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Originally published Saturday, March 30, 2013 at 8:03 PM

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Scholarly couple gets fiscal tutor | Financial makeover

With nearly 14 years of higher education between them, Grant and Helen Storey have $135,000 in student loans looming over their future.

Special to The Seattle Times

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If you would be interested in a free financial makeover in exchange for having your story and photo published in The Seattle Times, answer a few questions at seattletimes.com/yourmoneysurvey.

With one doctorate to his credit and one on the way for her, Seattle newlyweds Grant and Helen Storey have more years of education under their collective belts than most couples.

Three months shy of a one-year wedding anniversary, the pair and their courtship seemed like a match made in science-plus-marriage heaven.

Grant, now 30, was completing his doctorate in physiology at the University of Washington several years ago when he fell in love with Helen, now 31, who was a public-health doctoral candidate.

Big paychecks, they agreed while dating, were less important than helping others.

“We both have made choices in life to pursue careers that don’t just pay the bills, but that inspire us,” says Helen.

In fact, after 16 months of postdoc study and work in a UW research unit, Grant made a change.

He took his experience to Seattle’s Cleveland High School, where he’s a slightly more than part-time lab teacher for 90 students in four college-prep science classes.

After research in Kenya, Helen is a few months away from graduation. She wants to land a global-health job in the nonprofit sector.

Between the two of them, the Storeys have logged almost 14 combined years of college and postgraduate course work.

The result: The couple — who made about $60,000 combined last year and rent a Green Lake neighborhood mother-in-law apartment — have racked up nearly $135,000 in student debt.

“We think about having a family and maybe buying a home someday,” says Helen, but “It’s hard to see how that is possible with the amount of student loans we have. And yet, we don’t want to pinch pennies until the end. We still want to enjoy life now.”

What to do?

True to form, the experienced scholars sought a crash course in money management. Helen completed an online survey to participate in a free financial makeover from a member of the Puget Sound Chapter of the Financial Planning Association.

She explained their predicament: “No savings, no idea where to start planning for retirement and not the most lucrative career paths possible. We have more education than most, but no idea where to begin when it comes to financial planning. I promise we’re great students and learn quickly. Please teach us!”

The Storeys were paired with Maureen Jones, a certified financial planner with Lakeview Financial Group near Green Lake, who personalized a tutorial for the couple.

Jones says she often feels like a teacher when advising people about money.

“People are undereducated about finances — specifically about savings vehicles,” she says. “A lot of really bright people just put 10 percent of their money away in savings ... until something kind of slaps them and they say ‘Hey! I’ve got to learn about this.’ ”

Getting married was the wake-up call for the Storeys. Ready with a whiteboard and a pen, Jones approached their finances like a professor.

Future needs

Chapter One, Jones told them, is “Pay for Your Future.” This includes saving for emergency reserves and setting aside some retirement funding.

The couple have a head-start on emergency reserves, but Jones would like them to allocate $200 monthly until they beef that fund up to $10,000.

This gives them a cushion to cover several months of expenses in case they face a short-term crisis.

The retirement portion of this chapter covers “the rule of 72,” Jones says. “By starting to save and invest 10 to 12 percent of their gross income, they’ll have $9,000 this year.”

In general, the rule of 72 is a formula that loosely explains how $1 invested at 10 percent takes 7.2 years to double to $2. (Several websites can help users calculate this rule with their own figures.)

Jones detailed to them the distinctions of “taxable savings, tax-deferred and tax-free” investments and the differences between Roth and 401(k) accounts.

“If they find 10 to 12 percent is tough, and that they’re struggling, I suggest they start with a little less, maybe 8 to 9 percent, and gradually increase by 1 percent every time they get a raise or annually increase it by 1 percent,” Jones says.

Accumulated debt

Chapter 2: “Paying off Your Past.” For the Storeys, this means paying down their “credit cards ASAP” and their auto loan within three years.

“Most people own a car for five, six or seven years,” Jones says. “I recommended to them not buying an auto brand new, but instead getting something that is 1 or 2 years old, and not taking out a 72-month loan. Instead, get something for about 48 months or a loan that is in that price range.

“Then, if you pay it off in 48 months, you can continue to save that amount toward the down payment on the next car.”

Next: student loans

After those debts are addressed, Jones says, tackle student loans, which have a lower interest rate.

“I strongly recommend that Helen and Grant arrange an income-based repayment plan for the student loans,” she says.

For those like the Storeys who “shape their careers according to their values” but want to build a bigger nest egg, Jones encourages them to at least research government or other public-sector employers, which might forgive portions of their student loans.

Jones’ Chapter 3 is “Save for Near-Term Goals.” She recommends the Storeys “Save whatever they can toward a 10 percent down payment” on an eventual house — but adds that there is no rush for them to buy.

“On a normal trajectory, this might be a good time to buy a house, but if you have $135,000 in student loans, it’s a bit unwieldy and you’re not a good candidate,” the planner says.

No rush to buy

For the Storeys and others, getting their financial house in order is more important than taking on the kind with a hefty mortgage, she adds.

Even when the couple decide to start a family, says Jones, “The baby is not going to remember the house. Frankly, you don’t need a house until kids get closer to school age, when you can really decide where you want to settle down with the schools you want.”

Life-insurance stage

Jones believes it is necessary to secure life insurance before the stork arrives.

“Life insurance will move to top of the list for priorities the minute you decide to get pregnant,” she emphasizes. “You can forgo (a child’s) educational savings, but do not neglect life insurance. If cost is a factor, get as much as you can through your employer.”

Since the Storeys make camping and an annual vacation a marital priority, Jones covered travel under near-term goals, too.

“Vacations are something you know are coming, so plan for them,” she says. “It’s OK to put a vacation on a credit card for travel miles and the convenience, but you should have all the cash available ready to pay it off once you get home.”

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