Kathleen (Kate) Cote, CFP® Red Clover Financial Planning

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About Kathleen (Kate) Cote, CFP®

Kate began her financial career in the trenches at Fidelity Investments, the fourth largest mutual fund and financial services group in the world. She quickly advanced into leadership positions, managing an operations team, working in problem resolution and navigating the 2000 and 2008 financial crises.

Although she loved helping people work toward their financial dreams, she realized that just focusing on the investments wasn’t enough. She wanted to provide a service that not only delivered investment results but helped clients with their entire financial picture, including insurance, benefits, debt, taxes, estate planning, and social security. After all, those financial aspects impact the bottom line just as much as investment decisions. To realize her vision and truly help clients, Kate established Red Clover.

Kate is a Certified Financial Planner TM, a commitment that goes beyond simply advising to include strategizing, creating, and delivering financial plans that serve as a comprehensive, action-oriented roadmap. She is adept at connecting all the dots for clients, asking the hard-hitting questions and sharing hard truths so that they fully understand and appreciate all the pieces and parts of their financial wellness equation.

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Recently Published

Financial Planning for Small Businesses

March 21, 2018


As a small business owner myself, I understand the challenges that come along with starting your own company.  There are many reasons we take the risk to start our own business.  Whatever your reason, in order to succeed you need to be passionate about what you’re doing and have a clear vision of what your company will do, who it will serve and how you will grow the business.  

It’s not easy starting a business.  According to the Bureau of Labor Statistics, 50% of small businesses fail within 5 years.  There are many reasons businesses fail and I think it is worthwhile taking the time to understand why others have failed so you can avoid those same pitfalls.  Set yourself up for success by taking these steps.

Business Plan

Resources:  Free templates online.  The Small Business Association(SBA) has classes for creating a business plan.

A business plan should detail your vision, how your company is formed, it’s products/services, who you will serve, your goals, your marketing plan, budget and other financials.  In short it acts as a roadmap for your business.  Having a well thought out business plan is a key step to the success of your business.  It should be treated as a living breathing document, changing as your goals change for the business.  In addition, if you plan to go to a lender for financing, you will need to have a business plan to obtain financing.  Here’s a list of the key sections your business plan should contain. 

Executive Summary is the equivalent of your 30 second commercial.

Business Description will have more detail about your vision for the business and the key elements of your business that you will elaborate on in subsequent paragraphs.  The key elements include the following; 

Product or service description explain in detail the services you will be offering.  If you need materials from other businesses, list them and who will be the supplier.  List any potential pitfalls and how you will deal with them.  Doing a cost benefit analysis of each of your products or services is helpful to understand at what point that product/service will become profitable, how much profit you can expect to make and thus, help you determine if it is worth offering that product or service.  There are many free templates online to do this calculation.

Legal structure list the legal structure for your business; sole proprietor, LLC, partnership, C corporation, or S corporation.  

Market analysis and marketing strategy is perhaps the most important section because it is where you convince people that your business will be successful. The first step is determining if there is a need in the given area for another one of your business segment.  Taking the time to see who your competitors will be and what distinguishes your firm from the competition is crucial to establish your marketing strategy.

Financials are meant to show your current financial position and where you want to be.  It includes the following statements; cash-flow, balance sheet, profit and loss and a break-even analysis.




“If you don’t know where you are going, you’ll end up someplace else.”
-Yogi Berra



Resources:  There are online templates and classes at the SBA for creating SMART Goals.  

We all have goals but actually putting them down on paper and coming up with a plan for achieving those goals is what separates those that reach their goals from those that don’t.  If you use the smart system, it’s easier to figure out if the goal is worth achieving, create the steps you will take to reach your goal and measure your progress towards that goal.

Specific - list what you want to accomplish and why you want to accomplish it.  You should list the requirements to meet that goal and any thing that might get in the way.

Measurable - quantify or give an indicator of how you will know when you have reached this goal.

