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Camino Reality : The Right Financial Road Will Take Couple to their Dream Destination--a Life in Mexico

March 04, 1997|HELAINE OLEN

When Rafael and Merry Lopez Macedo look out the window of their Newport Beach apartment, they envision the home of their dreams. Not in Newport Beach, but in the seaside community of Puerto Vallarta--a town not unlike the one where they met and fell in love.

The couple enjoyed a whirlwind romance while serving as sports instructors for Club Med in Huatulco, a small beach town on the southern tip of Mexico. They were married a year ago in February and can often be seen biking or in-line skating near a local beach. They're happy enough here, but eventually they'd like to settle down in Rafael's native Mexico.

Both Merry, 34, and Rafael, 28, say they prefer the slower pace of life south of the border. They want more than anything to rear a family near Rafael's relatives, a close-knit bunch who live in Mexico City.

"The family stays together in Mexico," says Rafael, adding that he's baffled by the American practice of sending children away to college at 18 and never expecting them to live at home full time again.

But the pair's finances haven't caught up with their dreams. If they want them to come true sooner rather than later, they'll have to count on working in the United States until they have enough saved.

The couple is mostly living on Merry's $36,000 annual salary as an insurance claims adjuster. Rafael, a Mexican-trained chemical engineer, has been unable to find a permanent position in that field since moving to the U.S., so he works sporadically as a sample tester for an environmental firm, earning $12 an hour.

Their only savings are the $1,000 in their joint checking account.

Their goal: Save about $200,000 to build an oceanfront home in Puerto Vallarta or in their second choice, Vera Cruz. They wonder if they will ever be able to sock away that much before they reach their retirement years.

"If we could bottle our love, we would be very wealthy, but unfortunately it's not that easy," Merry says.

*

The Lopezes are both closer and further from their goal than they think, says Judith Martindale, a fee-only certified financial planner based in San Luis Obispo.

On the plus side, the two have excellent financial habits.

Despite living mainly on one income, they have no credit card debt. They own one car. Merry rides her mountain bike to the office every morning, taking a shower there before sitting down at her desk.

Rafael avoids expensive long-distance phone calls to his relatives, instead writing letters and going through the Internet to communicate with his family.

When Martindale marveled at how the couple could maintain such discipline, Merry had a one-word answer: "Rafael."

"Before I left for Mexico, I was earning close to $45,000 [annually] and had no savings," she said. "I've changed my priorities. Now I enjoy eating at home and staying at home, not dining out in restaurants."

Although their insistence on avoiding debt is to be commended, Martindale said, it has left them with a paltry savings account. For instance, the two put any extra money they got last year into paring down their car debt. They now owe a little more than $3,500 on the $14,000 loan for their 1995 Jeep Wrangler.

"If anything goes wrong, Merry and Rafael are $1,000 away from living on the street," Martindale pointed out. Planners advise clients to pare down debt ahead of schedule only when adequate emergency savings are in place.

Still, the couple's ability to live on one salary augurs well for carrying out their long-term savings strategy, Martindale says.

Rafael believes an entry-level job could pay about $35,000 annually. So once Rafael finds permanent employment, Martindale said, it should be relatively simple for the couple to begin putting aside at least $1,000 a month.

Based on this scenario, Martindale devised a strategy for the couple to follow, one that could land them in Puerto Vallarta in less than a decade.

"Rafael speaks lovingly and longingly of Mexico. I suggest they devote all their efforts toward saving for a move to Mexico as soon as possible," the planner said, adding that it's rare that she advises anyone to pass up the benefits of a 401(k) plan like the one Merry's firm offers.

Martindale urged the couple to build up their emergency savings until they have at least $3,500--about 10% of Merry's gross annual income--before they address other financial concerns, such as paying off the loan balance on the car.

Martindale agreed with Rafael's statement that his job search has been hampered by the fact that all his professional contacts are in Mexico. She suggested that he work with someone to perfect his resume- and cover-letter writing skills, begin networking by joining professional organizations, and that he perhaps enroll in higher-level classes in his field.

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