This week (and the two weeks to follow) we are going to examine the financial (and emotional) life profile of our composite couple, Joe and Tanya Smith. As we progress through a small segment of their simple (they think) lives, perhaps you may recognise familiar patterns in your own family. We will analyse their current financial situation, track them through a series of significant life changes, then make individually tailored financial planning recommendations to assist them in keeping their lives focused on their goals, attaining their dreams, and achieving future financial security.

Mr. and Mrs. Frugal

Joe is 43, Tanya is 40. They've been married 15 years and have two children, a boy George (8) and a girl Crystal (12). They are a good looking couple, but constant fatigue has prematurely lined their faces. They feel they have built a wonderful life together.

Finances are always very tight; but they feel secure enough to go out for dinner occasionally, that is, when their schedules coincide. Crystal is responsible, and willing enough to care for George for short periods, especially as they believe in paying her market rates.

It wasn't always like this; dining out used to be a real luxury.

While they did not grow up near each other, he's from Southampton and she is from St. George's, it seems as if they have known each other most of their lives. Bermuda is like that.

As children, they attended different school systems; neither of them liked formal education. In fact, they barely scraped by, waiting for the day to get out and earn their own money.

Down the Way Where the Nights are Gay, Drifting

For quite a few years after high school, both of them drifted - completely unmotivated - from job to job, spending each paycheque as fast as it came in. Joe had worked in retail stores, driving a delivery truck, tried repair jobs for a while, and was getting into computers. No manual labour for him.

He was obsessed with all electronic equipment, meticulously building a huge collection of sound tapes & records.

You remember those 33 big plastic things? Joe's father, arriving home after long days spent running a small landscaping company upon seeing this accumulation of trivia, was often very critical of his spendthrift son. "You should be getting an education, boy, so you won't have to end up working like me."

Customer Service, Not

Tanya tried jobs in customer service (she hated it, "may I help you, Madam"), office administration (file clerk, she was bored out of her mind), and shoe shops (she loved it, but you can't eat shoe discounts). She stumbled into doing a little bookkeeping at one small business - she loved the numbers, now that was easy! Not too seriously she decided to take a college correspondence course in accounting.

Tanya's big weakness was shoes; like fashion-obsessed women everywhere, she thought she was Imelda Marcos' cousin. She owned more shoes than her own mother, no contest there! She and her mother did not get along; as directionless as Tanya felt sometimes, her mother was worse.

At age 50, she was still spending every cent she made, and sometimes borrowing from Tanya before next payday. Are there some parents out there who never get it together, she wondered?

Goals, what goals?

If you had asked either of them what were their personal goals? What did they want to do with their lives? You got met with a blank stare. What goals? Not to be bored was a big one, Tanya said. Joe said, "He never thought about it, he just wanted to have a good time and listen to cool sounds."

Someday, he was sure his record collection would be valuable. Sometimes he went all-day fishing with his friends. Joe is an only child and still lived with his parents.

Tanya shared a small apartment with a couple of friends. Kids could still do that (on starting-out wages).

Nor did they even like each other back then, although by their middle twenties, they moved in the same party circles. And the trips! How they both loved going on trips! Joe had even been to Tahiti; "too long to get to a place almost like home," he said.

After that one, he and Tanya started seeing each other; they were married a year later. In true party fashion, they spent everything on an elaborate wedding. One of the gifts from his parents was a year rent-free in the large studio apartment in the basement of their small cottage.

Opportunities derived from tragedy

Life has a way of shaping us, does it not? How you play the cards you are dealt, determines your character. Within weeks of their marriage, Joe's father, at age 56, passes away - worn out froma life of physical labour and onset diabetes.

There are few estate assets: a small pension, $100,000 in a passbook account and a debt-free house to his mother. His father loved him fiercely, and in a great surprise left him a very small life insurance policy.

His mother, with no employable skills, is slowly diminishing before their eyes. Joe is forced to leave his electronics sales job, and take over the family business.

His mother insists they pay rent; she can't make ends meet as it is.

And there they were, with no savings, facing their first tragic life crisis, the challenge of operating a marginal-return business, no place to call their own, and a dependent mother-in-law. They have a revelation, determining with every bit of resources they can muster, that they will buy their own home.

You Can Get Used To Almost Anything

The next few years are a blur. Tanya puts college courses on hold and takes a second job as a bartender. Five days a week, she heads directly to the restaurant from her day job, sometimes finally knocking off at midnight. She starts to pull in some real good money. Joe hustles hard for the business.

Using his salesman skills and working 14 hour days, he gradually grows Dad's business, hiring two people three years later.

They pay market rent and subsidise his mother. Every single cent left over is hoarded. Gone is the impulse shopping: no eating out; no trips; no movies; no partying; no boats; no shoes; not much of anything. Besides, most weekends they are both too exhausted to care.

Home Sweet Home

Five years into this brutal schedule, they walk into the bank and put down $120,000 - 30 percent of $400,000, the price tag on their starter home. One month later, they move in. Two weeks after that, Tanya announces they have started their family.

Joe and Tanya have survived physical, mental, and emotional hardships. But how financially and emotionally equipped are most of us really - for catastrophes on even a small scale? How balanced is our family planning when life hands us a setback? Could we be better prepared? Stay tuned for the next two sequences.

Martha Harris Myron CPA CFP is a Bermudian, a Certified Financial Planner (US licence) practitioner and VP, Personal Financial Services at Bank of Bermuda and a member of the Bank of Bermuda's Global Investment Policy Committee. She holds an NASD Series 7 license and formerly owned a United States financial services practice meeting the needs of 400 individual and corporate clients.

Confidential Email can be directed to marthamyron@norrthrock.bm

•The financial planning case composite described above does not represent any living individual or family. Any resemblance to any real person is purely coincidental, and does not imply endorsement of any particular lifestyle, culture, religion, or ethnic background.

The article expresses the opinion of the author alone, and not necessarily that of Bank of Bermuda. Under no circumstances is this financial advice to be taken as a recommendation to buy or sell investment products or as a specific individual financial planning advice.