C.F.W.

Financial LLP
2800 Waterview pkwy, Richardson TX, 75080
Tel 281-935-2483
Fax 940-337-0503
www.cfwfinancial.com

WHITE FAMILYS
FINANCIAL PLAN
OCTOBER 2013
C.F.W. Financial LLP helping you reach your financial goal

TABLE OF CONTENTS
Contents
Engagement letter _________________________________ Error! Bookmark not defined.
Clients Information Summary ________________________ Error! Bookmark not defined.s
Statements of Net Worth ____________________________ Error! Bookmark not defined.
Statement of Income and Expenses_____________________ Error! Bookmark not defined.
Top Spending and Debt Charts ________________________ Error! Bookmark not defined.
Financial Ratios ___________________________________ Error! Bookmark not defined.
Refinance Mortgage options __________________________ Error! Bookmark not defined.
Recommdations of Pay Debt__________________________ Error! Bookmark not defined.
Auto,Home and Life Insurance ________________________ Error! Bookmark not defined.
FDIC Information _________________________________ Error! Bookmark not defined.
Additional Information ______________________________ Error! Bookmark not defined.
Contact Information ________________________________ Error! Bookmark not defined.

ENGEMENT LETTER
Dear Mr. White and Mrs. White,
This letter will confirm the term of our agreement regarding the financial planning services we
will provide for you.

ENGAGEMENT OBJECTIVES
The primary services including review and analyze your familys financial situation and make
some financial recommendations. This review will including identify your financial strengths
and weakness, track the important financial ratios, and also provide some possible strategies to
achieve your financial objectives.

ACTIVITIES
Our first step may include a review of all your assets, liabilities, current and projected cash
flow, investment, and your income tax situation. As the process goes, you will need to provide
some information about your current financial circumstances.
Once we obtained all relevant information. We will start to analyze your present financial
situation, which may include your assets liabilities, current and cash flow. At this phase, we
will request some meeting with you to verify the accuracy and clarify any uncertain numbers.
Base on the information that you provide we will make a written report and recommendation.
Your written report will contain 12 parts such as top spending and debt charts, refinance
mortgage options and so on which will including this engagement letter.
After we present to you all the methods, the one that you choose to follow for the
implementation of the financial planning recommendation are at your discretion. You will be
responsible for all decisions regarding implementation of the recommendations.
As part of this engagement, we can answer questions, monitor activities, or make new
recommendations base on your financial as circumstances changes.
All information that given to us and all the recommendations present by us to you will be kept
confidential by each of us and will be not be disclosed to anyone as we agree in writing or may
be required by law.

TABLE OF CONTENTS
Your financial plan should be reviewed with us on a semiannual basis. These update can help
us to adjust your financial plan for changes in circumstances, economic condition or law
revision.

CLIENTS INFORMATION SUMMARY

WHITE FAMILY GENERAL INFORMATION
Suburban Family
Location: Frisco, Texas
Husband: Walter White (age 45)
Wife: Skyler White (age 28)
Two children: age 16 and age 1
Small Business owner.

GOAL
Tracking the expenses
Meeting or exceeding financial ratio
Understand the financial position.

STATEMENT OF NET WORTH

H
W
JT

Husband owns
Wife owns

Jointly owned by husband and wife

^Maturity date unknown. Assuming less than 1 year
*Portion of long-term credit card debt that is to be paid this year

STATEMENT OF NET WORTH

Total Assets
1%
26%

73%

Current Assets

Investment Assets

Personal Use Assets

Total Liabilities and Total Net Worth

1%

42%

57%

Current Liabilities

Long-Term Liabilities

Total Net Worth

STATEMENT OF INCOME AND EXPENSES

Statement of Income and Expenses
Mr. and Mrs. White
2011
Monthly
Cash Inflows
W's monthly Salary
H's Monthly Salary
Dividend/Interest Income
Total Cash Inflows
Cash Outflows
Savings
H's 401K Contribution
W's 401K Contribution
Dividend/Interest Reinvestment
CashSaving Contribution
H's Roth Contribution
Total Savings
Debt Payments
Mortgage Payment (PITI)
Infiniti Payment
Jeep Payment
Harley Payment
BB National Credit Card Payment
Sears Credit Card Payment
Student Loan Payment
Total Debt Payments

2,500.00 12
5,300.00 12
47.00 12

Annual
30,000.00
63,600.00
564.00
94,164.00

300.00
250.00
47.00
300.00
120.00

12
12
12
12
12

3,600.00
3,000.00
564.00
3,600.00
1,440.00
12,204.00

1,777.00
448.00
240.00
210.00
195.00
305.00
280.00

12
12
12
12
12
12
12

21,324.00
5,376.00
2,880.00
2,520.00
2,340.00
3,660.00
3,360.00
41,460.00

STATEMENT OF INCOME AND EXPENSES

Living Expenses
Cable*
Alarm System
Internet
Gas
Cellphone
Water
Entertainment*
Home Repairs
Groceries
Child Care
Dining Out*
Hobbies*
Club Dues*
Dry Cleaning*
Charity
Landscaping*
Maid*
Parking and Tolls
Total Living Expense
Insurance Payments
Life Insurance
Auto Insurance
Total Insurance Payments
Taxes
Total Taxes
Total Saving Expense and Taxes
Net Discretionary Cash Flow

