Financial makeover: Learning to talk about money

By Chris Winters

Joye and Corey McNamee knew that when they bought their Seattle home in 2008, pretty much everything they had would go toward making their $2,765 monthly mortgage payment.
But they were confident they could do it.
When Corey was laid off two months later, it eroded that confidence.
While it took Corey four months to find a new job, they realized that a longer-term solution was necessary.
Step one was for Corey to get a better-paying job and that meant going back to school.
Step two was to find out where all their money was going, and see if they could make ends meet.
It was the second step that led the McNamees to filling out an online survey to participate in a free financial makeover.
They knew they had expenses, and they knew what their income was, and they avoided spending money wherever they could.
But it wasn't adding up.
In addition to the mortgage, there was day care for their two children, who are 8 and 2 years old, which cost $1,160 per month.
Joye, who is 36, also has $42,000 in student loans from her schooling as an occupational therapist.
Corey, 35, didn't have outstanding loans, and he worked as a warehouse manager for a nonprofit. Together, their household income approximated $70,000 per year.
But there's also an $8,500 balance on their primary credit card, another $2,000 on a Fred Meyer card they use for gas and groceries (in order to get an additional 20 cents per gallon off at the pump), car payments and repairs, utilities, a phone/television/Internet package, sports and other activities for the kids, money in the state GET program for the kids' future college education, and a bathroom remodel that eats up any spare change they might have.
Corey said he just doesn't know where the money goes. Joye, who did all of the money management in the family, thought she knew, but is not sure how to go about making any significant changes.
"I think I do a good job, but maybe I don't," she said.
When Corey left his job to return to school to study to be a physical-therapist assistant, they took a hit in income but were also able to reduce their day-care expenses down to almost nothing. So far they've paid for tuition one quarter at a time, but they know they'll have to take out more loans.
Corey now works part time while he's studying, although he never brings home more than $200 per week.
"Basically I'll be working for experience and to cover gas and day care," Corey said.
"I think our biggest goal is to have spending money," Joye said. "Just to have a little bit of guilt removed."
She explains she'd like to be able to send the kids to sports camp or drama camp in the summer. They'd like to save up frequent-flier miles to visit Corey's family in Alaska.
They hope to save about $400 a month by refinancing their home, but so far the bank has only presented what seems to them to be a lowball offer.
Bhaj Townsend, a certified financial planner and member of the Puget Sound chapter of the Financial Planning Association, looked at the McNamees' situation and decided that a different approach was needed.
"I saw their needs as being more about their cash anxieties rather than the need to do a traditional financial plan," Townsend said.
Townsend's business, Kirkland-based Focus and Sustain, takes a more personalized approach to financial planning, she said.
"I want my clients to know themselves so they own their plan," Townsend said.
There are a few strategies she uses that helps transform cash anxiety into "cash stewardship," she said. She also focused on getting the McNamees to have productive conversations about money and not producing tension in the household.
"Corey had indicated that he did not have a clear picture of where money was going and had trouble talking about money, and he felt that budgeting would crimp his lifestyle, and he wanted to make better decisions about money," Townsend said.
Townsend suggested using software to track spending and income — Corey already used QuickBooks at work, so it was easy to get up to speed with Quicken, and his showing Joye how to use it brought him into the financial conversation.
"It also gives me a chance to show Joye different ways of looking at things," Corey said. "And it's also good for her because she doesn't have to explain things to me."
Cutting the day-care expense has already been the most significant savings they have made.
Townsend believed, and the McNamees agreed, that rather than setting long-term goals such as saving toward retirement, their focus should be more on getting through the next two years without getting deeper in debt while Corey is in school.
Once he's out, he should make enough in his new profession to start paying down debts and making a serious investment in their future.
The process of meeting with Townsend has been a learning experience.
"I realized I can't do it all by myself," Joye said.
"My ability to save or think I was saving — I wasn't. I was keeping us above water, but I was probably spending more than I should have."
Townsend encouraged the McNamees to talk with each other every month over the next two years about money and spending, "to look at money as dollars, and not as emotional hot buttons," she said.
Corey learned as much by becoming an active participant in budgeting. "We're way more in control," he said.
They agreed that having to rethink how they managed money was difficult at times, but in the end they learned a lot about money and about each other.
"We have a way to stay committed to our financials and to ourselves," Joye said.