Financial Advice on College, Debt, and Retirement

Episode #73. Host Jonathan Hughes talks with Amanda Sharratt, Chief Operating Officer and Financial Advisor for Whitaker Myers Wealth Managers, who shares financial advice for families as they plan for college, manage debt, and save for retirement. They discuss Amanda’s background, how to prepare financially for college costs, strategies for repaying loans and other debt, and balancing saving for college and retirement. If you enjoy the MEFA Podcast, please leave us a review.

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Resources Mentioned in this Episode

Whitaker Myers Wealth Management




0:00 Introduction

0:56 Interview with Amanda Sharratt


Amanda Sharratt: [00:00:00] If you are at the point where you're not even able to save enough for your retirement, or you're just at that and there's no extra money, then what we say is just throw any extra money that you can find, maybe what that the kids get for gifts, or maybe the kids have a small part time job or something. And I'm not saying use all of that. The kids should use some of it for fun, but then you take some of it and put it into their college savings.

Jonathan Hughes: And that was our guest on the show today, Amanda Sharratt, who is a financial advisor. We, of course, at MEFA, are not financial advisors, so we're not here to advise you on what to do, but to bring perspectives like Amanda's to you so that you can make your own decisions and live a financially healthy life. And to that end, I think you'll get a lot out of this conversation, as I did. So enjoy it, and I'll be back afterwards with a wrap up.

Amanda [00:01:00] Sharratt is the Chief Operating Officer and Financial Advisor for Whitaker Myers Wealth Managers. Specializing in a planning based approach, she works with clients to design investment portfolios to meet their individual needs. Additionally, she works on the team of Dave Ramsey's SmartVestor Pros, focusing on helping clients live their lives debt free and financially independent.

Before joining Whitaker Meyers Wealth Managers, Amanda was a financial coach. As a financial coach, she helped clients achieve their goals with money, including being able to save more, spend smarter, pay off debt, and feel more comfortable and confident with money management. We are going to talk about how these goals intersect with what we do here at MEFA, which is, of course, helping students and families planning, saving and paying for college and career readiness. [00:02:00] Welcome to the MEFA Podcast Amanda Sharratt.

Amanda Sharratt: Thank you. Thanks for having me.

Jonathan Hughes: Oh, it's my pleasure. Okay. So I told everybody a little bit about you, but can you tell everybody what I didn't say?

Amanda Sharratt: Okay. Yeah. Thank you. Yep. My, I, my husband and I have been married for 14 years this year. We have a daughter, she's eight years old. And so that's personally in my life, we live in Ohio and then professionally, as you said, I'm a financial advisor and chief operating officer at Whitaker Myers Wealth Managers. And really, I think we'll probably get into it throughout this, the podcast here, but the way that I got into the financial industry and this career was from a personal experience of really just paying off debt and learning about finances and investing and all of those things. And as you said, I started out as a financial coach and became a financial advisor. And then last year I moved into the chief operating officer role.

Jonathan Hughes: Congratulations. [00:03:00] So can I ask then, were you always interested in that or in money and wealth management and finances, or was it that personal experience that you had that sort of brought you into that field?

Amanda Sharratt: I was not always interested in it. Actually, I went to school for dental assisting and dental hygiene, so it was nothing in the finance industry. And so it was really that personal experience of really just starting with us and getting, Are money under control and realizing what it did to our lives and that not a lot of people Knew some of these basic principles and what it could do to your life And so we started off really small just leading classes at our church And then just that passion kept growing and I became a financial coach and progressed in my career from there

Jonathan Hughes: Have you helped clients specifically with their college plans or post-secondary education plans, whatever they may be. And what circumstances, what experience do you have with that?

Amanda Sharratt: Yeah. So I have experienced in [00:04:00] a couple of different ways. So as when I was a financial coach and now we have a financial coach on our team. That's really helping families to start understanding what the cost of college is and talking about it.

I know it sounds really simple, but I think a lot of times families don't even have the discussion around who is responsible to pay for college. Whether it's all on the parents, or all on the kids, or if they're splitting it, there just isn't that open lines of communication. And just talking to both the parents and the students and saying, hey, let's have open lines of communication so you know what to expect.

