Finance Food

Financial advisors??

I have a question.. I am into some pretty deep debt.. I was wondering if anyone knew how a financial advisor or financial planner works.. How would I pay them? I am needing their help to help me pay off debt so how do I possibly afford to pay them?

Public Comments

1. You dont need one for your situation. I suggest that u look in ur local yellow pages and call credit/debt counselling companies that will work with ur creditors to try to consolidate things. In the mean time get another job it will help pay off ur debt. u can definately work 2 jobs. and save ur money dont spend it on things u dont really need at the moment. Financial Planners are pretty expensive and if u are in debt right now it would not help much. Financial planners involve people into the stock and bond market, IRA's, insurance planning, retirement planning, college education planning, buying a home.
2. Try to find a CONSUMER CREDIT COUNSELING organization in your area. You should be able to find one either online or in the phone book. You also might check at your bank--if they don't have someone "in house" to help you, they should be able to give you the contact information for one. The first thing you need to realize--which you probably do by now--is that YOU have to control your money, or your money will control you. You can learn to manage your money, but it will require discipline and knowledge. The discipline is entirely up to you, and you can get the knowledge with a little bit of effort. Dave Ramsey has some great books, out and while I generally like his advice (especially how to "snow ball" to get out of debt) there are some things I don't necessarily agree with him on. One book that I've been recommending for years is called "The Richest Man in Babylon" by George S. Clason. It's written mostly in story form, but the advice it gives is absolutely sound and the budgeting system it recommends is absolutely wonderful if you will work hard at following it. The book has been out for at least 25 years, so you might be able to pick up a copy at a used book store, or you might be able to find someone willing to give you a copy through your local Freecycle group. Either way, if you'll get it, read it and apply it to your life, you can't go wrong! (The system it has is how I got out of the debt my first husband left me in when we divorced.) Commit to getting out of debt, work hard at it and you'll make it! Good luck!
3. You probably don't actually need a financial advisor or financial planner. You just need some strategies to get out of debt. More on that in a minute. Financial planners are either paid by a fee, or by commission. For instance, if you see a planner who is paid a fee, usually the first consultation is free, and they then charge a set fee for an hour. That's how they make their money. They're more likely to give unbiased information. Financial planners who are paid by commission get a kickback for recommending a product. They recommend product X and then the company that offers product X pays them the commission. The commission is paid by you when you make the investment, and is usually only around 0.5% of what you invest. For example, invest $100, pay a fee of $0.50. These planners are more likely to give biased advice, based on kickbacks, although the vast majority of them are law abiding, honest, upstanding people who will recommend the right product for you. If I were you, I'd go to the local library, and have a look at the books in the personal finance section. There's usually a few on debt management, and they're usually pretty easy to read and cover all the information you'll need. Best of all, its FREE. In general, look at your debts. Find out what the highest interest rate debt is, and pay more on that while paying the minimum on the others. That is the most efficient way to get out of debt. Debt consolidation will ruin your credit history, making it far harder to get a loan, or at least get a decent interest rate, down the track. If you wanted to buy a home, for instance, you might end up paying 1% more than the rate they offer everyone else, because the lenders will consider you a bad risk. So avoid debt consolidation. You're smart enough to do this yourself. If you need some quick funds, I suggest you have a look around your home and see if there's anything you could sell in the newspaper classifieds. Things like textbooks, appliances, sporting equipment, and furniture sell pretty well. Anything you don't need, you should sell. You can then put that money on the highest interest rate debt, giving you a head start in paying the debts off. If you possibly can, transfer higher interest rate credit card debts to cards with lower interest rates. Lowering the amount of total interest you have to pay can make a small difference right now in payments, but a big difference down the track. Talk to the companies you owe money to. If you've been a good payer in the past, they might help you negotiate a different arrangement. They just want their money. If you haven't been late yet, they are likely to help you out. This is tough, but you can do it yourself. Just go to the library and get out some books, and have a read. Paying off the highest rate debt first is one of the best strategies to get on top of debt. Best wishes
