Seeking Financial Counseling

Seeking Financial Counseling

There are many reasons why a potential client will contact me. Some are not sure whether they have found the right place.

This article is based upon actual email correspondence between a worried and stressed husband and myself. It illustrates the type of issues you may encounter and what you can do to possibly persuade your significant other to hire a professional money coach.

A call for help at 3:50 AM

I sometimes will receive requests about my services late at night, but it is pretty rare to get an early morning email. Which read:

Hi, I am about at the point of despair. We have tried to make a budget using many means, the most recent being mint.com. We get stuck with the multitude of different things we spend money on. I get literally dizzy seeing all the numbers, trying to put them into categories, then get dizzy with all the categories. We make a very good living, but no matter how much comes in, more goes out and we have nothing to show for it. We’re also not disciplined (at all).

I feel like we need somebody to:

• Help us categorize spending and figure out a reasonable budget
• Figure out places we can spend less money
• Help us get more disciplined (sounds like a miracle is required)

I’ve talked with others a few times about budgets and their responses fall only into two camps: either “it’s easy, just write down your expenses and categorize them” or “I’ve never figured out how to do it either.” Neither of which help me. 🙁

I’m not positive my wife is onboard with this. I’m gathering information and will present it to her. I understand her reluctance, as we’ve tried this before and it never helped. Part of the reason is our lack of discipline, another is that we’ve never tried it with somebody who really specialized in this sort of thing. We’re in the Washington DC area: do you work by Skype?

My reply:

Dear XXXX,

I can feel your pain, especially, since you sent this email in the early morning hours.

Mint can be a useful tool to help with budgeting but as you have experienced it is not the complete answer. Understanding the why behind your spending is just as critical as the actual numbers. That is where having a third party can be extremely effective. I don’t embrace cutting every expenditure but help my clients decide what are the best choices for them.

I do have clients throughout the U.S. and I currently use Zoom for video conferencing.

If your wife is on board, the next step would be to have a conference call with the three of us. I can explain more about my process and answer any questions you may have.

His Reply:

Thanks for your quick response, Diane. I’ll talk to her. We’d be looking at a few weeks out, as right now we’re getting the house ready for some serious makeovers. I really hope you can help us, as it’s so frustrating to see so much money coming in and yet still being overdrawn every paycheck, and nothing to show for it.

Do you have any success stories or other reasons to think that working with you, we’ll succeed when we have not before? I know she’ll say, we tried this twice before, and it didn’t help. When we went to the financial planner her advice was, get more income. I do not believe that is the answer.

Thanks,
XXXX

My Reply:

Dear XXXX,

Waiting is fine. I do find that it is better to address this sooner rather than later. It sounds like you are committed to making some large financial decisions if you are making updates to your home. I would be careful about how much money you are committing to the work.

In regards to seeing a financial advisory. Yes, that is common advice. You may have found that making more only leads to spending more. (Life-style inflation.) Financial advisers are not taught about why you are spending and will not discuss things like your cable or cell phone bill.

The biggest difference in working with me is that I look at your complete situation. There are two parts to the equation. Making more and spending less. The solution may mean you need to adjust both. That’s why I refer to myself as a money coach (some call themselves financial counselors.)

Why will it work? It does not appear you have tried it this way before. The successful clients are the ones who do the exercises I asked them to do between meetings. I believe that you need to be personally involved in the process, and that it is not a blanket reply such as make more money or stop spending so much.

His reply:

That sounds good. You are right, of the other people we talked to, the financial planner (“make more money”) didn’t talk about bills at all except to say ours didn’t seem unusual for people in our area. That wasn’t much help! The other guy was part of Crown financial ministries (Dave Ramsey’s people) and I think that he might have been able to help, but he only worked in person and we had to drive quite a distance to his office, so we only went out there once.

Unfortunately, we’ve already committed to spending a bunch of money on the house, plus we have our daughter’s college coming up and unlike our son, she won’t have a nearly full-ride scholarship. I like your approach to finance as well as to coaching. So I really hope I can get her on board.

Right now we are crazy busy with the renovations, and I know she won’t want to talk about anything new. I will definitely contact you within a couple of weeks. Thanks for your patience.

Waited until the home renovations were completed

My inquiry:

It’s a few months since we last communicated. You and your family were beginning your home renovations and wondering how you would pay for your upcoming daughter’s college education.

Is it yet time to talk to your wife about seeking advice and financial counseling concerning your money challenges?

His reply:

Hi Diane, thanks for checking in on me. No we haven’t done anything and no things haven’t really changed except that there’s not as much pressure now that there’s not a lot of bills around our daughter’s graduation. We were just talking the other night about how we still want to do something, but she is adamant about wanting to try it ourselves first. However, I do suspect that once we do, we’ll find ourselves foundering again and we’ll find we need your help, so I expect we’ll be contacting you at some point.

One more back and forth:

Hi Diane, it’s funny you should contact me. I was just about to contact you, as our period of madness around here is easing off.

I talked to my wife and what she wants to do is to try the first steps ourselves. We figure the first step is to go through our spending and categorize. We’ve gone back to the beginning of the year and categorized all our spending. I still need to make a pass through it to hopefully fix most of the uncategorized items.

After that, she wants to take a cut at putting together budget numbers ourselves first. I can see that, but I suspect that we’ll be back in the same situation we were and being overwhelmed by it all and not knowing where to go with it. That was the problem we had before: too many categories, too many “uncategorized” items, and (the worst) dealing with transfers from account to account. I’ve never been able to figure out how to deal with transfers in a budget. Perhaps the problem is that we shouldn’t have all those transfers – every paycheck we end up transferring money back and forth to make up for deficits. But we really need to do something now, as our accounts are overdrawn and we’re getting hit with overdraft fees.

How would you suggest we proceed?

My Reply:

Hi XXX,
I have few thoughts.

• No matter how you approach this – you need to know where you are spending your money now. Categorized or not. All amounts needed to accounted for. I have experience with spouses that look at categories differently. That’s where, as a third party, I can help couples decide how to categorize items.
• It sounds like you have several accounts that may have been set up for various purposes, but those reasons become clouded when you don’t have enough cash in them. It depends upon your situation whether having many accounts is useful. If we were to work together I would ask questions like: What are the bank accounts, their purpose, how are they funded, how are the funds spent.
• Having detailed information is critical, but what do you do with it? This is frequently the reason why clients seek my assistance. Questions like what is an appropriate amount of money that should be spent on groceries or clothing or any other expense. How much should we be saving for college and retirement? How can we pay off our credit card debt, if we can’t even keep minimum amounts in our bank account? Why does my spouse spend money on xx when we really need to pay for yy?
• Finally, consider you are paying the bank hundreds of dollars (I am guessing) for inadequate funds, and not receiving anything in return. Isn’t it worth it to pay for financial counseling and have tools you can use for the rest of your life and can also pass onto your children?

I hope these points are helpful. One last thing – if you have tried before and failed, ask you wife why not try something different? It’s unlikely that you will be in a worse situation and even an incremental improvement is better than none.

Regards,
Diane

PS Transfers between bank accounts are not expenses. Therefore, there is no need to account for them when analyzing your spending.

Closing Thoughts

I hope that the above exchange gives you something to think about regarding financial counseling. One thing that is very important. Try your best to get your spouse involved as soon as possible. Help them realize it’s important to invest in the relationship including financial matters.

Do you have any suggestions that can help this couple? What have you done to get your spouse on board?