Berkeley, CA – East Bay Financial Planning Services for Managing College Debt

Tackling Student Debt and Other Financial Goals While Growing a Family

We recently had a younger couple under the age of 40 approach us to help them with their financial future and develop a plan that prioritizes what is most important to them.  They have a young child and have recently moved into a more spacious rental property to accommodate their growing family.  Both parents are high-income earners with master’s degrees, but both parents are saddled with large amounts of student debt; more than $300k between them.  They have recently consolidated and refinanced their student debt, but currently are not eligible, due to high debt balances, for the better, lower-rate, refinancing programs offered through private banks.

After meeting with them to review their overall situation, we learned about their financial goals and priorities.  We discussed their thoughts on additional children, retirement, housing preferences and goals for education.  The challenges they face with funding multiple goals became apparent right away.  It was critical to gain a full understanding of their current and future expense structure and also their family’s priorities. We engaged in a data gathering exercise to assess their overall financial situation.  As information was gathered, it was entered into our financial planning software, eMoney.  Leveraging eMoney for its annual cash flow projections and the ability to model ‘what-if’ scenarios were critical to making sure the financial plan being recommended would work throughout their lifetime.  An important component of their plan is to systematically reduce their student debt over time and simultaneously stick to a disciplined savings strategy that will allow them to make progress on all their goals at the same time.   In addition to paying off their student debt, they also want to save for retirement and education, as well as put money away for a down payment on a future home.  They are also looking forward to having at least one or possibly two more children, so their plan also incorporates ‘what-if’ scenarios with additional children to assess the impact that this would have on the overall financial plan.

During the analysis phase we went through many iterations of different savings options and eventually settled on recommended annual contribution amounts for retirement, education and a future down payment, while simultaneously paying down their student debt with a periodic payment plan.  We projected what each amount would turn into when they expected to need to use the money, whether it was time to buy a house (projected in 6 years), time to pay for college and of course a tax-efficient retirement withdrawal strategy for when they were expecting to retire.  We also outlined when their student loans would be paid off and recommended that they refinance their debt as soon as they become eligible for some of the better private refinancing programs.  Although their student debt will take time to pay off, having a set plan in place with milestones and a projected amount of wealth at end-of-life will help to keep them on track and not lose sight of their goals.

In addition, we walked them through recommended amounts of life and disability insurance and referred them to trusted agents in the Bay Area to help them with determining the right amounts of coverage for their specific situation.

After our presentation, we also assisted with rolling over a couple of older 401k plans from previous employers, so now they both have a single IRA with First and Main Financial in addition to their employer retirement plans.

Within the first year with us, we have already re-visited their financial plan due to a recent job change which resulted in higher annual income and bonus amounts.  A financial plan is a living document, so we periodically make updates as needed over time to keep the plan on track.  All of our clients have ongoing access to an eMoney client portal where they can monitor their net worth, account balances, investment values and allocations, as well as spending/expense details, if this functionality is utilized.  It also offers a secure vault where important documents can be stored safely.

If you are looking for financial guidance, whether it be for a one-time financial plan or continuing advice on your investments, we invite you meet with the First and Main Financial advisors for a free consultation.  We would be more than happy to sit down with you, assess your current financial situation and review with you our services to help you navigate your own financial future.