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Advertise With UsBringing the baby home takes a financial plan
Written by Troy Neff | Toledo Free Press Writer | troy@troyneff.comThis story is one that I’d like to tell you because it has a happy ending. Although when I first met the people involved, they weren’t very happy.
Julie and Mike have been married several years and were not able to have kids. Julie went through lots of testing and the doctors thought they had taken care of everything and she would be able to conceive.
Then they discovered that Mike had medical problems. However, his problem was not treatable. They were heartbroken.
After a while they decided adoption would be the best route.
About the same time, a college friend of Julie’s had a friend who had a 16-year-old daughter, Erica, who was pregnant. Julie’s friend knew she and Mike were interested in adoption. She mentioned it to Erica’s mother, who was interested. She spoke to her husband and to Erica and her boyfriend and decided this was a good alternative.
Erica’s dad hired an attorney to check out Julie and Mike. His report came back mostly OK with the exception that Julie and Mike’s financial situation was a mess.
Julie and Mike had good-paying jobs, lived in a really nice house, and had all the external appearances of being very successful financially. The reality was that they couldn’t have made their financial situation worse if they tried. Virtually no savings, credit card debt, out of control spending, owing back taxes …
“I know this doesn’t make Julie and Mike bad people,” said Erica’s father, “but I’m not going to agree to this unless they clean up their act, and we have some assurances that they can be responsible for taking care of this baby.”
That’s how Julie and Mike ended up in our office. The real story was worse than what the lawyer had discovered. Like most people we see, they had all the wrong kinds and amounts of insurance, had financed their house incorrectly, etc.
We first helped them establish where they were and worked with them and Erica’s family to set goals and acceptable standards for how they would handle their money.
We then helped them develop a plan that would take at least a few months to implement and that realistically would get them back on track, with them achieving their goals over a period of a few months.
For example, we suggested they:
- Buy the correct amount of life insurance based on the baby being in the family. They both had old policies and were horribly underinsured. We helped them get the right amount based on a new capital needs analysis. And, with the cash in their old polices, were able to increase their coverage and keep their annual premiums about the same.
- Rearrange their financing on their home. They had decent credit scores, but not spectacular. They had a really bad, subprime loan that was due to explode in payments in a few months. We suggested a 75 percent loan, fixed for 30 years at today’s still-low rates.
- Changed the way they had their company benefits set up and were able to reduce their income taxes by more than $350 a month.
This newfound money is set up to:
- Start a college fund for the baby.
- Establish a retirement fund.
- Set up a debt “pay-off” fund.
- Upgrade home and auto insurance so they could cut their premiums and improve their coverage.
They used a proven debt repayment method we helped them set up so they could remove their debt.
Well, the good news is Julie and Mike really turned around. They not only stuck to the plan, but did even better. With the guidance and their financial plan, they got their spending and taxes under control.
Not too long ago they brought their beautiful little girl home. This could not have ever happened if Julie and Mike hadn’t agreed to set up and implement a financial plan that was realistic and responsible.
Troy A. Neff is managing director of Advanced Retirement Solutions. He also hosts “The Troy Neff Show” each weekday 6 to 10 a.m. on WCWA-AM 1230. He may be contacted by e-mail at Troy@TroyNeff.com.
