The List (Our financial planning voyage — Part 2)

I’ve made a ton of progress since the last check in. All of the work of piecing together our complete financial picture and researching the fundamentals of financial planning culminated in one long checklist of todos to actually begin to build out our plan. What follows is a version of our punchlist.

I’ve redacted our list of things we don’t feel comfortable publicizing, but hopefully Alright, so here we go.

The List

  • Get our allocation of existing assets right. We entered this process very heavy on cash savings, which is good, but not great for actually building wealth.
  • A solid plan for how to allocate our income between retirement accounts, savings plans, and investments.
  • Diversify stock in one company that was gifted to us, in a tax-efficient way.
  • Retirement planning in a good autopilot (allocation / right split between pre-tax and Roth).
  • A tax-efficient non-retirement investment strategy (so that we have assets that are growing that we can access before we’re 59).
  • In all cases, we want to use low-fee, passive investments like index funds and ETFs.
  • Decide whether to refinance/consolidate student loans that have high interest rates. Some of my federal loans are at 7.65%, and after some comparison shopping and negotiation, we had the option to refinance all our student loan debt to 3.2%.
  • College savings for 1 child, currently (planning to do public school K-12). Questions include whether it’s possible to “over-save”?
  • Support for 2018 taxes with the tax law changes and any impact of the things above.
  • Mortgage payment strategy, with respect to other investments, tax deduction, etc. I.e. should we be paying down principle?
  • Get the right amount of life insurance.
  • Get an estate plan in place (will vs. living trust).

That list still boggles my mind a bit! It took a lot of reading to even know that all of this is what we’re looking for.

Another interesting part of the process was understanding some of the things that don’t apply to us. These include things like debt management (we only really owe our mortgage and student loan lenders, thankfully), management of unsteady income streams, strategizing around large existing portfolios of assets (like rental property, time shares, etc.), and major upcoming expenses (like going back to grad school).

So that’s it right?


That leaves the last big step: execution. Knowing is only half the battle. There are a lot of options for how to attack it. But it basically comes down to two categories. Either we self-manage it with my own research or we bring in a professional. When it comes to professionals, my research led me to conclude that the gold standard is an advisor who operates solely under the fiduciary standard. That means they have to work either for a negotiated project fee, an hourly rate, or for a fixed percentage of assets under management (AUM).

We decided that the magnitude of what we’re trying to accomplish merits bringing in a professional, who can help us make sound decisions about each individual item with the whole picture in mind. For our situation, our assets are modest enough that a project-based or hourly fee would probably actually exceed an AUM rate for a year. And with the tax changes, we also felt that having support at least through Tax Day 2019 is a smart move. But at this time next year, presumably, we won’t nearly as much ground to cover, and we’ll mostly be maintaining our plan. Then we can decide whether we think it’s worth it to continue to pay an AUM fee, or self-manage, with the help of robo-advisory services (think Betterment or Wealthfront).

I don’t feel comfortable shouting out the providers we have chosen. I just don’t feel qualified to give an endorsement, and it’ll be at least a year until I can report back on how it has gone. But we have made a decision on a well-respected fiduciary advisory firm.

One thing I’ll add is that all of the work I put into uncovering all the corners of our financial situation was extremely helpful in streamlining the process of onboarding. I have come to realize that at our level, there’s no one else who’s going to do that for you, although I can see how having an advisor would have provided me with more motivation, if I didn’t already have it.

What’s next?

In the last part of the main trilogy, I hope to share some of the details on how those questions from the punchlist ended up, with professional help. Maybe we can pay forward some of the advice we’re paying for. And if anybody’s reading this, you can celebrate with me on a job well done.

I’d like to conclude by saying, if you haven’t spent time on getting your financial picture right, please, don’t put it off. I’m simultaneously painfully aware of how much it has cost us to procrastinate on this through our early 30s and how much opportunity we still have by not wasting any more time. I find it extremely difficult to motivate myself to do this type of work. If I can do it, you can too. You might be thinking, “gosh, that’s a lot of words he’s written. That’s really intimidating.” It’s all just the result of baby steps. They’re finally starting to amount to something, and the peace of mind is so worth the effort.

I hope you find this helpful in your own process — good luck!

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