What We Do – The 360 Degree Financial Plan
Here are the modules that are part of our comprehensive 360 degree financial planning process. Each module below may be experienced as a single service but generally are all included (as each is relevant) in our clients’ individual coaching plan as part of the Financial Health Clinic.
Since your income stream is your most important asset, establishing the right ongoing system and discipline for managing that inflow is paramount to the success of your long term financial plan. Every dollar of that income stream should have a designated purpose and projected timeline for its use. The key to properly mastering this cash flow, is having a system that provides clear visibility to three strategic time horizons.
First you must master the nearest term inflow of cash—the next 30 days (or 4 to 5 weeks if paid on a weekly or bi-weekly orientation). Every dollar in the next 30 days should have a fresh unique assignment for that period. Assuming it’s “about the same every month” will erode your financial discipline and visibility. It starts with structuring a budget that strikes a balance between simplistic and sophistication. The budget framework should provide macro-categories– for consumption (recurring bills, debt service, discretionary spending, and non-recurring annual expenses) and traction (savings, investments, debt payoff)–and sufficient detail to customize the framework subcategories for your individual needs. In addition, there should be a built-in flexibility and a clear integration point with your real-time bank balance to insure that adjustments with in the period can be made as necessary.
After mastering your recurring 30 day milestone, you then stretch your view to the next rolling 12 months and capture/quantify the expenses that you can see coming in that timeframe that do not recur on a monthly basis—such as known auto and home repairs and maintenance, household overhead, taxes, insurance, annual fees, travel expenses, vacations, gifts, tuition, pet expenses, etc. The system should help you efficiently manage the anticipated expenses by setting up proper reserves and transfers between accounts without having to juggle large amounts of cash or raiding your other liquid reserves for emergencies or retirement. The annual budget totals by category should be refreshed continuously every 30 days since the succeeding 12 months may require refinement and recalculation as life changes pertaining to these annual categories may also change.
The next level of cash flow management is absolutely essential for avoiding future debt. After all consumer debt is initially retired and the cash safety net is completed, a well-defined capital expenditure budget should be set in motion to fund the assets that need to be acquired or replaced within the next rolling five years (e.g., cars, home improvements, depreciable big-ticket purchases). Not only is this smart for avoiding financial regression, but setting up a self-funded line of credit for these purchases will insure your retirement or other long-term plan objectives won’t be disrupted or placed on hold. Like the annual expense categories, this budget is also ongoing, recurring and refreshed regularly to maintain the integrity of the long term plan.
As financial coaches we have witnessed the best (and the worst) practices for managing finances and cash flow. From thousands of clients, we’ve gleaned many insights and tips from the superior performers of personal finance and are eager to programmatically introduce and install the same practices for our clients. These are well-founded practices that are proven to work in most any client situation we encounter. Likewise, it’s equally important that poor practices that undermine performance are identified and discouraged. We won’t– and don’t–coddle bad behaviors that are detrimental to your success.
- Cash / Asset / Financial Records Organization
- Redesign of Financial System / Process
- Relating and Communication with Money
How well you function in a system is directly correlated to well you can navigate and maneuver within it. Having an optimum number of bank accounts, an internal cash management system and a means to efficiently access critical information is central to our coaching process. We can assist with setting up and designing a functional system of organization so you can retain only what you need and have confidence you can access it when needed.
Everyone has a financial system/process. Your process should always serve to support and empower your plan. However, sometimes the process itself is broken, dysfunctional or is a hindrance to your financial health and plan. We review the process “as is”, identify the strengths, weaknesses and inefficiencies– then streamline and/or redesign the process to what it “should be” to operate efficiently and smoothly integrate with your longer term financial plan.
Through these best practices, we have identified the “Top 10” Financial Roles and Disciplines for every household. The critical questions for couples are—which of the 10 are currently in place, at what time frequency are the disciplines being done and is the right person doing them? We carefully examine each spouse’s own strengths and weaknesses related to these roles/disciplines and make recommendations on which spouse should take the lead or responsibility for that respective role to balance out the process so that each spouse participates in the process, gains proper visibility to the overall financial function, and becomes responsible and accountable to the other. This minimizes friction and ambiguity with financial roles. Moreover, this exercise fosters open, productive financial communication and tends to remove frustration that commonly accompanies “role collision” or “role overlap”.
Having a third party review your discretionary spending is usually very eye-opening for both quantifying and qualifying the proper boundaries for future discretionary spending. Your coach doesn’t control or mandate your spending habits but will review these on a regular basis and hold you accountable to the financial plan and the boundaries to which you committed.
Having a hindsight analysis of where you adhered to plan or had departures from plan is helpful for refining the ongoing plan and planning discipline. However, critical to your future success is how you perceive or view the plan relative your past behavior. Does the past behavior drive the plan or by contrast does your plan drive the current and future behavior? Which will it be? One is healthy, the other is not.
Financial coaching will pay for itself multiple times over. One of most evident ways this manifests is in the review of your household costs. Since we have had the perspective of reviewing the bills and expenses of thousands of households, we retain a knowledge base of where our clients can find recurring cost savings and discounts. More often than not, our initial planning fees are more than paid for by this one review alone.
