Cathy Curtis

The Best Laid Plans

Back in July, I talked about a fantastic group of Bay Area women business owners. Kathy Wiley, Christine Doerr, Malena Lopez-Maggi and Mindi Fong are all involved in the food business and each had a different take on the value and importance of having a business plan. The original post is here, Women and Money – Women in the Food Biz Talk Business Plans. In that post I shared some thoughts of my own on why business plans are so important. As the article below describes, assumptions and circumstances change and having a plan can help you stay flexible to deal with an ever changing environment.

The Small Business Blog
The New York Times has blog for small business owners called You’re the Boss. As of this writing the lead post is, “Six Ways to Deal with Small-Business Stress”. The Small Business Blog is a valuable resource for every small business owner with all kinds of wonderful stories and it has a rich mix of comments.

My So-Called Business Plan
I love stories about food, restaurants, money and yes, business plans, so I was fascinated by a recent post on You’re the Boss. The post is titled, My So-Called Business Plan (Enter Laughing) by Bruce Buschel. Mr. Buschel is a writer who bought a restaurant – an old, beat up place in Bridgehampton, NY called The Wild Rose.

The Original Wild Rose
The Original Wild Rose

It’s a lively story with a lot of ingredients: one part lifelong dream, two parts bank loan (for 1.5 million), one part contractor nightmares, three parts local bureaucratic snafus and yes, at least two parts business plan. And it has the requisite blog that details all of his ups and downs on the way.


Curious Bits and Bites
Mr. Buschel has a list of 100 things his waiters must never do that include never announcing your name, (??) no perfume, no touching the patrons and so on. Mr. Buschel waited an entire year to get his permits and he has no restaurant or liquor experience.  His restaurant will serve only fish. Mr. Buschel’s local planning board required that he bring to their office samples of the actual roof shingles he was planning to install. Opening is tentatively scheduled for April Fool’s Day 2010.

The Plan, What About the Business Plan?
Oh, yes the plan. Here is an excerpt from his blog post.


“Do I have a business plan? You think a man with 100 rules for a waiter wouldn’t have one business plan for himself? In fact, I have had, like a fecund humpback whale, two in two years and another one on the way.”


Mr. Buschel crunched numbers with an expert who had owned, run and built half a dozen restaurants. They used the best available data. A major conclusion: Based on the evidence, a clever, well-run restaurant could be successful in the Hamptons. Not exactly earth shattering information, but useful.

Then, right after he purchased The Wild Rose, the recession kicked in. Shortly thereafter, Lehman brothers failed. And to cap things off, the food writer Mark Bittman wrote in the New York Times that if fish are so endangered, maybe we shouldn’t be eating them at all. Oh dear…

So the business plan changed and changed again.  Here, is Mr. Bruschel’s current plan for a restaurant in the Hamptons.

– Avoid a hefty key fee and a long, ever-increasing lease by buying a place with important permits in place. Eateries are finite around here and therefore always in demand. Every penny spent will come back one way or another. If the restaurant fails, change the concept or rent the space or sell the property.

– Create a folksy place with funk.

– Assemble a crackerjack team.

– Open the best fish restaurant in the Hamptons (where none exists west of Montauk).

– In October, after your first full summer season, sit down and read the numbers, not the tea leaves. You will know where you went astray and where true you stayed. Adjust.

The new Wild Rose under construction
The new Wild Rose under construction

Should be great fun to watch this project unfold. Good luck Bruce, we’ll be watching with great anticipation!

You’re the Boss Blog
My So-Called Business Plan (Enter Laughing)

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“Making Home Affordable”

The Irrepressible Trudy -
The Irrepressible Trudy

Lots of women know their hair stylist almost as well as they know their closest friends. That’s why we don’t dread haircuts the way men do – we actually look forward to the 1-2 hours when a friendly person will make us beautiful with the added bonus of a good  heart-to-heart. No staring glumly at the mirror until it’s done for us! Topics of conversation in a hair salon run from love life to clothes, movies to food, and of course, my personal favorite, money.

Meet Trudy
So without further ado, please meet my hair stylist, Trudy. She’s 40-ish,  a single-mom (of a 13 year old daughter), a homeowner, a fashionista, and, as you can tell from this photo, irrepressibly vivacious.

