I struggled with the topic for this post because there are different types of financial counseling one might need, yet it would involve more than one person typically. The truth is that most people need financial counseling in one way or another, sometimes multiple ways. Whether it’s to make money or save money or not get penalized in some fashion because of how you used your money.

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Make sense? If not, don’t get discouraged, because here are 5 reasons why you might need financial counseling, and what type of counseling you might need.

1. You need to be put on a budget.

Do you make pretty good money yet never seem to have enough to last you until the next time you get paid? Are you making little money and struggling to survive?

You need someone to help you set up a budget. Only by setting up a budget can you possibly know how much money you actually have to spend, where you’ve been spending it, whether you have enough left over to save or buy things you need or want that are outside of the budget and, believe it or not, find some peace of mind.

It could be an accountant who you go to for help, or maybe an independent person who works with you to help you to set up a budget. For a little more per month you can employ them to pay all your bills for you if that’s something you keep forgetting to do, although it would probably be smarter to set it up with your bank to auto-pay your bills… if you’ve done your budget and actually have enough money each month to take care of them.

2. You have your own business.

When you’re a business owner with employees or a sole practitioner, you want to spend your time marketing and working your business. You don’t want to have to spend time keeping track of receipts, trying to figure out quarterly taxes and the like.

The best part about having someone else tracking these things is that it frees your time up so you can concentrate on your business, no matter what it is. You can pay someone to manage your books and expenses. You can pay someone to process your payroll.

You might also need a business consultant to help you figure out what else you can push off on others. For instance, you might want to find out if you can afford someone to do some housekeeping, cut your grass, shovel your snow, answer your phones or even pick up your dry cleaning. You might even need someone to help write your content if you have a blog. 🙂

3. You’re being hassled by bill collectors.

In this case, you’re not sure if you have enough money or not, but the pressure’s growing. Your first step should be Consumer Credit Counseling, which is in every major city. They’ll help you look at all of your bills to see if you’re making enough to pay your bills and still survive or not. The best thing about them is their evaluation is free.

Of course, we have to use that word budgeting again because it’s the first thing CCC or anyone else will do. If you’re lucky these folks will also call your creditors and try to work out deals on your behalf.

Any good financial counselor will do the same for you, even though it’s something you can do for yourself. The difference is that they’re not going to be emotionally involved and most of the time they’re going to know what to say to someone to help get you the best deal possible.

4. You want to put extra money away or start investing.

You may not need someone to help you put your money into a savings account but these days that’s little comfort and won’t help you increase your money any. If you’re talking about investing, either in something small like a CD or an aggressive money market account, you’re definitely going to need some kind of financial counselor.

I’ve known a few people over the years who felt that they had enough knowledge to invest on their own, and in today’s world it’s pretty easy to set up your own account at one of many investment companies online, although you need to be ready for a host of fees that will eat into your profits. Some people do very well… but it’s not often sustainable. It’s best to have a money manager who spends all their time reviewing the market and making the best decisions on your behalf.

This is one area where you need to make sure you can trust the person you hire to manage your money for you. There have been way too many stories about people like Bernard Madoff, along with athletes and musicians who have had the wrong people managing their money, not to do your homework in finding someone reputable. The best piece of advice is to interview more than one investor and make them prove how good they are by showing you their own portfolio… at least a good piece of it.

5. You want someone else to handle all of your money and just give you what you can spend, like an allowance.

It’s too bad you can’t always have your mother around to take care of these things, isn’t it? Accountants are great for this type of thing, but if your needs are relatively small and you can find one you can trust, find a bookkeeper instead.

However, you need to be smart about this one. Let someone else write out all your checks for you but you need to be willing to sign them all. This gives you the opportunity to see what you’re paying and keeping a handle on your money.

A good bookkeeper should be able to produce a monthly report of every bill they wrote up and had you sign, produce your bank statement matching up with each check, along with total amounts so you can keep track of everything and know whether you’re being cheated or not. Truthfully, if you’ve gotten to this level you might not even look at those reports, but at least you’ll have all your paperwork if you ever decide you need to hire someone else to audit your books.

