New Podcast with Kevin Roark: Is Your Financial House in Order?

Parents, is your teen college ready? Are you feeling overwhelmed, stressed out, or excited about your teen applying to college? Do you know what colleges are looking for? And if your kid gets in, do you know what you'll pay for it? College admission has never been so competitive or expensive. Shellee Howard will take you on a journey to help you and your teen get college ready. Now here's your host, Shellee.

Hello, this is Shellee Howard with Parents, Is Your Teen College Ready? And today I have an incredible guest I cannot wait to share with you. Kevin Rourke is my guest today. Kevin, welcome to the show.

Thank you. Thanks for having me, Shellee.

Outstanding. So for our listeners and viewers, can you give them a little bit of your background so they understand where you're coming from?

Sure, absolutely. Just to relate to everybody here, we're in the college planning realm. I myself am a comprehensive financial planner. But let's fast forward or rewind rather back to my days. I was a college athlete. I'm the youngest of 3 from Indianapolis, Indiana. I've been traveling all over the country, but I played college football in Virginia. Um, 6 knee surgeries after my first year for scholarship and that taken away, I did end up playing junior college basketball, uh, still in Virginia. But since then, I found a passion in helping families prepare financially, and in that, uh, we've gotten to introduce myself to you, Shellee Howard, and the college funding, because as we know College is just getting increasingly, increasingly expensive, and professionals such as yourself and myself are needed to help. So I've found a passion because once my scholarship was taken away, I had no more aid, I had no more scholarships. I was completely paying out of pocket. Pretty much any mistake you could make or, you know, was out there to make, I made in that process. And so once I learned the tricks of the trade after I started my career, I thought it's too valuable to not share with somebody else. So that is my passion here today and branch off from there. And I know you can identify with that.

So the interesting question that I love to ask every guest, because keep in mind, we're, we're parents trying to help our kids navigate. It's so different than it was. Did you know you wanted to be a financial advisor when you were in high school?

Uh, absolutely not. No, I did not have, uh, my, my life plotted out. I think if I had my way, I might have been an NFL player at the end of the day. Um, you know, and of course I had backup plan in business, and I actually started a clothing line, uh, back in the day in college with a famous athlete. I won't name him, but a famous NBA player. His brother's a good friend of mine. And trudged that road for a little bit, wasn't for me. Trudged multiple different roads and I ended up meeting someone who I looked up to who was a financial planner and landed there. But by no means was that my plan in elementary, middle, high school at all.

Which is such a blessing for so many parents listening because if you ask, I don't know, 80% of teenagers what do they want to do, they're frustrated because they truly don't know. When did you know that financial advising was going to be the thing that stuck?

I would say roughly about 2 to 3 years after graduation of college. I, I tried a few, like I said, different avenues in business, and once I found someone who had everything that I wanted, and he had been a mentor to so many people and had helped thousands and thousands of families, um, his name was Bill Zimmerman. He, he actually was a founder of a very large financial firm and very successful man. And I got to watch him, be a fly on the wall. I was his business assistant for years, and he taught me so much along the way. And what really did the trick for me was the families that he's helping, seeing the actual change from point A to introduction to seeing on the other, other end of it, the, the fruits of their labor and listening to him. I'm also— I've always been a little gifted in the math side and dealing with people. So I love talking to people. I love dealing with families. And mixed together, that's when I knew. So roughly about 2, 3 years outside of graduation.

Which is very common. I tell families, I say, you know, at 5 years post-grad, you're finally there. Like, you finally understand, what are my gifts? How am I going to use them? With College Ready, we do our very best to try to help families narrow it down to what are their gifts and talents and core values. Speaking of core values, how, you know, there's financial advisors, there's wealth advisors, they're certified this and that. Can you maybe share with our families like what it is that you do and how it's different from all the other people out in that space?