Attainable - it should be a goal that you can realistically achieve.  Think through the steps you will take understand if it is attainable.

Relevant - is it in line with the overall vision and objectives for your business?

Timely - when do you want to achieve this goal.

I like to reverse engineer my goals.  Let’s say my goal is to increase my monthly income by $1,000 per month.  I have to figure out how many new clients I would need to achieve that income.  Then I look at how many prospects I would need to speak to to convert that many new clients.  Finally I would look at how I’m getting prospects and see what I would need to do to increase the number of prospects I’m speaking to.  


Resources:  SBA offers classes on creating a budget.  There are free templates on the internet. This site not only has a good template but walks you through creating a budget. https://www.smartsheet.com/free-business-budget-templates-any-company

Using historical data to create your budget is best.   If you’re just starting your business, make a list of all your planned expenses.  Create a miscellaneous category for unplanned expenses especially when just starting out.  Your cash flow and profit and loss statements you pulled for your business plan should provide all your expenses and your projected income.  It’s a good idea to revisit your budget at the end of every fiscal year to use what your actual expenses were to create the next year’s budget.  Add in any expenses for new product offering, improvements, etc.  

When you first start your business it seems like everyone is trying to sell your business a product or service.  Having a budget keeps you on track.  It’s a lot easier to say “no” to someone when you can say you didn’t budget for that this year.

Funding Your Business

Resources:  SBA, banks and other lenders.   

A common mistake many small business startups make is using credit cards to finance the business.  It often takes a small business longer to be profitable than anticipated.  Credit cards can be a pricey way to finance because of higher interest rates.  It can also adversely affect your credit score.  As you max out the credit card your credit score falls which can make it more difficult to obtain a loan later.

Alternative financing if you have a 401k from your former job, you could take a loan to finance your small business.  The interest you pay on the loan will go into your 401k.  If you have an annuity contract or whole life policy you can often borrow against those products and the interest is paid to you in your account.

Here’s a great article on other alternative funding sources.

Protecting Against Risk

Understanding the potential risks and how it will affect you financially is essential.  The First step is to identify the potential risks in your business.  Second determine if you can avoid the risk, reduce the risk or control the risk.  Lastly determine if you will obtain insurance to ensure these risks or self insure to cover potential losses.  The risk of self insuring is that the loss could be greater than your assets.  These are the common insurances small businesses have.

Liability Insurance covers you if something were to happen to an employee or a client.  Check with any associations you belong to first. 

Disability Insurance how will the costs of your business be covered if you become disabled and aren’t able to work?  There is a 1 in 4 chance that a person in there 20’s will become disabled.  Building an emergency fund to handle expenses for 3-6 months is one way to self insure for a short term issue.  Getting long term disability insurance is another.

Property Insurance to protect against any loss affecting your equipment and property.

Plan for Retirement

Resources you can open a retirement account at any discount broker dealer or mutual fund company.

Don’t forget to put some money aside for retirement.  As small business owners we have a tendency to reinvest in the business and take whatever is leftover as income.  In addition to ensuring that you have enough money to retire, there are tax benefits to contributing while you’re self employed.

For a small business with no other employees the SEP IRA is one of the more attractive alternatives.  It's easy to set up and maintain.  You can contribute 25% of your income up to $55,000 per year.  In addition to lowering your income taxes, the contribution is not subject to the FICA tax which is another tax advantage.  If you do have employees the same contribution must be made by the business to all employees 21 and older that have earned $600 in 3 of the past 5 years.  Employee contributions are not allowed.

If you have employees and can't afford to contribute a lot to the employee accounts but what to maximize your savings, then a SIMPE IRA might be better.  Your employees have the option to contribute up to $12,500 or $15,500 for those 50 and older.  The employer can match a fixed amount of 2% a year or opt to match 3% a year.  With the 3% you have the ability to reduce the match to as low as 1% in 2 of 5 consecutive years.  Thus enabling you to reduce the match when your business isn't performing as well.


