You could call Elizabeth Leonard and Connor Durham “accidental landlords.” They bought a duplex in Seattle’s Hillman City neighborhood with friends in 2017 with the thought that they would own it together happily ever after. Then the friends got dream jobs in another city in 2018, and the couple had to buy them out and rent the unit.

Leonard, a disability rights attorney for a nonprofit, has fought many evictions for her clients. “Finding myself a landlord is kind of an out-of-body experience for me,” she says.

The couple, who aren’t married but have been together five years, had finished the basements of the units when an epic storm last December wrecked the remodel. Repairing the flood damage cost $20,000 and wasn’t covered by insurance. At that point Durham, who works for the city of Seattle, felt like they should “sell the entire thing and stop the headache of being landlords.”

Repairing the duplex is not the only way their savings has been spurting red ink recently. Leonard, 34, and Durham, 40, are undergoing in vitro fertilization (IVF), hoping to become pregnant. The couple last year spent about $23,000 on the treatment, which is typical for Seattle, according to Fertility IQ.com. “It was a shock to find out it wasn’t covered by insurance,” says Durham.

The couple feels like their financial situation is getting more and more complex and they knew they needed help. “Connor reads the Money Makeover regularly,” says Leonard. “He said, ‘Why don’t we try it?’ ”

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Our Money Makeover partners, the Puget Sound chapter of the Financial Planning Association, put out a call for planners willing to help. Lee Martin, a certified financial planner in Bellevue, volunteered to create a road map that would help the couple with cash flow and retirement savings for the future. He says he quickly discovered “their situation is challenging and complex.”

The couple makes good money — together they gross around $122,000 a year. But they have substantial school debt: $147,000 for Leonard and $96,000 for Durham. They owe $570,000 on their duplex.

The way Martin sees it, there are two potential mistakes that could jeopardize the couple’s financial future.

One: “Because they work for a municipality and a nonprofit, they are on track to have a significant portion of their school debt forgiven” — if they do things right. His advice? “Don’t screw up the schedule. Don’t quit your jobs.”

The other mistake Leonard and Durham could make, Martin believes, is to sell the duplex and buy a house in Seattle. “They get $2,200 in rent from the other unit,” the planner says. “If they bought a house they would have an $800,000 mortgage and no rental income. It would eat up the money they need to set aside for retirement.”

The only way to buy a house and have it pencil out, Martin says, is for them to sell in Seattle and buy someplace like Kansas. “I have clients who are considering that,” he says.

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Some of this advice was easy to accept. Leonard and Durham are both four years into a 10-year loan-forgiveness program, and have no intention of switching jobs. “For me as a lawyer, I could be making more money if I didn’t work for a nonprofit,” Leonard says. “I’m in this for more than the loan forgiveness!”

It was harder to hear that they couldn’t afford a single-family house in Seattle. They considered looking in Tacoma, but the pandemic changed their minds. “We love our neighborhood,” Leonard says. “We can walk to friends’ houses, and with coronavirus that is more important now than ever.”

Staying in the duplex and remaining landlords means more money can go to retirement. Martin says they will need it. “They are not on track now. Their probability is close to zero for successful retirement.”

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When planners talk about the probability of a successful retirement, they are crunching numbers to see if people are accumulating enough savings to last for their life expectancy. Leonard and Durham aren’t, especially if they retire when they want to — at ages 59 and 65 respectively.

The couple was surprised by this news because they are good savers. Connor puts 11% of his salary into a pension. Elizabeth stashes away 5% of her paycheck in a 401(k) and gets a 5% match. They have $176,000 saved; about $120,000 is earmarked for retirement. The retirement is in stock-heavy target-date funds, which the planner says is where they should be invested because they are young.

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But Martin says they are spending too much — around $100,000 a year. He says they should reduce their living expenses to $67,000 a year, and he would like Durham to increase his deferred compensation — the money going into his pension and a 457 retirement plan — to 20% of his pay.

Durham’s response? “That’s impossible! There is no way we could do it!”

“Once they get the IVF and school loans behind them there will be more money for retirement,” Martin predicts. He also admits that he could be employing a “tough love” tactic with Leonard and Durham.

“I make it look harder than it’s going to be,” he says. “Not so ‘glowy.’ I find that serves people better.”

Swap Seattle for someplace cheaper? Planner says don’t leap before you look.

It’s tough to buy a house in Seattle, as this month’s Money Makeover participants discovered. Housing-related costs are more than double the U.S. average, and Seattle is the sixth most expensive city in America overall, according to the Cost of Living Index.

Lee Martin, a certified financial planner in Bellevue, volunteered to create a roadmap that would help the couple with cash flow and retirement savings for the future.
Lee Martin, a certified financial planner in Bellevue, volunteered to create a roadmap that would help the couple with cash flow and retirement savings for the future.

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What that means is that some folks are ready to get the heck out of Dodge — or perhaps flee to Dodge City, Kansas, where an average house costs $101,000. Certified financial planner Lee Martin says more of his clients are considering swapping out Seattle for someplace cheaper.

“People have told me they want to retire to Vietnam or Venezuela, and I ask, ‘Have you visited?’ and they admit they haven’t.”

Here are Martin’s tips for folks who are thinking about moving away from Seattle.

1. Put together a financial plan to see where you stand.

2. Spend a lot of time in the place to which you want to move. Does it match the dream?

3. Don’t sell everything until you have completed the first two steps.

4. Have a plan B.

“I know people who sold everything and moved,” Martin says. “Then decided they didn’t like it and moved back.”

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