Sure, absolutely. So I myself, or our company, has multiple certified financial planners, chartered financial consultants, licensed agents. We are comprehensive financial planning. It's not just one avenue. We don't just do investments. If you go to Fidelity or if you're going to Goldman Sachs, things of that nature, they're going to be focused on investing your money in the market. That's, that's what they do. I'm sure they might have, you know, if you ask them what's a college savings plan, they might give you 529 plan, something of that nature. I meet the family where they are. I do a number of things. I do estate planning, tax-free retirement planning, college funding. I don't have a blanket answer for every single family on what the solution is for them. It really gets down to meeting them one-on-one, finding out what their needs are. Education is the biggest piece for me. I don't I don't tell a family they need to do this or they need to jump into this strategy. I educate and I give them books. If you're looking at my desk right now, I have tens of books with tax-free retirement and I give them resources. And then by the time I'm done educating, they have a clear path on what they would like to do for their future. Now, I'll have families such that you deal with that have a very specific need sometimes who already have a financial planner. And that's great. I love working with other financial planners. Like I said, most of them do not have a specialized field in college funding, so to speak. So when they come to me, I work in cohesiveness with other financial planners that have been with the family for 20 years or even 2 generations. I love doing that. It's again, just education. College funding is one lane that is unique. There's strategies to where you kind of have to— a client would have to put their beliefs and prior dispositions aside to learn the way that I handle college funding. And it goes hand in hand with exactly what you do, Shellee Howard. I think colleges— the cost of college is so expensive these days. It's— they're really allowing young adults, 17, 18, to sign up for such a large liability of cost. And sure, there's a return on investment, but if you don't know exactly what you're doing, and the planning of what school, why am I going here, what major am I doing, which you're so good at. Then to the other end with— that's great. If there's anything left over, how are we going to pay for that and how do we set up our rest of our retirement future? I believe it's very, very important for families.

So that really segues into college. You know, when I'm first meeting with families and we're talking about what's important, and I always ask a family this, Are you looking for an academic fit, a social fit, or a financial fit? Right? What do they all say? We want them all. That's what we want. Yes, please. We like all of it. But then I get deeper into— I ask the student, what is most important to you? The academic fit, the social fit, or the financial fit? I don't think any parent listening would be shocked they say the social fit.

Sure.

Every now and again, I'll get a, a stray student that will say, oh, the financial fit. And then they look at their parents like, did I answer that right?

Right.

And then I'll look at the parent and I say, okay, so tell me what is most important? And the parent is in a tough spot because they wanna support the child academically and socially, but they also are wise enough to know they don't wanna put their family in debt nor their child in future debt.

Right.

How is it that you can help families as they think about paying for college?

Well, as I said before, I'm an educator. I like to teach. So if it's okay with you, I'd like to share, uh, maybe a slide or two, and I can talk you guys through, uh, all the possible ways there are to pay and then segue just for a couple minutes into really what I do in that field of college funding, if that's all right.

Sounds great. I would love to learn.

Awesome. Okay, so let me share my screen real quick here.

And for those of you who are listening on the podcast, we'll do our best to verbalize what's on the screen, but you can always see this on our YouTube channel at College Ready Plan.

So for those of you listening, I have a chart up and it has 5 different categories, and these are the 5 possible ways you can pay for school. Outside of these 5 ways, there's literally no possible way to pay. So number 1, we have private loans. Okay? It really depends on a very unique situation if we're going to go with a private or federal loan. Like I said, there's not a blanket answer to almost anything in our field. But private loans, there's some downsides. Some of those are you can have variable interest rates, whereas you might be paying this rate at one point, it might change down the road. Also that you have to start paying very close to the time at which you take that loan, as opposed to a federal loan to where you don't have to pay till post-graduation of your, of your student. I know our president currently tried to do a $10,000 forgiveness program. It did not pass through, but let's say it did go through, that would only qualify for federal loans. So there's a lot of give and take, and depending on credit history with families and where our cash flow is, it's going to depend very specifically. So I help families if a loan is necessary, but if you have someone as good as Shellee Howard, hopefully that's not necessary and we can get that scholarship passing. Uh, the next, number 3— so number 1 was private loans, number 2 is federal loans, number 3 would be 401 or qualified accounts such as your 403s, any sort of IRA. Uh, obvious downsides if you're not familiar. If you have a 401, if you have an IRA, there's going to be restrictions as to pulling the funds out. And that is, if you're not 59 and a half, there's going to be some penalties on top of the taxes on any sort of gains that you have there. Uh, not to mention, if you do borrow from your 401 and you do lose your job, you only have about 30 days to 90 days to pay that back. Otherwise, we're going to hit with some more penalties and fees on top of that. Okay, then we have cash flow. So number 3 was 401 qualified accounts. Number 4 is cash flow or assets. Uh, the average family— family rather— has saved about $15,000 for school. Now that's average. Of course, we're going to have outliers. I've had families that come in and they have $400,000 saved for one student, and of course there's outliers, but The average family saved about $15,000. The average cost for college, if you're going to a state school— and again, average, outliers on both sides— but is $9,000. The average cost per year. The average cost for a private school is about $27,000 per year. And again, if we have someone like Shellee Howard, hopefully there's no cost again. And she does a fantastic job helping our families. Uh, but the real reality of the situation is most families have not saved a sufficient amount, uh, to pay for school. There is a calculation, as you can see, for those of you watching, uh, it says raise EFC. So EFC is called expected family contribution, and that is a number that the government deems on any one family that says, based on your income based on your assets, this is how much that you have that we say you can afford for college. Whether or not you actually can or you can't, the government is going to put a number on you. Uh, that term EFC is going to be changed to SAI, Student Aid Index, uh, shortly. Now the calculation is pretty similar, there's not a lot of differences, but long story short, the calculation is jaded into the government's favor in that it's assuming in the calculation that a family of 4 can survive on $25,000 per year. Okay. I don't know about you, Shellee Howard, but my family can't survive on $25,000 per year.