On my last visit, we got into a chat about money because Trudy had just completed a loan modification and was more than happy to share the details with me. I was very interested because I knew banks were considering loan modifications, but hadn’t heard of anyone actually getting one.

Trudy’s story is typical of many American homeowners who were enticed by loans that “magically” made debts disappear and lowered mortgage payments.

Here’s what happened. Trudy bought a condominium in Hercules, California in 2003. She paid $248,000. She put $50,000 down and took out a 30 year fixed rate loan for $202,000.

She was thrilled to become a homeowner and excited by the prospect of home price appreciation.

When a Refi is a No-No
Fast forward a couple of years later. Her condo had appreciated but so had her credit card debt. Enticed by all the refinance offers that came in the mail daily, she decided to investigate. Not fully understanding what she was getting into, Trudy refinanced her loan to one that offered a myriad of payment choices, better known as an “option-ARM.” The lowest payment option caused the loan to negatively amortize – which means the deferred interest is added to the outstanding loan balance – the exact opposite of a fixed amortizing loan where part of every single loan payment reduces the mortgage balance.

Like many other homeowners before and after her, Trudy chose this option in order to improve her cash flow and at the same time pay off her $30,000 in credit card debt. It’s understandable why this would seem like a good idea, but unless you truly understand what you’re getting into, the ramifications can be devastating.

By the time she applied for the loan modification in December of 2008, her deferred interest had grown to $22,000, her loan was now $260,000 and the interest rate was 7.11%.

All hell broke loose in September 2008.  Trudy received child support from her ex, which helped make ends meet. But he was a mortgage salesperson and with the fall-out from the credit crisis his income was slashed by $80,000 a year.  He was able to get the court to reduce his child support from $1200.00 a month to $180.00 a month. Ouch!

House Underwater
Trudy notified her mortgage company in October that she wasn’t able to make her payment. She had few options. Her loan balance was larger than her home value (also known as being “under-water”) so selling wasn’t an option.  She knew foreclosure was next and starting thinking about moving in with friends or family to regroup.

She found out about loan modifications and applied with her lender. She was turned down in January – the lender cited “information contained in her credit report.”

With a Little Help From Her Lender, Trudy Pulls Through
Then, as fortune would have it, President Obama’s mortgage relief program “Making Home Affordable” was launched in March. Trudy re-applied and this time she was successful. She received a letter of agreement on April 10 from her lender. Here are the new terms:  1. The lender agreed to reduce her loan balance by $53,442.4 to $208,402.44.  2. A new payment and interest schedule starts with a 2% interest rate and gradually increases (.75) per year to 6.5%. 3. Interest only payments are valid, but the borrower can choose to make a fully amortizing payment.

After hearing Trudy’s story, I did a little sleuthing to get some updates on the Obama administration’s $50 Billion mortgage relief program.  Turns out that Trudy was lucky. So far, the results have been disappointing, as lenders were not cooperating. But there are signs that this is changing.

Lenders have sent out offers to reduce monthly payments to around 19% of 3 million eligible borrowers’ –  – this is up from 15% at the end of July. Here’s the story>> (Sorry, the story has been removed by Yahoo.)

In the end, Trudy’s persistent and irrepressible self saved the day. She’s learned a lot of lessons from this…one of which is to always read the fine print and to better manage her use of credit cards.

You can find Trudy at the beauty salon at the Claremont Hotel in Berkeley, 510-843-3000 or at Altogether Different in Corte Madera, 510-334-5401.

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I Will Teach You to Tweet – Women in Consulting Twitter Panel in San Francisco


Get Twitterized at the Sir Frances Drake Hotel
Twitterize your business at the Sir Frances Drake Hotel / Sept. 23 5:30 pm!

Hi everyone! Public appearance alert. I’m honored to be part of a distinguished panel dishing about all things Twitter at a Women in Consulting event at the Sir Francis Drake Hotel. This is coming up soon and I wanted to make sure you know all the details.

What:   Tips, Tools and Tricks to Make Twitter Work for Your Consulting Business.
Where: Sir Francis Drake Hotel, Second Floor, 450 Powell St. San Francisco, CA.
When:  Wednesday Sept. 23, 2009 5:30 – 7:30pm
Who:    My fellow panelists are Nancy Friedman chief wordworker at, and Irene Koehler, founder of Almost Savvy

Irene and Nancy are leading lights in the Twitterverse so you really should attend to hear what they have to say.
Eats: Light appetizers.

