AMZN Amazon.com Inc

By Lisa Ward 

Jerina Pillert 36, and her husband, Logan Bowers, 37, are pursuing unusual career paths. The couple owns a recreational marijuana business, which she manages. He, meanwhile, is running for Seattle City Council.

Inspired by a relative who legally sells medical marijuana in Arizona, Ms. Pillert and Mr. Bowers applied in 2013 for a license to sell cannabis recreationally in Seattle. Hashtag Cannabis opened in April 2015. The couple now has two retail outlets, and wants to open a third soon, either with money from the business or from taking on a new business partner.

They want to buy a home and start a family sometime in the next few years. If they stay in Seattle, they anticipate paying about $800,000 for a home.

The couple's primary source of income is the business: a salary of $120,000 a year. They expect that the company will earn about $250,000 in profit this year, which they plan to reinvest in the business or save for future endeavors. Ms. Pillert runs the daily operations. Mr. Bowers, an ex- Amazon.com Inc. employee, is focusing on his campaign. If he wins in the November 2019 election, his salary likely will be more than $120,000 a year.

Assets include a brokerage account with about $400,000, about $30,000 in Mr. Bowers's 401(k), and $4,800 in a savings account. Their only debt is a student loan of about $26,000, for which they pay almost $370 monthly.

The biggest monthly expense is their $2,400 rent. That includes utilities except electricity, which costs $100. They pay $210 for phone, internet and streaming; $500 for groceries; $600 for restaurants, coffee and bars; $300 for health insurance; $150 for car insurance; and about $40 to charge their electric car.

They don't have rental or life insurance. They try to save about $800 monthly.

Advice from a Pro: Eric Bailey, founder and CEO of Bailey Wealth Advisors in Silver Spring, Md., suggests the couple first build up their savings account to at least three months of personal expenses in case of an emergency. Similarly, he recommends setting aside three months of operational expenses for the business. The cannabis trade is an inherently risky venture, he notes, since federal law still considers cannabis an illegal substance.

Next, to afford an $800,000 home, Mr. Bailey says they need to avoid using funds in the brokerage account -- which gives them a head start on retirement and provides a buffer should anything happen to their business -- and increase their income. If Mr. Bowers is elected, his salary can go mostly to saving for a down payment. The couple also should talk to an accountant to see whether their business is structured in the most tax-efficient way. Increasing their salary (the amount they pay themselves from the business) also would make it easier to save for a down payment and help them qualify for a larger home loan, though that could also make it more difficult to fund the business expansion.

Mr. Bailey suggests creating a 401(k) plan for their business -- with an employer match -- and funding their accounts to the maximum of $18,500 a year. Another way to beef up their retirement savings is an employee profit-sharing plan, where some of the profits are invested in a separate tax-deferred account.

"Through their 401(k) and profit-sharing, they might be able to shelter more than $100,000 worth of income from taxes," says Mr. Bailey.

Finally, he recommends more insurance. They should have an umbrella policy, which would shield their assets should someone try to sue them. They also should buy rental, life and disability insurance that would replace their income should one of them no longer be able to work.

Ms. Ward is a writer in Mendham, N.J. She can be reached at reports@wsj.com.

(END) Dow Jones Newswires

December 16, 2018 22:15 ET (03:15 GMT)

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