The following is a dialogue between myself and a friend who wanted to create a plan to tackle her substantial student loan debt. I feel that this situation reflects what many recent grads are experiencing -
Hey Ebe! I always see you posting things about financial planning on here, and I was wondering if I could pick your brain. I will be graduating from my Masters program in May, and even though I know the job market for my field (speech-pathology) is good, I have so much student loan debt to pay off. I know very little about financial planning, and my parents are totally clueless about saving and spending money. I have lots of private loans that I wanted to consolidate, and I think I am going to need some help with that process, as well as managing the best way to pay off my loans as quickly as possible. I was just wondering how much it costs to consult/retain a financial planner and if they would even be able to help me with something like that. I already have so much anxiety about this debt hanging over my head, and I feel like I need someone who knows what they are doing...because clearly I don't. Also, if you have any recommendations about companies/what to look for in a local financial planner, I would gladly take them. Thanks for your help! I hope all is well with you, but it seems like you are doing quite well for yourself!
Hey Tiffany! Congrats on getting your masters! Thanks for your question, it's a good one.
To point you in the right direction for consolidating your private loans, this is what I came up with after researching. Wells Fargo looks like it has a good program for consolidating loans - https://www.wellsfargo.com/student/consolidateloans/privatestudentloans
2. A consultation with a financial planner should be free for the first time. What costs money is for them to actually put together a plan for you. A financial plan for you at this stage would be to create a budget, have 2 separate bank accounts, 1 for bills, 1 for spending leisurely, stay within your budget, and always make your payment on time and a little more if you are in a position.
Once you know your income, if you aren't comfortable making your own budget, then a financial planner can help you. That shouldn't cost more than $250-500 max. Usually financial planners make plans for middle aged professionals with different kinds of investments and more responsibilities like retirement, a mortgage and kids college education, so planners fees for their typical plan require way more work than one for you.
At this point the only thing you need a planner for is a budget geared toward helping you pay off your loans ASAP. Don't get talked into an IRA or anything else at this point (your 401k at your employer should be a good start for retirement investing, and I can talk to you about that later)
Hope this was helpful. Nice to hear from you!
Wow that was very helpful! You know your stuff! I'm so jealous-I cannot tell you how sick of being a student I am!!! I'm going to take your advice on having 2 separate accounts. I think that's a great idea. Like I said, my parents made a lot of mistakes regarding their money, and I don't want to fall into the same pattern. I appreciate the help! Thank you so much!!!
Thank you very much Tiffany. You are not alone with your motivation to make sure you avoid some mistakes your parents made. I am right there with you! That was a large part of my motivation to learn a lot about managing finances. I am happy that I was able to help and never be afraid to ask any more questions should you wanna run something by me.