Ages: Amy 38, Jesse 41
Occupations: Technical Writer and Crossing Guard
Salary: $86,000 combined

401(k): $100,000
IRA: $50,000
Home equity: $143,000

Fixed rate home equity loan: $41,000 owed

Amy and Jesse Dickinson love their games. At their San Leandro, Calif. home, they challenge friends to Warhammer, a fantasy role-playing contest of knights and warlocks. But when it comes to financial planning, Amy doesn’t play around.

Amy, a technical writer, began investing during the dot-com bubble, putting her money in hot stocks. But she found the market too volatile, and decided to shift her savings over to mutual funds.

“I got the need to gamble out of my life early on,” said Amy, who still enjoys penny-ante poker games with Jesse and friends.

Her work provides the couple $71,000 a year, and Jesse’s part-time job as a crossing guard brings in around $15,000. The couple also gets $600 in monthly rental income from a boarder.

Amy uses auto-deductions, which do a lot of the heavy lifting in her weekly budget and savings. She puts $10,000 into her 401(k) every year, and her company puts in another $3,000. She deposits $230 a month into a bond fund that’s intended for emergencies and puts $2,150 a month into a money market fund to earn interest on the money she pays toward her mortgage.

Much of her savings are in stock funds. Amy says she prefers an aggressive investing strategy. “I know I have a good 20 or 30 years to recoup losses,” she says. The only individual stock she owns is that of her employer, Integrated Device Technology.

When the couple found their home in April 2002, she sold some mutual funds in order to put a $54,000 down payment on the $360,000 home. They now make payments of $2,150 per month toward their mortgage and home equity loan and expect to pay off the home in 13 years. The house was recently appraised at $490,000.

“I feel very, very fortunate,” said Amy. “Any stock can crash, any market can have a problem - but you can always live in the house.”

The couple keeps their budget balanced with real dedication to thriftiness – Amy has declared Jesse “a professional scrounger.” He’s learned to make his own shirts after buying the fabric, and she says the couple tries to prolong the life of all their belongings.

Amy budgets $400 a month for food and saves money by shopping at Costco and taking advantage of sales at grocery stores. The couple’s gaming hobby is a moderate expense. The miniature battles that incorporate tiny painted figurines are games of “fantasy as opposed to recreation.” House payments aside, their expenses total roughly $1600 a month.

As far as insurance goes, Amy has taken out a $300,000 life insurance policy in addition to the $120,000 policy she has through work. Jesse also has a small life insurance policy.

Looking ahead, Amy says she’d like to retire a little later than most people and be sure to have the house completely paid off.

Down the line when they’re close to paying off their mortgage, the Dickinsons would like to add solar panels and an additional room for gaming to their home.

They’re considering adopting a child in the future, but aren’t making the decision just yet.

“I don’t consider my budget strict, but others would,” she said. “I think of money as a tool to help you get everything else you need.”

Our Expert’s Take: The Dickinsons have gotten a good start on retirement savings but need to take further steps to protect themselves against possible outcomes, said Lee Pence, a Certified Financial Planner at Pence Financial Advisors.

“Protect yourself first, and then invest in further opportunities,” he said. “I’m concerned that because so much of their wealth is in their home, they’re underdiversified. All it would take is for the real estate market to go south, and they’d be in a difficult situation.”

Also, based on their monthly expenditures, said Pence, they’re spending over 50 percent of their monthly income on their daily expenses, mortgage and home equity loan combined – above the recommended level.

“Banks recommend that you spend less than 36 percent of your monthly income on expenses,” he said. If they need to take out a bank loan, they’re going to face higher rates because of that. They should work to either increase income or cut down further on expenses, he said.

They need to come up with a specific estimate of what they’ll need each year when they retire, he said. He projected that, with an average 8 percent growth in the stock market, the Dickinsons’ savings will reach $4.2 million in 26 years, when they are at retirement age.

He emphasized that they need to consider the potential costs of long-term care, which average over $75,000 a year.

“People are retiring earlier and living longer. What happens if they live to be 100? The house will be paid off, but you can’t eat a house,” he said.

He also said they should have an umbrella insurance policy of at least $2 million in order to supplement their other policies.

He said they need to keep their emergency money in a bank, not a bond fund.

“Bond funds can kill you if interest rates rise,” he wrote in an email. “The cash emergency fund is critical. I have seen people lose their homes because of unforeseen medical expenses.”

They need a minimum of six months’ worth of income in a secure cash account, he said.

–By Rob Kelley, CNNMoney.com staff writer

Are you a millionaire in the making? Tell us why at millionaire@cnnmoney.com

Note:

A number of changes needed to be made to this story:

Amy Dickinson does have a life insurance policy outside of work. It’s for $300,000.

The Dickinsons have a fixed rate home equity loan, not a home equity line of credit as previously stated.

The couple makes a total of $2,150 in mortgage and fixed rate home equity loan payments, not mortgage payments of $2,100 per month and home equity line of credit payments of $400 per month as previously stated.

The Dickinsons do not have a cash emergency fund of $7,000. They do have $7,000 in a bond fund.

The couple plans to hold off on installing solar panels or adding a gaming room until after they pay their mortgage.

The Dickinsons’ monthly expenses total $1,600, not $1,200 as previously stated.