If you would like to register for this event, please go here>> See you there!

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I Will Teach You to be Rich

What Exactly Does it Mean to be Rich? Ramit Sethi Tells All in His Book
What Exactly Does it Mean to be Rich? Ramit Sethi Tells All in His Book
What Exactly Does it Mean to be Rich? Ramit Sethi Tells All in His Book

Until a few months ago, I hadn’t heard of Ramit Sethi (pronounced Ra-meet, Say-tee) and his blog or his book of the same name. Then one day while I perused the book section at Costco, there it was – boasting a bright orange and yellow cover with black print. It practically screamed out at me. “I WILL TEACH YOU TO BE RICH.” My first thought was, “that sure is an obnoxious title.”  But being the personal finance junkie that I am, I chucked it into my cart in hopes that I would learn something new and share it with my clients.

After reading the first few pages I knew this book was different.  It’s written in an irreverent, breezy style and I found myself nodding my head and thinking to myself, “I so agree with this” as I read each paragraph. It’s written for people in their 20’s and 30’s (Ramit himself is 27) but this book is a great guide for anyone who is struggling with getting their personal finances in order.  It offers great, solid, no-nonsense advice, and an easy to implement 6-week action plan, plus lots of motivating talk about building a life that is “rich.”

Ok, I’ll admit it. I was fooled by the title, which of course is exactly his intent.  A rich life in Ramit’s world doesn’t necessarily mean lots of $$$, it means living the life that makes you most happy – which is different for each person.

Ramit is passionate about two things. He wants younger people to take action NOW and build a solid financial foundation (and he gives them the tools and specific advice to do so) and he is passionate about exposing the financial industry’s flaws. He is determined that his audience doesn’t  fall prey to the nefarious practices of some advisors and institutions.  He doesn’t like big banks, credit card companies, big brokerage companies and most financial advisors (although he does concede that “if you are determined to get professional help, begin your search at the National Association of Personal Financial Advisors (”  Full disclosure: I am a NAPFA advisor.

A couple of weeks ago, I was fortunate to have the opportunity to interview Ramit about personal finance philosophy at  the Commonwealth Club of California

I wasn’t surprised to find him smart, witty, engaging, and articulate. I asked him to describe his 6-week action program in 5 sentences or less. He said, “I can do it in 5 words.” He then proceeded to do it in 4, “Automate, Negotiate, Spend Consciously.” I asked him if he was rich. He said “….money is a part of that, but it’s a small part. People seem to think that being rich is only about money, but that is simply not the case.”

To learn more about Ramit’s personal finance philosophy and system, you can buy the book at Amazon.

Or, read his blog or view this video on the Commonwealth Club youtube channel.

Teaser from the book:

Week 1, you’ll set up your credit cards and learn how to improve your credit history (and why
that’s so important).
Week 2, you’ll set up the right bank accounts, including negotiating to get no-fee, high-interest accounts.
Week 3, you’ll open a 401(k) and an investment account (even if you have just $50 to start).
Week 4, you’ll figure out how much you’re spending. And then you’ll figure out how to make your money go where you want it to go. In Week 5, you’ll automate your new infrastructure to make your accounts play together nicely.
Week 6, you’ll learn why investing isn’t the same as picking stocks—and how you can get the most out of the market with very little work.

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Let’s do the Numbers – Secrets of the FICO Score Revealed

Jeanne Kelly of The Kelly Group
Jeanne Kelly, Founder and CEO of The Kelly Group

As a financial planner, I know too well how important good credit is to the financial health of my clients. Excellent credit is a financial asset that can pay huge dividends across all areas of your financial life. But the world of credit bureaus and credit reports can be a little confusing to many people. Maybe even a lot confusing.

If you weren’t already aware, whenever you apply for credit, whether for a mortgage, an auto loan or a home equity loan, the lender is going to “pull your credit” and take a look at your FICO score. That score is a hugely important metric. Virtually every lender depends on the FICO score to measure your creditworthiness. A “great” score means you’re eligible for the best possible interest rates. A “good” score means you can get a decent, but not “lowest possible” interest rate and so on. But what is “great” and what is “good” and who decides?