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CNN once did a news story on people who have been scammed by fake insurance plans. In these cases, people who were in dire health straits would look on the internet, find someone purporting to cover a certain area of the country, most probably the area where the people lived, signed up, started paying premiums, then when they finally had to go see a doctor came up empty. Not only no coverage, but no one had ever heard of them. Money gone, contract canceled, can’t talk to anyone; you’ve just been scammed.

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I’m particularly sensitive to health care, as, in my main career, I am a health care consultant in the financial area, and even once wrote my own idea for a health plan for America. I hate seeing people get ripped off, and I hate that people still don’t seem to understand how to protect themselves when it comes to their financial needs concerning health care.

Not that I’m always perfect, even being in health care. I’ve actually messed up a couple of times myself, although not with health coverage specifically.

A couple of years ago I purchased vision insurance, thinking that it would help me cover the co-pays of my ophthalmologist’s visits. When I presented it to the front desk, it turned out to truly be “vision” insurance, as in earning a discount when presented to certain places where you’d buy glasses.

If I thought that was disappointing, I found a way to top that more recently when I purchased dental insurance… or so I thought. This time, trying to be smarter, I contacted my dentist to see what insurances they accepted. They named one that I was able to find online and that’s what I purchased.

I was surprised by the low amount of coverage for the year, but since it matched what the dental office had said, I figured I was getting the right thing. Unfortunately, it turned out to be a plan where I would save 20% off the final total of any bills I incurred… which wasn’t all that much at all when you realize how much dental bills can be.

This proves I’m not perfect at insurance across the board, but luckily health insurance is something I know pretty well. I can’t take care of everyone immediately, because there are different plans all across the country (and the ACA is still the law of the land for at least another year), but I can offer some tips on how to protect yourself when you’re looking for insurance, or dealing with insurance companies.

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First, no matter what insurance you have, whether you pay for it individually or belong to an insurance plan through your employer, your first step is always to contact your doctor, or the doctor you want to visit, to see if they accept your insurance, or participate with your insurance plan.

Both of those phrases mean the same thing. In essence, it means that they will bill your insurance for you and will accept payment coming directly from the insurance company. If they participate with the insurance company (which means they have a contract with them) then they’ll write off any adjustments they’ve previously agreed to and only bill you for the amount agreed upon.

Second, after you’ve checked with the doctor’s office on participation, call the insurance company to find out whether you need an authorization for services you’ll need. Some insurance companies are sneaky like that; they say they cover something, then after you go to the doctor they say you were supposed to get an authorization up front. Although it’s supposed to be the job of the people working for your doctor to do this for you, it’s always best if you verify it beforehand since it could mean money coming out of your pocket..

Third, with these “off brand” plans, make sure that what they’re not telling you is that you have to pay your doctor, then send the bill to them for them to pay you. This isn’t sneaky at all if they tell you up front, and it’s more to help you defer the costs of your medical bills than actually totally covering you like traditional health care insurance.

Fourth, with any insurance company you sign up with that says they participate with these physicians, ask them for a list of names of physicians up front before you pay them a single cent.

If they say you have to sign up first, don’t do it. If they say “all of them”, don’t do it. If they say “covered in full” for everything, don’t do it. That’s just not how insurance works. Finally, if they don’t show your physician on the list but the physician said they were on the list, call the physician back to let them know.

Fifth, and the most important piece, read everything you receive. I mean it, from the first word down to the fine print, read absolutely everything!

Don’t sign anything until you do my first recommendation, but read everything. Anyone they connect you with, read everything, get an understanding of how your medical claims are supposed to be processed, talk to your doctor, then decide how you want to proceed.

Insurance can be a strange animal but truthfully it’s not that deep buying what you need. These days co-pays are the initially scary part but it’s better to have the right coverage that you can afford to pay for.

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My wife and I used to own a water softener. We bought it because our water is considered hard by water standards, and we feel this interesting film on our bodies after showers. We gave it up because, for whatever reason, it softened the water close to where it was located in the basement but couldn’t reach the bathrooms, thus rendering it useless.

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Once it was gone my wife said “Now we can take that money and apply it to the roof fund.” My response to her was “no, that money will get recycled into paying down more of our debt.”

