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Introduction to Debt Management with Financial Advisors

Dealing with debt can often feel like trying to climb a mountain with no peak in sight. For many Canadians, this is where a financial advisor comes in – not just as a guide but as a partner in your journey towards financial freedom.

 

The Financial Advisor’s Toolkit for Debt Reduction

Financial advisors employ a variety of methods and tools to help clients manage and reduce their debt burdens. These include:

  • Debt Consolidation Strategies: Simplifying multiple debts into a single payment.
  • Budget Management: Creating and implementing a budget to control spending and allocate funds effectively. Advisors can often supply you with well-tested tools for tracking your income and expenses. While many of these are simple tools you could replicate yourself, sometimes having a coach urging you on adds the needed discipline to get it done effectively. You’ll find additional support on LARi.ca on this topic, including our post on creating a family budget. The LARi Insight budget calculator allows you to assess your monthly income and expenses, and set well-defined savings goals for the future.
  • Negotiating with Creditors: Working on your behalf to potentially lower interest rates or settle debts.

“Do not save what is left after spending, but spend what is left after saving.” – Warren Buffett

Creating a Customized Debt Management Plan

Every individual’s financial situation is unique, and so is their path to overcoming debt. Financial advisors assess your specific circumstances to create a personalized debt management plan. This includes setting realistic goals, choosing the right debt reduction strategies, and adjusting the plan as your financial situation evolves.

 

For more on financial planning, visit The 7 Stages of Financial Planning. You may also find it helpful to add up your assets and liabilities prior to meeting with an advisor. Our Net Worth Calculator (Canada) can assist with this task.

 

When Bankruptcy is on the Table

In extreme cases, bankruptcy might be considered. Here, financial advisors provide crucial guidance on the process, consequences, and alternatives like consumer proposals. It’s about finding the right solution, even in the most challenging financial situations. However, if you’re not currently working with a financial planner and you’ve reached a point where bankruptcy seems like the best option, you may be better suited to working with Canada-Licensed Insolvency Trustee. This is a specific professional designation devoted to bankruptcy and insolvency proceedings in Canada.

 “The role of a financial advisor is not just to guide you out of debt but to help navigate a course towards a prosperous financial future.”

An Alternative: Free Credit Counselling

If you are having trouble paying back debt or keeping up with debt payments, credit counseling can provide services such as one-on-one counseling, group courses, tips and seminars on budgeting and using credit wisely, and debt management plans. It can also help with budgeting, spending habits, and credit use. A credit counselor will assess your financial situation and help find suitable options, whether that involves a debt management plan, a consumer proposal, or bankruptcy.

 

Credit counseling is also beneficial for individuals who need help with budgeting their money better, have concerns about their credit, or want assistance in dealing with their debts. The process typically starts with a free evaluation, where a trained credit counselor helps assess the individual’s situation and understand their options for managing their debt. For more information, visit Credit Counselling Canada.

Your Financial Ally in the Journey Out of Debt

Engaging with a financial advisor can be a game-changer in your battle against debt. They offer not just expertise in debt management but also provide the moral support and encouragement needed to stay the course. Remember, overcoming debt is not just about regaining financial stability, it’s about setting the foundation for a prosperous future.

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