There is much to do outside of actually serving your clients to ensure the success of your business. Build time each week to work on it.  If you find yourself putting it off then consider hiring a coach, joining an accountability group or working with a financial planner to ensure it gets done.


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Stay Financially Fit This Holiday Season

December 6, 2017


Ah, it's the holidays, time to deck the halls, make merry and give to those in need.  If you're feeling the financial squeeze this holiday season, know that you're not alone. Between the gift buying, holiday decorations, cards, shipping costs, and charities we all feel the financial squeeze. Avoid the January credit card shock many people experience by making a plan before you start shopping on black Friday.

Step 1: Figure out how much you have to spend

Take a look at how much you have in your bank accounts and figure out how much you expect to earn.  Outside of your regular budget calculate how much money you can allocate to food, travel, gifts and charitable giving without spending more than you earn or more than you have saved.  This is a decision you and your spouse or partner should be making together. 

One of the tricks I use to meet my holiday spending needs is to save my credit card points for holiday shopping.  I have both a cash rewards card that I use for my business and an amazon prime card for my personal shopping.  If you shop a lot on amazon, the amazon prime card is worth getting.  You earn 5% on all amazon purchases and 2% on groceries and restaurants.  The key to using credit card points is to make sure you are paying off your total balance every month.  If you're maintaining credit card debt, the rewards will never make up for the interest you are paying on the debt.

Step 2:  Create your budget

You and your spouse or partner should agree on where the total budget should be spent.  Breakdown how much you will spend on gifts for each person you plan to give to and allocate the other funds to food, travel, charities, etc. If this your first time putting together a holiday budget, it can come as quite a shock when you see the total amount you plan to spend.  If you find you're struggling to buy all those gifts, or if you wish that some of that money was going towards one of your financial priorities like retirement or a new home, chances are the others in your family are feeling the same way.  To cut costs, consider talking with your family about reducing the amount of gift giving.

Between my husband and I, we could potentially find ourselves buying gifts for over 30 people in our family alone.  Just thinking about that stresses me out.  Where would I find the time to buy all those gifts?  How would I come up with 30 gift ideas that people would actually want?  I'm so grateful that 20 years ago my family stopped buying gifts for everyone.  It was a gradual process.  We started with pulling a name out of the hat and just buying a gift for that person.  After a few years we realized we really just wanted to spend time with each other so we stopped the gift giving for the adults.  We don't buy for all the nieces and nephews either. We split them up among the brothers and sisters so that each one us only buys a gift for 1 or 2 of the kids.  

Step 3:  Track your actual spending

Before I head out to the stores, I like to figure out what I'm purchasing for each person to make sure I stay within budget and make sure I'm getting them the things they really want.  This also helps you save time shopping by knowing what you are going to get.  As an added bonus, if you have young kids it helps you ensure you're getting the same amount of gifts for each child.  There is nothing you can do if the night before the big day you pull out all the gifts and realize Sally has 10 gifts while Ben only has 5.  Yikes!

Once you've started shopping you can track your spending the old-fashioned way by creating a spreadsheet like the one attached or you can use one of the online budgeting tools.  The online tools feed the transactions from all your credit cards and bank accounts into your budget so you can see how much you've spent so far on food, gifts, etc.  This will help you stay on track and give you a good base to plan for next year's budget. 

Step 4: Create a savings plan for next year

Use what you actually spent this year to figure out a budget for next year.  If you found you spent a lot more money in a category than you planned, make sure that it is where you want the money going.  If it isn't come up with a plan for how you will reduce that expense next year.  Set up a direct deposit to a savings account and plan to save a little each month to meet your needs. Having the cash sitting in an account ready for next year's holiday spending will go a long way in reducing your holiday stress.

It's easy to get caught up in the holiday spirit, having a budget can help you stay on track and reduce holiday stress. Make 2018 the year you become financially fit. Call me at 703-677-4587 to find out how.

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Thinking About Buying a Home?

