3TN

3TN

CONSULTING 8415 High Corners

Dallas, TX 75201

THE WILKINSON FAMILY

PREPARED BY

Thu Pham

Nelson Trang

Tung Do

Surasak Moolpim

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TABLE OF CONTENTS

Engagement Letter.........................................................................................................................3

Financial Record Keeping .............................................................................................................5

Net Worth Statement .....................................................................................................................6

Cash Flow Statement .....................................................................................................................7

Top Spending Areas .......................................................................................................................9

Financial Ratios ............................................................................................................................10

Insurance ......................................................................................................................................11

Debt Repayment ...........................................................................................................................12

Mortgage Refinance .....................................................................................................................15

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ENGAGEMENT LETTER

3TN Consulting

8415 High Corners

Dallas, TX 75201

October 25th, 2014

Dear Mr. & Mrs. Wilkinson,

We welcome the opportunity to work with you as this letter confirms the terms of our agreement

regarding the financial planning services will provide for you.

At 3TN Consulting our mission is to simply help our clients achieve their financial goals. We are

committed to maintaining the highest standards of integrity in our relationship with you. Please

rest assured that all information you provide will be kept strictly confidential.

This engagement will include services designed to meet your stated goals and objectives

ultimately reducing your costs and debt. These services will specifically include:

Developing a summary of your current financial situation, including a year-end net worth

statement and an annual cash flow statement.

Identifying your top spending areas.

Analyzing important financial ratios.

Reviewing your current home and auto insurance policies.

Developing a debt repayment strategy.

Analyzing mortgage refinancing options.

At 3TN Consulting we maintain the highest level of fiduciary responsibility, meaning that we put

our client’s best interests first. Not only is it our job to act with high fiduciary standard of care, it

is also our job to communicate this with our clients. The cost of our services will be a flat fee of

$1500. We feel that this is a fair evaluation based on the services provided.

Common billing structures when working with certified financial planners are typically fee-

based and commission-based. Fee-based planners earn fees from advice given and make

commissions off products sold. Commission-based planners only earn money from the products

they sell. Our billing structure is simply fee-only. We earn from advice given and do not make

any type of commissions.

We look forward to helping you meet and exceed your financial goals.

Sincerely,

3TN Consulting

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By signing below, you are acknowledging that you have read, agree to and accept all of the terms

and conditions contained in this agreement.

Head CFP Professional: Client:

______________________________ ________________________________

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FINANCIAL RECORD KEEPING

It is critically important to keep all your financial records safe but accessible. Keeping your

records up to date and in order will allow you to:

Save time and reduce stress

Keep track of expenses

Prove that a bill has been paid

Show legal proof of events

Prove ownership status

Prove claims to insurance

Correct errors on statements

The following steps can help you get started on organizing your financial documents:

1. Gather all your financial documents.

2. Set up a filing system.

3. Separate your paperwork into labeled stacks such as “Bills” or “Statements.”

4. File all documents into their appropriate folder.

5. Immediately file when you obtain additional documents.

In addition there are many web and mobile-based personal financial management services

available. Listed below are several popular budgeting and personal finance applications.

Mint.com

Mint not only helps you track your income and expenses but also your financial state as a whole.

Besides allowing for in-depth personal budget management and expense logging, the Mint app

lets you sync your bank and card details for an up-to-date and secure look at your financial state.

BUDGT.ch This application focuses on budgeting and expense tracking, allowing you to create and manage

a monthly budget with income and recurring expenses, and then enter your own categories that

can be displayed in colorful expense charts.

MoneyGuidePro.com

MGP offers financial planning software that’s great for college, retirement, estate and Social

Security planning. In addition asset allocation and insurance needs analysis.

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NET WORTH STATEMENT

Assets Liabilities and Net Worth

Current Assets

Current Liabilities

Checking (Joint) $2,000

BB National CC $5,237

Bank CD (Joint) $3,000

Sears CC $6,200

Savings Account $2,300

Total Current Assets

$7,300 Total Current Liabilities

$11,437

Investment Assets

Long-Term Liabilities

401 (k) Account (His)

$108,657

Student Loans (H) $37,380

401 (k) Account (Her) $65,581

Harley Davidson Loan $18,000

Roth IRA (H) $4,295

Jeep Auto Loan $8,500

Brokage Account $3,700

Infiniti Loan $42,000

Primary Mortgage

$178,000

Total Investment Assets

$182,233 Total Long-Term Liabilities

$283,880

Personal Use Assets

Total Liabilities

$295,317

Primary Home

$271,980

Furniture $12,300

Total Net Worth

$258,496

Jewelry $3,500

Harley Davidson $21,000

2007 Jeep Patriot $9,000

2010 Infiniti E35 $38,500

Boat $8,000

Total Personal Use Assets

$364,280

Total Assets

$553,813 Total Liabilities and Net Worth

$553,813

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CASH FLOW STATEMENT

Cash Inflows

Monthly Annual Annual Totals

Todd's Salary

$8,000 $96,000

Sarah's Salary

$6,000 $72,000

Dividend Income

$120 $1,440

Total Cash Inflows

$169,440

Cash Outflows

Savings

Todd's 401 (k) Contributions

$300 $3,600

Sarah's 401 (k) Contributions

$300 $3,600

Todd's Roth Contributions

$230 $2,760

Cash Savings Contribution

$600 $7,200

Dividend Reinvestment

$120 $1,440

Total Savings

$18,600

Debt Payments

Mortgage Payment (PITI)