And coaching them in that way. And then if the student knows what they are responsible to cover, we can help them, look at how many hours they need to work in order to cover that tuition and really avoid student loans altogether would be the goal. But if they're set on taking out student loans, then reducing the amount that they need to take from that aspect.

So as a coach, that's what we talk about. Also, of course. Encouraging them to get scholarships and negotiate tuition [00:05:00] between schools, because I think that is something that not a lot of families think about. So on that side of it, and then as an advisor, of course, myself and all of our advisors help clients with saving for college. So if their kids are younger and they're starting to save into 529s or ESAs, we help them with that planning aspect of it.

Jonathan Hughes: I'm curious if there's anything that comes to mind in terms of things that come up misconceptions or ideas that both parents and students have about paying for college and how they're going to do that. Are there things that you hear over and over again that you're always saying no, it doesn't really work. That way?

Amanda Sharratt: Yeah, I think there are a couple things. One is it's very common that student loans are the norm to pay for the entire tuition. And our opinion is that doesn't have to be the case because, then kids are graduating and are not able to find a job or that sort of thing and have a ton of student loans, and so there's a lot of stress there. I [00:06:00] think some other things are that, that the students. Feel, or the parents feel that the students can't work during school. And what we've seen is actually that really builds time management in the students.

If they are working at least some hours during school. And of course then that helps, it's building the skill of time management, and then it helps with the financial side of being able to contribute towards the cost of college. And then I think the last thing I would say that I see commonly is.

Parents feeling very guilty that they cannot help their students financially and wanting to put that ahead of their retirement, even if they're behind on retirement savings, they want to put helping the students ahead. And I get it because as a parent you want what is best for your children. But what I say is really what is best for them is for you to make sure that you have your retirement plan set and help them in other ways that are maybe not financially based.

Some things like we already talked about, encouraging them to apply for scholarships, helping them negotiate costs [00:07:00] with the colleges, just teaching them good money management skills that will last them a lifetime. And you don't necessarily have to help financially for college if that isn't in your budget.

Jonathan Hughes: One thing that you mentioned earlier is A lot of times it's not really clear because there's been no communication between parents and students who is actually going to pay for college, right? Is it going to be the parent? Is it going to be the student? And I know from experience that can carry through college until after college is over and it's time to start paying loans and maybe both parties are responsible.

And there is a never really a clear I'm going to pay for this loan or you're going to pay for this loan or I'm going to pay this amount and you're going to pay that amount. Moving on to repaying debt. I know that helping clients with debt is a big part and a big focus that you have. A big part of what you do.

And so famously, student loan debt is a huge issue. What are some of the ways that you've counseled not just students, Clients on how much to take out or the responsibilities of [00:08:00] borrowing but who are struggling with repaying the debt that they have taken out

Amanda Sharratt: Yeah I think that is key is just really looking at what amount of debt that they have because that again sounds so simple But sometimes people just don't even really want to look at it because they feel so overwhelmed with it So of course that's the first step.

The second thing I would say is what a lot of people consider a bad word, which is a budget. And I just like to try to retrain people to say a budget is not restrictive. A budget does not mean that you are broke, which I think is what the common norm is like, Oh, I'm on a budget. I can't afford that.

But really it's just telling your money what to do. And so making sure that you are planning ahead and you have the money in your budget. To pay at least the minimum payment on your loans and then you're finding anything extra that you can throw at it and what goes along with that is I would say do the debt snowball smallest to largest.

Financially speaking, mathematically speaking, everybody wants to pay the highest interest rate first and I get it, but it's so much more about those [00:09:00] quick wins to keep you motivated because when My husband and I were paying off debt. Our largest debt was over a hundred thousand dollars. That was also our highest interest rate, but if we would have started there, we would have never felt like we were making progress, so we needed to get those couple hundred-dollar credit cards out of our life and see the momentum building. to keep the encouragement going to continue paying off the debt quickly.

Jonathan Hughes: I cannot tell you how much this is resonating with me because me and my wife have these conversations all the time. And so it's really funny. I judging going from my own life here, I have to ask you, How do you help folks prioritize between maybe paying off credit cards versus loans, student loans?