The good news is, it’s possible to improve your score. The not so good news is that banks and other lenders, frequently adjust what a “best score” is depending on overall economic conditions.

Jeanne Kelly is founder and CEO of The Kelly Group, based in Danbury, CT. The Kelly Group is a credit repair firm that specifically works with their clients to improve their FICO scores. The company works with individuals directly and with mortgage brokers. Jeanne was kind enough to spend a few minutes discussing the nuts and bolts of FICO scores.

Q: So what exactly is a FICO score? What does it measure exactly?

Jeanne Kelly: It works like this. Thirty five per cent of your FICO score is derived from your payment history. Thirty per cent comes from amounts owed on revolving balances. That’s a huge number – and people should know that by lowering balances owed, that could really help your score. Length of credit history is 15%, new credit is 10% and types of credit used is 10%.

Q: So there are five categories that go into your FICO score?

Jeanne Kelly: Right. If you understand this, you can work with your FICO score and stay on top of it and hopefully improve on it.

Q. Where does FICO get the information?

Jeanne Kelly: From all three credit bureaus – Experian, Equifax and Trans Union. A simple way to think about this is that FICO looks at your credit report and gives it a grade. So in order for the grade to change, you are really dealing with the credit bureaus, not FICO.

Q: How often is the information updated?

Jeanne Kelly: It could be updated every day. It depends on when your creditors decide to report your balances.

Q: Where does a person get their FICO score?

Jeanne Kelly: The thing to watch for are those offers where someone will give you your “credit score”. I’d stay away from that. Since most lenders are using FICO scores, then that’s what you want. Go to — that’s exactly where you want to go.

Q: If a young person is just getting out of college, do they have a FICO score?

Jeanne Kelly: Well, you have a score if you’re using credit. You have to have two to three accounts to get a score. So whether it’s an automobile, a major credit card, a store card, a student loan – as long as you have three things reporting, you’ll get a score.

Q: How do you feel about young people and credit?

Jeanne Kelly: I suggest using credit in a healthy way and I also suggest trying to start young. I know people get afraid because college kids get these credit card offers and some of them go wild. But if you start young, by the time you’re 25, you will have learned how to use credit correctly and you’ll have a great score and get better interest rates.

Q. What’s a good score?

Jeanne Kelly: You know things change all the time; if you asked me that question last year I would have told you 680 was “A” credit. Now it’s 740.

Q. What changed?

Jeanne Kelly: Well, look around you. The banks have tightened credit, they’re being more cautious. People are talking more than ever about credit because of what’s going on in the economy and I’m glad — being aware is a good thing. If people are informed, then they can figure things out and improve their scores. But right now this is what banks are doing and people should be cognizant of that.

Q. Should people continue to use credit?

Jeanne Kelly: I do see people being afraid of it now. I’ve heard people say, “I’m going to use my debit card.” That’s a mistake. It’s perfectly okay to use credit, just do it in a healthy manner.

Q: Is it possible that your score is one point below what the lender needs to give you the best possible rate?

Jeanne Kelly: That does happen, sure. It’s like being in school – you might have to get a 90 or above to get an A. If you get an 89, you’re getting a B+. In that situation, you wait a little bit, you pay down some balances and try to move your score a bit.

Q. Is the FICO score a fair measure of a person creditworthiness?

Jeanne Kelly: I think it is. For the banks that are issuing credit, it simplifies the process quite a bit. Rather than trying to evaluate all the information in a credit report, or three credit reports, they have a grade. I think it’s a fair system.

Q. If someone believes that their score is inaccurate or isn’t a fair representation of creditworthiness, what should they do?

Jeanne Kelly: I would look at whether all your bills are being paid on time. And look at your balances. Remember earlier I said that 30% of the FICO score comes from revolving balances? Well here’s a great tip. If you keep your available balance to 20% or less of your credit limit, you’ll maximize your score for that particular portion of the FICO score.

Q: How long does it take for your FICO score to change?

Jeanne Kelly: It could take up to 90 days. So if you’re planning to go house hunting, be aware. You should start looking at your score months and months in advance.

