11. (A third son is an adult who is out on his own.)
Back in 2007 and 2008, Steven and Vickie contributed to a prepaid tuition program run by the state of Michigan that allows participants to buy credits toward future tuition payments at current rates. The credits can applied toward tuition at a public college or university in Michigan. The $60,000 they contributed to the plan should be enough to pay for seven full-time semesters for their younger son and six full-time semesters for the 16-year-old.