4. They work by commissions or fees. You don't necessarily need their help with debt, you just need to structure it better and stick to a plan. If you have a hard time figuring it out, then seek out an advisor/planner/analyst to help you. They will also recommend products that may also be beneficial to you. If you find a good one that will work with you, they will still help even if you don't buy anything up front. Stay away from credit counseling services. They usually do more harm than good.
5. What your financial plan should have. I believe everyone should have a financial game plan, but many don't have a clue on where to start. Hopefully this blog will help understand what your financial plan should include. so you have to follow these instructions to draw it. 1) Grab a blank piece of paper 2) Draw a large simple house (a vertical rectangle box with a triangle on top of it) 3) Now draw 3 horizontal lines, evenly spaced, in the rectangle box. Each of these boxes represent a floor of your financial house. 4) On floor one (which is the bottom floor), write, "DEBT" 5) On floor two, write, "Emergency Fund" 6) On floor three, write, "Retirement" 7) On floor four, write, "Education" 8) In the roof, write, "Will" Now I'm going to explain why you should have each part included in your financial plan. The first step is to eliminate debt, which is floor one. Having debt will make you worry every day on when you going to pay it off. If you don't find a way to eliminate debt, you will be in debt for a very long time. Second step is having an emergency fund. An emergency fund is an easily liquidable asset that in case of an emergency, you can take money out. You should put in between 3-6 months of your income into an emergency fund. For example, if you were fired at work, where would you go to pay off your bills and be able to survive without income? Or if you become hospitalize and you can't work for awhile, where would you go to draw income from? Third step is retirement. This should be the primary step that everybody should focus on. I believe there is no such thing as "saving too much money." But if you don't have anything or not much saved for retirement, you are going to be in deep trouble. Social security don't pay out much, pension plans are going extinct, and the government is going to make it very difficult for you to get help (because the government is in debt too). Where are you going to go to get money? From you kids or grandkids? They are more likely to have problems of their own. Do you want to put this huge burden on their shoulders as well? Forth step is setting up a college fund. If you have kids and you want them to go to college, then you should setup a 529 plan for each child. 529 plans are the best education plans in America. I would not recommend opening one up if the child is in high school since there won't be much growth, but its totally up to you if you want to open it. Fifth step is having a Will. If you die tomorrow, who should get your assets? Who should take ownership of your home? If you don't have name a beneficiary, everything that doesn't have a name beneficiary will be held by the state and the state will decide on who should get what. This usually leads to family wars and your family will pay taxes on your estate. So you want to take care of this as soon as possible. But if you look at your financial house, do you notice anything that is missing? What are all buildings built on top of? A foundation! Step 9: Draw a horizontal rectangle below floor one. Write: "Income Protection" in the foundation. Without a foundation, your house will begin to sink or fall apart. In life, without having income protection (also known as life insurance), you are putting a high risk on your family that you are going to live for a very long time and that nothing is going to happen to you. But what if you do die unexpectatly, how would your family survive? Without life insurance, your spouse will first use the emergency fund. Soon that will disappear. Then your spouse will go either into the kid's college fund or the retirement plan. Eventually those will disappear until your spouse finds a new partner or your kids go to work to keep the family in the house. If not, the family will have to move in a cheaper home or rent an apartment. If you and/or your spouse don't have life insurance right now, then the entire financial house is resting on you and/or your spouse shoulders because both of you are providing income to the family (unless your spouse doesn't work, or you are not married, then the whole burden lies on you). With life insurance, you are managing your risks. There are many types of life insurance out there and the ones that are commonly sold are whole life or universal life. I can give you many reasons why they are sold more, but I pretty much revealed the whole truth about cash value life insurance in this blog. With cash value life insurance, you can only buy what you can afford. That's why many families are under-insured. With term insurance, you can buy the right amount of coverage because premiums are low. In every financial house (your financial plan), you should have life insurance to protect it. You should have a game plan to eliminate debt, open an emergency fund, save for retirement, save for kid's education, and complete a Will. This is what I do for every family I sit down with.