Q: How does the Kelly Group help its clients improve their score?

Jeanne Kelly: We work directly with the creditors reporting the derogatory information on our clients’ credit reports. We’re the middle person. We know who to talk with to get the best, fastest results. We’re going to make sure that your creditors report accurately and we’re going to educate you at the same time. We’ll suggest what accounts to pay down, we might suggest opening a different account or closing an account.

Q: How much improvement can you achieve?

Jeanne Kelly: Well, every case is different. Some people might get a ten-point spike; others might see a 100-point gain. On average, our clients see a 50-point increase.

Q: That’s a big jump.

Jeanne Kelly: When you’re talking about a 30-year mortgage, it’s very dramatic.

There’s so much money riding on your FICO score. If you look at the interest on a thirty-year mortgage and the difference a better score could make, it’s just incredible. Think about it – when we do our taxes, we hire an accountant, when we go into a court of law, we hire a lawyer to protect our interests. With something as big as this, we really need someplace to go. That’s what we’re doing – we’re a small company trying to do the right thing.

Q: This has been fantastic. Really very helpful and informative, thanks so much.

Jeanne Kelly: I loved it! Thank you!

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Living Within Your Means – 10 Tips on Saving Money

Are you cash-flow challenged?When did dining-out, facials, manicures, pedicures, personal trainers, pricey haircuts, books, magazines, CD’s, I-Phones and expensive annual vacations become necessities? How did we get here?

This fee-only financial planner contemplates this question as client after client comes in with cash flow issues – agonizing over credit card statements, wondering how they can keep up with an avalanche of bills.

As a first step in my financial planning process, I ask clients to complete a detailed cash flow worksheet. This is followed by a meeting to review this document line by line.

Are you cash-flow challenged?

This exercise is as exhilarating as it is agonizing – clients are relieved to finally be doing something around financial planning, but terrified that the end result will be deprivation.  Everyone has his or her own “can’t give this up” list.

I’ve learned to remain neutral as a client explains to me why they can’t possibly cut out their $400 a month Amazon habit or can’t postpone the $4,000 vacation for a couple of years. (Really? Are you sure?)

Lately, there are more and more cash flow challenged clients at my door, and of course, it’s the economy.  No longer is cash-out refinancing an option as house values plummet and equity lines of credit disappear or decrease. And, to make matters more difficult, credit card companies are lowering limits and raising interest rates. Brokerage balances are also down.

Some state employees are seeing pay cuts as high as 8 %. The self-employed and freelancers lament incomes that have been slashed in half over the last year.

A spouse loses a job, two incomes are now one because of divorce, or unemployment — benefits have run out and there’s no job in sight. Not exactly a pretty picture.

All of a sudden, people have to live within their means, and for many, this is the first time they’ve had to watch what they spend and they’re not finding it easy to cut back.

As a financial planner, I can assure you – our incomes are finite, there’s just no way around that fact. I remind clients that recessions and hard economic times don’t last forever. The good times will roll again, but in the meantime, this is a good opportunity to really tap into what makes us most happy and to learn to live within our means and make it stick.

Living within your means doesn’t mean that you have to cut out all pleasure. Think of living within your means as good practice for your retirement years when you live off the money you save now. Think of it as living a sustainable lifestyle.

10 Ways to Save Money and Not Feel Deprived

Here’s a few spending tips for the person who doesn’t want to feel deprived:

  1. Suspend spending on those items you can do yourself:  manicures, pedicures,  highlights, gym workouts. Or, cut back on frequency.
  2. Don’t buy things you can borrow or trade  (books, magazines, cd’s).
  3. Avoid temptation – stay away from your favorite shops and toss out the catalogs unopened.
  4. Stop subscriptions to things you aren’t reading: newspapers, magazines, online and offline.
  5. Eat really well at home.
  6. Bring delicious food to work for lunch.
  7. Buy entertainment a la carte instead of via subscription: movies, theatre, and music events.
  8. Hold onto things longer – your cell phone, computer, car, and oven.
  9. Ramp down the luxury a bit – buy less expensive wines, eat at moderately priced restaurants.
  10. Postpone the big vacation for a few years; enjoy smaller trips to great places.

I’d love to hear from you. What are your favorite money saving tips?