November 15, 2017


Before you find a realtor, have a conversation with your financial planner.

Owning a home can be one of the biggest wealth creators but it can also become a financial disaster for some. Your decisions around where to buy, when to buy, and how you finance the home will not only impact whether or not you end up making any money when you sell it but these decisions will have a significant impact on whether or not you reach your other financial goals. Many people don't consider if the new home will really make them happy but if it takes away from the things you really want to be doing it can make you very unhappy. Here are some of the things your financial planner should review with you so you can make an informed decision.

Will the new home really make you happy?

You should take advantage of your financial planner's impartial advice, after all they won't be swayed by a chef's kitchen or huge master closet. Working with you, they already know your big picture; things you like to do, what's important to you, your goals and dreams. They will help you consider the pros and cons of how the new home will impact your desired lifestyle. How long will the commute be? If it means going from a 30 minute commute to an hour commute each way, are you going to be happy adding an hour a day away from your family and the things you really want to be doing? Consider what kind of maintenance the home will require. If you don't plan to hire someone to maintain the yard or clean the home, doing maintenance can really take away from the time you should be spending having fun. Weekends are too short to spend hours mowing the lawn. If you do plan to hire people to take care of it consider the cost. A low maintenance yard can cost as little as a $100/month to maintain vs. a higher maintenance property costing $400 or more. That could mean $3,600 less you have a year to spend on vacations.

What are the risks?

Your realtor and websites like Zillow can tell you what the real estate market is like in the area you intend to buy. Knowing where we are in the economic cycle is just as important. When buying at the top of the economic cycle, you should consider making a larger down payment in case home values fall. You don't want to become underwater on the home, owing more than the home is worth. How secure is your job and your spouse's job? If one of you lost your job, can you afford the home on one income? Do you have an emergency fund to help you get through a period of unemployment? Unfortunately many homeowners resorted to dipping into their 401k to make their mortgage payments during the last recession and now are having to delay retirement to rebuild those savings.

How much home can you afford?

Mortgage companies require that your total debt payments not exceed 36% of your gross income. This would be a significantly higher portion of your take home pay. Just because you qualify to borrow a given amount, doesn't mean you should borrow that much. You should look at how various mortgage payments will affect your spending plan and your other goals. A good rule of thumb is to allocate 50% of your spending towards your living expenses, 30% towards your discretionary expenses and 20% towards your financial goals. The living expenses covers your needs; housing costs, utilities, transportation, food, etc. Your discretionary expenses are the things you want; vacations, movies, restaurants, etc. Financial goals include creating an emergency fund, paying off your debt or saving for retirement. When you calculate what your mortgage payment will be, look at how it fits in with your other expenses. Will you become house poor or do you still have enough income left over to pay for the things you want to do? Prioritize your goals. Having a bigger mortgage could delay retirement or make it more difficult to help pay for your child's college education. Your financial planner can show you the impact of different mortgage payment amounts on your financial plan.

Should you get a 30, 20 or 15 year mortgage?

Your financial planner should review the various mortgage term options with you. You should try to get the lowest term loan you can comfortably afford. With interest rates at all time lows you don't want to refinance a few years from now to get a shorter term loan. Let's say you plan to borrow $300,000. 

30 Year Mortgage 15 Year Mortgage
Interest Rate
3.6% 3.0%
Your Monthly Payment $1,265 $2,072
Total Interest Over the Life of the Loan $191,017 $72,914

In this example going with the 15 year term allows you to get a lower interest rate and would save you $118,103 in interest! Putting that money towards your retirement could mean retiring earlier.

There are many things to consider when buying a home and really what it all comes down to is whether you're going to be happy with the decision that you make. Research has shown that people make a decision about buying a home as soon as they walk in the front door. That just shows that our emotions play a huge part in the decision. It's so easy to be charmed by a home without making sure it's the right home for you. Put the odds in your favor by consulting an impartial party. Your financial planners knows your big picture better than any other impartial party you could consult.

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