The Personal Refi
The Personal Refi: the art of the personal finance, refinance

Heading into the end of the year I often hear, and read, about aspects of finance that are readily overlooked. Budgets, charitable giving, credit cards, insurance, employee benefits, retirement contributions, property taxes, and the list goes on. Admittedly I used to not give ample attention to the majority of my personal financial life. Thankfully, I’m better educated on the topic than I used to be. I’ve grown to call this annual exercise the Personal Refi; partly because some items are legitimate refinance items, but also because we are simply revisiting our personal finances. Allow me to share some refinance items that my family is practicing as we head out of 2019 and into 2020.


1 – Refi the Budget: My wife and I never use to be budgeters prior to marriage. Boy were we silly not to be. We admit budgeting is not a fun exercise, particularly the first go around. When we began budgeting we were cutting out the fun things we enjoyed in order to pay our necessary items. It seemed so discouraging. Now that we are in the habit of making the budget our decision making has never been less burdensome. We create a budget for everything. Monthly expenses, annual expenses, birthdays, vacations, Christmas, you name it! Now I realize that coming from the financial planner, this is likely going to be met with a serious eye roll. I’m even doing one as I type this out. But let’s be honest: all we are doing is making a plan. As I have been so often reminded throughout my life “Failing to plan is planning to fail.” Even when I was a teacher and coach I would remind my students and players of this, only to later realize my own hypocrisy when I did not practice this is my personal life. We are certainly guilty of breaking the budget, multiple times over in fact. Maybe we make more money than we did last year. Perhaps our family is growing (Trimble #5 due April 2020!!!). Maybe we want to be more generous this year than last year. We definitely need a vacation heading into the end of this next year. Whatever the case may be, creating a framework allows our decisions to be based in the reality of our financial discipline which carries over into every other aspect of our life. Simply categorizing expenses does us no good. We want to control and command our money, before it controls and commands us.


2 – Refi the Home Mortgage: The last half of 2019 saw interest rates drop significantly, which prompted my wife and I to look at our home loan. Sitting at 4.875% we could surely do better. We DID! Ending up at 3.75% we are saving a significant amount of money each month and over the life of the loan. However, this is where the “Results not typical” disclaimer should be inserted. My wife and I purchased during a time of rising interest rates, so for us it made sense. Furthermore, we had equity built up in our house from the hot real estate market directly around us. Not only were we able to refinance into a lower rate, but we also are soon to be done with our Private Mortgage Insurance (PMI) payments due to our equity percentage. WIN-WIN. Maybe you don’t have PMI, perhaps your rate is EVEN BETTER than 3.75%, and perhaps your equity is far better than 20% ownership in your home. Refinancing or a Home Equity Line is an option to consider when it comes to home repairs and renovations, or other big ticket items. Keeping in mind our budget, we want to make sure this fits into our overall financial plan and monthly expense items. Don’t refinance for the sake of refinancing, especially if you have intentions on moving in a short period of time. Yet taking the time to evaluate if there is opportunity to either save money, cash out, or decrease the term of our loan could provide flexibility down the road.


3 – Refi the Credit Cards: The Trimble’s loathe paying interest. I mean seriously LOATHE it. Particularly after paying off $60,000 worth of my student loan debt. We NEVER want that burden again. See the last line from item #1: “We want to control and command our money, before it controls and commands us.” How easy is it to simply put an expense on the credit card? FAR TOO EASY! Sure, charging an expense only to pay it off before the month’s end is no issue at all. After all that how we get those invaluable airline points right?! Yet once that interest charge hits, those minimum payments leave us almost in a state of payment perpetuity. Especially around the holiday shopping craze (or Super Bowl for those crazy TV deals) we are so tempted to buy, buy, buy; even if we end up giving much of it away! This is where the budget helps my family know what we can afford and the line that keeps us out of financial trouble. Credit cards often get lumped into the “Bad Debt” category. This may be true, but only for the undisciplined credit card holder. We want to utilize all of the tools in our tool belt, but we need to recognize when those tools become a danger to the user. Things we evaluate: Do we have too many cards? Can we afford to close a credit card? Can we afford to pay off our credit card? There are certainly aspects to consider for each of these questions, all personal to your circumstances.


4 – Refi the Home/Auto/Liability Insurance: How often do you assess whether or not you’re either amply covered or paying too much for your insurance coverage? In my opinion this should be an annual occurrence. When my wife and I became home owners, our combined insurance literacy left much to be desired. However, having been homeowners for a few years we have discovered that loyalty in the insurance industry also leaves much to be desired. We now want to make sure we are getting the best deal for the necessary amount of coverage we need. Sure, we are going to combine these items because there are substantial discounts to be had. However, we are certainly not going to stay at one insurance company simply because it is easier. Perhaps you have an incredible agent who provides wonderful customer service! We had that before too, but when we ran into an issue with underwriting our agent had very little sway in what the underwriters’ perspective was or what they were asking of us as homeowners. Thankfully, it was a minor issue. Also thankfully, I learned that it’s not personal, it’s insurance. So we found a great guy that we trust to shop around our policies to the carrier who will give us the best deal. He will also tell us when filing a claim may be more of a headache than it’s worth. This is something that should not be done more than annually as insurance carriers aren’t like phone carriers. When we recently refinanced our insurance we ended up with a better rate and increased coverage on our home and autos. WIN-WIN


5 – Refi the Employee Benefits: For the Trimble’s this means our medical insurance, life insurance, short/long term disability, 401k contributions, HAS contributions, FSA contributions, and ANY other benefits our employers offer. Do we need the high deductible plan or can we afford higher premium plan? What does our budget say? Can we afford to contribute more to our employer retirement plans? What does our budget say? Do we need more or can we get by with less shot/long/life insurance coverage? What does our budget say? Are you sensing a theme here? Really this is one area I believe can be far too easily overlooked. Look back at the previous year and see what you needed, where you can adjust, and then look forward to what you’ll need in the future. Like I mentioned previously, baby Trimble is coming April 2020 and our health insurance is in the forefront of our employer benefit decision making. Our mantra: What does our budget say?

About the Author

JT Trimble, Candidate for CFP® certification, joined YHB in August of 2018 and serves as a Client Account Manager. He is a regular contributor to Let’s Talk Investing and speaker at numerous events throughout the region. JT is a member of the Loudoun County Chamber of Commerce and the Financial Planning Association.