Can A Personal Finance Advisor Help with Debt Management?


According to a study by Northwestern Mutual, the average American is $38,000 in debt, and this doesn’t include mortgage. Unfortunately, many people don’t seek help concerning what they owe until it is advanced. This often leads to a situation where while you can make progress in reducing it, it may take much longer. Getting a financial advisor is one way to ensure that you are on the right track to either being debt-free or having a better handle on it. If you are drowning in debt, here are some ways that you can better manage it with the help of a financial advisor.

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Budget Creation

One of the significant reasons to find yourself deep in debt is because you do not budget adequately. Your budget should not only include your expenses and needs, but clear guidelines on how to manage your debt. With the help of a financial advisor, he can look at your earnings, costs, and liabilities to come up with a budget to get you out of trouble. You have to provide all financial documents so that he can analyze them to determine what changes you have to make. Ensure that you pay attention when discussing the budget since this is one of the best ways to get your debt in check.

Advice on Investments

Sometimes what you need to clear or better manage the debts that you have is an increase in income. This is not always possible by changing jobs or requesting a raise since they are out of your control. However, an advisor can find some surplus money in your budget and advise you on how to invest it wisely. It can be a short-term investment opportunity, but it can also grow into something long term that you may rely on for income. Make sure that you ask any questions that you may have before making the final decision as the SEC advices.

Prioritizing Various Debts

Different kinds of debt can be grouped into good and bad debt. Good debt refers to debt that has low-interest rates that you can pay over a long period. However, lousy debt includes items such as credit card debts since the interests and penalties are quite high. These bad debts are usually the most significant contributor to a bad credit score, and hence, they need to be taken care of fast. Your advisor analyzes all of these, and come up with a plan for you to prioritize the ones that hurt you most.

Help with Downsizing

Sometimes the biggest cause of debts is living above your means, which means to save yourself, you may have to downsize. However, if you have been doing it for a while, it might be challenging to know what exactly you need to do, which is where an advisor comes in. After carefully analyzing your expenditure and earnings, he can tell you precisely what you need to reduce on, and how you can use that money to help clear your debts.

Long-Term Plan

A financial advisor may get you out of debt, but if you don’t have a plan to keep it off, then you are still in trouble. He can create for you a long term plan, which can be up to 10 years to guide how you spend, invest, and save your money. The plan has to be a sustainable one that brings together various efforts in a bid to bring you financial independence. With this, you know what to do in different situations, where to invest your money, such as purchasing a life insurance policy and how to secure your future.

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Can A Personal Finance Advisor Help with Debt Management?

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