and Rhionna Watson are very good at making their money
go a long way. They have to be.
a modest combined income the couple have raised three
children, earned college degrees, started careers and
remained steadfast contributors to their church.
the Watsons also found themselves beginning their 40s
with a negative net worth and facing questions about
shrinking their debts, building their savings and laying
the groundwork for their retirements.
their three children approaching adulthood — the
oldest is a community college student — the Watsons
are ready to put their years of "survival
mode" behind them and create a more secure
also saw an opportunity to change when Rhionna Watson
began working full time in June, increasing the couple’s
combined annual income 32 percent to about $90,000 a
year before taxes and withholding.
way we’ve always lived before is survival. How we can
do the most with the least?" Rhionna Watson said.
Now that they have more take-home pay, the Watsons want
to use the additional money wisely.
the Seattle-area couple asked for a free money makeover
from a financial planner with their local chapter of the
Financial Planning Association. The chapter connected
the Watsons with financial advisor Trish Howe.
examined the Watsons’ finances and found the family
was just scraping by, even though both parents have
steady, full-time jobs.
Watson is a certified technician who makes artificial
limbs. Rhionna Watson is a case manager at a
two bring home about $6,321 a month after taxes. But
they also spend about $5,300 a month, Howe estimated,
leaving the family with a weekly surplus of about $255.
a family of five, that’s not much," she said.
Watsons also have about $44,800 in debt from a student
loan, a car loan and credit card purchases. They have
about $750 in savings.
immediate goals for the family were to help them reduce
their debt, live within their means and support their
children in college.
couple’s credit cards were at the top of Howe’s hit
list. She urged the Watsons to stop digging a deeper
hole by ending all credit card purchases except for
emergencies. Howe also advised the couple to use debit
cards instead, because the cards make spending more
transparent by withdrawing money directly from the
household checking account.
Howe advised the Watsons to pay down their debt,
starting with a $1,807 credit card balance at a variable
interest rate that is currently 13.24 percent. The
Watsons figure they can pay $400 a month on the card by
tapping their weekly surplus and also diverting some
money earmarked for savings. At that rate, the balance
would be paid off by April.
fine by them. "I hate having that debt over my
head," Jason Watson said.
the Watsons reduce their debt payments, they will have
more money available for savings, Howe said.
of the Watsons’ employers offered matching
contributions with their 401(k) programs. So Howe
advised the Watsons to open individual Roth IRA accounts
at a discount brokerage that doesn’t have annual fees.
Watsons and Howe even discussed the couple’s
longstanding commitment to charitable giving, chiefly in
the form of tithing 10 percent of their gross income to
the Seventh-day Adventist Church. The contribution is
one of their largest monthly expenses.
suggested temporarily reducing the contribution until
the couple pays down their debts. Another alternative
was contributing time instead of cash.
charity and the church are among the couple’s core
values, and the Watsons did not want to reduce their
annual giving. "It wouldn’t feel like we were
walking in faith," Jason Watson said.
want to do well with the money, but we also want to do
good things with the money, too," Rhionna Watson
the Watsons, one of the biggest takeaways from talking
with Howe was pretty simple: "Start saving,"
Jason Watson said.
years of living paycheck to paycheck, the Watsons
believe they may be turning the corner, chiefly because
of their higher income and Howe’s guidance.
feel a little more hopeful," Jason Watson said.
"Once we get a few things paid off, we’ll be able
to breathe again.
looking forward to that."