Our internally developed proprietary system provides a statistical analysis on our client’s financial health and dashboard to help measure and track our client’s progress on their journey toward financial independence. For more information, see Financial Health Index®
When you file your income taxes every year, you want to avoid both a tax deficiency or a tax refund. Neither outcome is good planning. Proper tax planning through a twice a year W-4 analysis will typically keep you tax efficient and better positioned for financial traction. Also, through a review of recently filed tax returns, we often find missed deductions and/or credits that can produce additional tax savings and/or refunds. We also help you plan for tax consequences related to your short and long term plan—such as capital gains/losses, when to contribute to tax advantaged retirement plans, HSAs, ESAs or other deductible issues.
We help you identify and quantify areas of financial exposure or risks that may be transferred or mitigated through insurance, liquidity or other strategies.
Insurance is a key component in every financial plan to insulate you from unforeseen financial risks. Since we do not sell insurance, our objective evaluation is to make sure you have the proper kind of insurance and proper coverage amounts for your situation, at the least overall cost. We review the following insurance coverages– Health, life, disability, accident, long term care, medicare supplement, homeowner’s, automobile, liability, flood, windstorm, etc.–and provide unbiased recommendations for each.
Typically, retirement isn’t an age, rather it’s a number (an accumulated nest egg of investments from which passive income/cash is generated and distributed to the retiree over time). Also the definition for what “retirement” looks like will be different for all clients. For some, retirement means never having to work again. For others, it could be mean generating supplemental income while you continue to work and/or for when your earning capacity has diminished. We listen to your individual objectives and your personalized definition of retirement, then calculate your “number” based on the amount of your investible retirement assets you currently have, the plausible length of years in retirement and your retirement income based on the level of consumption (lifestyle) you select. Then from that analysis, we define the corresponding incremental saving rate from current income, assumed rates of return, and timeline required to attain your goal.
We neither sell investments nor earn commissions nor will we replace your need for a competent asset manager. However, we provide an independent review of your current assets to highlight the performance and the notable strengths and weaknesses of the overall portfolio. If needed, we will make recommendations for adjustments if we notice any imbalances or unhealthy concentrations in the various asset classes or industry sectors represented within your portfolio or retirement account (401k, 403b, IRAs). We also provide training to those who prefer to be self-directed in their investment selections and asset allocations.
If you have consumer debt, delinquent debt, or are considering bankruptcy, you need a well-defined strategy to eliminate the debt. Most of the time, paying off debt from a combination of current income, reduced expenses or liquidation of assets will be the right approach. Sometimes, a debt acceleration/catch-up plan is in order. Other times, debt settlement is the preferred solution. Very rarely, bankruptcy will be the right answer. If fact, 99% of our clients who were being sued by a creditor or considering bankruptcy discovered that bankruptcy was unnecessary and the least desirable approach. Regardless of what debt situation you’re in, we are prepared to help you form a strategy, navigate these situations and make a wise course to once and for all permanently eliminate debt.
The debt snowball is a powerful method to harness your income into a debt-killing machine! We’re passionate about our clients setting goals for their “debt divorce” and start building their own “internal line of credit”. The debt snowball is ingenious in that it will not only eliminate your debt in a fraction of the time, but then afterward also instantly condition your cash flow to begin the true wealth building phase. The snowball calculation and forecast is “casting the vision” by creating a detailed report and a visual marker for attaining this climactic milestone in your financial plan. See attached sample Debt Snowball Report. Debt Snowball Report
We’re big on remediating a client’s financial reputation. However, the purpose of a credit report review is not to “fix” your credit so you can go and borrow more money. Debt is your enemy not your friend. Rather, let’s use the credit report to alert us to problem areas that need to be addressed—whether errors reported by creditors or just old debts that need to be cleaned up and resolved. Coincidentally, when these actions are taken, a noticeable improvement in your credit score typically happens anyway.
When is a mortgage refi the best maneuver? We’ll review your current loan terms, determine what refinancing options you have and help you evaluate both the timing and the breakeven period of the transaction.
Preparing for your child’s college education is no small task. This also is about timing and strategy. However, we don’t concern ourselves for this worthwhile goal UNTIL the client has first demonstrated they are taking care of their own financial health BEFORE they embark on a child’s college funding plan. Many issues such as proper funding methods (ESAs, 529s, State prepaid tuition plans), FAFSA preparation/disclosures, student loans, scholarships, and grants and even college education alternatives need to be thoroughly vetted before action is taken.
A home purchase is a monumental decision. Homeownership often has some advantages, but many times the decision to buy is premature. There are common myths that suggest homeownership is ALWAYS the best answer. This simply isn’t true. We’ve seen MANY families struggle because they’re “house poor”, can’t sell when they need to or even just unaware of the “money pit” a home can be. We provide a thorough rent/buy breakeven analysis to strip out the emotion of home buying and prove which option is the most financially sound. There are 7 optimal criteria we hope to see in place before a client makes the leap to buy a home to insure the purchase is a blessing and not a detriment. Also, if already you’re a homeowner, we’ll help you validate if, when and why it’s time to put your house on the market.
Purchasing big ticket items are mostly acquired through financing rather than savings. However, our approach sets in motion how and when to properly acquire that next car, home improvement, appliance, computer, RV/Boat, etc—without debt! Don’t assume that to buy these items one must resort to “payments” and start the debt trap all over again. Replacing depreciating assets is a fact of life, but debt doesn’t have to be!
If you’re a small business owner, we know first hand that it’s full of both challenges and opportunities. We are experienced in helping you analyze your overall business performance and provide recommendations and strategies to improve cash flow, tax efficiencies and other essential elements to strengthen your business’ financial position.