Planning
A few weeks ago, Sweets and I had our first meeting with a financial planner. We were anxious and unsure of what to expect. After lots of questions. And a long conversation. We completed that meeting. No cuts, scrapes, bruises or broken bones. Though we were a bit surprised by how much money we had in some cases and our lack of it in others, the meeting wasn’t as bad as we expected.
We spent some time that next weekend filling out a budget. Breaking out our expenses line by line. Things like housing. Utilities. Transportation. Groceries. School debt. Insurance. Credit card payments. Gym memberships. Dining out. And so on. By the end of that exercise, we realized we weren’t in as bad of a position as I had originally thought (yes, I always expect the worst and am surprised at the best).
Earlier this week, we had a follow-up conversation with our financial planner, who had reviewed our goals, our financial situation and our monthly expenses. I was ready for the bad news. I was ready for him to tell us we can no longer buy clothes. That we have to get rid of our data plans on our phones. That we have to choose HBO or Showtime, but cannot have both. That we have to cut down our grocery shopping costs, even though we’ve already slashed them recently. Essentially, I was expecting our lives to dramatically change.
The reality is, it’s not that bad. If we want to continue living the same quality of life when we retire as we have today and we were to continue saving the way we currently save, we’d have two-thirds the amount we need to retire when we’re ready to start pulling that money out. The bad news is we need to start saving more; the good news is it’s totally doable. Well within our capabilities and means.
How do we do it? Well, we need to make some changes. But, the changes aren’t as dramatic as I expected. I need more life insurance, which at our age still doesn’t cost all that much. Sweets needs to re-balance his investment plan at work. We need to change our tax deductions from our paychecks. We need to look into refinancing our mortgage. We need to pay down some debt. And we need to take some of that freed-up cash to start putting more dollars away each year.
The important thing is it feels manageable. Our financial planner thinks we’re in a pretty good place and don’t need to make a dramatic overhaul of our lives. The key for us, right now, is shifting things around so we can access more of our money. Which means, the ball is in our court. Yes, our financial planner has plenty of great advice for us, but only we can refinance our house, change paperwork with our employers, fill out and sign paperwork so we can consolidate some accounts and so on.
It’s a big fat pain in the butt to have all this extracurricular homework hanging over our heads. But, we see the light at the end of the tunnel. And it looks bright.
What about you? Maybe you’ve been meaning to call that mortgage broker to start talking in detail about a loan for a new home. Maybe you’ve got a bunch of different, small investment accounts that you’ve been meaning to consolidate. Maybe you’ve been meaning to look into life insurance. Maybe you need to consolidate debt and haven’t yet started investigating your options. Or maybe you’ve been meaning to find a financial planner and have been too skittish to take that next step.
Whatever your needs and goals, from the comments in my last post on the subject, it sounds like we all want to do something next. Does anyone want to join us in taking a step (or many) towards that next financial goal? How many of you think you can take that next step before the end of the month?
March 10th, 2010 at 8:44 am
I know that I need to realign my investments in my 401k… which I can probably do by the end of this month after I find the papers hidden somewhere in my filofax =) I also need to investigate the idea of opening a money market account which I suppose I could do this month.
I’m glad things are better than you expected; that always makes these things easier to take!
March 10th, 2010 at 9:31 am
The Hubs and I had that conversation this weekend too.
We are looking to modify our home loan and just have to pull the trigger. We will be using part our tax refund to pay off the rest of our wedding debt. This will free up extra money to pay down some more debt by the end of the year.
We have been watching every penny. We go shopping with a list and only buy what we will use. We are looking at ways to sell and donate some things we do not use or need. We are not going out to eat much anymore, just for special occasions and we always look for online sales and cupons before any purchases.
It helps, we know that we have to be tight for the next few years but, we are still standing.
We will be meeting with a financial planner in the summer.
March 10th, 2010 at 9:54 am
I’ve always wondered about meeting with a financial planner. Due to the massive amounts of changes in my life currently I think I might take that step a bit sooner now. Especially after hearing how much it can help :)
March 10th, 2010 at 9:55 am
i just read this and get anxious thinking about how i don’t do any of it.
shit, i think a hive just popped up on my arm.
March 10th, 2010 at 9:55 am
I have to save more. That is for sure. To a certain extent I am counting on inheritance to put me in a good position for my retirement. That is horrible to say, but I know what my sister and I can expect when my grandma passes. And I plan to invest that for my future. Because I have no kids and no plans for kids, my savings plans are much different than other people’s plans.
March 10th, 2010 at 10:25 am
I need to pay down some credit card debt. I’ve been doing that and I really need to up my savings account as well. While I dont have a formal budget, I’ve been doing really well these past few months.
I’m glad that your meeting wasn’t as bad as you expected and that everything you did discussed is doable.
March 10th, 2010 at 10:32 am
This actually all sounds great to me. You guys have an actionable plan and a realistic retirement goal. Go you!
March 10th, 2010 at 10:46 am
You know I don’t want to live in Tiny Apartment forever, and my goal is to spend the summer in my beautiful garden and then get the heck out of there before next winter and I was looking at these beautiful apartments, wondering how to come up with the extra (about) $200 a month to have a light, airy, two bedroom apartment all to myself and then as I was walking to work this morning – the CUTEST LITTLE HOUSE is for sale on the corner and it’s got a yard and trees and a porch and well – I had given up on owning a home. But if I’m going to put an extra $200 into living somewhere, shouldn’t I OWN IT? Sigh.