$1,777 $21,324

BB National CC Payment

$195 $2,340

Sears CC Payment

$200 $2,400

Harley Payment

$175 $2,100

Jeep Payment

$280 $3,360

Infinity Payment

$448 $5,376

Student Loan Payment

$280 $3,360

Total Debt Payments

$40,260

Living Expenses

Water

$80 $960

Gas

$300 $3,600

Child Care

$1,200 $14,400

Maid

$400 $4,800

Entertainment

$400 $4,800

Landscaping

$300 $3,600

Charity

$350 $4,200

Groceries

$500 $6,000

Home Repairs

$200 $2,400

Cable

$105 $1,260

Alarm System

$39 $468

Internet

$100 $1,200

Cellphone

$130 $1,560

Dining Out

$400 $4,800

Hobbies

$300 $3,600

Club Dues

$150 $1,800

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Dry Cleaning

$160 $1,920

Parking and Tolls

$45 $540

Total Living Expenses

$61,908

Insurance Payments

Life Insurance

$100 $1,200

Auto Insurance

$268 $3,216

Total Insurance Payments

$4,416

Taxes

FICA and Income Taxes

$800 $9,600

Total Taxes

$9,600

Total Cash Outflows

$134,784

Net Discretionary Cash Flow

$34,656

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TOP SPENDING AREAS

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FINANCIAL RATIOS

1. Emergency Fund Ratio = $7,300

($92,316 /12) =

$7,300

$7,693 = 0.95 month

Non-discretionary expenses:

Utilities (Water, Gas)

Childcare

Home (Alarm System, Home Repairs)

Internet, Cellphone, Cable

Groceries

Dry Cleaning

Charity

Parking &Tolls

Insurance Premiums (Life, Auto)

Debt Payments

Tax Payments

Benchmark: 3 – 6 months

Comment: Weak

2. Current Ratio = $7,300

$11, 437 = 0.64

Benchmark: 1.0 – 2.0

Comment: Low

3. Housing Ratio 1 = $1, 777

$14,000 = 12.69%

Benchmark: £28%

Comment: Low

4. Housing Ratio 2 = $3,355

$14,000 = 23.96%

Benchmark: £36%

Comment: Low

5. Saving Rates = $18,600

$168,000 = 11.07%

Benchmark: 10 – 13% (Age 25 – 35)

Comment: Good

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INSURANCE

A split limit policy is when you have different coverage limits for bodily injuries and property

damage. Your current policy is $50k/$100k/$50k. This simply means that you are covered up to

a maximum of $50k for bodily injuries per person, $100k for total bodily injuries per accident,

and $50k for total property damage per accident. Anything over these amounts will be your out-

of-pocket expense.

The $500 deductible is money you pay out-of-pocket before the insurance company pays toward

a claim resulting from a loss or damage. You will be responsible for paying the first $500 for

repairs from an auto accident and then the insurance company will pay for the remaining

balance.

Your home is currently insured 100% of its actual cash value. Actual cash value is the amount it

would take to repair or replace damage to your home after depreciation. On the other hand your

property has replacement cost coverage. Under replacement cost coverage, if your personal

property is damaged or stolen, the insurance company will pay you what it would cost to buy the

property today. You should consider switching your home insurance policy from actual cash

value to replacement cost. Although insurance premiums are lower for an actual cash value

policy, you may find yourself paying a significant amount of money out-of-pocket when you

incur a loss.

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DEBT REPAYMENT

It is extremely important to prioritize your debt. By paying off the right debts first, you can save

a great amount of money while clearing your debts faster. Power payments are highly

recommended. Power payments mean that as soon as one debt is paid off, the monthly payment

from that debt is applied to the next debt. This is beneficial because the total amount of money

paid towards these debts each month will be held constant until all are paid. Below is a table

displaying total payments of your debt with and without power payments.

By using power payments, you will save $6,254.31 with a time reduction of 3 years and 9

months! In addition, if you could pay down the debt with an extra $300 per month, the amount

saved will increase to $10,188.67. The table below shows power payments with an extra $300

per month under the highest interest first method.

The following pages contain a detailed payment calendar should you decide to establish the

power payment plan above beginning January 2015.

