Personal Financial Planning

angelsong21

H and I would really like to get control of our finances and get a realistic picture of where we are at.  We'd like to buy a house in future and begin paying off my student loans.  I e-mailed a well-known planner here in Dallas and she told me for what we needed, we should attent personal financial planning seminars which are frequently held by the city at the Y, etc.  It's a lot cheaper than the $500 minimum that most would charge to help us look at our situation and come up with some goals and plans.

Anyone have any thoughts or recommendations here?  I really wanted the guidance of someone who could help us set realistic goals and do some comparison work for us.  I get overwhelmed thinking about doing all this on my own.

AshJohnson30

I think the person you talked to is right. You guys don't need in depth planning so educating yourselves may be the best route. If you are okay with spending the money to use a professional because you may be overwhelmed then the cost may be worth it. I really think you guys can do it on your own though.

cwaggoner07

If you want it from a Christian perspective, Dave Ramsey's Financial Peace is a great program I hear.
Before we got rid of cable I watched a ton of Suze Orman and Dave Ramsey. Like, for fun.
Suze Orman has a LOT of great books, and I read the one for young people right after I graduated college called Young, Fabulous, and Broke.
You might try buying one of those books for a starting point and see where that gets you.
Good luck! I think it's awesome to get this stuff under control when you're young, because there are people that call into those shows who are in such a big hole and it's really really sad and scary.

angelsong21

I agree that we can probably do it on our own, but finance was NOT my strongsuit in college.  I'm not sure how long some of these programs the city has, but I really don't want to spend 8 weeks to get a plan together.  I don't even know what online resources or calculators to use.  I just want some little finance wizard to do all the math and say, "Yes/no to buying a house now.  We recommend that you ______________."  Is that weird?  I'm feeling weird that I'm this overwhelmed by it.

Maybe books are the way to go right now.  I will look into the ones you posted, Carrie.  Thanks!

AshJohnson30

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_texas-dallas-ft-worth_personal-financial-planning?plckFindPostKey=Cat:Local Wedding BoardsForum:102Discussion:fb348284-9223-4785-b73b-64da725f09ecPost:d51722f7-a5c2-4b17-a26e-2f498e5463ca">Re: Personal Financial Planning</a>:
[QUOTE]I agree that we can probably do it on our own, but finance was NOT my strongsuit in college.  I'm not sure how long some of these programs the city has, but I really don't want to spend 8 weeks to get a plan together.  I don't even know what online resources or calculators to use. :( <strong> I just want some little finance wizard to do all the math and say, "Yes/no to buying a house now.</strong>  We recommend that you ______________."  Is that weird?  I'm feeling weird that I'm this overwhelmed by it. Maybe books are the way to go right now.  I will look into the ones you posted, Carrie.  Thanks!
Posted by angelsong21[/QUOTE]

This was me exactly. You can get prequalified to see how much of a loan you would be able to get which could help you decide if you want to buy. I think bank of america has a calculator that may be helpful and defintely look into the books Carrie suggested!

angelsong21

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_texas-dallas-ft-worth_personal-financial-planning?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:102Discussion:fb348284-9223-4785-b73b-64da725f09ecPost:593fd10f-6a58-4e8d-b518-bbcb6e9632b7">Re: Personal Financial Planning</a>:
[QUOTE]In Response to Re: Personal Financial Planning : This was me exactly. You can get prequalified to see how much of a loan you would be able to get which could help you decide if you want to buy. I think bank of america has a calculator that may be helpful and defintely look into the books Carrie suggested!
Posted by AshJohnson30[/QUOTE]<div>
</div><div>Done this already -- we put offers on several houses back in February and lost them all.  Looking back, it was a godsend.</div><div>
</div><div>My thing would be:  do we borrow against our 401k now, get an amazing interest rate, and pay ourselves back (no pentaly for borrowing, only for withdrawing).... or do we wait another 3-4 years to save for a down payment, pay higher interest, be able to afford less house, etc.?

</div><div>
</div><div>ETA (for clarity):  We'd be borrowing against our 401k to make the down payment and the closing costs.</div>

nextrightthing

If you are considering withdrawing from your 401k, I think a financial planner or CPA might be a good person to talk to. There are a lot of tax consequences associated with doing that, so a professional could explain that end of it. I get overwhelmed by this stuff too student loans....ahhhhh!

angelsong21

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_texas-dallas-ft-worth_personal-financial-planning?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:102Discussion:fb348284-9223-4785-b73b-64da725f09ecPost:1527ec11-9176-45fb-9603-f3547396f4bb">Re:Personal Financial Planning</a>:
[QUOTE]If you are considering withdrawing from your 401k, I think a financial planner or CPA might be a good person to talk to. There are a lot of tax consequences associated with doing that, so a professional could explain that end of it. I get overwhelmed by this stuff too :/ student loans....ahhhhh!
Posted by nextrightthing[/QUOTE]<div>
</div><div>Withdrawing is not the same as borrowing against.  We don't want to withdraw -- just borrow.  You pay a low interest rate, but you pay it back to yourself.  Other than that, there are no consequences.

