I consider a significant part of my value offering to clients to be the unique financial planning analysis I provide. Moreover, the specific tool I use for this has evolved a great deal over the past several years. Each page of the output contains very useful information without a lot of “fluff” which is so common in many of the “out-of-the-box” tools on the market today.

After all, the better the information, the better the decision , and good-decision making adds real value.

Many of us create a customized plan or analysis for our clients. But what frequently happens is the plan ends up on a shelf or in a filing cabinet rarely to be referenced again. Just as the initial plan was important for gaining a perspective on a client’s financial situation, future plan revisions are equally important. Just as the initial plan provides a point-in-time analysis, future plans allow the client and planner to compare projections to actual results and track progress toward the client’s desired goals. . Therefore, planning is not a static exercise, but a very dynamic one

Last week, I spent some time updating a client’s financial plan and compared it to the initial plan created a little over two years ago. There is a question on the table for this particular client: “Should I pay cash or finance our second home?” Without planning, you might base this decision on whether or not your investment return is expected to exceed the mortgage rate. That’s part of it, but I believe there’s more. Yes, money is cheap right now.

Allow me to digress for just a moment. It was an “easy money” policy which got us into this mess and the same policy is presented to get us out. Basically, it was Washington’s desire to create homeowners from lower-income individuals and their punitive threats to lenders for non compliance which changed the face of lending and Wall Street. This policy is centered on pushing loans out the door.

With an easy money policy which includes low interest rates (Keynesians arise), borrowing, when it make sense, can be a wise move. Actually, the best time to borrow is when rates are low and higher inflation is expected. Both of these conditions exist today. Now let’s get back to my client.

I ran three scenarios: Pay cash; finance for 30 years; and finance for 30 years, but pay off the loan when the client’s current house sells in three or four years. The answer? The financing options resulted in the best outcomes while paying cash was the worst. I expect the decision will come down to the client’s comfort level with debt and whether he feels the need to maximize his investments. We’ll see.