And once a year, they should pay an independent financial advisor to look over their financial situation and recommend any needed changes. But that's a small price to pay on an annual basis to get objective advice and make sure you're not screwing up. Field said Johnson might have been able to avoid some unfortunate decisions had she sought professional advice last year. Although that's true, Field said, Johnson has very little wiggle room now to cover her monthly expenses. By taking a longer loan, she could have freed up more money for short-term and retirement savings.
Most planners argue that having such a cushion takes priority over paying the mortgage off early.
At this point, it isn't worth changing the mortgage or selling the car. Roth IRAs are attractive because investors don't have to pay income tax on the money when it's withdrawn at retirement. Johnson might want to save in a Roth IRA in the future, but Field said she can't afford the taxes on a conversion right now. Field also suggests that Johnson start paying her bills electronically to make that process easier. The program is mandatory, but unlike the pension plan, employees can direct the way their DCP funds are invested.