Adding Up Reinvested Self-Interest : A Year Later, 3 Households Assess Value of Financial Advice on Budget Woes
William Stanton had expected that his longtime job would provide a decent retirement fund for his wife, Bridget, and himself.
But after an unexpected layoff six years ago, the Stantons were left with a small pension that wasn’t growing much and with questions about what to do next.
So last year, the Stantons joined three other households looking to sort out their finances by meeting with financial planning experts arranged by the Times Orange County Edition to map out individual strategies. The effort was designed to give readers practical ideas about handling similar money woes.
“It made our lives better,” Stanton, 58, said recently about his planning session. “It was very helpful.”
Suggestions from financial planners prompted 28-year-old Tammy Raiton, who wants to buy a home, to make some changes, though she said she hasn’t altered her spending habits much. And Ralph Kraft, 40, said his session was “enlightening,” though he found the advice a bit conservative for a corporate executive who’s trying to save money to buy his own business.
As a catalogue warehouse manager at Sears, Roebuck & Co., where he worked for 28 years, William Stanton had accumulated about $50,000 in his pension account before he was let go during one of several corporate restructurings at the retailing giant. He quickly found another job, but his new employer doesn’t provide retirement benefits.
The advice the Stantons received led them to make some clear choices. William Stanton, for instance, increased his life insurance coverage from $100,000 to $120,000. The couple also paid off the mortgage on their Placentia home by doubling up on house payments, thereby freeing some money for monthly mortgage bills on several rental properties.
“The major thing I’m doing is paying off debt,” he said. “I think we’re doing OK.”
The investment adviser also recommended that if the Stantons plan to sell their rental units eventually, they should set up a charitable trust--something they hope to do during 1994, Stanton said.
Raiton’s goals when she met with a financial planner last year were to own a home in five years, pay off loans and credit-card debt and begin saving for retirement.
“It was beneficial to hear what the planner had to say, and she tailored the advice for me,” she said. “I think I’m on the right track.”
Raiton reduced her $930 monthly rent on her Fullerton apartment to $500 by getting a roommate. And with a raise that increased her annual salary from $26,000 to $28,000, she began putting $100 away each month in the state teachers’ retirement plan.
However, the Whittier Union High School teacher also bought a Jeep, adding $300 a month in car payments to her budget.
As a controller for Ropak Corp., a plastics manufacturer in Orange, Kraft has to be adept at crunching numbers. He’s a financial guy who has attained a level of financial security. The Krafts own their own home in Placentia and have their bills under control. But they want to save $300,000 in the next three years so they can buy a small company in Seattle.
Having some expertise in financial planning himself, Kraft, who earned $86,700 last year, found that the suggestions from another planner on how to achieve the family’s goals were “enlightening” but didn’t have much impact.
“Basically, it made us think,” he said. “It did not change our life in any way.”
Another couple, Lynn Johnston, 39, and her roommate, James Jax Jr., 36, have moved out of state and could not be reached for comment on whether advice from their financial planner helped them erase $20,000 in credit-card debt.
