Financial Coaching Services at Capstone
Need some guidance with your credit report or your family budget? At Capstone, we can help.
Financial Coaching At Capstone Community Action: in Barre, Morrisville and Randolph
I first met Chuck and Sarah a few months ago when they called Capstone looking for help with family budgeting through our Financial Coaching services. Both were working full time with two young kids, but every month was a financial struggle, to the point where they missed a loan payment and were two months behind on their electric bill. Theoretically, the money should have been there, but after an emergency car repair, they found they were falling behind and it was catching up to them to the point that their credit scores had taken a dive. They weren’t sure what steps they needed to take to get their finances back in order. One of their friends had used our financial coaching services, so they thought they’d give it a try.
The goal of the financial coach is to be a guide and help clients discover their personal path to financial stability. The coach also helps the client hold themselves accountable to their financial goals. At our first visit, we talked about why they had made the call and what they hoped to get out of our coaching sessions. We reviewed their credit reports which revealed the late loan payment, an overdue credit card payment and a student loan in default. Both Sarah and Chuck confessed that they were too relaxed about their spending and were at a point in their lives where they were ready to make some positive changes so that they could eventually buy a home and start saving for college for their kids and retirement for the two of them. We ended the meeting with a few tasks for them to complete: Chuck would contact his work about contributing to the retirement plan and inquire about the match the company offers, Sarah would call the university to find out how much she owed and what sort of payment plan she could work out. She would also get current on her credit card and make sure the loan payment was made on time. Additionally, the two of them would make a list of their monthly expenses and create an inventory of their loans—where they had debt, how much interest they were being charged, and how long until their loans would be paid off.
We met two weeks later for a check in. Sarah had made a payment to her credit card so that it wouldn’t be reported as 30 days late to the credit reporting agencies. She had also made a phone call to the university and found out the loan balance. She hadn’t gotten as far as making a payment plan, which actually was smart—we hadn’t yet talked about their family budget, so we didn’t know what a realistic amount would be for her to pay each month. That’s where we headed next— the Family Budget.
If you’ve never kept a budget, you’re not alone. But at the very least, you should know what you need to pay for, how much, and when it’s due. Budgets include not just rent or mortgage, heat, and electricity, cable and phone, but lots of other expenses, as well. Car payments, car repairs and maintenance, insurance, registration and inspection, snow plowing. Groceries. Groceries. Groceries. Own your own home? Don’t forget about taxes, water bills, insurance, and home repairs. Fido and Max, your dog and cat, they cost money, too—food, litter, flea treatment, vaccinations, yearly check-ups and registration, they aren’t cheap and they need to be a part of your spending plan. Birthdays, holidays, Netflix, and your daily coffee run? We include those too. How many times have you said, “I should have $XX left over each month, but I never do!” That’s what Chuck and Sarah said—“we should have enough but we don’t.”
When we looked at their budget we made some discoveries. First, we added an important item that they hadn’t been paying for—Renters’ Insurance. For a small price each month, they would have the security of knowing that their own personal belongings were protected in the event something happened to their apartment such as a fire or a theft. After including a few unknown variables such as “car repair” we did the math and determined that they were short about $200 each month—the very reason why they were late on their loan payment and having trouble paying more than the minimum on credit cards. Thankfully, Sarah and Chuck had a few places that they could cut their spending. They were definitely buying more on groceries than necessary. They admitted they never made a list and often bought whatever suited them at the moment, regardless of what was already in their cupboard. They decided to set a goal to slash their grocery bill by $200 each month. We also determined that they were spending too much on garbage—taking the garbage to the transfer station would save them about $25 each month compared to curbside pick-up. They also loved to spend their free time together visiting antique stores and second hand shops. While we kept that in the budget, we brought it down a bit to help offset the deficit in their monthly spending. That way, they could still enjoy this pastime together, but not spend so much money on it. Finally, they agreed they would use their tax return next spring to pay off outstanding debt on their credit cards, which would soon free up nearly $200 per month, the amount they were currently spending to meet minimum credit card payments. After making a few minor changes, we determined that Sarah could comfortably make a $50 payment to her university loan—a move that would get her loan out of default and into good standing, and it would be an automatic boost to her credit score.
Sarah and Chuck still have a way to go before they are able to start house hunting. They need to continue to work on repairing items on their credit reports and building their credit scores so that they can get a mortgage loan with a preferred rate. I’m hopeful that with continued coaching, and some adjustments to their spending habits, they will be ready to take that step in the next year.
If you think you’d benefit with a budget check-in, you can work with a financial coach at Capstone. We have coaches at our Morrisville office, our Barre office, and we now travel to our Randolph office a few times per month. Please contact me, Liz Scharf, at 802-477-5215 if you are interested in meeting to talk about your spending plan.