Let's Make a Plan
The first step where you define the relationship and expectations.
What is the engage stage?
The budgeting rule that suggests allocating a specific amount to needs, to wants, and to savings.
What is the 50/30/20 rule?
Refinancing is often used to reduce this, lowering the total cost of borrowing over time.
What is the interest rate?
Acting in the client’s best interest at all times.
What is fiduciary duty?
These government-sponsored entities buy and guarantee mortgages in the U.S. system.
What are Fannie Mae and Freddie Mac?
A planner asks about goals, income, and lifestyle preferences during this step.
What is the discover stage?
Fund recommended to cover three to six months of expenses for unexpected situations.
What is an emergency fund?
This strategy prioritizes quick psychological wins by paying off the smallest balances first.
What is the debt snowball method?
This type of financial professional provides advice on securities and must register with the SEC if managing large client assets.
What is an investment adviser?
Fees or credits tied to the interest rate, where paying more can reduce your stated rate.
What are points?
In this step, you evaluate whether a client’s assumptions and goals are realistic.
What is the analyze stage?
Lenders use this ratio to decide if your monthly debt is manageable relative to income.
What is the debt-to-income ratio?
This strategy prioritizes paying off debts with the highest interest rates first.
What is the debt avalanche method?
This type of financial adviser uses algorithms and automated platforms to provide investment advice with minimal human involvement.
What is a robo adviser?
This is an account used by lenders to collect and pay property taxes and insurance on behalf of the borrower.
What is an escrow account?
This stage includes presenting recommendations along with assumptions and limitations.
What is the recommend stage?
This ratio focuses specifically on housing costs like principal, interest, taxes, and insurance.
What is the PITI ratio?
This group of borrowers, mentioned in the WSJ, is most likely to carry balances and pay high interest rates.
Who are subprime borrowers?
Designation specifically for a CPA specialization in personal financial planning.
What is a personal financial specialist (PFS)?
Falling below this equity threshold typically triggers private mortgage insurance.
What is 20% equity?
A client’s plan no longer fits after a divorce and job change—this ongoing step ensures adjustments are made.
What is monitor and update?
When creating a spending plan, expenses are categorized into fixed, variable, discretionary, and this final category.
What are tax expenses?
Refinancing student loans with private lenders may cause borrowers to lose access to this federal benefit.
What is loan forgiveness?
This widely recognized certification focuses broadly on personal financial planning and requires meeting specific professional standards.
What is a certified financial planner (CFP)?
A proposed mortgage discussed by the Wall Street Journal lowers monthly payments but significantly increases total interest and slows equity buildup.
What is a 50-year mortgage?