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Month Visa American Express Home Equity Loan Student Loan Auto Loan

Nov 2014 $225.00 $150.00 $506.31 $354.37 $647.00

Dec 2014 $225.00 $150.00 $506.31 $354.37 $647.00

Jan 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Feb 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Mar 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Apr 2015 $525.00 $150.00 $506.31 $354.37 $647.00

May 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Jun 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Jul 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Aug 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Sep 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Oct 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Nov 2015 $525.00 $150.00 $506.31 $354.37 $647.00

Dec 2015 $378.36 $296.64 $506.31 $354.37 $647.00

Jan 2016

$675.00 $506.31 $354.37 $647.00

Feb 2016

$675.00 $506.31 $354.37 $647.00

Mar 2016

$336.33 $844.98 $354.37 $647.00

Apr 2016

$1181.31 $354.37 $647.00

May 2016

$1181.31 $354.37 $647.00

Jun 2016

$1181.31 $354.37 $647.00

Jul 2016

$1181.31 $354.37 $647.00

Aug 2016

$1181.31 $354.37 $647.00

Sep 2016

$1181.31 $354.37 $647.00

Oct 2016

$1181.31 $354.37 $647.00

Nov 2016

$1181.31 $354.37 $647.00

Dec 2016

$1181.31 $354.37 $647.00

Jan 2017

$1181.31 $354.37 $647.00

Feb 2017

$1181.31 $354.37 $647.00

Mar 2017

$1181.31 $354.37 $647.00

Apr 2017

$1181.31 $354.37 $647.00

May 2017

$1181.31 $354.37 $647.00

Jun 2017

$1181.31 $354.37 $647.00

Jul 2017

$1181.31 $354.37 $647.00

Aug 2017

$1181.31 $354.37 $647.00

Sep 2017

$1181.31 $354.37 $647.00

Oct 2017

$1181.31 $354.37 $647.00

Nov 2017

$1181.31 $354.37 $647.00

Dec 2017

$1181.31 $354.37 $647.00

Jan 2018

$1181.31 $354.37 $647.00

Feb 2018

$1181.31 $354.37 $647.00

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Mar 2018

$1181.31 $354.37 $647.00

Apr 2018

$1181.31 $354.37 $647.00

May 2018

$1181.31 $354.37 $647.00

Jun 2018

$1181.31 $354.37 $647.00

Jul 2018

$1181.31 $354.37 $647.00

Aug 2018

$1181.31 $354.37 $647.00

Sep 2018

$1181.31 $354.37 $647.00

Oct 2018

$1244.73 $354.37 $583.58

Nov 2018

$1828.31 $354.37

Dec 2018

$1828.31 $354.37

Jan 2019

$1828.31 $354.37

Feb 2019

$1042.82 $1139.86

Mar 2019

$2182.68

Apr 2019

$2182.68

May 2019

$2182.68

Jun 2019

$2182.68

Jul 2019

$2182.68

Aug 2019

$2182.68

Sep 2019

$2182.68

Oct 2019

$1846.33

TOTALS $6603.36 $3932.97 $52157.72 $36337.82 $30992.58

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MORTGAGE REFINANCE

The chart above shows the total payments of interest and principle of the current mortgage and

the two refinance options. Total interest is significantly lower in both options 1 and 2 therefore

refinancing is highly recommended.

As for monthly payments, option 1 will increase payments by $98.47 while option 2 will save

you $336.62.

Current 30 years @

6.6%

Option 1 15 years @

4.2%

Option 2 30 years @

4.6%

Interest $259,834.35 $64,142.54 $155,152.87

Principal $200,000.00 $183,500.00 $183,500.00

Total $459,834.35 $247,642.54 $338,652.87

$0.00 $50,000.00

$100,000.00 $150,000.00 $200,000.00 $250,000.00 $300,000.00 $350,000.00 $400,000.00 $450,000.00 $500,000.00

Total of Payments

Interest

Principal

$1,777.00 $1,875.47

$1,440.38

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

Current 30 years @ 6.6%

Option 1 15 years @ 4.2%

Option 2 30 years @ 4.6%

Monthly Payments (W/ Taxes & Insurance)

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Important factors to consider when deciding between the two refinancing options are the housing

ratios. Although option 1 has a lower total interest, the monthly payments will be higher than

what you are currently paying. Refinancing with option 2 is recommended due to the

significantly low housing ratios. In addition, refinancing to 30 years at 4.6% will lower your

monthly mortgage payments giving you the flexibility to pay off other debts and expenses.

12.69% 13.40%

10.29%

23.96% 24.67%

21.56%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Current 30 years @ 6.6%

Option 1 15 years @ 4.2%

Option 2 30 years @ 4.6%

Housing Ratios

Housing Ratio 1

Housing Ratio 2