this post was submitted on 24 Jul 2023
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It depends : do you thing you can do it all by yourself?
Do you have a budget? This is usually the first step we'll recommend here, as knowing where your money goes is important to understand why you're aren't getting ahead. If you can post more details here on your income, your spendings and your current debt (amount, rate, minimum payment), we may also be able to point you toward the right direction.
I definitely can't do it on my own. There are so many intricacies involved in all the different options.
Without going into much detail. My debts grew when I was making much less salary. Like... less than a quarter of what I make now - and now that I am in a new position I think I need to speak to an expert and give them access to everything.
The stupid part of my question really is: Who should I be talking to? Does the expert I need have a single title/role? Or are they multiple people?
A debt consolidation expert will usually look at how to reduce your debt payments, and a financial advisor will usually try to sell you investments, which may not be appropriate here.
While that's not the right wording, I think you need some kind of money coach (please do not search that on Google, you'll mostly get grifters and scammers): I feel a financial planner (CFP or maybe QAFP) would be better suited for your needs, but not all of them go as far as you seems to be interested in. You could still identify a few of them in your area, and check if that's something they'd offer. I have also met a few accountants/CPA that offered these kind of services: going through your spendings and debt with you, making a budget and a savings plan, and following up every now and then to see that the plan was executed correctly, but I haven't seen it offered recently, as CPA have been in quite a high demand these last few years.
This is a great answer! Thank you kindly for the well thought-out response. I will contact a few CFP/QAFP folks, and send a line out to local CPAs. I think the latter would probably be the most comfortable for me. Someone who I can get a relationship going with, and who has an interest in me making progress beyond trying to sell me an investment when I'm so much in debt.
I will now edit my post to remove the salary amount, as a few people have messaged to let me know that is probably not a great idea :p
Just a quick FYI on the CPA vs CFP debate: they really have different missions. To make it simple, a CPA's goal will usually be to give you more money now, which will usually imply reducing how much money you give to the government this year, and the next, and the next. A CFP's goal will usually be to give you more money over your life, which will usually means having less now and more later, especially during retirement
To give you an example: I work through my own corporation, and my CPA advises me to pay myself through dividends as much as possible, as it allows me to lessen my tax burden, while my CFP advises me to take part of my revenue as salary, which costs me more in the short term but give me access to both QPP (Quebec equivalent to CPP) and RRSP room.
They are both right, and both very useful and complementary, but they have very different philosophies that you need to account for when deciding which way to go.
Thanks! It sounds like my best bet is a CPA to figure out how to get the most out of the money I am bringing in now, and then take the numbers to a debt expert to see if I can make it happen.
Would it make sense to go to a new bank (all my current debt is with one bank) and speak to them about moving my finances there and doing consolidation/reworking to get the best payment scheme to get the debt serviced quickly without impoverishing me? Or would you recommend going back to my current bank first?
Quite frankly, no advice here, YMMV: maybe your bank want to keep you as a customer and will give you the best deal, or maybe a new bank will give you a better deal to get your business.
There is no risk in getting in touch with a new bank to see what they can offer you, or to look for better deals, even for part of your debt if you don't mind the complexity.
Depending on your credit card debt interest rate, and your LOC rates, a good first step may be to repay your credit card with your LOC if you have some room, as CC rates (often 20-30%) are generally higher than LOC rates (10-20%). It will also make your situation more simple.