</div>

AshJohnson30

oh i see. that's tricky cause interest rates are low right now which makes it prime time to buy. deciding whether to borrow would depend on the interest rate you'd be charged, if you'd still be able to make contributions while you are paying the money back and the method of repayment (which may be directly out of your check). I'm sure Suze Orman discusses this somewhere in one of her books so it may be worth it to browse a few before deciding to use a professional.

angelsong21

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_texas-dallas-ft-worth_personal-financial-planning?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:102Discussion:fb348284-9223-4785-b73b-64da725f09ecPost:a1d2ce1a-4e89-4079-9f4f-6b546dca9447">Re: Personal Financial Planning</a>:
[QUOTE]oh i see. that's tricky cause interest rates are low right now which makes it prime time to buy. deciding whether to borrow would depend on the interest rate you'd be charged, if you'd still be able to make contributions while you are paying the money back and the method of repayment (which may be directly out of your check). I'm sure Suze Orman discusses this somewhere in one of her books so it may be worth it to browse a few before deciding to use a professional.
Posted by AshJohnson30[/QUOTE]<div>
</div><div>Thanks, I'm looking into some of the books now!  That's my dilemma.  I just want someone to take all of our statements and such, crunch the numbers, and tell me what is to our advantage and what isn't.  When we did a pre-approval in February we qualified for a 30-year conventional with a fixed rate of 3.8%.  I can do the long-run picture.  I just don't know what option is best for us.

</div>

crash2729

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_texas-dallas-ft-worth_personal-financial-planning?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:102Discussion:fb348284-9223-4785-b73b-64da725f09ecPost:593fd10f-6a58-4e8d-b518-bbcb6e9632b7">Re: Personal Financial Planning</a>:
[QUOTE]In Response to Re: Personal Financial Planning : This was me exactly. <strong>You can get prequalified to see how much of a loan you would be able to get </strong>which could help you decide if you want to buy. I think bank of america has a calculator that may be helpful and defintely look into the books Carrie suggested!
Posted by AshJohnson30[/QUOTE]
This actually didn't help us at all (IMO). We "qualified" for way more than we bought our house for. However, once you put taxes, Insurance and PMI on the payment there is no way we could have made the mortgage payment on what we qualified for. Well I mean we could have but we would have been paycheck to paycheck without cable or any fun stuff.<div>I think which options for DP really depend on how comfortable you feel with being able to pay it back to the 401K. </div>

nextrightthing

Yeah, I realized that you said borrow after I posted. Does borrowing not have tax implications?

crash2729

clicky

A link about 401K loans. 

No income tax implications, but since 401K's are pulled out pre-tax, apparently it is different with a repayment, so you could end up with some of the money actually being double taxed.

cwaggoner07

It's not as bad as it used to be, but as a general rule, people get qualified WAY more than they can probably budget to pay month-to-month.
I have some friends that are very conservative with their money, and they decided what they could budget to pay on a mortgage each month and then they got approved for a loan TWICE the size. That's insane! Granted this was in 2008 and I don't think it's AS bad now.
The amount you get approved for essentially means nothing in my eyes. It's all about what you can afford.

ktwed1

I was going to bring that up that you do qualify for typically way more than you could actually afford. Years ago when my ex and I were prequalified I did the math on what we could afford every month for a mortgage and live comfortably that's what we went with. If I remember correctly we used one of the calculators to figure out what a price range would be that we could afford and only looked at houses in that range.

angelsong21

Oh yeah, we definitely qualified for way more than we could truly afford... and that was this year!  We qualified for around $200,000 but realistically we could pay for a house around $160-165k.  I was shocked that they want all this info to come up with the numbers, but then the numbers are so incredibly unrealistic...  No wonder people get in over their heads.  You see that higher number on your approval letter and you think, "Surely we can afford this or they wouldn't give it to us!"  Gotta do the math.

Thanks for the link, crash.  The double taxation on part of the money isn't a huge concern to us.  But this is all part of what I wanted someone to help us with.  Look at the whole picture, figure out which situation is the best, and tell me why.  I don't know all the rules and loopholes and such, you know?

