Personal Finance Plan

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Grand Canyon University *

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210

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Finance

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Nov 24, 2024

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Running header Included Personal Finance Plan Shawanda Comer FIN - 210 August 18, 2019 1

Personal Finance Plan Planning and financing a life can be daunting but it does not have to be difficult. As a child, and as a young adult, I was never taught financial literacy. This included how to manage my income for my expenses, and savings for both the future and rainy days. It was not until 3 years ago that I began to inquire about my financial life and where I wanted to be in the upcoming years. I know that I want to begin to work for myself and employ others, mainly because I want my family to be financially set in terms of readily available money and the opportunity to work for themselves as well. As I put together my personal finance plan, I have considered my life goals, my financial goals, and the practices I could use to meet these goals. Life Goals Ten years form now seems like a long time, but as the old saying goes “Time flies when your having fun”. In these years the things that I would like to accomplish include operating a trucking company, purchasing vacation rentals, buying land and building a home, and traveling outside the country at least once a year. Goal #1 To begin investing and supporting other aspects of my life, my plan is to begin with operating a general freight company. The freight transportation industry is a lucrative industry that has many opportunities for individuals and companies to gain liquidity. My plan is to start with one truck and after one year begin to add an additional truck every six months. In a ten-year time span I would hope to have eighteen, if not more, working trucks on the highways. Goal #2 I have always wanted to explore real estate, but my initial thought was just to offer yearly rentals. After traveling and having to use sites such as Airbnb and VRBO, I have come to realize that there is more money to be made through short term vacation rental. I will target major tourist 2

Personal Finance Plan destinations such as my home town of Philadelphia, Panama City Beach, Virginia Beach, and Atlanta. After the first year of successful transportation, I will begin the transition and purchase my first property. My intention is to purchase one home a year with a goal of ten units within eight years. Goal #3 Over the next few years, money will be saved from the trucking company and real estate to purchase land and build a home. My goal is to pay cash for the ten acres of land and cash for my home so that I will only have to pay yearly taxes on my property. With the ten acres of land both myself and my children will have a starting place to build a home and settle down when they are ready. I will continue to save so that their homes can be paid for in cash as well. I do not want a mortgage or to pay more money in interest fees then I have already paid over the years from renting. Goal #4 Last but not least I want to see, smell, taste, and feel everything that the world has to offer. Traveling outside of the United States will allow me to do this. I will start in the upcoming year with one trip to a new country every year. At the ten-year mark, my children will have enough experience and information, from working alongside my husband and I, that they can take on more responsibility within the businesses that we have established. This will permit us more time to experience life and begin taking two trips a year in a more relaxing atmosphere versus stressing to get ideas off the ground. Financial Goals As with all goals and adventures in life, there is money involved. Money to purchase products or equipment, and money to pay for the journeys and expenditures. Currently speaking 3

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Personal Finance Plan my financial situation is limiting what I want to accomplish. I currently have a few more expenses and liabilities than I have assets and liquidity. But not too much to where it prevents me from making any future moves. Both my husband and I still work full time jobs, our cost of living is relatively low compared to other cities around the United States, and we have begun to save and invest in the stock market. Goal #1 To become financially free from any loans and credit cards is the first step in my financial plan. Over the past few years, my husband and I have accumulated quite a bit of credit card, personal loan, and student loan debt. This is majorly due to him switching career paths. We knew that this would happen, but we agreed that it would benefit us within the long run. We are currently on schedule to be free of all debt (minus school loans) by March 2021. When we began acquiring debt, we discussed this as our pay off date, partly because we did not want to graduate college with more than our student loans. We have set up payment schedules outside of what was given by the loan companies so that we can pay it off before the time that they have given us. This leaves room for life’s errors and if something were to happen, we can still make the original payments that the companies are asking for. Goal #2 To pay for my children’s college tuition. The cost of an education seems to be one of the most stressful situations that I have encountered, and I hope to alleviate some of that for my children. Student loans are not ideal, and if anyone can get a higher education and graduate with no student loan debt, then they should most definitely try. With my oldest son planning to enlist in the armed forces, I will have four years from now to save for my daughter’s education. She has not made a career decision yet, this and the fact that the cost of an education keeps rising, I 4