I guess it depends on where you live.

All right. Right. And so, like I said, it's in the, in the government's favor. So if you have assets in your bank account, if you have private brokerage accounts,, it's going to raise that number. It's going to raise that EFC. So we ideally don't want to keep a whole lot of money sitting there. Number 5 would be home equity. Again, I can't sit here and say that any one person should borrow against their equity. If there's a low interest rate environment, it can be, but currently it is not. So that's something on a one-on-one basis we would have to look at with families. There is one other strategy that I'd like to cover with you guys, and it's really just a concept more than a strategy. I want to share my PowerPoint here. Okay, okay. Shellee, can you see step 1 and step 2?

Absolutely.

All right, so step 1 is Shellee's avenue. This is where she operates. Lower the cost, get those scholarships, get the grants, pick the right school for the family. Make that upfront cost as low as possible. Step 2 is where I come in. So what our goal for any family is, any money that you have that you have to come out of pocket for school, we would like to refund that back to you for your retirement and talk about the implication there. So Step 1 is what Shellee— where Shellee operates, how she helps families gather those scholarships, institutional need merit-based aid. Let's say the average cost, just for this example, of a university is $40,000 per year. Between the aid, let's say that we can lower that to $25,000. So you're saving $15,000 per year. So let's multiply that freshman year, sophomore, junior, senior, assuming we're only going to school for 4 years. That's saving $60,000, $15,000 per year. If we invest that amount of money now, that can be up to a quarter million, even higher than a quarter million dollars for a family in their retirement. So it's not just what you're saving right now, it's what could that savings do for you in the future as well. Okay, so that was step 1. Step 2 is get that refund. Any money that we have coming out of pocket, we want to be returning to us for our retirement. We all love our kids, we all want to help our children, but at the end of the day, we don't want to have to move in with them in retirement. So to have them supporting us, right? So how can we avoid that? I say we are— you're financing everything you buy, Shellee Howard. And that is if you're going to the grocery store, you're spending $50 on groceries, that money is cash gone, is no longer working for you, right? Or if we're borrowing money, then we're literally borrowing from a bank and paying interest on that money. So if you're borrowing for a car, you're not just paying the face value of the car, you have to pay interest on top of that. So either cash out of your pocket, you're not gaining any interest, or you're having to pay interest out of money that you're borrowing. One of the two. My goal is to separate that into a third possibility, into creating wealth. Okay? For those of you who cannot see the screen and you're listening, there are 3 types of people in this world. There are spenders, there's savers, and then there are wealth creators. People create wealth for themselves. Okay, so the spender, number one, let me get my laser pointer here. There's a black line that represents $0 financially. The spender is going to borrow for any major capital purchase. They're going to borrow for a car and slowly pay that back and get back to $0 financially. So you're going negative by borrowing and then chipping it away to pay that back. They're going to borrow for school and then chip away and go back to the zero zero dollar line as well. Okay, the saver, however, who thinks they're so much better than the spender, right? They're gonna save, save, save, save, save for a car and have a lot of cash and then pay the dealership, go back to that zero dollar line. They're gonna save for college, drop cash, go back to that zero dollar line. Either way, if you're the spender or you're the saver, your cash is going back to zero. Michael, for all of the clients who are coming in specifically for paying for college. Now, this isn't something that might be good for everybody. This is an educational piece. We'll have to see fit. But for the purpose of we don't want to lose the money, we're coming out of pocket to pay for tuition. We don't want to have to just borrow and lose and pay a bunch of interest and not have that back to us. We're going to put the asset in your own bank. Okay, we're going to be banking with yourself, so to speak. We put cash with yourself, allow that to grow so that when you're borrowing, you're not borrowing against an institution, you're borrowing against yourself. And that means borrowing that cash is in the principal, still intact, and that is growing over time so that every time that you pay that back, you're catching up to growth that has occurred. Okay, and this is in general terms what we try to accomplish with all of our families. So I, I hope we didn't confuse you too much there, but that is a small snippet, uh, for families, Shellee, that come into my office. I speak for about an hour. I send them an hour of me speaking, even more unfortunately for them, and then I send them home with education, more books. Again, just education there, but that's a good general overview.

