— Sometimes timing really is everything.
was the case for Caitlin Littlefield and Nick Neverisky,
both 30, engaged and earning about $63,000 a year
are at an age when the future stretches in front of them
like a long boulevard. The Seattle couple’s goals
include graduate school, rewarding careers, children and
a house, to say nothing of a trip to New Zealand and
the two were unsure about an affordable sequence of
events that would make their dreams come true. Both
completed their bachelor’s degrees just before the
financial panic of 2008 and the Great Recession, which
rattled their confidence in the future.
the crash they learned, Neverisky said, that
"success is not assured."
local chapter of the Financial Planning Association
connected Littlefield and Neverisky with Len Skiena, a
certified financial planner.
helped the couple crystallize their plans for the future
and avoid financial potholes by staggering some of their
more expensive life events, such as earning advanced
degrees, having children and buying a house.
we’re planning for is the life they want," Skiena
said Skiena brought the couple’s financial future into
sharp focus. "Everything is much less nebulous
now," she said.
many young people in Seattle, Littlefield and Neverisky
are relative newcomers, having moved from New England.
Littlefield is working toward a doctorate in forest
ecology at the University of Washington School of
Environmental and Forest Sciences. She earns about
$20,000 a year as a research assistant supplements her
income with occasional catering jobs.
earns about $43,000 a year as a project associate with
Triangle Associates, a downtown Seattle consulting firm
that provides environmental education, mediation and
their uncertainty about the big picture, the couple are
meticulous when it comes to their day-to-day household
finances. They currently have about $14,000 in a
checking account and about $6,900 in savings.
and Neverisky are already saving for retirement, with
about $5,500 in their 401(k) and Roth IRA accounts.
Their debts add up to about $28,700. Two-thirds of their
liabilities are student loans; the remaining debt is for
talking with the couple and running financial
projections, Skiena was not concerned about their
long-term outlook. He saw some red flags, however —
not years in advance but within this decade.
really good thing is that they found out in time to do
something about it."
example, Neverisky has toyed with the idea of earning an
advanced degree. But Skiena’s projections showed the
couple’s income and cash flow would suffer if
Neverisky enrolled in a graduate program before
Littlefield completes her degree and resumes her career.
Neverisky waited to go back to school until after
Littlefield graduates in 2018, the couple could avoid a
doing that, it gives her a chance to start making more
money before Nick starts making less," Skiena said.
advised the couple to keep their assets in cash now
because they need the money for living expenses. Now is
also not the time for the couple to buy securities that
could lose value in a Wall Street downdraft.
also offered Littlefield and Neverisky some emotional
support: Money will be tight for a few years, and it
will be frustrating at times, he said. He told them to
couple’s first reaction to Skiena’s assessment was
relief. "The haze is cleared," Littlefield
said. "I’m not that worried anymore."
meeting with Skiena, Littlefield and Neverisky are also
using a particular phrase far more often: "cash
flow." The term helps them think about their
current and future finances.
is not the least bit worried about the couple running
out of money, given their financial habits and their
commitment to invest in their careers. Their big
challenge is to get through the next five years.
they reach the age of 35," Skiena said, "they’ve
reached the promised land."
THE MARKET — SAY WHAT?
a sound financial plan takes time and thought, but the
real work comes later — when you have to stick with
many people stray from their individual financial plans
when they are either spooked or seduced by passing
market conditions, said Len Skiena, a Seattle-area
certified financial planner.
financial plans compensate for market volatility, which
is another reason to stay the course, Skiena says.
disciplined to it," he said. "Don’t try to
that individual investors are too often stampeded into
making poor decisions is especially abundant in the
the Boston-based research and auditing firm, has studied
individual-investor behavior for 20 years. The findings
are sobering: Individual investors consistently earn
less than the market averages, as measured by the major
because too many individual investors try to
"time" the market’s peaks and lows, Skiena
said. It’s a recipe not for beating the market, but
for getting beaten.