March 10th, 2010 at 10:46 am
I still have no plan besides stop buying stuff you don’t need on ebay. Ebay is a money-suck for me. Even though, I am an Ebay all star. I did run. And I am proud of that. :)
March 10th, 2010 at 12:39 pm
I’ve made a promise to myself that as soon as I get down to a healthy weight and/or stop smoking, I will get life insurance. Because I’m only 23, it’ll be super duper cheap.
And I have to start looking into a TFSA, right now my yearly limit is 10,000$ (it’s capped at 5,000 a year and any unused limit carries over to future years). So as soon as I get off a student lifestyle/budget its gonna be done. I can’t wait to make more money and get the ball rolling on all this adult stuff. HA!
March 10th, 2010 at 12:48 pm
I think I’ve mentioned before that we got a year with a financial planner as a wedding gift from said planner. It was a huge help as we were getting started as “us,” since we both had our own established patterns of money use before we got married. I loved our planners approach. She explained what made the most financial sense, but also told us that sometimes emotions need to win out. An example: we should have saved 20% down for a house. Instead we found a house that was a KILLER deal (bank owned), exactly what we wanted, and mortgage rates were really low. She supported us buying with only 5% down because it was such a great deal.
March 10th, 2010 at 1:23 pm
ooh… i do feel a bit skittery about this stuff. but i know that i just need to make the first step. manfriend and i, i think will look into taking the jump this summer sometime. currently we’re in total saving mode, so i think it would just a bit too much extra stress for us right now to meet with a financial planner. we’re cutting basically everywhere we can right now. definitely in the next couple months though, so we can plan going forward. it will be nice to get some feedback about how we can live comfortably and still save, still pay off debt, still have fun!
March 10th, 2010 at 1:34 pm
We’re thinking of meeting with a financial planner in the fall. Our investments are kind of all over the place right now and we need to focus them on our next goal. Of course to do that we need to figure out what our next goal is :) This grown up stuff is so much work.
March 10th, 2010 at 1:38 pm
So, I lived for a long time in fear of dealing with finances. Only in the past year have I gotten on a budget, put money aside, etc. Next will be consolidating/handling my debt, a very scary thing for me. I wish I wasn’t so afraid to deal with money!
March 10th, 2010 at 2:05 pm
I will let you know…. ;)
March 10th, 2010 at 2:08 pm
The hubs and I switched to a cash-only lifestyle in ‘06. By end of next year we will be COMPLETELY debt-free (hear the angels singing in the background?). Last week we experimented with using the “envelope” system for our daily expenses. It worked out well, though it was hard as hell. So, that is our new financial commitment.
March 10th, 2010 at 2:45 pm
I definitely plan on opening an RRSP sometime this year and through that I will start saving for my first house and retirement. I’m in a really good spot financially right now but I’ve been semi-supported by my parents for the last four years. In a few months, I’m on my own. Guess we’ll see how that goes… :)
March 10th, 2010 at 6:30 pm
oy! i know i should be thinking about $ for the future, but honestly i’m not going to right now! i’m sure that decision will bite me in the ass soon, but i’ll continue to live as an ignorant 21 year old for the time being
March 10th, 2010 at 8:34 pm
That’s great news! I want to see someone once we move to Denver so we cxn figure out our financial situation, hopefully buy a house, think about kids, etc
March 10th, 2010 at 9:47 pm
According to my step-dad, the well-seasoned businessman, the financial world is still very unstable. So right now I’m saving, but I’m not investing it anywhere. In 2 or 3 years I’ll re-visit my finances and see what I can do with my savings. I guess effectively my step-dad is my financial planner. He learned everything the hard way and now he’s very successful, so there’s no one I trust more than him.
March 10th, 2010 at 9:50 pm
I would benefit from talking to a financial planner. In general, my finances are in good shape but I need to come up with a better plan to pay down my student loan payments. The payments are steep and while there is a tax benefit, that is limited so I could certainly benefit from paying them off more quickly.
It’s good to be reminded/inspired to get our finances in order. It’s really easy to push it off & say I’ll do it next month!
March 11th, 2010 at 12:19 am
We met with our financial planner today. We’ve been working with one for a few years now but things had been progressing pretty slowly. (Our fault, not theirs.) But having a baby sure kicked our butts into gear! Suddenly we’re thinking college and making sure there is money if (God forbid) something happens to us, etc.
This adult stuff is HARD! :)
March 12th, 2010 at 1:38 pm
I think I’m going to start tracking my expenses in categories and cutting myself off when I get too close to a self-imposed limit in that category. I haven’t purchased a clothing item since early January and have tried to curb the eating out, but I still feel like I’m barely making ends meet.
March 14th, 2010 at 4:54 pm
Last year, my wife and I took out a home improvement loan, using the house (which is in her name, not mine) as collateral. The interest rate was pretty low and it allowed us to restructure some debt, a good amount of it related to improvements we made to the house in late 2008 and early 2009. The only thing we can’t use the money for is to purchase a car.
Speaking of which, my wife tried to get out of her truck lease – $438 a month for 6 years (she’s into it almost 3 years now), but the numbers didn’t work. It was only going to save her $15 a month. While that would add up over time, we took into consideration the value of her truck (a 2007 Nissan Frontier 4-door) and it still was not worth the headache and up front money we had to provide.