Case Study: Starting as a Client

In our last case study post, Josh and Sarah Ackerman had their initial consultation with me and decided to sign on with NewLeaf Financial Guidance. Now, they’re ready for their first-ever client meeting.  

In this meeting, we’ll be talking about something that’s more important than any other aspect of Josh and Sarah’s financial plan: their goals and values.  

Note: If you’re just joining us for this case study now, you might want to start at the beginning!

The financial plan we create for Josh and Sarah needs to always line up with what they value. As soon as we set saving or spending goals that don’t go toe-to-toe with what we value, a financial plan goes awry. 

We fall off the budget bandwagon because our spending goals aren’t fulfilling us. 

We stop saving because we’ve lost sight of our “why.” 

We take on more debt because we’re trying to fill a need that our financial plan isn’t addressing.  

Many financial plans focus on what we’re planning for – retirement, sending our kids to school, building a lake house, taking care of our parents as they age. But they miss why we’re planning for those things. This initial client meeting is set up to help us capture Josh and Sarah’s why before we start planning for specific goals. 

Values Exercise 

First, I have Josh and Sarah go through the think2perform values exercise. This process isn’t revolutionary, but it’s incredibly helpful at starting the conversation about Josh and Sarah’s values. The test helps us distill each of their five most important values. 

Josh and Sarah’s Values 

Josh’s five values are: 

  1. Family 
  2. Adventure 
  3. Freedom 
  4. Happiness 
  5. Money 

Sarah’s five values are: 

  1. Religion 
  2. Family 
  3. Stability 
  4. Happiness 
  5. Education 

Some of their values line up, which is fantastic. Others are unique to them, and we’ll have to work on a financial plan that takes all of these into account. In talking with Sarah and Josh, I discussed how they value spending time with their family (including their close friends).  

They both value experiences more than things, and they want to have both the time and the resources to travel. It’s important to both of them that their future kids have the opportunity to see the world from a young age – which isn’t something that either of them had growing up. Their parents were never keen on traveling outside of the United States (or really, outside of the Minnesota area).  

Josh and Sarah’s Fears 

Josh and Sarah believe that life is for living – which means they want to work to live, not live to work. However, they feel like they’re on a slippery slope right now. With Josh’s large student debt load from medical school, they feel like their finances are out of control. Sarah’s student debt is much more modest, but it’s still weighing on them. So far, their only solution has been to work more. Sarah’s even been looking into babysitting for a neighbor after school to make some extra money.  

They don’t want to worry about money on a daily basis, but feel like that won’t be possible until they’re out of debt. This is a frustration for Sarah, because it’s looking like Josh’s loans won’t be paid off for another 25 years. At that point, they’ll be 52! Josh is worried about how they’re supposed to provide for their children while under the burden of his loans.  

Finally, they’re both worried about buying a house. With Baby #1 on the way, they want to put down some roots, but the Minneapolis market is hot right now. A starter home might cost them around $350,000 – and that’s not even their dream house.  

Their Current Financial Situation 

Over the last year, Josh and Sarah have been able to stop the bleeding a little bit. They have around $2,000 in cash in their checking account, which means their monthly bills will always be covered. But they haven’t been able to keep up with Josh’s credit card, and have about $5,000 in debt.  

This debt bugs Josh. He feels like he’s already bringing a massive amount of student loans to the table, and his credit card debt primarily came from his college roommate’s bachelor party and wedding a few years ago. These days, Josh doesn’t even really talk to that guy anymore – and it feels like the hefty cost of being part of his wedding celebrations was a total waste. 

Sarah and Josh are realistic. Although Sarah drives a new car (and is paying off her loan responsibly), Josh is driving his old, beat-up sedan. They both know that Josh’s car is going to break down in the next year or so, and want to build a cushion to that when they need to shell out for repairs they won’t have to put it on a credit card. 

Summarizing Their Conversation 

This was a productive first meeting with Sarah and Josh. We pulled several concrete goals from this initial conversation that match both of their values, and alleviate some of their financial concerns: 

  1. Get a handle on cash flow. 
  2. Pay off Josh’s credit card ASAP. 
  3. Build a $5,000 cash reserve for when the car breaks down. 
  4. Create a travel fund. 
  5. Start contributing toward a house fund. 
  6. Build a strategy for retiring student loans (for both Josh and Sarah). 
  7. Create a plan for insurance – both disability and life. 
  8. Remain flexible when saving for their kid’s education. 
  9. Start planning for retirement. 

With these goals in mind, my next step will be to build an initial financial plan for Josh and Sarah. Stay tuned!