Amanda Sharratt: Yeah, we really just stick with the smallest to largest. So if they are all due, there are some, like the IRS, You didn't ask about that, but you know that kind of we put that to the front of the line. You don't want to owe the IRS money, there's [00:10:00] certain things that we do change it up.

But otherwise, we just say smallest to largest and pay it off in that order. Because again, if you are budgeting and you're being very intentional about paying it off, then you're going to get through all of them quickly. And now quickly, can be a relative term that can be a couple years for you, but it's going to be a whole lot faster than if you were just paying the minimum payments. Yeah, we just really say, just build it out smallest to largest and throw as much as you can at that smallest one. Of course, you're paying minimum payments on everything and the snowball.

Jonathan Hughes: Okay. If I can draw this out of it, the snowball is you make your payments, you pay off the smallest or the most manageable, the easiest to pay off.

Soonest and then you free up that monthly payment and allocate that towards the next one And so your payment starts to snowball towards your debt. Is that right?

Amanda Sharratt: Exactly. You got it That snowball rolls over and you're paying whatever you were paying on that smallest plus the minimum payment You're rolling that to the next loan until you get that [00:11:00] paid off and then you're rolling it on to the next one So by the time you get to that largest loan, you're throwing a lot of money towards that loan each month usually

Jonathan Hughes: Really quick question. Did you ever talk about refinancing at all?

Amanda Sharratt: Yes, we do say that there are times where you should refinance, but we don't typically start there. That's just if it's glaringly obvious that it makes sense because of one reason or another, maybe their interest rate is super high and they can get a lower interest rate.

That makes sense. But what I think a lot of times happens with refinancing is you feel like you did something. You feel like that loan is paid off in, in your heart, in your mind, it feels like you did something to it. And then you don't actually spend the time to pay it off. And so we are very clear that if it does make sense financially to refinance, do that, remind yourself, be very clear that you didn't pay it off. You just refinanced it. So it still needs to be on that, that snowball and a focus to, to continue paying it off.

Jonathan Hughes: I want to shift gears [00:12:00] and talk about college savings a little bit. Okay. In particular, you mentioned families with young children how can families who are saving for college, they only have a finite amount of money to save after all the bills are paid, et cetera, and I, we get this question a lot, what should I be saving for? How much should I be saving for college versus saving for retirement? That's a really hard calculation to do, maybe a hard choice to make. Where should it go? How do you help families think through Those questions?

Amanda Sharratt: Yes, that. Those are very good questions. And like you said, a lot of people have those questions, so we help families follow a very defined set of steps, and they are in order, but some of them are at the same time, and that would be retirement savings and college savings.

Those are in at the same time because you're never done saving for retirement until you retire. But what I mean by in order is retirement savings comes first. And that's [00:13:00] goes back to what we just talked about is you are going to retire at some point. I know there's a lot of families we talk to and they say, Oh, I like my job.

I'll keep working. But the reality is we don't know what health concerns are going to come up or what could happen in the future. So you have to plan to retire at some point. And so you want to make sure that's the priority. We typically give a general recommendation that you should be saving 15 percent of your income towards retirement.

Now that can be very different for families that feel like they're behind or maybe they need to retire early for one reason or another. So you would talk to a financial advisor and really look at what the right amount is for you. But what we say is after you have achieved that, Then you start putting money towards the kids college And so if you are at the point where you're not even able to save enough for your retirement Or you're just at that and there's no extra money Then what we say is just throw any extra money that you can find Maybe with that the kids get for gifts or maybe the kids have a small part time [00:14:00] job or something And I’m not saying use all of that the kids should use some of it for fun But then you take some of it and put it into their college savings The other thing I tell families is most kids do not need more plastic toys, right?

We if you're like most families, Christmas is okay, we're getting all of this stuff in that the kids maybe play with for a few days. And so what I've encouraged people and what I've done in my family is saying, hey, yeah, buy them a gift because I know you want to see them open it, but consider putting into their college fund if you'd like to.

I know that isn't as fun today for the grandparents. But the kids are going to be so grateful when they are able to go to school and they know that grandma and grandpa helped them with that as well. So I think thinking outside the box, if you don't have the money in your regular budget to how can you throw some money in it?

