Success Story: Preparing Financially for a Baby

a quote from Helen in Oregon that says, '[My Money Coach] was a huge stress reliever, and I am going to give him some of the credit when this baby comes happy and healthy. I am so much more relaxed about our finances thanks to his guidance and our work together. Thank you!' on a blue overlay covering people's faces in the background
Did you know that your personal MSA Money Coach can help with planning for a new family and the finances that follow?  See why one couple relied on their Money Coach for financial transitions, and why they gave credit to their coach for a happy, healthy baby.

When Helen and her husband turned to their Money Coach, Patrick, for help with bolstering income, they knew to expect great things.  “This is the second time I worked with a Money Coach from MSA.  The first time, it was about creating and sticking to a budget; this time, it was about trying to ‘find money’ in our budget since we are expecting a baby in the spring….  Patrick has helped in many ways.  From my experience with the previous coach, I knew to expect great customer service.”

Here’s how Patrick helped them prepare for their bundle of joy:

1. Adjust Your Monthly Expenses

“He’s saved us some money on our monthly expenses, which can then go right to baby!”

Initially, Helen and Adam didn’t have any savings, so Coach Patrick explained the importance of having a cushion for emergencies, especially with a baby on the way.  They took an in-depth look at monthly expenses – which were needs versus wants – and what could be adjusted or cut; consequently, Helen and Adam were able to automate $100 towards savings each month.  Recently, they shared with their coach that they have saved $1,130.

Helen saw just how relieving savings could be and immediately shared the experience with her coach:  “It’s my birthday, and my newer (2010) car decided to break down while I was driving it today.  I’m so happy we have that emergency savings account, thanks to you!  This stuff isn’t so bad when you have a little cushion.”

With a baby coming in six months, Patrick also walked Adam and Helen through several financial scenarios, including the difference between Helen staying at home or returning to work once the baby arrived.  Walking through the options helped the couple feel better about their choice.

2.  Consider Your Loans

“He also referred us to the student loan coach who conferred on our repayment of loans.”

One of the great things about the MSA Financial Wellness program is that MSA members have access to a whole team of Money Coaches with all kinds of financial specialties and years of experience.

In order to tackle the student loans totaling $200,000, Patrick connected Helen and Adam with MSA Money Coach, Katherine, who is a specialist in college planning and student loans.  That way, the couple would get a better handle on their loans (ergo their debt), and they wouldn’t have to worry about the extra expense when the baby came.

With their coaches’ guidance, Helen and Adam learned how to check if their loans were in deferment, how they could boost their payments to $400 a month to conquer the debt faster, and how they might even get the loans forgiven.

3.  Create a Debt Management Plan

“He helped us get down the debt stacking method, so we can see which credit cards to pay off first, and also [suggested] refinancing our car to get a lower payment.”

On top of the student loans, $2,383 of their monthly ($3,700) income was going towards things like their mortgage, credit cards, and medical bills.  Patrick suggested a debt stacking plan that would systematically reduce each debt.

Debt stacking involves paying as much as you can on the debt with the lowest balance or the highest interest rate, while paying the minimum amount on all the other debts.  Once the first debt is eliminated, you add the amount you were paying to the next lowest debt (or the highest interest rate).

Using the debt stacking strategy for the three credit cards alone – totaling $9,331 – would allow Helen and Adam to knock off the first card in as little as 6 months.

Coach Patrick also showed Helen and Adam how they could be proactive about not accumulating so much debt in the future.  Helen put it this way, “[He] gave us good insight on how to protect our credit scores and negotiate lower interest rates with them.”  With a lower interest rate on the credit cards, the payments wouldn’t be so debilitating.

4.  Change Your Withholdings

“Patrick assisted me with referrals to a tax coach, maximizing our refund and making sure we had the proper amount of withholdings on the W-4.”

Because a new baby affects a family’s tax situation, Patrick connected Helen and Adam with another fellow Money Coach (Donna) who is a tax specialist and Enrolled Agent.

Coach Donna helped make sure they had the proper amount of withholdings and knew about the additional tax credits they would soon be eligible for because of the new baby.  She directed them to resources like the IRS Withholding Calculator, to determine the need/benefits of an updated W-4.

Helen and Adam also learned how to maximize their refund by putting it towards different goals.  For example, their recent refund was $3,210, so their coach suggested putting $2,000 to emergency savings, $1,000 to debt, and having the leftover change for baby expenses and fun activities.

5.  Remember the Support of Your Coach

“[My Money Coach] followed through with everything he stated he’d do, which was actually really stellar!  He held me accountable for doing the legwork in between appointments, and as a result, he made sure he took care of every little thing that I came to him with.”

Having professional guidance allowed Helen and her husband to accomplish their goals quicker than they could have on their own.  They never felt alone or at a loss for what to do next, because their Money Coach supported them every step of the way.

More so, Helen and her husband were able to sit and talk about finances – something they weren’t able to do before.  Working with a Money Coach helped them become a team, achieving financial success together.

With their finances under control and prospering, they have the freedom and confidence to fully enjoy their new family:  “[My Money Coach was a huge stress reliever, and I am going to give him some of the credit when this baby comes happy and healthy.  I am so much more relaxed about our finances thanks to his guidance and our work together.  Thank you!”

Do you want better finances for your family?  Do you have a baby on the way?  Work with your own team of Money Coaches by calling 888-724-2326 today.