120.00
39.00
100.00
370.00
130.00
80.00
400.00
200.00
500.00
1,400.00
400.00
300.00
150.00
160.00
350.00
300.00
400.00
40.00

12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12
12

1,440.00
468.00
1,200.00
4,440.00
1,560.00
960.00
4,800.00
2,400.00
6,000.00
16,800.00
4,800.00
3,600.00
1,800.00
1,920.00
4,200.00
3,600.00
4,800.00
480.00
65,268.00

140.00 12
168.00 12

1,680.00
2,016.00
3,696.00

353.00 12

4,236.00
126,864.00
(32700.00)

H- Husband owns
W- Wife owns
* Living expenses counted as discretionary items, but can be negotiated with clients depends on clients need

TOP SPENDING AND DEBT CHART

Top Spending Chart
3%
3%

10%

21%

33%

30%

Total Savings

Total Debt Payments

Total Non-Discretionary

Total Discretionary

Total Insurance Payments

Total Taxes

FINANCIAL RATIOS
Debt Payments as of 12/31/2011
6%
9%
7%
6%

51%

8%
13%

BB National Credit Card Payment

Sears Credit Card Payment

Jeep Payment

Harley Payment

Student Loan Payment

Infiniti Payment

Mortgage Payment (PITI)

Emergency Funds
Ratio

Cash & Cash Equivalents

Monthly Non-Discretionary Cash Flows

1.96

When emergency happens, for example loss of family income, the number of months a family
can use their cash & cash equivalents to pay their monthly non-discretionary expenses.
Benchmark: 3 months to 6 months

MONTHS

Emergency Funds Ratio

7
6
5
4
3
2
1
0
Ratio

Lowest
Benchmark

Clien't

Highest
Benchmark

1.96

FINANCIAL RATIOS

Current Ratio

Cash & Cash Equivalents

Current Liabilities
The number of times a client can satisfy their short-term liabilities.
Benchmark: 1.0 to 2.0

Current Ratio
2.5
TIMES

2.0
1.5
1.0
0.5
0.0
Ratio

Lowest
Bechmark

Client's

Highest
Benchmark

1.0

1.8

2.0

1.80

FINANCIAL RATIOS

Housing Ratio 1

22.78%

Housing Costs
Gross Pay
The percentage of income spent on housing debt.
Benchmark: 28%

Housing Ratio 1
30.00%

PERCENTAGE

25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Ratio

Client's

Highest Benchmark

22.78%

28%

Housing Ratio 2

Housing Costs + Other Debt Payments

Gross Pay
The percentage of income spent on housing and all other recurring debt.
Benchmark: 36%

PERCENTAGE

Housing Ratio 2
50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Ratio

Client's

Highest Benchmark

44.29%

36%

44.29%

FINANCIAL RATIOS

Debt to Asset
Ratio

Total Debt
Total Assets
The percentage of total assets being provided by total debt.
Benchmark: Depends client's age, the lower the better.

57.56%

Savings + Reinvestments + Employee

Contribution
13.04%
Gross Pay
The percentage of income saved towards client's retirement goal.
Benchmark: Depends on client's age begin to save, assume the Whites start saving at their current
age (35-45), they should save between 13%-20%.

Savings Ratio

Savings Ratio
25%

PERCENTAGE

20%
15%
10%
5%
0%
Ratio

Lowest Bechmark

Client's

Highest Benchmark

13%

13.04%

20%

REFINANCE MORTGAGE OPTIONS

Each of the refinance options
before you have pros and cons.
Lets assume that the refinance
costs have been rolled into the new
loan.
Current Mortgage
a) Payment (PITI) $ 1,777.00
b) Total Interest to be Paid About
$167,431.87
c) Housing Ratio 1 = 22.78%
d) Housing Ratio 2 = 44.29%

Refinance Option 2 (30 Year)

a) Payment (PITI) -$1507.30
b) Total Interest to be Paid $179,242.65
c) Housing Ratio 1 = 19.32%
d) Housing Ratio 2 = 40.84%

Recommendation:
We recommend the 30 year
refinancing option. Even though
you will end up paying more in
interest in the long run, the lower
housing ratios will put you in safer
place financially. Also, the lower
monthly payment will allow you to
put more toward your debt and
decrease the interest paid on all of
your debt.