AshJohnson30

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_texas-dallas-ft-worth_personal-financial-planning?plckFindPostKey=Cat:Local Wedding BoardsForum:102Discussion:fb348284-9223-4785-b73b-64da725f09ecPost:95ecde45-40dc-49b0-8506-e749672900a9">Re: Personal Financial Planning</a>:
[QUOTE]Oh yeah, <strong>we definitely qualified for way more than we could truly afford</strong>... and that was this year!  We qualified for around $200,000 but realistically we could pay for a house around $160-165k.  I was shocked that they want all this info to come up with the numbers, but then the numbers are so incredibly unrealistic...  No wonder people get in over their heads.  You see that higher number on your approval letter and you think, "Surely we can afford this or they wouldn't give it to us!"  Gotta do the math. Thanks for the link, crash.  The double taxation on part of the money isn't a huge concern to us.  But this is all part of what I wanted someone to help us with.  Look at the whole picture, figure out which situation is the best, and tell me why.  I don't know all the rules and loopholes and such, you know?
Posted by angelsong21[/QUOTE]

Yea, I know this occurs a lot. I think its still good to do cause you can see what you could spend and then determine how much you really want to spend.

I'm glad Crash found that link for you. There aren't too many loopholes related to it just making sure you get all the facts about the effects of it upfront from your employer. Most financial planners won't suggest it since you're borrowing from your retirement but if it'd just be for closing costs, etc. it may be worth doing. Good luck figuring everything out!! Being an adult is hard lol

angelsong21

LOL being an adult does suck sometimes...

The funny thing is, my brother works the multi-million dollar accounts with Fidelity.  He's up there, so this is what he does all day, every day.  But he can't give advise to family, and he's really serious about following the rules.  He did tell me before though that they borrowed against his 401k to purchase their house and as long as you pay it back in a reasonable time frame, you're good to go.  I guess I should go on our benefits website at work  today and see if they have a repayment calculator I can look at.

karulyne

I think, if I were you, the first thing I would do is look at my monthly budget and H's monthly budget, for 'regular' months where you are just living your life, no wedding payments, etc. What are you spending your money on and how much? You can use a website like mint.com to figure it all out for you, especially if you tend to use debit and credit to pay for your day to day expenses, otherwise you'll have to enter things in. Anyway, once you look and see ok, we spend about X a month on gas, Y on groceries, all the rest of your living expenses...how much is leftover that you're saving? And how much is going to things you don't necessarily need, are there any areas that you could do better on? 
The big one is what you spend on your rent and utilities. That should make it a bit clearer to you how much of a house/tax/upkeep expenses you can handle every month. You should factor in some cushion, I'm sure you'll want to go shopping or take trips or otherwise enjoy yourself rather than put all your money into the house! Not to mention if your water heater breaks or you need foundation repair or any of the other surprise expenses that you get with home ownership you'll be glad if you have some flexibility in your budget. A financial planner can definitely help you get on track, but I think you should start first by figuring out what you're spending right now, its intimidating at first but its not that hard really once you get comfortable keeping track of where your money is going. Interest rates are low now, but I don't think that should be the driving force behind your decision to buy now or wait, rates won't shoot up overnight and you want to make sure you're ready. Obviously this is just my opinion, you should do what you feel comfortable with.

cwaggoner07

DUH I can't believe I didn't mention Mint. I LOVE Mint, and have been using it for years. It's been fun to see my net worth grow (slowly but surely).

cynizzo

I am on a modified version of Dave Ramsey's financial peace plan, which I started in October 2010--to date, I have paid off my car, all credit cards, and nearly $50K in Student Loans.  (I still have a bit left due to my graduate school costs, but I should be done in the next 2 years well under Sallie Mae's schedule and 3 years before I hit 35!)  My fiancee also followed the snowball method a while ago and he finished paying off his student loans 3 years ago and is 5 years ahead on his mortgage payments on the house he bought 2 years ago.   Needless to say, I think you can DIY by following Dave Ramsey's financial peace plan, budgeting well, and living within your means :-).  I hope this helps and good luck!!!!

 


In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_texas-dallas-ft-worth_personal-financial-planning?plckFindPostKey=Cat:Local Wedding BoardsForum:102Discussion:fb348284-9223-4785-b73b-64da725f09ecPost:64694d86-09e0-4a7c-b275-bdad0a80d8b9">Re: Personal Financial Planning</a>:
[QUOTE]If you want it from a Christian perspective, Dave Ramsey's Financial Peace is a great program I hear. Before we got rid of cable I watched a ton of Suze Orman and Dave Ramsey. Like, for fun. Suze Orman has a LOT of great books, and I read the one for young people right after I graduated college called Young, Fabulous, and Broke. You might try buying one of those books for a starting point and see where that gets you. Good luck! I think it's awesome to get this stuff under control when you're young, because there are people that call into those shows who are in such a big hole and it's really really sad and scary.
Posted by cwaggoner07[/QUOTE]