Personal Finance Plan do not have a specific idea of how much she will need so I am basing it off what I must pay per course plus $200. Saving this amount while I am in school and paying for mine seems a little hard to do, so I am starting with a small savings and will hopefully be in a position to pay for each of her courses as they come up. Goal #3 To have enough cash inflow to retire. Retiring comfortably is the life goal of every citizen around the world, and I am not different. While I do not plan to fully retire (as of now), I do plan to teach my children, or whoever wants to learn, how to properly run the businesses that I have established so that I can take more of a hands-off approach. By age 45, I plan to be off the road an in office overseeing others that are still out in the field either acquiring properties, moving freight, or facilitating duties to others. By age 55, I would like to be able to pass the torch of who has the final say on transaction including what direction the business should take. By the time that I am 65 years old, I want to have as little involvement as possible in the daily activities. While I will be checking in randomly to ensure that there is still a smooth process, my telephone should only ring when I am called into a meeting that requires all the shareholders of the company. I know that in the real-world hiccups happen and things do not go as planned, but as I develop this financial plan more, I will be sure to have a plan B and C within the back of my mind. Implementation Plan Now here comes the fun part. What will I do to help my plan get off the ground and how will I see it through? There are so many options in terms of financing a life and investing in a future. One thing for sure is that you do not need to start out at a high level of savings or at an 5

Personal Finance Plan advanced level of investing. Simply coming up with a game plan, and back up, will help in seeing your vision become truth. When life events affect my financial needs, this financial plan will provide a vehicle for adapting to those changes. Regularly reviewing this will help you make priority adjustments that will bring your financial goals and activities in line with your current life situation. Planning Tools Throughout my life I will periodically analyze my financial values and goals. This involves identifying how I feel about money and why you feel that way. The purpose of this analysis is to differentiate your needs from your wants. What I may feel is important at this specific time in my life may change in ten to twenty years form now. An example of this would be in the case of life insurance. Right now, I would want to replace my income for my children if I were to pass away, therefore I would need a substantially large amount of insurance. Where as in twenty years from now my children will be grown and no longer be dependent upon me for a source of income so I would only need enough insurance to cover any outstanding debt as well as funeral arrangements. Keeping track of my needs versus wants will be the key tool I will utilize to succeed in this financial plan. Managing Liquidity As I have learned, liquidity is the ability to generate cash on short notice. It is not about how wealthy we are, but about how much of cash we can pull out as and when needed. My current liquidity consists of a few older vehicles, checking and savings account, household furniture, and electronics. As my business and salary grows this too shall grow which means that I will need to adjust my spending habits so that I do not reduce liquidity. Creating an emergency fund is a much-needed step in managing my liquidity. I would like to set aside money that covers 6

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Personal Finance Plan 6 to 12 months of my expenses in an easily accessible investment option. Since one of my goals is to own my home with no mortgage, if a situation occurs that I need more liquidity, then a home equity loans will permit lower cost money that can be raised as needed. Ensuring a good quality long-term relationship with the bank is a good tool in liquidity management. Banks can offer presanction loans and pre-approved overdraft limits. Not only will banks help with the paperwork and process but they are eager lenders during times of need. Financing With retirement in thirty-one years, I have a cash goal of $400,000. This seems a bit farfetched, but I am optimistic that is can be done. For starters, a savings plan with compounded interest at a rate of 2.6% and monthly contributions of $200 would suffice. This would yield me around $75,000. Secondly is the 401K that both me and past employers have been contributing to for the past sixteen years as well as continuing to contribute to in the future. This should yield about $185,000. To top all the savings off will be what liquid assets I sell while “downsizing” to retire. I expect to sell most of whatever stocks, bonds, CD’s, and real estate that I have accumulated over the years. This includes some that I have purchased years ago when I knew nothing about the stock market and was at an event and wanted to fit it. I am glad that I did because one of those stocks are Netflix, which was something I did not see going as far as it has. While I have a little more planning to do in this area, I do know that I have not intention as of now to sell my personal home. Protecting Wealth Insurance, insurance, insurance. Many believe that insurance is a waste of money and that they will never need it, I beg to differ. If I continue full coverage on my vehicles, then it will 7

