Case Study: Scott and Susan Smith
Scott Smith was in college when he decided to become an Otolaryngologist. Despite the fact that he would have to take out large amounts of student loans, he and his parents decided that through dedication and hard work he could graduate medical school and eventually buy into a practice that he could ultimately call his own. His parents helped him with his undergraduate education but he was borrowing to fund his graduate education. When he was 32 years old, he had finally finished his schooling and had just landed a job as an Otolaryngologist in a small practice in Charlotte. That’s when he heard of HSC from a friend and called us.
During our introductory meeting he and his wife Susan relayed that they had been recently married and would like to have a large family someday. Scott relayed that his highest priorities were to take care of his family but also live well below their means. He said he wanted to partner with a financial advisor who would hold him accountable in establishing a repayment plan for his student loans while helping them develop aggressive saving habits.
When Scott became a client in 2008, his net worth consisted of 2 student loans amounting to $200k and a savings account of $10k for a Net Worth of NEGATIVE $190,000. He said that his new job would pay a first year salary of $300,000, but that he and his wife had established a monthly budget of $5,000. Together we determined that we should create SMART goals to direct the remaining amount toward his loan balance, emergency fund and other investment options that would save taxes. We were able to help Scott and Susan uncover solutions to customize their plan to their current stage of life.
We established a plan to repay the loan in 10 years. And we developed a plan for them to save enough for a 30% down payment for a house within 3 years. We also spent time developing strategies to help him save on taxes utilizing his company 401k and their personal IRAs and Roth IRAs. Although he has always made more than the maximum amount to be eligible for a Roth, he and his wife have made contributions to non-deductible IRAs and have converted those balances to Roths for the last 5 years. In addition, Scott has contributed the maximum amount to his 401k. When he became an owner, we set up a solo 401k so that he could contribute in excess of $50,000 per year.
Today, just 6 years later, Scott and Susan’s net worth is $1.1 million and they have $424,000 saved in investable assets. They have four children and have already begun to plan for college costs. They are on track to own their home and be debt free. Scott is enjoying his practice and his clients. The Smith’s have now graduated from our young professional’s savings program to our Wealth Management offering.
To learn more about the young professional’s savings program, contact us today!
*This success story is based on true events but names and minor circumstances have been changed for confidentiality purposes.