That was incredibly helpful. For those of you who could not see it, and are visual learners, highly recommend going to College Ready Plan YouTube channel and watching it because it really brought it to life. So, you know, what are some of the issues when people come in and they're like, well, the issues that I see is either a family is like, Shellee, just get 'em in and I'll pay it, write a big check, just get 'em in. Or it's, Shellee, we don't have the money, we did not save, I'm now really concerned. What about when they come in to see you, Kevin? What are some of the issues that you see?

Sure. To be honest, I think in the whole process, a killer for most families is procrastination. They're not taking charge and they're coming in, their child's senior year, maybe even worse and already started college and they now they wanna know, How can we prepare and pay for school and, and not go into crazy, crazy debt? And I can still help that family, but if they can come see someone like you freshman, or even earlier than freshman year, the earlier the better. And for myself, as far as financial planning, the best time to start saving and planning for a student's tuition is before they're even born. If you can come in, you know that you want children, now is the time to start planning. Right, so procrastination is a big one. Uh, two is not understanding what that EFC is, what I talked about before on what's the expected family contribution, and trying to just put together a plan last minute of I'm just barely being accepted to this school. If you're just barely skating by to get into a school, we're not going to have a lot of availability for grants, scholarships, and things of that nature. If you don't understand what expected family contribution is and that private schools will give you more money than state schools will, again, it ties back into procrastination, not being prepared for this process. The second thing is listening to family, friends, people who have already been through the process and holding on to the idea that what someone else did for their child is what I need to do for mine. I think that it— this planning process, and I think you can co-sign this, is very individual. It's to the person, okay? Not every student should take the SAT. Not every student should take the ACT. This college doesn't prefer this one over the other. It's— let's sift through what you've heard from other families and let's focus in on a one-on-one basis. So my process really is bring you into the office. I'm going to ask you a ton of questions. And to the point where you're going to be tired of it. But I want to know everything about the family, okay? And then I want to educate, educate, educate, educate, and then implement. But if we're procrastinating, we're not willing to learn new things, there's not a lot we can do. So my advice to anybody, come see Shellee Howard, come see someone like myself after Shellee's helped you, or even before. Like I said, we can start immediately for this college planning, uh, and make action. Steps, move forward.

That's such great advice. You know, I get people every week call me and say, Shellee, I know I'm really early for this process. And I'm like, wonderful, what age? And they're like, oh, beginning of my senior year. And I'm like, I'm having a little heart attack because that is very late in the game. Remember, the FAFSA looks at the second semester of your sophomore year and the first of your junior year. So if your financial house is not in order, I— my hands are tied when it comes to a lot of opportunities. Testing is only optional if you don't want scholarships, right? I'll say that again. Testing is only optional if you don't want scholarships. So people are always trying to take the easy, you know, let's see what happens path, and that is called college debt. That is why our world is in such a dire need of support right now. I started this crazy process, uh, because it was a need of mine. My firstborn wanted to go to a top-tier school, and I was quite scared. I had no idea how I was going to pay $70,000 a year on top of providing for my family's needs. So, Kevin, you know, when you think about people don't prepare for retirement the day they want to retire, right? They don't start saving for a house the day they want to buy the house. So how can you help families understand the benefit? What are some of the benefits of starting sooner?

