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Money Makeovers

The Quigleys

Couple:Ryan (28) & Kara (28) Quigley

Kids: daughter Mackenzie (2) and son Owen (8 months)

Hometown: Attleboro, MA

Incomes: He earns $55,000; she's a homemaker

Ryan Quigley knows a thing or two about goals. A minor-league hockey player in his early 20s, Ryan now works as a transportation director at a private school -- where he oversees bus routes and keeps tabs on the after-school routines of 700 students -- to keep his recently expanded family afloat. His wife Kara was in the military until she was injured in an accident on duty; she is now a disabled veteran, receiving $200 a month in disability payments. Kara is a stay-at-home mom, but still needs childcare three days a week while she goes to physical therapy.

Their goals: Since saving for college is not as much of a worry (as a disabled veteran, Kara's children qualify for generous assistance with education expenses), the Quigleys have focused their savings on retirement, salting away $450 a month in a plan sponsored by Ryan's employer, which offers a $150 monthly match. They also scour the real-estate ads regularly, looking for a modest three-bedroom Cape Cod home they could buy on a quarter acre of land.

Their roadblocks: The Quigleys pay $1,300 a month in rent on their two-bedroom apartment, which leaves them living paycheck to paycheck and wondering how they will ever accumulate a down payment for their $225,000 dream house. A big portion of their budget  -- nearly $900 a month  -- goes to payments on a recent-model sedan and minivan.

The expert's advice:

• Begin accumulating six months of living expenses in a liquid money market or checking account in case Ryan loses his job or is unable to work  -- especially important since he is the sole breadwinner.

• Cut back on retirement funding somewhat in order to save for a down payment. The Quigleys should contribute just enough to get the employer match from Ryan's job.

• Reduce the car payments. "They are forking over nearly 20 percent of their gross earnings for car payments, and that doesn't include the cost of insurance," says McKinley. "That's too much money to be spending on a rapidly depreciating asset." Instead, the Quigleys should consider selling the cars and buying older, cheaper models, or keeping one nice car for long trips and getting a "beater" car to use for daily commuting and short jaunts. Another option: Sell the cars, and lease instead. Leasing ties up less money and makes decent, reliable vehicles (with little chance of high repair costs) more financially available.

• Consider buying a duplex. If the Quigleys rented out the other half, they could begin building home equity faster than if they wait until they have enough money to purchase a single-family home, and they'd still have more room than their current two-bedroom affords. • Save on childcare by using a dependent care account (DCA). If Ryan's employer offers this benefit, the Quigleys should take advantage of it. DCAs allow employees to make pre-tax deposits to an account out of which the caregiver is paid. Kara could also offer to provide free childcare for a friend or relative on the days she's not at therapy in exchange for the same benefit.