Debt Management and Retirement Planning
It is very important for Howe to pay all their debts and free themselves of the liability since a lot of loan like credit card loan, car loan, student loan, are hampering Howes to save up more. If they have plans for retiring in 22 years, they need to free themselves of all the loans and credit they have on them, thus saving up the interest money that goes out monthly. They can use that money for other expenses and purposes. In short term they might feel like they have lesser funds but they can have the relief that they don’t own anything to anyone and focus on saving for their future. There will be one more debt addition because of Pat’s college education, so it’s better they slowly focus on paying off the loans first and then proceed to making progress with the savings once the loan of Pat is also paid off. Since the additions of newer debts will again make them stuck in a loop of being more in debt to pay off the existing ones. It’s better to get rid of debts in the first place. This will also help in saving up the money, they need for retirement due to interest payments on loan and secondly, because they can solely focus on the saving part as well.

Once the debt is paid off, they can become more financially stable and can make decisions independently. They can direct themselves to other goals since there are so many premium payments of insurance, monthly expenditures and future considerations like retirement plan.

Even previously they weren’t able to pay the bank, for which they had to make a short-sale on the house they were living incurring a loss because of which they had to move to a rental place. Getting into debt and accumulating more debt over the years creates a never-ending spiral and drastic measures such as these has to be taken in desperate times.

Education of children is getting expensive with the passing time and corporations are requiring competitive degrees for the jobs they are offering. Since Brett is still in his sophomore year with not that much earning and a credit card debt and PAT can’t have that scholarship he was striving for before, they need to save up for their children and have more free funds available to assist them with their expenses along with the education since they currently get $225 and $100 respectively.

The college tuition fee has witnessed the highest price hike till 2014 compared to all the other consumer services of about 260% than 120% on other items.[footnoteRef:1] Which shows that the hike hasn’t stopped and can grow more, so it’s very important for Howe’s to clear themselves of the debt and save up their interest money for their children’s educational needs while also assisting them to become more stable and independent in their lives. [1: Solution, I. D. (n.d.). How To Set Financial Goals: 6 Simple Steps. InCharge Debt Solution.]

Moreover, these saved up funds from paying off the liabilities can be used for investment purposes where Howe’s can get the returns, helping them with increasing their cash on hand for education, expenditures and so many other options, while also giving them chance to save it up for future purposes.

So paying off debts saves Howe from the spiral of taking more loans in the future to pay off the existing ones as economic condition might vary and Howe doesn’t have a lot of available funds to assist themselves in the time of crisis, while the college education fee and other expenditures adds up to more of a negative balance. It’s better for Howe to pay off the credit card debt and other loans. Since they can do so by cutting expenditures like moving to a smaller rental unit, it will help save them money to pay off the loans while they have available funds like saving account that...…future and creating a trust for their kids, providing them with support for their future as their parents did for them through setting up a 529 Plan. This will help their future generations while if anything happens like a sudden illness, the amount can be covered through this saved up retirement amount. Since they’d be living in a small rental place, they can buy a house by paying the down payment from this saving. They can have a lot of ease and comfort because of a saved and secured future they create for themselves now through the following the above-mentioned step like paying off all their debts as early as they can through the available funds putting themselves off the burden while investing in better opportunities that can save up cost and have a promising rate of return with lesser risk. These returns can be saved up or re-invested with a tax free IRA, again assisting their financial goals.

Through Chris and Dayna, having better job opportunities, and a raise over time, they will have more opportunities to plan the retirement saving’s spending like any luxury item for example boat etc. The more funds they’ll have the better they can plan and allocate them for the things in future. They can have more control on their lives due to their financial well-being.

Retirement planning tends to be simple requiring lesser or no hassle so people can manage it well in the future as well while providing you with the peace of mind in the present, since it gives you the relaxation that you have planned and allocated funds for the future. The retirement plan given above is cost-effective and takes into consideration tax benefits, it is the optimal and effective plan that will help Chris and Dayna after they retire after 22 years. It’s better to have a plan as early as possible to direct the funds and process their allocation to investment opportunities to get a more clear and bright picture of the future.…