>> Ruth Cospari assumed spelling: I'd like to open a bar and restaurant in Redmond, Washington. It's going to be pretty difficult but I think I can do it.
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>> 41-year old Ruth Cospari assumed spelling is an aspiring career shifter.
>> Ruth: I've shifted careers now five times and I don't think I'm done yet.
>> Presently she's a graphic artist by day and a dance instructor by night. But she also has a new ambition--to move up to Washington State and start a small business.
>> Ruth: I have an interest in changing careers and that would be to open a bar or restaurant nightclub museum-type establishment.
>> The question is how can Ruth pursue her business dreams while securing her financial future?
>> Ruth: The task of juggling the new career and the finances is a bit daunting.
>> Over the years Ruth has built a strong net worth which has given her the opportunity to buy both a condo in Redmond, Washington and a house in Oakland, California. But even with these valuable assets, she's uncertain about achieving her goal.
>> Ruth: I think handling two properties as well as envisioning a new property, a new club that I want to own and operate is a pretty formidable task.
>> To help Ruth come up with a financial strategy, we introduced her to Jill Slussinger, moneywatch.com's resident financial advisor.
>> Jill Slussinger: Whatever it is, I want you to keep it in cash or cash equivalents.
>> This is a current snapshot of Ruth's personal finances. Her salary is $92,000 a year. She owns a condo in Redmond, Washington valued at $263,000 which she rents out. She also owns a home in Oakland worth $390,000 which she lives in. Her debt is $10,000. Jill believes Ruth is in a strong position financially, but at a crossroads in her life professionally.
>> Jill: A lot of times people come to their late 30's or early 40's, they may have done a job now for 15-20 years and felt like there's something else in their future. Unfortunately for most people, they have some golden handcuffs attached to their previous job or current job so they don't have the ability to make a career shift very easily.
>> Her advice, Ruth needs to come up with a financial plan so there is no risk in her next move. First, she needs to sell her Oakland house and create cash flow for her move to Washington State.
>> Jill: The good thing is that her Oakland house has equity in it. The bad thing is she's only owned it for eight months so if she were to sell it right now before one year is up she would be subject to short term capital gains tax. So the first thing we say is if you're going to sell it and that is the recommendation you're going to sell it, wait until the one year period is up. After one year you're going to be incurring long term capital gains rate, a much lower level.
>> Ruth also has to clean up her balance sheet.
>> Jill: We've got to pay off her credit card debt. We've got to pay off her 401k loan, we're going to have to pay back the loan that she took to buy the house in the first place, and essentially have Ruth start her new life with a clean slate; so all that debt boom gets taken care of in one filled swoop from the proceeds of the sale of the Oakland house.
>> And she should establish an emergency reserve fund.
>> Jill: What she'll need to do is figure out what her monthly expenses are and set aside probably six months of an emergency reserve fund; that's probably around $15,000 or $20,000 for Ruth.
>> Jill says by creating this reserve fund it gives her the ability to pursue her business venture more aggressively. And finally, in order for her to get her business going, she'll need to resurrect her career as a graphic artist by freelancing.
>> Jill: I'm suggesting that what she do is continue to do some consulting back in her old business. That will free her up with a little bit more cash flow and then with the remaining time, she'll start building a business.
>> Going forward Ruth needs to be diligent and make some tough choices. But Jill believes she can do it.
>> Jill: She has this unique opportunity to pursue something that's in her heart. Not everybody has that opportunity. And people watching this may feel like well if I didn't have my six children and spouse I could maybe pursue my dream. But Ruth does have the opportunity, she has the courage and the where with all to do it; we're just helping her get her financial life in order so that she can do it.
>> And Ruth is ready for a new adventure. So where does she see herself in three years?
>> Ruth: In three years I'd like to be one year into my business; I'd like to be thinking about having a child; I'd like to be able to have a vacation once or twice a year and to see progress in my bar and night club; see an income and see a lot of people coming in and enjoying what I have to offer.
>> From moneywatch.com I'm Sumi assumed spelling Doss.
==== Transcribed by Automatic Sync Technologies ====
