Where Can I Get Financial Help?

by Neal Frankle, CFP ®

I love the question “where can I get financial help”. It demonstrates that the person asking is usually ready to take action to address what’s not working in his or her financial life. But this question is also a double-edged sword. That’s because if you answer it incorrectly, you might actually make your situation far worse than it already is.

Need a few examples? Consider the person who needs a financial plan but gets help from an insurance agent who sells them a boat load of the wrong kind of life insurance. Consider the person who has debt problems and asks her lawyer or accountant for advice. These professionals might be ethical and well- intentioned but they aren’t usually experts in this field. And consider the person who asks for investment advice from the wrong advisor. The fallout from that mistake could range from making really bad investments or worse. It could lead to losing all the money to people like Bernie Madoff or Allen Sanford.

So how do you know where to get financial help that will really benefit you? My experience tells me it is a three-part process of a) understanding the nature of the problem b) getting some basic general education about the issue and then c) seeking help from the right people. Let’s go through a few examples to demonstrate what I mean.

1. “I’m in debt. Where can I get financial help?”

Remember the first step is to have a full understanding of the problem. Why are you in debt? Are you spending too much every month and your debts have slowly built up? Or was this debt caused by a one-time event such as losing your job or a major remodel at home?

Before looking for a solution make sure you really understand the problem. In this case, you might have two problems. The first problem is that you are in debt. But the second problem might be that you are overspending. You must address both these problems if you want a real and permanent solution. Why? Because if you don’t address them both and you simply work on the debt issue, your overspending will reappear and you’ll end up creating more debt in the not-too-distant future.

Let’s say that indeed, you really have two problems; you spend too much and you are in debt. First solve the spending issue by tracking your budget. I suggest you consider using a program like YNAB. Not only does this program have a wonderful and easy way to track your spending, the company also has fantastic learning resources to help you understand your spending and get it under control fast. Even if you don’t use the program, make sure to tap into the resources they provide.

Once you’ve addressed the root cause of this problem, it’s time to look at your debt. There are a number of steps you can take to get out of debt quickly. First, look for lower-cost debt alternatives to reduce your cost. If you have credit card debt, consider rolling that over to an unsecured loan from your family or think about using a social lending site like Lending Club to slash your cost of debt. Then, apply that savings to the principal balance so you get out of debt much faster.

If your debt problems are much greater than this, I would suggest you consider speaking with an attorney and possibly consider bankruptcy too. I strongly encourage you to stay away from debt consolidators or debt restructuring companies. You can probably use a qualified attorney for less money and you’ll usually get better professional advice.

Again, this is a situation where you should slow down, get a real understanding of the problem and then get well versed in the alternatives before jumping into a solution.

Let’s move on.

2. “I need life insurance. Where can I get financial help?”

If we go back to our 3-step method, the first requirement is to understand the problem fully. Do you need life insurance to protect your family? If so, my strong recommendation is to buy inexpensive term life insurance. The only reason I’d ever suggest that you buy whole life or universal life is if you have estate planning needs.

Once you are clear on what the problem is, get yourself some background information. Read up on how insurance agents work before you get quotes. And while you are at it, take a few minutes to understand the debate between term term insurance vs whole life. Just taking these easy steps can really save you thousands of dollars a year in premiums.

Once you understand what the problem is and the basics of how the solutions work, you will have your solution. Sure you can talk to some insurance agents but you can also double check prices on the internet as well. It’s a snap.

3. “Help, I need to invest my money. Where can I get financial help?”

Before investing or hiring a financial advisor, be clear on your financial objectives. Are you saving for retirement? Are you saving for college? Do you need to buy a house? What will each goal cost and when do you want to achieve that goal? Understand the problem before you start looking for a solution.

Once you are clear on your objectives, it’s time to educate yourself. First, learn how investments work and then study how investment advisors work. Once you do understand these two issues you may know enough to invest on your own or you may decide you need an advisor. But by taking these two steps first, you’ll make far better decisions.

Summary

You can see that before asking for help, you need to do some homework. You need to understand the exact nature of the problem and get a basic understanding of the alternative solutions. Once you do these two things, you will know where to get help.

Many people don’t take the time to do their homework. It’s a shame because the result can be that they make really expensive mistakes. I have done this myself a few times so I know how important it is to go through this process.

Have you ever looked for a short-cut to fix a problem and paid dearly for it? What happened? What advice would you suggest to us?

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