And also don't underestimate that even if it's a small amount, keep doing it because saving is a muscle. So save a little until you can save a lot. [00:15:00]

Jonathan Hughes: That's great advice. Now, yeah. You mentioned five 29 plans and ESAs. I wonder if you can say in your experience what are some of the more popular ways that people have saved for college?

Amanda Sharratt: Yeah, those two are the most common for saving specifically for college. What we are hearing a lot and I wonder if it's because of Student loans or just personal experience that people have had. And they say what if you can't, what if my child can't go to school or doesn't want to go to school? And I've saved money into these college savings accounts.

Now with the 529, there is the really cool feature with the secure act that you can roll over $35,000 of that into a Roth IRA for the child. And so there's rules around that stipulations around that. You have to have it in place for a certain number of years, but that is really nice because that helps that question of if they don't go to college or they don't use all of the money, what do you do with it?

So if you are thinking that your kid is going to go to college, those types of [00:16:00] plans are likely the best option, but if you're not, and you're thinking, I just want to save for their wedding or something else in their future, then there are other options of accounts like UTMAs and that sort of thing that you can save into.

Jonathan Hughes: Yeah, and I'm glad you mentioned, in your listing of the different sort of methods that people have used to save for college, opening it up to grandparents and family and friends. MIFA is of course a 529 plan provider ourselves. So we are familiar with this, but other people can to a child's 529.

It doesn't have to be the owner or the parent of the child. Grandparents, families, and friends can do that. And that's a great way to grow those accounts. Speaking of information that's out there that, that may or may not be accurate. Are there any misconceptions or myths regarding saving for college or maybe saving for college and retirement that may cause people to delay or to not save as much as they should that you've run into?

Amanda Sharratt: Yeah I think it's more just that they are not sure that there was a big [00:17:00] question. And I think the biggest concern that people had is, when my child is two or three, how do I know what they're going to do when they're 18?

Are they going to go to college and are they going to use that money? And now with that feature of the 529 that you can roll it over, that has been very simple to answer that question because you're still setting them up for success. But I think that's been the biggest thing that I've seen is people just aren't, Excuse me. People are just not sure if they should even start saving or their other question is how much should they save because they don't know are, are they going to go to school for four years or they don't going to want to be a doctor or a lawyer? And what we say with that is really what is your goal with this?

Do you want to pay for four years or if they want to go to be a doctor or a lawyer? Are you willing to pay for more because that can answer that question really simply if you're saying I’m only paying for four years So I think again it goes back to communication between the spouses and then as the children get older Communication to them of what you are willing to help [00:18:00] with

Jonathan Hughes: Before we go, is there anything else that you'd like folks to know?

Amanda Sharratt: I think the biggest thing is that no matter where you are at in your financial journey There is hope so people if they are behind on saving for retirement They feel like I don't am I ever going to get caught up? Am I going to be able to retire? Chances are you can you will be able to retire and Same goes with college.

They are, if they're behind on saving for their child's college education, they're concerned. Are they going to be able to go to school? Are they going to be able to do the things they want to do? Chances are there is a way. And so I think just having hope and realizing I just need to look at where things are at and make a plan for where we're at and how we're going to achieve the goals. It may be a little bit different than you had anticipated, but that's okay. Just adjust and move forward from there.

Jonathan Hughes: Amanda, thank you so much. This is great. I really enjoyed it.

Amanda Sharratt: Thank you.

Jonathan Hughes: Alright, folks, that was our show today. I want to thank Amanda Sharratt for being here. I hope you enjoyed that conversation as much as I did, and if you did what you heard today and you want to know more from [00:19:00] us on planning, saving, and paying for college and career readiness, then you can follow the show and you can do that wherever you get your podcasts, and please remember to review us if the mood should strike you to do because it helps us to keep doing what we're doing getting the show out to folks like you. I want to thank our producer, Shaun Connolly. I want to thank AJ Yee, Lauren Danz and Lisa Rooney for their assistance in putting the show together. Once again, my name is Jonathan Hughes, and this has been the MEFA Podcast. Thank you.

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