How Can Financial Advisors Help You Become Debt-Free

Saturday, March 28, 2020, 6:00 AM | Leave Comment

Debt can be overwhelming to handle if they come from various sources.

Even if you paid one credit provider with the minimum payment they are asking, you have to pay another provider down.

It becomes even more overwhelming if you consider your daily expenses, taxes and investments you also have to pay and budget for.

If you want some help with your debt and finances, reaching out to financial advisors can help you out. They can help clients manage their finances and prepare them for the future. They even offer other services that deal with investments, taxes and estate management.

If you will reach out to them because of your debt, here’s how they can help you:

  1. Budget Reconstruction

    If you want to manage your debt, you have to be able to budget all your income and direct funds to pay off any existing debts. Financial advisors can identify any flaws in your budgeting and find ways to get through it so you can pay your debts faster.

    When you do reach out to them, you need to provide the advisor all your financial details to help them determine your actual financial status. Some of the documents you can bring include your bank statements, tax returns, credit card bills and other things that you believe affects your financial status.

    When they figure out your actual financial status, your advisor will draft a budget you should follow. This budget will help you focus on your debts and not add more to the list.

  2. Debt Reconstruction

    Debt can be classified into two different types: one that is manageable like mortgages and tax and one that is uncontrollable like credit cards and any account with penalty fees.

    When your advisor analyzes your financial status, they will identify which debts must be paid first and how it can be done. The highest debt with a high interest rate will go first, and those with modest rates will go last. As you pay off the debts one by one, the more funds you have to pay for your remaining debts.

    Your advisor will also find other ways on how you can get your debt restructured. For example, they may advise you to take out a mortgage to pay off your credit cards or use a 0% interest credit card to consolidate all your credit card debts in one account.

    But, it is important to remember that financial advisors won’t assist you personally to get these adjustments done. They can only advise you on what to do and it is up to you to follow it.

  3. Future Financial Planning

    Finally, once your debt is manageable but you are uncertain if you can sustain your financial stability, your financial advisor can help you create a long-term financial plan that you can follow. This financial plan will consider everything that you may need in the future such as life insurance or opening high-interest accounts. It may also include opening a retirement savings account which you can use after you retire from your job.

    When you finish your meeting with your financial advisor, your financial plan will have clear milestones that you should meet so you are on track to a stable financial future. If there are any setbacks in the plan, clients can reach out to the advisor to find a solution.

How to Select the Best Financial Advisor?

If you are ready to meet a financial advisor, picking one can be a challenge.

  • Research online or check your country’s financial associations for financial advisors you can ask to help you out.

  • You can also ask for referrals from family and friends who have reached out to local advisors in their financial needs.

  • Your tax preparer or accountant can also recommend trustworthy financial advisors you can reach out to.

  • The financial advisors must also have the right credentials and regularly attend seminars to update their knowledge about finances.

Ideal financial advisors must charge their services at an hourly rate. If you reach out to commission-based advisors, their services are limited because they will mostly focus on selling investments and insurance policies from companies they are affiliated with. As a result, their interest is not focused on helping you get rid of your debt but more on getting a sale for their portfolio. If the financial advisor is affiliated with an association, they will not charge any additional fees when you reach out to them.

Debt is a problem that many of us should nip in the bud before it grows to something you cannot control. A financial advisor can help you get through these trying times and find a solution to your financial problems, you may also check to help you with your problems. If you follow their advice, you can be assured that you will get rid of your debts and have a better opportunity to become financially stable in the future.

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