Do you want to manage your money (and life!) better?

The Happiness SpreadsheetIf you want to think differently about the relationship between your spending, your values and your happiness, then sign up to get your FREE copy of The Happiness Spreadsheet.

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Healthcare and Money: Fee Only Financial Planner Discusses Ways to Improve Your Insurability

Buying health insurance when you are self-employed, pre-Medicare, or temporarily jobless.

Remember: An Apple a Day Keeps the Doctor Away | photo
Remember: An Apple a Day Keeps the Doctor Away

The healthcare debate rages on… will the Obama administration succeed where the Clinton Administration failed?  Will the new healthcare system cost you more or less?

Too soon to tell, says this fee only financial planner.

In the meantime, if you’re an individual looking for insurance there are a few critical  things you need to know. Once you leave a group insurance policy, (including Cobra) within which the government prohibits discrimination against people by age or health condition, all bets are off. You will be “underwritten,” which means that an insurance company only offers you coverage if they think they’ll get more from you in premium than they’ll pay in claims (may sound cynical, but true.)

If you can plan ahead for the underwriting process you are fortunate. Most people look for individual insurance when they: 1. retire early and know Cobra will run out before Medicare kicks in. 2. decide to quit their job with health benefits to start a business or freelance. 3. lose their job or a spouse with coverage loses his or her job.  Two out of three of these situations allow for advance planning.

What measures can you take to improve your insurability?

1. Ask your doctor to review your medical records for accuracy.

Human errors happen, a condition you have been treated for may have improved, a code may have been applied to your record to get insurance coverage – you’ll want to get these kinds of discrepancies updated and corrected on your medical records.

2.  Order your MIB report (Medical Insurance Bureau report).

This report is the healthcare equivalent of a credit report.  Instead of tracking your bill paying ability, it tracks your medical history.  The data is created by previous insurance carriers – the very same folks with whom you have applied for individually underwritten life, health or disability insurance.  The insurance carriers use 230 codes to report your health conditions such as high blood pressure, asthma, diabetes or depression, and lifestyle choices such as smoking or high risk activities (sky diving).  Review it and make sure any errors are corrected.  It’s free once a year.

3.  Chronic illnesses cost more.  Work with a doctor to get your weight, blood pressure or diabetes under control.  Start an exercise program and make healthier food choices.

How do you go about shopping for individual health insurance?

1. You can go directly to health insurance companies but my advice, especially if you have a chronic health condition is to use a “non-captive” health insurance agent or broker-one that does not work directly for an insurance company.

2. If you do have a chronic health condition, make sure the agent you choose has expertise in getting insurance for people with your condition.

3. Health insurance agents are paid and incentivized in many ways.  Learn and understand the ways they are compensated. It’s not always transparent.  Ask the questions and insist on answers.

4.If you need help, find a financial advisor that will guide you through the process, many financial planners offer health care planning as part of their comprehensive financial planning services.

Though these proactive steps may seem like a lot of work, they can save you money. And, best of all, they might get you the insurance you deserve.

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Fee Only Financial Planner Dishes on House Buying in the Bay Area

House Buying in the Bay Area | Jim and Annette’s Financially Sound, Thoughtfully Executed, Excellent Adventure

Curtis Financial Planning
Jim and Annette in front of their new home

“I really admire the conscientious way you bought your first house,” said I. “That’s because we’re really cheap!” said they, almost in unison. Meet Jim and Annette. They’re in their late 30’s and lucky. They both watch their pennies. If only all my clients would…well, never mind.

While many of Jim’s and Annette’s friends bought houses in the last few years, they held back. The market was too frothy and unaffordable, they thought. At the time, life was a cramped one bedroom apartment in North Berkeley. But of course things change. Soon enough real estate prices crashed, and taking the leap made more sense. They started out on their own, found some neighborhoods they liked and found some houses in their price range: no more than $525,000.

Know Thy Numbers
In the meantime, Jim and I worked on their cash flow adding in housing costs (they’ve been clients since 2007).  Both were adamant that they know the numbers and not get in over their heads.  Jim has an inviolable goal, “I want a six month buffer of living expenses at all times.”  As a self-employed graphic designer,  he has a about a thousand good reasons for doing this. And while Annette currently works for Williams-Sonoma – layoffs have begun there.  I recommended they get pre-qualified for a mortgage, which they did.

