Hey everyone!
My husband and I both work. We need both of our incomes to pay our bills. I have been pretty unsuccessful in getting a budget that we can stick to. We don't have the self discipline, and I get overwhelmed trying to do it by myself because DH chooses not to handle balancing the checkbook/paying bills/etc.
We have $1k in savings. We want to have the typical 3-6 months of expenses saved, and $1k is nowhere close to that. We have no savings for incidentals, like car repair, the vet, emergencies. We have a lot of credit card debt that we want to pay off. We have been talking about having a baby, but that is not going to happen if we can't buy diapers or formula. We have been using end of year work bonus and tax returns to pay huge chunks on credit cards once or twice per year, but other than that, we don't pay anything extra.
So, my therapist recommended that we think about seeing a Financial Advisor/Planner to help us manage our money. I know Ameriprise offers services that sound like what we need. I'm not sure how comfortable I am taking everything out of our Chase checking and savings, and our credit union accounts, though. We love our banks.
What are your thoughts on using a Financial Advisor for money management (not for investments right away, that would come later). Should we figure this out on our own?
Ameriprise Examples:
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I do not recommend commission based advisers such as Ameriprise. Look for fee-based and certified planners
Have you created a budget together? most planners work with people for investing not budgeting.
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Okay, the board is being weird and not letting me edit my post, so I will add it below.
Would we be better talking to a CPA instead of a Financial Advisor, since we're not looking to invest anything yet? We would also need a will made, someone to look at our insurance, etc.
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We have tried to create a budget, but it ends in an argument because one of us is overwhelmed and/or frustrated. DH does not have the self discipline or knowledge (according to him) to put together a budget.
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do you belong to a credit union? many provide free financial advisers.
even with a perfectly devised budget without discipline it won't work.
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some good advice is found in the stickies in this forum, such as
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Great tip, Heg. We belong to a credit union that is VERY big on debt reduction and savings. They have had monthly "Earn or Burn" contests involving members that volunteer to see who can reduce and/or save the most. They have a free of charge financial advisor, and I just emailed him to set an appointment.
Thanks for the link to the thread. I really appreciate your help!
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Aplogize for this long post .... I used to be an Ameriprise advisor (well, before it was spun off from American Express), and I had my share of clients just like you. Whether one would be helpful and worth the cost for you now, that mainly depends on you.
, you hardly need a financial advisor to help you make a budget and stick to it. You know what you need to spend money on and where you can cut back. You know you need to save money every month. An advisor could give you some good basic advice, but you could get that here, and not have to pay for it. (Though it is possible you are making certain mistakes, like having old overly expensive insurance policies or something, and a financial planner could point that out).
, the reality may be that you will never do anything unless you get some prodding from a 3rd party, have some professional guidance and accountability. Someone to hold you hand for that first step. Perhaps your therapist sensed that, and so gave you the advice they gave. I saw tons of people like that. For such people, if they don't get an advisor or take some sort of explicit step like that, they'll just be in the same boat 10 years from now because they're doing nothing to break out of the rut.
Hege's issue about commissions versus fee-based -- that's something to consider, but there's no need to be too dogmatic about that, IMHO. You'll have to pay for an advisor one way or another, they're not charities. Ameriprise advisors do not have to rely on commissions, and can generally operate in a fee-based mode if you prefer (an hourly fee or an annual fee). They are able to sell products from any fund family or insurance provider, they're not captive to Ameriprise-affiliated products. In fact my own Ameriprise advisor (yes I have one) basically refuses to do commission work or sell loaded funds, and works by fees and asset-based wrap fees.
That said, yes there are Ameriprise advisors who will habitually seek to put people into costly insurance products as the solution to everything, or they just use the in-house mutual funds because they never bother to look for anything better. It's a mixed bag, to be honest.
Fee-based planners sound nice but my two concerns about one are: it may not be worth their time to deal with you unless they can charge you $1500 - $2000, which is too much for basic help; and, they might give you the plan but not prod you to implement any changes.
The one advantage to a commission-based agent is that they are motivated to get you to . Believe it or not, that is exactly what a lot of clients desperately need.
You mention the will and insurance. That is the whole point of a financial planner/advisor (and where a CPA is useful). Advisors are not just about investment advice, they are about the whole picture. You would expect an advisor to have a stable of lawyers to refer you to for wills and estate planning, and CPA referrals if you need pro tax planning. An advisor is knowledgeable about insurance and would analyze your needs. Believe me a lot of people are criminally negligent in being uninsured or underinsured. Yes you too can die or become too disabled to work. (Yes some might then proceed to upsale you on too much insurance, but others won't. That's the reality.)
My anecdote here is that my former brother in law was a CPA, and so was much too arrogant to consent to work with me, even though he had a complex CPA practice and my sister was becoming a physician. So when he suddenly died, that's when I learned he didn't have a will, had inadequate life insurance that he'd bought with no real thought to it (my sister had no clue if he even had a policy), had done nothing to facilitate winding down his business, and even though he had a large clientele of tax clients, he hadn't bothered to pay his own taxes for some time, and they had just taken on the biggest mortgage they could get while still being fully mortgaged on the previous house. It was a disaster. So I guess CPAs don't impress me...
Finally it's a business with high turnover (example: me), so you may want to go with an advisor who's been in business for several years, and has an established enough practice that he or she is making a decent living, and doesn't have to spend all their time marketing 12 hours a day.
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excellent advice Kevin!!!
BTW, I am not diametrically opposed to ameriprise (I have a small account and its cobranded credit card) but the money management advisors I've met with were hard sell-types.
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Actually, I would have loved to hang in there long enough to launch my own fee-based practice. But it you can't really START OFF as a self-employed fee-based planner, you'd just starve to death - got to get your start elsewhere. Takes awhile to build up a clientele that spins off enough recurring income to make a living. I couldn't afford to hang in there long enough. Sadly. Loved the job.
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Thank you so much, Kevin. I appreciate it. That does put things into perspective.
I see that you're in Texas... would you happen to be anywhere near the Houston area?
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Austin.
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Ahh, we want to move to Austin eventually. We are up that way frequently as DH is a Longhorn.
I signed up for mint.com on Friday. I haven't finished tweaking it, but while we use Quicken and catagorize everything, I like how mint.com breaks it down further to tell me how much we've spent on "fast food" or "drive thru coffee" type stuff instead of just "dining" like in Quicken. Maybe there's hope for us yet!
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Mint.com is really helpful for seeing exactly where your money is going and how quickly all the little things add up and kill your budget.
It sounds like your husband wants a third-party person to tell him exactly what to do. If that's what you need to accomplish your goals, then an advisor may be helpful. However, reading some simple books on budgeting/financial management would probably be just as useful and free if you borrow them from the library. Something along the lines of Smart Couples Finish Rich, Suze Orman, etc.
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I opted for the credit union and got a free 45 min consultation on my overall financial picture a couple months ago. Try you CU first, it can't hurt.