SEATTLE – Jason Newquist had a good job with a six-figure salary, and Kristin Mueller was building her mental-health counseling practice, but something was amiss with the couple's household finances.
They were running in the red every month, and the cash-flow deficit was getting deeper.
Newquist covered the shortfalls by tapping the family's savings. At first, he could make ends meet by transferring $500 a month. Then he needed to move $1,000. When the monthly subsidy from savings hit $1,500, alarm bells went off.
The couple's household finances ran the risk of getting swamped when a drop in their income coincided with a mountain of debt bigger than they realized.
Following the advice of a volunteer financial planner, the couple charted a course that should ease the cash-flow crisis and put them on a stronger footing for the future.
The experience taught Newquist, 38, and Mueller, 42, that household finance is about much more than spreadsheets. It's also about communication and awareness of the different ways people think about money.
Newquist earns about $102,000 a year before taxes as an electrical engineer with the engineering firm of Gray & Osborne in downtown Seattle.
Mueller is working part time as a mental-health counselor for a Bellevue, Wash., clinic while she establishes her business, Work and Play Therapy, in West Seattle.
She expects to earn about $30,000 this year before taxes and expenses. That's down from the $38,000 she earned last year, when she worked more hours at the Bellevue clinic.
The couple and their 3-year-old daughter live in a West Seattle townhouse worth about $430,000, on which they owe about $285,000. They have a net worth of about $121,000.
But the family's finances also contained time bombs that were more serious than the couple realized.
They didn't curtail their spending to match their reduced income. Newquist and Mueller also had separate credit-card accounts and were unaware of each other's spending habits.
They have outstanding balances totaling about $26,000 on four accounts.
Also lurking was an even bigger debt bomb: outstanding student loans.
With the credit cards, student loans, the mortgage and a car loan, the couple's monthly debt payments add up to about $3,700 a month.
The debt, combined with diminished income, was dragging them down.
Amy Shappell, a certified financial planner with Juetten Personal Financial Planning, reviewed the family's finances and came up with several recommendations. Easing the couple's cash-flow crisis was her first priority.
Working with Shappell, the couple agreed to borrow money at a lower interest rate to pay off their high-interest debt, saving money in the process.
To increase their household income, Newquist will reduce his 401(k) contribution at work to 3 or 4 percent from 14 percent, boosting his take-home pay. Mueller, meanwhile, will continue to build her practice; she expects it to be self-supporting next year.
The couple are also looking for ways to cut their spending.
More work remains. After they fix their cash flow, the couple will work with Shappell on a plan for paying off the student debt and building their retirement savings, among other things.
At this point, Newquist and Mueller are determined — and somewhat relieved.
"She [Shappell] brought to light a problem that I was only vaguely aware was happening," Mueller said. "I'm grateful that there is a solution."