Refinance Option 1 (15 Year)

a) Payment (PITI) - $1912.84
b) Total Interest to be paid $70,868.63
c) Housing Ratio 1 = 24.52%
d) Housing Ratio 2 = 46.04%

2,500.00
2,000.00

Monthly Payments (PITI)

1,500.00
1,000.00
500.00
PITI (Current
Mortgage)

PITI (15 Year)

PITI (30 Year)

RECOMMDATIONS OF PAY DEBT

It is always best to tackle whichever debt has the highest interest rate or the lowest
principle first. In your case, these are basically the same. Therefore, I recommend
paying the minimums on all of your debt payments and moving any extra money going
toward debt to the highest priority debt that you have. By refinancing your home, you
will also have an additional $269.70 that you should apply to your debt plan as well.
Debt prioritization:
a) BB National Credit Card
b) Sears Credit Card
c) Jeep Auto Loan
d) Harley Davidson Loan
e) Student Loans
f) Infiniti Loan
g) Primary Mortgage
As each debt from the top of the list is paid off, all of the money that was being used to
pay it should be rolled down into the next debt on the list. Although this will keep you
from introducing any money back into your living expenses, it will decrease the
amount of time you spend in debt, and the total interest you pay, dramatically. For
example, by the time you are putting all of your debt payments to your primary
mortgage, your monthly payment will be $3455.00.

Debt Payments as of 12/31/2011

6%

BB National Credit Card Payment

9%

Sears Credit Card Payment

7%

Jeep Payment

6%

51%

Harley Payment
8%
13%

Student Loan Payment

Infiniti Payment
Mortgage Payment (PITI)

Original debt payments including current mortgage

RECOMMDATIONS OF PAY DEBT

Progression of Debt Payments
Sears Credit Card
1
Payment
Jeep Payment

22%
44%

Harley Payment

7%
6%
13%

Student Loan
Payment
Infiniti Payment
Mortgage
Payment (PITI)

8%

Debt payments after refinancing the home and paying off the BB National

Progression of Debt Payments

2
Harley
Payment
35%

44%

13%

8%

Student Loan
Payment
Infiniti
Payment

Debt payments after Sears CC and Jeep Auto Loan has been paid in full

Progression of Debt Payments

3
Mortgage Payment
(PITI)

Final progression, all debt payments ($3455.00) are applied to the mortgage

AUTO, HOME AND LIFE INSURANCE

The split limit policy of $50K/$100K/$50K:

a) The first $50k - $50,000 coverage for bodily injury to each injured
person.
b) $100k - $100,000 coverage the total bodily injury per accident.
c) The second $50K - $50,000 coverage for property damage per
accident.
d) $500 deductibles the amount client is responsible for paying if client
is made on auto insurance policy.

House insurance:
100% of actual cash value plus replacement cost coverage means that,
should the house be destroyed, not only will they receive the cash value of
their home (the market value) but also the additional money they need to
replace their house.

FDIC INFORMATION

About FDIC:
a)
b)
c)

d)

The Federal Deposit Insurance Corporation (FDIC) protects

consumers from bank failures.
Since January 1, 2008, FDIC insures deposit up to $250,000.
Applies to deposit accounts includes: checking accounts, saving
accounts, money market deposit accounts and certificates of
deposits. If money put in to those accounts, then it will be insures
by FDIC only up to $250,000.
FDIC does not apply to stocks, bond, mutual funds, money market
mutual funds, insurance products, or annuities.

e)

FDIC insures up to $250,000 per depositor, per legal account

ownership, per financial institution.
f)
Start on January 1, 2014, the amount insures by FDIC will go back
to $100,000.

Recommendation:
As a financial planner, my suggestion is Walter and Skyler separate the
settlement amount of $800,000 before January 1, 2014, among these
categories (checking accounts, saving accounts, money market deposit
accounts and certificates of deposits) with up to $250,000 coverage per
category. In this way, if their bank fails, they will be insuring for total of
$800,000.

ADDITIONAL INFORMATION

Certified financial planners (CFPs) are required by law to have a fiduciary

responsibility for the client. This means that they must put the clients
needs first at all times.
To be a CFP, one needs to pass the CFP exam, have three years of
experience and agree and adhere to the CFP Boards code of ethics.
There are four types of fee structures:
a) Fee Only Hourly or retainer fee for financial planning
b) Fee Based A fee is charge for the plan, and a commission is charged
c) Commission Only CFP is paid commission by financial institutions
d) Fee Offset The client is charged a fee less any commissions earned

CONTACT INFORMATION

JOHN COOMER
SENIOR PARTNER, CFP.

ZHOUXIAOHAN FAN
SENIOR PARTNER, CFP.

YIYI WEI
SENIOR PARTNER, CFP.

Tel 469-247-4991
Jd.coomer@yahoo.com

Tel 281-935-2483
Zoey.fanzhou@yahoo.com

Tel 940-337-0503
Yiyi92tina@yahoo.com

Company Information
C.F.W. Financial LLP
2800 Waterview pkwy, Richardson TX, 75080
Tel 281-935-2483
Fax 940-337-0503
www.cfwfinancial.com