Here’s a few things they learned along the way.

Know your must-haves
Jim and Annette knew what they had to have:

1.  A good location so they could walk to shops and services, and have an easy commute.
2.  A live-in ready house: some work would be okay, but they wanted no delays or additional costs.
3.  They wanted to live near their friends.

What you can live with?
No house is perfect, especially a house in the Bay Area in the $500,000 price range. Here’s what Jim and Annette had to contend with:

Close proximity to Bart meant noise, so new windows are planned.
They lack storage space, typical of older homes (1926).
They have $18,000 worth of work  to do – plumbing upgrades, electrical work, window replacement, foundation repair and some unexpected termite damage. Closing cost credits (due to the fine work of their realtor Carol Parkinson) and first time home buyer credits ($8,000 on their 2010 taxes) will help pay for all this.

Know what you care about most
Jim and Annette are now proud and busy homeowners: they’re refinishing floors, knocking out walls and buying a few new furnishings. They splurged – on a $4,000.00 Thermador Range.   When I questioned the decision, Annette said something to me that I thought was very wise:  “It’s about knowing what you really care about” she said, “and putting resources and energy towards those things, and then making compromises on the rest.” Wise words.

My Take: Top 5 things to consider when buying a home in the Bay Area

1. Know what you can afford before you start looking for a home.  Get pre-qualified.
2. Identify the neighborhoods where you want to live. Get to know prices.
3. Make a list of your no-compromise must-haves.
4. Get referrals for real estate agents and mortgage brokers.  Make sure you’re comfortable and that there’s a level of trust between all parties.
5.  Know that the costs of home ownership don’t end with the purchase.  Endless amounts of money can be spent improving, furnishing and decorating a home. Carefully plan your expenditures based on your income and budget.  Most important: don’t rely on credit.

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Couples and Their Money – Yin and Yang

Here is my advice to couples who are facing financial challenges and don’t see eye to eye on the value of a financial planner: Work together and see if you can find consensus.They were in their late 30’s with three small children.  He was friendly and open, she was quiet and not terribly happy to be there. He’d orchestrated our meeting after finding my website and liking it so much he called me.

Like many Americans, they are caught in a financial “perfect storm.”  They got married 6 years ago and decided to have a family. After the first child was born 4 years ago, she left her job to be a full time mom. They now have a 2 year old and a newborn as well.

The American Dream

In 2006, they put 20% down on a million dollar home.  Back then (it seems like another age entirely), not having the income to support the mortgage payments on an $800,000 loan was no big deal. You just “stated your income” and secured an interest-only loan.  And voila! Home ownership was yours – the American Dream.

Fast forward three years. The ITI (Interest, Tax and Insurance) payments are killing their budget, vacations are out, they’re having a hard time finding the money they need for home improvements and funding college savings accounts.  To add insult to injury, the company she worked for went bankrupt, and all of her retirement savings was in company stock which is now worthless.

Stormy Weather

She tried freelancing,  but with three young children, concentration is difficult and the stress level is climbing. His employer has announced no more matching funds for the retirement account and no cost of living raises this year. Serious storm clouds are gathering on this couple’s financial horizon.

Love and Money

Given what is happening to this couple, I found myself surprised that only one of them – the husband – wanted to meet with me. It was rough sledding with his wife – she wasn’t convinced I could help and was quite firm in her convictions. But credit where credit is due, she did come to the meeting. Truth to tell, it’s usually the other way around. Such is married life, I suppose. You like camping, I like bed & breakfast’s, you  like parties, I like quiet nights at home, you want a financial planner, I want a vacation. Yin meet Yang.

Advice and Consent

Here is my advice to couples who are facing financial challenges and don’t see eye to eye on the value of a financial planner: Work together and see if you can find consensus.

Remember one of the rules of marketing: What’s In It For Me? Help your partner understand there are benefits.  Even though the process may be uncomfortable, and difficult to understand, the end results are what matter most.

It’s one thing to say, “We have to have a financial planner because we don’t know what we’re doing” vs “If we get a financial planner to help us, we increase the chances that we can put Peter and Julie through college and have a decent retirement. Without that kind of help, I’m not sure how we can do those things. Will you help me?” Stress the long term and short term benefits.

