My Second Visit With My Financial Planner

Today is Sunday, February 25, 2018, and I just finished participating in a high energy 45 minute Zumba class! I’m preparing to make a guest appearance at my part-time job. I don’t particularly like to work part-time, especially on a Sunday, but I, like everyone else am all about the money.

Previously, I shared with you that I hired a financial planner to help me organize my finances. On the first visit, I had to provide her with information such as my retirement account statements, savings and checking account balances, balances for my liabilities, tax information, pay stubs, and a list of monthly bills. I wanted to know if I was going in the right direction with my financial life. Although the banks are not tired of me, as Cardi B mentioned in her hit single, Bodak Yellow, I was pleasantly surprised by the analysis. She changed my trajectory and gave me some different strategies for handling monthly expenses and paying off debt. In this post, we will get down to the nitty-gritty of the master plan.

Student Loans

My student loans are egregious, however, she suggested that I change my mindset about this particular payment. My initial plan was to pay off my car as quickly as humanly possible, then apply that payment to the student loan. The financial planner said not so fast! I’m in the loan forgiveness program, for now, thanks to being a public safety employee. Who knows what the president is going to do with the program. She told me to continue making the required payments while making additional car payments. Once the car is paid off, start putting that payment into your emergency fund, which she recommends 6 to 9 months’ worth of living expenses. This would be about $25,000 for me, I got a ways to go. She wanted to know what was the purpose of being in the loan forgiveness program if you are going to pay them off early?

Deferred Compensation (457B)

As I mentioned in a previous post, I am entitled to a pension after I retire. The deferred compensation plan is a separate account that I started contributing to when I started my career. Unfortunately, due to an unforeseen circumstance, I withdrew money from that account a little while back.  Since then, I doubled my contribution. However, she suggested that I lower my contribution and apply even more money to the car payment, in an effort to boost my emergency fund.  I will never overpay for a car again! It is such a thorn in my side. Lesson learned, save up and buy it in cash. Forget that car payment nonsense! UGGGGGH! If I had followed this advice, I  could have been contributing more to the deferred compensation plan. Let’s hear it for financial faux pas!

Credit Cards

She told me to continue paying my entire statement balances off each month to avoid accruing interest. I have two cards and they have really boosted my credit score. I will not be getting any more cards, this is all I can handle responsibly. Don’t forget, the key is to use no more than 30% of your card each month. I’ve been getting card offers left and right and I shred them all because I know myself. Please know thyself before partaking in excessive credit card usage. Been there, done that and will I NEVER do that again. It’s a tool, not a method of survival.

Monthly Bills

I wanted to know if I’m paying too much for housing based on my income. She said, absolutely not. You can afford it and you can also afford to continue to save $400.00 a month in your emergency fund account after you’ve paid your bills and bought groceries.  I treat my savings account contributions like a bill by automating.  One account, in particular, is for discretionary spending. She approved keeping separate accounts for different reasons. Score! She also said that I really don’t need to work part-time to accomplish this, unless I want to. Working part-time will help to get rid of that car payment fast.  Its not even a luxury car. SMH. I should have financed a Tesla.

Income Taxes

In order to evaluate my income taxes, she needs to compare my 2016 tax returns to my 2017 tax returns. I’m in the process of having those completed. What I do know is that I would like to break even. I don’t necessarily care about a refund. A refund is basically an interest-free loan that you have given to the IRS. If you don’t believe me, do some research.  If I happen to get a small refund, it will go into a savings account. A CPA who is a tax strategist can probably assist you with this by advising you on how many exemptions you need to take out during the year. One positive aspect of refunds is that it’s essentially a savings account, for those of you who haven’t saved much during the year. Again, personal preference, no judgment here.

 Estate Planning

I asked for assistance with estate planning and organization for myself and my parents. She advised me to collect documents such as deeds to the home, car titles, insurance policies and wills. I have contacted an attorney for further assistance. I’ll let you know how that goes but I’d like to have it taken care of by the end of March. She also suggested that I list a POD (Payable by death) on my bank accounts to make it easier for the person who will be handling my affairs once I am a dead.  “Every body dies but not every body lives,” said Drake. If you want to hear more information about estate planning, check out episode #33 of the Journey to Launch podcast with host Jamila Souffrant. She interviews Art Steele, estate planner, about why it’s so important to pass down a legacy and how the African American community is still so far behind in closing the gap regarding generational wealth.

MoeTips

As Patrice Washington, author of Real Money Answers for Every Women would say, “information without application is useless.” Readers, I try to be as transparent as I can when it comes to food and finances because I’ve been through some $h*t, for real. I’m sharing what I’ve learned along the way, and I still have a lot to learn. Teach your children early how to avoid the pitfalls of life.  You do not have to hire a financial planner. Self-education works too. This was a personal choice for me. Do what works for you boo! Every mistake should be a teachable moment. Happy Sunday!

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