Student Loan Debt & Financial Planning 101 Presented By: Jimmy Diehl, MBA,CFBS® Financial Advisor, Managing Associate Wes Yamada- Financial Advisor, Investment Specialist 3003 Oak Road, Suite #250 Walnut Creek, CA 94597 (925) 979-2308 (925) 944-5742 fax Intro- Tawnya & Luke

Top Financial Concerns: 1 – 2 years Managing Student Loan Debt Protecting income Job Stability Emergency Funds Saving for retirement Managing cash flow/budget Saving for a home Protecting family & business 3 – 10 years in the business Starting a family Making smart investment decisions Looking to upgrade home Education planning Seasoned professionals Protecting wealth Leaving legacy Giving back

Options for Paying Student Loans Standard Repayment 10 year repayment period, no prepayment penalty Extended Repayment 25 year repayment period, no prepayment penalty Consolidated Federal Loans Up to 30 year repayment period, no prepayment penalty Income Based Repayment (IBR) Payment based on a percentage of Adjusted Gross Income (AGI) Pay As You Earn (PAYE) Standard loan- fixed payments 10yrs Graduated-starts small and grows Extended adds 15yrs (25) *discretionary income is defined as the amount of adjusted gross income (AGI) above 100-150% of the poverty level for the borrower’s household size. ibrinfo.org Public Service Loan Forgiveness (PSLF) is a program for federal student loan borrowers who work in certain kinds of jobs. It will forgive remaining debt after 10 years of eligible employment and qualifying loan payments. (During those 10 years, the Income-Based Repayment (IBR) plan can help keep your loan payments affordable.)

Options for Paying Student Loans Standard loan- fixed payments 10yrs Graduated-starts small and grows Extended adds 15yrs (25) *discretionary income is defined as the amount of adjusted gross income (AGI) above 100-150% of the poverty level for the borrower’s household size. ibrinfo.org Public Service Loan Forgiveness (PSLF) is a program for federal student loan borrowers who work in certain kinds of jobs. It will forgive remaining debt after 10 years of eligible employment and qualifying loan payments. (During those 10 years, the Income-Based Repayment (IBR) plan can help keep your loan payments affordable.)

http://www.vinfoundation.org/demoloansim/

What is the objective? Accumulation Distribution What is the objective of any journey? Where is the main focus?

Need to plan for unknown Contingencies Flexibility

The Problem We all make financial decisions. The problem is we make them: One at a time At different times With different people Under different circumstances

The Model Tawnya

The Model Tawnya

The Model

Model works under any economic condition P R O T E C I N Model works under any economic condition Coordinated/Integrated Test, Measure, Verify Strategies S A V I N G Organized Flexible G R O W T H

Starting Professional Program Luke No Financial underwriting First 2 years $4,000 Senior Vet Students $3000

Income Protection DI Income Protection Luke Income is your biggest wealth building tool. Without it who will pay rent/mortgage, Student Loans, retirement medical expenses, cellphone bill?

The Value of Time

How exactly does this work? $1,000,000                 “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” ― Albert Einstein $838,016 Value $389,927 $139,716 $10,000 1-10 11-20 21-30 30 TIME $300,000

What happens when we skip a year? A 30 year old that plans to retire at 60 has a 30 year time horizon Most people don’t extend their retirement age because they skipped a year of savings If this same person starts saving at 35, what impact does this have?

$838,016 – $581,563 $256,453 $1,000,000 $838,016 Value $581,563 $389,927 $139,716 $10,000 1-10 11-20 21-30 21-25 30 TIME $300,000

TAX TRIANGLE Post Tax Post Tax Pre Tax Roth IRA 529 Plans Muni Bonds Cash Value L.I. Post Tax Pre Tax Tax- Free Partially Taxed Fully Taxed Stocks Bonds Mutual Funds Social Security CD’s Real Estate 401(k) 403(b) 457 SEP IRA Traditional IRA Pension Jimmy

Person A Post Tax Post Tax Pre Tax 100,000 of Income 100% Taxable as Ordinary Income Jimmy 100,000 of Income

Income Output Person A ($30,000) in Taxes $70,000 Net Income $100,000 30% Effective Tax Rate ($30,000) in Taxes $70,000 Net Income $5,833/month Jimmy

Person B 33,000 of Income 33,000 of Income 34,000 of Income Post Tax Pre Tax Tax- Free Partial Taxed Fully Taxed Jimmy 33,000 of Income 34,000 of Income

Income Output Person B ($10,000) in Taxes $90,000 Net Income $34,000 Fully Taxable 15% Effective Tax Rate = $5,000 in taxes $33,000 Partially Taxable 15% Capital Gains Tax = $5,000 in taxes $34,000 Tax-Free = $0 in taxes Jimmy ($10,000) in Taxes $90,000 Net Income $7,500/month

The Penny Game If I were to give you a penny on March 1st and you were able to double it every day until March 31st, how much money would you have? March 1: $0.01 March 2: $0.02 March 3: $0.04 ~~~~~~~~~~~ March 31: $________???? $10,737,418.24 Tawnya

The Penny Game $81,934.65 March 1: $0.01 March 2: $0.017 If I were to give you a penny on March 1st and you were able to double it every day until March 31st, how much money would you have? This time, you have to pay tax on the growth of 30% March 1: $0.01 March 2: $0.017 March 3: $0.0289 ~~~~~~~~~~~ March 31: $________???? $81,934.65 Tawnya

TAX TRIANGLE Post Tax Post Tax Pre Tax Roth IRA 529 Plans Muni Bonds Cash Value L.I. TAX TRIANGLE Post Tax Pre Tax Tax- Free Stocks Bonds Mutual Funds Social Security CD’s Real Estate Partially Taxed Fully Taxed 401(k) 403(b) 457 SEP IRA Traditional IRA Pension Jimmy

4 Pillars of Planning Increase Long Term Wealth Increase protection from Wealth Eroding Factors Taxes, Inflation, Market Volatility, Unexpected Life Events, Law Changes, Technological Change, Long Term Care, Etc. Do so at same or reduced level of risk Do so with no additional out of pocket outlay Jimmy

EVALUATION FORM Evaluation Jimmy

Thank You CSHP! Northern California Advisors: Jimmy Diehl, MBA,CFBS® Financial Advisor, Managing Associate 3003 Oak Road, Suite #250 Walnut Creek, CA 94597 (925) 979-2308 jamesdiehl@financialguide.com wes@furstnergroup.com Southern California Advisors: Ryan A. Logan, CFP®, ChFC®, CLU® Financial Planner Capstone Partners Financial and Insurance Services, LLC 4695 MacArthur Court, Ste. 1000, Newport Beach, CA 92660 direct: 949.225.9350 | cell: 714.584.0222 | fax: 714.787.0988 email: ryanlogan@financialguide.com | CA Insurance Lic.# 0F16408