Last week I met with a financial advisor.
It was one of the benefits of my job. I work at a large organization that runs a number of “wellness” programs through the HR department. While I ignore a lot of them — house buying workshops, financing your child’s education, etc. etc. — I was intrigued by the one-on-one appointments with an independent financial consultant. So I signed up. Because, hey, it was free, and maybe I would learn something new!
I came prepared and sailed into the tiny conference room with my laptop filled with files and files of conspiracy-theorist level spreadsheets. We’re talking budgets, account totals, and lists of everything I have bought/spent for the last 18 months. As soon as I showed the advisor my screen, his eyes lit up with joy. “I’ve never had anyone come into the first meeting as prepared as you,” he said.
Which, honestly, makes we worry for my coworkers. But I digress.
Before getting really down and dirty with the numbers, he asked me a few background questions. What have I been doing with my finances? What are my goals? Am I married? Do I have student loans? Etc. etc. etc. After getting a handle on my situation, he asked me what my goals were. I said I had two main goals: (1) pay off my student loans and (2) be able to completely retire at 59.5, if I choose to.
One is a truth and one is a lie.
Frankly, I would like to FIOR (be financially independent and optionally retire–in my case, semi-retire) by 50. Of course, that’s a lie too. I’d like to FIOR by 45. Saying it out loud makes me feel foolish, though, as if it is an impossible dream, and not wanting to have the dream squashed, I told him 59.5, when I can start taking money from my retirement accounts. I’m 32 right now, and thirteen years just doesn’t seem that doable, given my current HCOL area and student loan debt. But it’s there, in my heart (and no longer a secret, since I’m putting it in my blog, I guess).
We looked at my student loans first. I have two big direct unsubsidized loans from the federal government. Each loan is approximately $20,000, and because I took them out in two different years, one has an interest rate of 6% and the other 6.6%. I’m currently in my grace period, so I don’t have an exact monthly payment amount yet, but I’ve calculated them to be a little less than $500 a month. Of course, like, a full $200 of that is just interest. He suggested refinancing, but here’s where my anxiety creeps in–keeping my federal loans comes with perks, such as hardship deferments and things like that, which I would lose if I refinanced. However, I plan on paying my loans off as quickly as possible anyway, so does deferment availability matter anyway?
(I’m still looking into this. If I can find somewhere that will refinance me at like 3.5% or less and allows for early pay-offs, I might do it. But that’s for future S to figure out.)
Then, we looked at the amounts I was putting away for retirement and where. I have a traditional IRA, but was advised to switch to a Roth. This is something I have been thinking of for a while anyway, mainly since I learned that you can take out what you’ve put into a Roth* at any time, since it’s already been taxed. This is something that I have worried about–I know it’s sensible to put as much into retirement as possible, but there’s a nagging ‘what-if’ worry in the back of my mind that makes me hesitate.
“What if my car blows up, and I have to spend my whole emergency fund, and then I get fired?”
“What if my mom’s house gets blown away in the next hurricane and she needs some liquid cash to get back on her feet?”
“What if I get some rare cancer not covered by my insurance and it costs ten million dollars?”
“What if Godzilla comes and smashes my apartment and I have nowhere to live?”
Knowing that this money isn’t necessarily 100% tied up until 59.5 does put me a bit more at ease. Even though I don’t plan on needing it until I am eligible to receive dividends, viewing it as a super catastrophic kablammo emergency fund that supplements my own, normal, less life-or-death emergency fund makes me feel better about putting so much of my cash into it.
After retirement plans, we spoke briefly about other types of investing. He beamed at me, eyes twinkling. “I usually don’t even talk about this kind of thing in these consultations, but I think you can handle it,” he said, while reaching for an investment brochure. We talked about the different types of funds and asset diversification, and picked out a few things to try–some REITs, Index Funds, Emerging Market funds, etc.
(I have a list of exact funds**, but this leads us to another issue–how to get my money to these funds. I’ve been trying to get some things set up through Fidelity and Vanguard, but both processes have been mildly frustrating, to say the least. Looks like I’ll have to actually call a human…)
Overall, I enjoyed the experience, although he was a little pushy in emphasizing “unexpected surprises” like accidently having a kid (“My partner and I don’t plan on having any,” I said. “Well, you never know what nature has planned for you!” he replied. And I bit my tongue, saying to myself “That’s why birth control and termination options exist.” BUT THAT’S A WHOLE ‘NOTHER ISSUE.)
While I didn’t necessary learn anything new in the appointment (I’ve done a LOT of googling, reading financial blogs, etc.), I found it valuable in that it gave me some assurance that I’m already doing some things right. It clarified a few things about my own finances that I still found fuzzy, and it also gave me a little push to pursue some opportunities that I had been thinking about, but that my own risk-aversion (and generally change-resistant nature) had prevented me from already doing.
All in all, it was pretty fun! I would say if you have the opportunity to take place in a meeting like this, do it. Even if you don’t necessarily learn anything that will make you change your financial goals and methods, it’s always nice to have a second (and hopefully, more experienced or knowledgable?) set of eyes go over your numbers and assure you that you won’t be eating cat food at seventy.
* Contributions, not earnings
** I signed a paper that said he and/or the university and/or his company was not to be held legally responsible if I lost all my money, FYI