So I want to do a little exercise with you, Shellee Howard, if it's okay with you. Kind of like a tongue-in-cheek storyline, so to speak, What I specialize in doing is helping families find money they're losing unknowingly and unnecessarily. And what do I mean by that? Let's say, before we go through our exercise, if we're paying a mortgage, let's say, and let's say you're actually paying over your mortgage. So if your mortgage is $2,000 a month, you're paying $2,500 a month. What I'll tell or ask a client rather, that extra money you're putting in over your mortgage payment, Is that making the value of your house go up? Not the equity, the value of your house go up? The answer is no. Is that extra money going to make your monthly payments go down? The answer is no. Is your money gonna be easily accessible if we're doing it that way? Can you go to the bank tomorrow and get that cash out from your— the answer is no. It's not bad, it's just not good. Okay, so there's better ways to do it. And that's an example. I'm not changing a lifestyle. In fact, I'm taking money away from their cash flow that they're having out of pocket to then better utilize those funds, and we can direct that into the school, the direction of a school. Okay, so another one, and this is gonna be our exercise here, little tongue in cheek, Shellee. So me and you are gonna go into business together, okay?

Okay.

So you're gonna do all the work, okay? But we're gonna be partners in this. You put up all the money, Shellee, Okay, if the business struggles, you're on your own. I won't offer any sort of financial protection. Okay, so from the word go, whatever you build this business to be worth, when you sell or liquidate it, I get a third. Okay, I get a third guaranteed, but if I'm hard up at the time, I reserve the right to increase my percentage. Okay. If you want to sell early, I'll charge you a 10% penalty in addition to my third, okay? And if you want to sell later than I want you to, I can force you to sell and charge you a 50% penalty on top of my third. How would you like to— That's awful. You wouldn't want to go into business with me, would you?

No, that would be a really bad business deal.

Right. What do you, what is, does it sound familiar to you?

Absolutely sounds familiar to me.

It's a 401, IRA, 403, any sort of retirement account. In that scenario, Shellee Howard, you're the one who is participating in the 401. I'm the US government. Okay. At any point in time, we can change whatever that tax is going to be, that penalty, and the ownership is the tax. Okay. Again, it's not you did anything wrong if you have a 401 or an IRA. It's not bad. It's just not so good that we have other ways around it. Now, there's, there's outside factors. If your company is giving you a match of your, you know, dollar for dollar, maybe that makes a difference. Maybe it's a 50. My point is there's ways that I educate you and not just things that just storylines, but educate families. Well, okay, Kev, well, what's a better way that we can do that if it's not the 401? How can we operate better? I educate, you make a family decision on your own. But my job is to find money you're losing unknowingly and unnecessarily, right? And then let's point that in the direction where we can protect your money, allow tax-free gain. The things that I do with our families for the tax-free strategies, you never, ever, ever lose a penny. It does not count against the EFC or the student aid index of what I was talking about earlier. And it allows you to borrow against your own funds and then have tax-free lifetime retirement income. And I know it's too good to be true. We hear that a lot. But I would urge you just to put your prior beliefs away, put them aside, come speak to us, and allow me just to educate. Okay? And I can see anybody that belongs with— in your world, Shellee Howard, any of your families— would love to educate them, no cost. They can come in, Speak to me anytime.

What a great gift. You know, finances are challenging enough. Now you layer in college and, you know, there's the 529, there's the FAFSA. I mean, there are so many things that I remember learning on my own. I read the FAFSA 3 times. The first 2, I fell asleep. It was really painful, but I really wanted to be versed. So when a family came to me and said, you know, who should claim my child if we're divorced? I wanted to tell them exactly who should claim them. If they had 2 children, how to handle that. So understanding knowledge, to your point, is going to save families time, money, and energy.

Absolutely.

So if a family wanted to reach out to you now, I will say we are having a webinar together here coming up, but if they wanted to reach out to you sooner, they didn't want to wait. How could they reach you?

Sure, you can email me at kevin@fgmci.com. I have a website, capeco.org, in which you can book an appointment with me. There's what appointment called a discovery meeting. That's where, again, ask a lot of questions, sit in front of each other. How can we help our family there? So email me, go to our website, book an appointment. That's completely free. We would love to sit with you guys and educate.

Wow. Such an incredible, powerful opportunity. I encourage all the listeners, free is amazing for free education. That's going to save you a ton of money. So, Kevin, thank you so much for being on the show.

Absolutely. Thank you for having me, Shellee Howard.