Thriftiness in the Minors Sets Up Couple for Major League: A Family

Andy Owen was full of anticipation when he was drafted by the Los Angeles Dodgers in 1995, dreaming of one day playing in Dodger Stadium and signing a multimillion-dollar contract.

But Owen was also practical. Picked in the 32nd round, the outfielder knew he faced long odds of ever reaching the major leagues. Even players taken in the early rounds of the draft probably will spend years in the minor leagues, and the vast majority of those drafted every year never hit the big time.

In the meantime, Owen was going to make peanuts--about $1,700 a month. So, instead of squandering his $2,500 signing bonus, the former UC Riverside player deposited the money in a savings account.

“I didn’t have any grand illusion that it was my destiny to make it,” he said. “My dad always said, ‘It’s great you got drafted, but what’s your backup plan?’ ”

Five years later, Owen is about to embark on Plan B. This fall, he’ll return to school in pursuit of a teaching credential. He also hopes to line up a job as a teacher and high school baseball coach.

Although playing ball for a living has always been Owen’s dream, at 26 he’s getting too old for teams to seriously consider him. Meanwhile, he and his wife, Jenny, also 26, have some other personal goals to attend to. They want to buy a house and start a family in the next few years. Andy Owen knows that he needs a real job if he wants to make his financial goals reality.

Andy and Jenny Owen are living in a $940-a-month apartment in Pasadena and saving every penny possible. That will make it far easier for them to attain their financial goals, said Gary Benson, a fee-based financial planner in Encino who reviewed the Owens’ finances for The Times.

Still, Owen is giving baseball one last shot this summer.

Though he has never made it out of the low minors--players generally compete at the rookie, Class-A, double-A and triple-A levels before reaching the majors--and has been released by both the Dodgers and Angels, Owen has returned to upstate New York this summer to play for the Elmira Pioneers, who compete in an independent league not affiliated with any major league organizations.

Elmira, 50 miles west of Binghamton, near the Pennsylvania border, is a sleepy town of about 38,000 best known as Mark Twain’s final resting place. Its other main claim to fame is its minor league team, whose players fill the city’s guest rooms and draw fans to fill the stadium seats each spring and summer.

Last month, Owen left his wife at home--they have lived apart every summer since they started dating in college--and moved in with Pauline Nybeck, a 59-year-old retired grandmother whose family has hosted minor league players in their Elmira home for years.

Owen will earn $1,300 a month. It is his third summer playing for the Pioneers and living with the Nybecks.

“I wanted to play one last summer,” he said before leaving home. “I love playing, and I know I can play. But I know the odds of getting picked up [by a major league organization] are astronomical.”

Meanwhile, his wife will be teaching summer school. She is an outreach consultant at a middle school in Duarte, working with children who have behavioral or academic problems.

Together, they will earn about $65,000 this year. Luckily, neither Owen is extravagant.

“Our parents have stressed saving and investing in order to build a foundation,” Andy said. The point was drilled home when Andy’s father, a clinical psychologist, told him about the sizable fortune he had accumulated.

“He really opened my eyes when he told me how much money he’s going to have when he retires,” Andy said. “I never had any idea. He led such a modest life. But meanwhile he was investing all his money in the stock market.”

Jenny’s father, an investment banker, taught her the benefits of investing when she inherited $20,000 after the death of a grandmother. Her father invested it for her in stocks, and she has seen it grow in value to about $35,000.

Married less than a year, Andy and Jenny have virtually no debt other than a car loan. Thanks in large part to Jenny’s holdings in individual stocks, they have built a nest egg worth about $82,500.

Already they have about $21,500 in tax-deferred retirement accounts, including $6,200 in a Roth IRA; about $5,400 in individual stocks; and about $20,000 in a money market fund.

“We’ve been fortunate enough to avoid any major pitfalls,” Andy said, “but we feel like we have our money spread all over the place, and we’d like to know how to consolidate it.”

Benson said the Owens’ finances are in good shape. They only need to tinker slightly with the structure of their investments to attain their goals.

“They’re pretty disciplined, and they’ve made some good choices,” he said. “It’s just a matter of modifying what they’ve done to help them out with taxes and restructuring their portfolio a little bit.”

Their first priority, he said, should be to maximize Jenny’s contributions to her 403(b) retirement plan at work. She had stopped contributing to the plan for a short time after mistakenly believing she was no longer eligible after adding her husband to her medical plan.

Her 403(b) money is held in a variable annuity and invested equally in two stock mutual funds, Mainstay V.P. Growth Equity and Janus Worldwide.

Jenny is paying unnecessarily high management fees by having the money held in a variable annuity, but Benson advised keeping it there for now because the couple could borrow against it without penalty to help them make a down payment on a house. If it were invested directly in mutual funds through the plan, they couldn’t borrow against it, he said.

Once the couple has made a home purchase, they should see about getting the money out of the variable annuity, which charges higher annual operating expenses than a mutual fund.

Benson said that Andy should continue to fund his Roth IRA and that Jenny should open one.

“That would give them tax-deferred growth with the ability to pull out the amount they contributed, tax-free, for a down payment,” the planner said.

As for the couple’s choice of investments, Benson doesn’t see much reason to change, though he said they might want to reduce their risk by getting out of individual stocks in favor of mutual funds.

They should be sure to keep the $20,000 they have in money market funds to use as an emergency fund, he added. They’ll need three to six months of living expenses to provide some cushion to handle unexpected costs when they have children.

Overall, though, the planner was impressed by the Owens.

“They’re off to a great start,” he said. “Houses and children are expensive. But they have great habits. Better than most at their age.”

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To be considered for a published Money Make-Over, send your name, age, phone number, income, assets and financial goals to Money Make-Over, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053, or to money@latimes.com.

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This Week’s Make-Over

Investors: Andy and Jenny Owen, both 26

Gross annual income: $65,000

Goals: Buy a house, start a family, save for retirement

Current portfolio

Cash: $20,000 in money market accounts

Jenny’s 403(b): $15,300 variable annuity, invested in Mainstay V.P. Growth Equity and Janus Worldwide

Andy’s Roth IRA: $6,200 invested in Fidelity Growth

Other: About $41,000 in individual stocks, including Nokia, Cisco Systems Inc., Concurrent Computer Corp., City National Corp., Compaq Computer Corp., Intel Corp. and Starbucks Corp.

Recommendations

* Contribute maximum to 403(b) account.

* Open Roth IRA for Jenny.

* Diversify investments and reduce risk by selling some individual stocks and investing in stock mutual funds.

* Maintain emergency fund of three to six months’ expenses.

Meet the planner

Gary G. Benson is a certified financial planner who charges through a combination of fees and commissions. He and partner Mark Pash operate Pash & Benson International, a financial planning firm in Encino.