Or, you can take a different attitude all together… as  another reticent  spouse said to me at the end of a recent interview:  “Oh, you mean I can pay you to listen to him nag about our money… that sounds really good to me.”

Say Goodbye to Your Money Troubles

Which brings me to a very important reality:  Money troubles are a leading cause of strife in a marriage and often times can lead to divorce.

If an objective advisor can help you to communicate about money and develop a workable plan which in turn leads to a more harmonious relationship… wouldn’t it be worth it?

So what do you think? 

Does this couple need a comprehensive financial plan?  Will he persuade her? Will she come around? Would love to know your thoughts.

Do you want to manage your money (and life!) better?

The Happiness SpreadsheetIf you want to think differently about the relationship between your spending, your values and your happiness, then sign up to get your FREE copy of The Happiness Spreadsheet.

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Women and Money – Women in the Food Biz Talk Business Plans

Women and chocolate photo

Can street smarts, charisma and passion stand in for a business plan?  It all depends on who you ask.

Women and chocolate photo
Women in the Food Business at the San Francisco Commonwealth Club – From left to right: Kathy Wiley, Christine Doerr, Malena Lopez-Maggi and Mindy Fong

I recently hosted two panel discussions that focused on women entrepreneurs in the food business. Participating were eight vibrant businesswomen in their 20’s and 30’s.  Each had the entrepreneurial bug from an early age, each has bootstrapped their business and most had no written business plan before they launched.

Of Passion and Practicality

Molly Fuller of Hands On Gourmet and Kathy Wiley of Poco Dolce are self-described pragmatists. “I wanted to make money,” said Molly. “My father always told me to do it myself, that was the way to make money.” Kathy Wiley said her decision “came down to the stable shelf life and high price point” of high-quality artisanal chocolate. Other participants cited their love of good food, and their lifelong desire to start a food business.

Fire, Ready, Aim

Kika Besher of Kika’s Treats and Christine Doerr of Neo Cocoa are graduates of La Cocina, a food business incubator in San Francisco where eligibility requires a business plan. Kika’s current business profile no longer resembles her first plan and she wishes she had a new one. “So many things change,” she said. Christine Doerr said her plan has changed and there’s a lot of “fire, ready, aim” in her business.  Kathy Wiley (Poco Dolce) started a number of business plans, only one of which she came close to finishing. Malena Lopez-Magg of The Xocolate Bar said, “I did write a long business plan but it was obsolete as soon as it left the printer.”

Recurring Themes

–    Understand the numbers, but don’t get hung-up on producing a document.
–    If you make a plan, be aware that things change and the plan may need updating.
–    Pay attention as you go and you’ll learn.
–    If you are self-funded, the decision to create a business plan is in your hands.

A Different Take

I have no doubt that these amazing women will succeed. Street smarts and passion can take a business a long way. However, as a financial planner I see what bootstrapping can do to a business owner’s personal finances and I am duty bound to counsel caution. Here are  my three reasons why you should consider developing a business plan.

Writing a business plan compels you write down the numbers and
decide which are most important to your particular business – then it’s
up to you to watch them like a hawk.

Taking shortcuts doesn’t work when it comes to growing a business.
Writing a plan helps you to think strategically and decide what’s best for the company in the long term. This can even include an exit strategy.

Assumptions change and circumstances change, but don’t make that an excuse to avoid having a plan.  Even if you launched on sheer gut instinct, step back and create a plan now. You’ll be rewarded with clarity and peace of mind.

What do you think?  Is a business plan an integral first step to launching a business? As always, your comments are welcome. If you have any topics you’d like to see here, feel free to let me know.

Women Entrepreneurs in the Food Business Panel
Molly Fuller, Hands On Gourmet
Nona Lim, Cook! S.F.
Gabrielle Fuersinger, Cake Coquette
Kika Besher, Kika’s Treats

Women and Chocolate – A Natural Combination Panel
Malena Lopez-Maggi, The Xocolate Bar
Kathy Wiley, Poco Dolce
Christine Doerr, Neo Cocoa
Mindy Fong, Jade Chocolates
Dayna Macy, Author

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Curtis Financial Planning