Simple Financial Stability: My Financial Advisor Experience


During last week’s post, I talked about identifying your expending habits for having a clear picture of your budgeting needs. This week, I will share our experience with a financial advisor and how it helped us develop a simple budget strategy. Let’s get started.

To simplify the whole budgeting scheme and stop wasting more money and time (#skipthestress), we decided to consult with an expert in the matter (a.k.a Financial Advisor). Yes, I was done with all that. I was even done searching the Internet, looking for options, and reading articles written in some kind of money language. I am a simple woman and wanted the money talk to be simple and understandable. I wanted to know my options and have a realistic budget to help me get the financial stability I was looking for. It felt right to have an expert looking at my numbers.

Now it was a matter of finding the perfect financial advisor. This turned out to be easier than expected. The company I work with offers the benefit of financial advisory for all their employees. The best part?? It is for FREE!!!!!!!! The best deal ever! I know my husband LOVES this! So, we made an appointment with one of the financial advisors at the company.

There are so many misconceptions about financial advisors, but you need to look for what works best for your specific situation, like everything in life. Our experience so far has been great! The financial advisor listens to us and focuses on what we want to accomplish. We have never felt like the financial advisor is imposing his ideas. On the contrary, we felt like being given the tools to make informed decisions regarding our money. Here our financial advisory roadmap:

  1. Before our meeting date, the financial advisor asked for all the documents needed for having a productive first meeting.
  1. During our first meeting, the financial advisor asked about our financial goals and looked at ALL our documents.
  1. The financial advisor completed a spreadsheet with all our incomes, recurrent bills, occasional expenses, contributions to IRAs and retirement plans, and everything else. It was like every single penny was taken into consideration.
  1. The next meetings were more interesting. The spreadsheet was just a tool (I’m sure you can find something similar online) to help us allocate expenses and create a budget based on our income and lifestyle.

The financial advice given to us was to create a mindful and realistic budget to have more money left (Extra Amount for The Principal) to accelerate paying off all our debts in 2.5 years (not including mortgages). Sounds pretty cool to me. Now, the financial advisor’s strategy:

  1. Create a budget.
  2. Calculate the Extra Amount for The Principal.
  3. List all debts from highest to lowest interest rates (Debt 1, Debt 2, Debt 3, etc.). The debt with the highest interest rate is the first to be paid off.
  4. Pay off debt faster following this magic equation!

Debt 1 New Monthly Payment = Debt 1 Monthly Payment + Extra Amount for The Principal

The Extra Amount for The Principal will be the amount of money left in your pocket after paying all recurrent monthly bills, setting money aside for savings, emergency funds, etc. This extra money available to you will be added to the Debt 1 Monthly Payment, making this your Debt 1 New Monthly Payment until the debt is paid off. By doing this, you will pay your debt in a shorter period, hence saving money in the long run (remember we are going from highest to lowest interest rate).

After paying off Debt 1, the Extra Amount for The Principal will be equal to the Debt 1 New Monthly Payment.

Extra Amount for The Principal = Debt 1 New Monthly Payment

This means more money to accelerate paying off the next debt on the list. Let’s call the next debt on the list Debt 2. Now your magic equation will look like this:

Debt 2 New Monthly Payment = Debt 2 Monthly Payment + Debt 1 New Monthly Payment

The same methodology will continue until all debts on the list are paid off. Pretty awesome, right? There will always be a constant Debt XY Monthly Payment to make and just one variable you can adjust, the Extra Amount for The Principal.

Following the financial advisor strategy, we have shortened our debt pay-off period to 2 years. How? Well, we maximized the Extra Amount for The Principal as much as we could. But HOW? With our financial advisor’s help, we created a budget and stuck to it. Next week I will share our budget strategy. More to come!

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