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I get asked a lot about what type of clients I work with, and what I do to help them.  This will be the first of several case studies where I talk about a client situation and what we did together to help them live their ideal financial life.  This particular client hired me on an on-going basis.

Facts

• Single, home-owner client
• Current Financial Situation
  • Carrying a small credit card balance
  • Has Student Loans that are being repaid monthly
  • Has a modest amount in savings
  • Saving for retirement in a 401k, contributing 5% of salary

Starting the Process

• With all clients, before we can start the financial planning process, we need to discern what their financial goals are and what they want their financial situation to be after working with me
• Client’s Mutually Agreed Upon Goals
  • Get out of debt
  • Save for short-term large purchases
  • Be better prepared for retirement

Initial Observations

• Client was saving money, but in a low-interest account
• Client was paying minimum required amounts on credit cards and student loans
• Client was contributing a low percentage of salary towards 401K when taking into account overall cash flow
• Client had good saving and spending habits and was interested in budgeting their savings towards specific financial goals
• Completed a cash flow analysis so client could see what money was coming in and where that money was going

Goal #1:  Getting Out of Debt

• Credit Card Debt
  • Consolidated credit card debt onto one card, to simplify payments and reduce overall interest rate
  • Focused payments on paying off credit card debt first (higher interest rate than student loans)
  • After 12 months of focused payments towards credit card, balance was reduced to zero, larger purchases were made out of savings to keep credit balance paid off each month
• Student Loans
  • Had four open loans and was paying minimum amount on each
  • Discussed two options, focusing on higher interest loans first and paying off lowest balance loans first
    • Client was more motivated to see loans get closed out, so we chose to focus on the lower balance loans first
  • Continued paying minimum on three of the loans, but used excess cash identified during the cash flow analysis to increase payment on fourth loan; once that was paid off, rolled payments to the next lowest balance loan until all loans were paid off
  • Net result, client was able to pay off all student loans 5 ½ years ahead of schedule and save over $5,000 in interest

Goal #2:  Saving for Future Purchases

• Client had amassed some savings, and was using a low interest savings account for the money
• We looked at alternatives and decided to move the savings into an on-line, FDIC insured savings account, more than doubling the amount of interest being earned on the money
• Named the savings accounts for specific financial goals
• Contributed money direct from paycheck on an on-going basis
• Being deliberate about saving and the higher interest rate helped double the total amount saved in just two years

Goal #3:  Retirement

• Increased contribution percentage to 401K on a yearly basis, tied to pay increases from work
• In three years, doubled the amount being contributed on a monthly basis and increased retirement account value four-fold

Does any of this sound familiar?  What are you worrying about financially?  I am committed to helping you reach your financial goals.  I do this by providing you education on your options, recommendations based on my experience and expertise, and finally by helping you remain accountable to your own goals and values.  Let me start helping you, let’s have a complimentary call/visit, where we can talk about your situation and see if I am a good fit to help you reach your ideal financial life.

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