What most people don’t think of when trying to assess the differences in saving money rather than paying down debt is that debt is actually more detrimental than saving is positive. Take your average credit card, where you might have an APR (annual percentage rate) of 15.9% on your outstanding balance, and compare that to a money market account that’s paying 3.5% (if you’re lucky), or your savings account that’s paying you way less than that.

Debt is sneaky in that you see those low monthly payments and figure that’s easy to take care of. Low monthly payments means the debt you owe is getting bigger and growing faster and, ultimately, is going to take you longer to pay off, if you’re lucky enough to ever pay it off.

I truly believe that most people need to set up a process and plan for paying down debt, especially credit cards, than in saving money for the future. The future is important but so is the present.

Many years ago, back in the early 90’s, I got into some credit problems myself after losing a job. Once I had new money coming in, which took a while, I learned what I needed to do was take a two-pronged approach to paying off debt. I’d like to share my process with you.

The first thing you have to do is actually write down all the debt that you have. Yes, I’m talking about setting up a budget. This scares many people, but it has to be done because you can’t fix what you don’t know is out there.

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I use Excel because it’s easiest for me, but you can use a pad of paper. When you’re ready to list everything, you need to have a column showing what the APR (annual percentage rate) is because it’s an important factor in what you’re going to want to do. I also mean all debt, which includes car payments and mortgage, and any outstanding loans you have.

Once you look at balances and APRs, you have to decide what to pay first, and how. The way I did it was I made slightly bigger payments to both the smallest amount I owed and the account that had the highest APR. When I got the lower balance to a place where I could actually pay it off in one chunk I did that.

You learns that it feels like a victory whenever you pay off the entire balance of an outstanding debt, and that makes you feel empowered and in control of your finances, which increases your dedication to your goal. For all the other debt, continue paying the amount that’s being requested of you for the time being, but try not to add any extra debt to your bills.

When you’ve paid something off in full, you then take that money and roll it into the next lowest debt or next highest APR to try to accelerate paying that one off. Continue this process until you’ve finally gotten yourself to a place where your debt load is manageable.

Notice I didn’t say when your debt is totally done. That’s because almost no one ever totally gets rid of debt, since we all need stuff, including houses and cars, but you have to be willing to stop spending and using credit cards just for the sake of wanting new things.

When I made my budget, I decided I wasn’t going to use any of my credit cards until I got caught up, and I was able to stick with that for the most part. I needed new clothes when I got a new and higher paying job, so I had to break out a retail store one time to purchase them. Other than that, I bit the bullet, paid for everything with cash as much as possible, and eventually cleared up all my outstanding credit card debt, since, at the time, I didn’t have either a car payment or own a house. Of course having the new job helped me pay down my debt much quicker.

Credit Card Debt
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Something you can do is cut up your credit cards and send them back to the issuer. I did that for most of my cards, but realized that I needed to keep at least one major card. In today’s world that’s even more important than it was before.

You can’t rent a car without a card. You can’t easily get a plane ticket without a credit card. You pretty much can’t get a hotel room without a credit card, as they want to have something on hand in case you decide to become a rock star overnight and trash the room or do things like order movies.

Once you’ve gained control of your spending, you might even figure out ways to use your credit cards if they build up points or cash, then pay off the entire balance whenever you get the bill. That way, you actually start earning things while still staying out of debt.

Finally, a warning about something that caught me off guard, but that I was able to rectify. We had paid off one of my wife’s credit cards, and the next month she still got a bill for the interest amount that supposedly had generated from the time the bill went out until the time the card was paid off. I had her call the credit card company up, then I got on the phone and ranted until they removed it.

That’s another one of those sneaky, underhanded things these banks and credit card issuers will do to try to get you, and it’ll try to keep you perpetual debt, even if it’s only pennies. The same goes for phone bills, wireless bills, and many times retail store bills. To be smart, you should call them up when you’re ready to pay off a bill entirely and request they send you a letter either proving you’ve canceled the card or acknowledging that there’s no further balance.

Debt is scary and can be paralyzing. Having a plan to attack it puts you back in control of your finances and your life.

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