Personal Finance Plan protect my personal assets in case of the unforeseeable future. I would hate to lose my business, savings, or home because of an auto accident that was my fault and I did not have enough coverage. Renters, and eventually home owners, insurance will protect the worldly possessions that my husband and I have obtained over the years. Many are easily replaceable, and even the ones obtained through travel, a quick internet search can result in those being replaced as well. If God decides to call either my husband or myself home, life insurance will see to my children being cared for. Initially, the thought of whole life was ideal because I would not have to worry about it for the rest of my life, but after comparing it to term life I have come to the decision that it is not good for me. If I choose a term of 30 years, it will surpass the time that my youngest child will turn 25 and all my children should be self sufficient to where they no longer depend on me financially. Once this term has expired, I will likely purchase an additional twenty years but at a rate that will be substantial enough to cover my funeral expenses and any debt that I may leave behind. Investing I would personally consider myself a risk taker. I am not satisfied with the tiny interest that is associated with most saving accounts, CD’s, or money market accounts. I have done this for my children just so that will have money put aside instead of going into it with nothing, but for myself and my business plan, this alone will simply not work. This is where I will turn to the stock market. Stocks have a huge risk associated with them but the payout it extremely rewarding. While I will save half of the cash inflow (minus expenses) from my trucking company, the other half will be put into stocks. I have considered less, maybe a quarter, but my payout will be less. When the time comes and I lose on an investment, I still have the other half in a CD account accumulating interest waiting for maturity. 8

Personal Finance Plan Retirement and Estate Planning Retirement is the goal of every human, and to do it comfortably is a bonus. Retirement is less expensive than working because there is no longer a need to saving for retirement, no more job-related expenses, and lower taxes due to lower income. To help set a nest egg for retirement I have taken a few different courses. The first is a 401K with the company that I am employed with now. Although I do not plan to work for them permanently, the account is through a reputable company that allows for the transfer of account allocation. This way I can take it with me at any stage in life and continue to make contributions. The second is an online savings account that offers a higher interest rate than traditional banks and they offer compounding interest. The company is well known and have been in business for quite some time so there is less of a chance for the company to fall apart to where I would lose my investment. As stated before, I plan to retire at the age of 65 and with the next thirty years of savings with compounded interest and regular contributions, I should be able to retire comfortably. As for my estate, writing a will should clearly state how things should be disbursed and should help the process run smoothly. My companies and personal assets will be distributed evenly amongst my children, or anyone who has helped me build my empire. I will also identify a power of attorney who can make financial decisions for me in the event that I am unable to, and a health care proxy who can make life-or-death medical decisions for me. Conclusion When it comes to my financial future, I want to make sure that I am the one in control. By clarifying objectives and constraints, identifying retirement issues early, and documenting everything, I hope to have a solid plan in place that aligns with my wishes. As I sit back and think of where I would like to be financially over the next ten years. I have realized that I have a 9

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Personal Finance Plan better idea of what I want more than I thought that I had. I understand my specific goal both personally and financially and I have a general idea of how I want to reach these goals, and I realize that I need just a little more planning in terms of how I am going to finance my retirement. When I am done with this plan, I understand that I will continuously have to revisit this idea to make any necessary adjustment, so I am going to print this and place it on a board that can hang on my bedroom wall where it can be clearly seen and remembered. Financial planning is a dynamic process that does not end when I take a particular action. I will need to regularly assess my financial decisions as changing personal, social, and economic factors will require more frequent assessments. It's called "financial planning" for a reason. Just like life itself, plan change and evolve as well. Once the plan is created, it's essentially a piece of history. 10