...and my financial planner story.
I'm back. Vacation was great. Not necessarily relaxing with 2 young kids at the beach and boardwalk but really fun. (I'm like a kid myself - LOVE the rides at the boardwalk)! But now I'm back to reality.
Hubby and I have been having major conversations about our financial situation over the last few months. The prices of everything are through the roof, and it's too tight for comfort for me. I showed hubby the numbers and indicated that we really need to crack down on all areas of spending. His response: the problem is the grocery bill, which averages about $600/month (including detergent, personal and paper products).
While that's certainly not the only area we could attack, it's definitely a good place to start. We could plan meals better, waste less produce, etc. to get it down some. But I think he may have an unrealistic view of how low it can go. (He's thinking in the neighborhood of $400).
So I gave him a challenge. I'll give him $400 (or $450, or $500 - whatever he finally decides) on September 1st and he will be completely responsible for grocery shopping for the month. I'll help him however I can, as far as planning meals, cutting coupons, whatever, but he's going to the store and shopping. If he's successful, maybe I can learn some of his tricks. If he's unsuccessful, at least he'll have an appreciation for what things cost and agree to attack some of the other categories that he's avoiding now. Either way, it's a win-win for me.
On another note, we met with a financial planner yesterday. What an absolute crock! We did it as a favor to friends who used this guy and recommended him to us. He's a "wealth management" advisor. His advice: 1) stop overfunding your 401(k). (We currently max out). His suggestion was to only contribute to the company match and invest the rest in his investment vehicle. 2) Refinance our current mortgage. We currently have a 15-year fixed at 4 5/8%, with 9 years left to pay and a balance of about $187k. He wants us to take out a 30-year fixed, leaving only 20% equity in the house and invest the rest in this investment vehicle. His logic: The return on the investment plus the additional tax deductions more than make up for the additional interest you incur moving from a 15 to a 30-year.
Are you kidding me? I won't bore you with the details of his argument, but suffice it to say that we weren't biting. I'd much rather have the peace of mind of being debt free with no tax deductions, then having a $600k 30-year mortgage hanging over my head at the age of 38. I'm sure people who aren't as cynical as I am lap up what he says, and are probably responsible for all of the "for sale" signs going up in my neighborhood. Unreal.
Plan for today is to work on cutting some more expenses, filling out some FSA paperwork, and the like. I'm also going to open the windows and let some fresh air in!
DH's Grocery Challenge...
August 14th, 2008 at 02:06 pm
August 14th, 2008 at 02:20 pm 1218720035
It'll be interesting to see how the grocery plan plays out for you - it's an area of my family's spending that I keep going back to often. Hope you post the results of your challenge, and good luck!
August 14th, 2008 at 03:31 pm 1218724306
I mentioned earlier, a wealthy client of ours, who had the cash to buy a second house when he moved, was told by his investment advisor he should just take a mortgage on the house. "It's a good tax deduction." So he asked my boss and my boss of course says, "pay cash." Duh. They guys seriously has more money than he knows what to do with. The tax deduction is not worth borrowing money he doesn't need to borrow. Of course his investment advisor doesn't want him to liquidate several hundred thousand dollars.
Egads!!!!
Good luck on the groceries.
August 14th, 2008 at 04:29 pm 1218727770
August 14th, 2008 at 04:30 pm 1218727843
August 14th, 2008 at 05:41 pm 1218732088
I have what I would call a VERY basic understanding of general finance and even I can see that the only pockets that would be getting padded are H I S !!
I guess technically he didn't do anything illegal, but his advice is/was bad, to say the least.
August 14th, 2008 at 06:38 pm 1218735499
I think I'd run from the financial planner!!!
August 14th, 2008 at 07:41 pm 1218739305
August 15th, 2008 at 03:51 am 1218768682
Oh, I would have run screaming from that planner's office!
August 18th, 2008 at 01:46 am 1219020413