Brant Greene, a certified financial planner in Poulsbo working with Meg Brown and Jennifer Self, focused first on the basics — expenses...
Brant Greene, a certified financial planner in Poulsbo working with Meg Brown and Jennifer Self, focused first on the basics — expenses and debt. He urges the couple to get control of spending and start paying down bills, a process that will require belt-tightening, at least for a while.
“The big picture is that they’re worried about debt,” he said.
In their initial meetings, Greene focused on where they stood, tracking income and expenses. “When someone has a lot of debt, it means they’re running a big deficit. So we spent several hours figuring out cash flow.”
Brown has been making a good income, but hopes to cut back her hours to spend time with baby Lucy. Self is going to school and makes less. The two realized they’re about $1,000 a month in the red. Credit-card bills have been mounting and Self has used her student loans as a reserve. They also tapped a line of credit to do work on their home.
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“A lot of debt is a concern,” Greene said. “That’s scary.”
Getting the debt under control will take about a year, to the point when Self graduates with her doctorate in social work and improves her income with a new job, perhaps paying about $70,000 a year.
“It’s not going to be bad forever. The good news is that next year Jen graduates and starts working,” said Greene, an independent franchisee of Ameriprise Financial, who mostly does fee-based financial planning. “But for now, it’s going to take dramatic measures. This is not uncommon.”
Among the tactics the three are discussing: cutting spending, including on entertainment, dining out and travel, and giving simple gifts on birthdays and holidays. The goal is to get to positive cash flow, especially because Self will have to start repaying her student loans soon after graduating.
The couple also have several financial strengths, including a first mortgage with a competitive rate, Brown’s pension and grandparents who want to help with Lucy’s education.
Greene was pleased that the two had taken some steps to ensure their security under the law as a lesbian couple. For example, Self has adopted Lucy, and each woman has economic power of attorney for the other. Nonstraight partners can’t assume the same legal protections that extend to married straight couples.
“It’s really critical for gay and lesbian couples to get their estate planning in order, especially if they have a child together,” he said. “They’ve been to an attorney, and it’s really good they did that.”
Once the debt has been pared down, Greene wants the couple to start building a cash reserve and accumulating retirement savings. Brown has disability insurance available through work, and Greene urges that she buy it. In addition, he suggests each woman buy life insurance — $1 million if possible — to provide added security for Lucy.
And, keep working on the debt.
“If their parents give them money as gifts, pay down the credit cards,” he said.