Do I need a financial advisor?

Question:

I am a ups driver and my wife works at a language school we are both 30 and make about 120k a year. i have about 21k in stocks. I contribute 20% to my 401k ( which does NOT match) and we both have ROTHs worth only about 4k each. We have 4 years left on our 5/1 ARM for 236k on our condo which is worth about 310-330k. . we owe $4200 on a credit card with 0% int until feb. and $2200 with 9.9%. we recently signed with ameriprise financial and dow im wondering if we really need it. he is chargin us $500 a year. we'd like to build our wealth as quickly as possible and figure putting any money we have left over from bills to work for us is the best way.

Answer:
Financial advisor is not just for rich and famous. A good financial plan can definitely help you and your family to be in a better financial position down the road, but there is a cost of this potential benefit, which is the retainer that you have to pay your advisor for his advise. Find out more about your advisor - whether he is qualified (i.e. does he have CFP credential? Number of years in practice? Number of active clients?) to charge you $500 a year fee to help you gain your "financial freedom." Some Ameriprise advisors charge a one-time fee (for the plan), while others charge a yearly retainer (for bi-annual/yearly review). See what makes more sense to you and your wife. I used to work for American Express Financial Advisor (now Ameriprise) as a financial advisor in NYC, so I am familiar with the general practice of Ameriprise.

I came across this article that might interest you. http://money.cnn.com/2007/05/22/pf/exper...

Good luck.

The first financial advise always given is use any extra money to pay off debts. Financial advisors are then an option. The extra you are putting away, some advise use to pay off the two credit card debts. About the ARM, do they allow amortization? Do you intend to reside there in four years?
When it comes time to refinance the loan, and you have amortized, you may be in a much more comfortable position, if you amortize at least 7 months of each year.

$500 is nothing for good financial advice. I'd charge at least 1K, but I'd save you that in the first meeting.

I get rid of that credit card debt. At best, your stocks are doing 11-15% a year. Your cards will chew that up in no time.

Sell your losing stocks right now for a loss. Figure out your loss in the stocks. You'll put that as a loss on your taxes. Use those proceeds to pay off all your credit cards.

My guess is that your $4200 0% card will kick it with not only high interest rates in February, but most of the time those 0% transfer balances actually back charge all the interest at those rates from way back to the date you put that money in.

Check that fine print. I'd bet that is the case.

Now max out that IRA. Once you have that money in the IRA, you can get some of that money back since it was untaxable income.

You use your medical savings account? Throw $500-$1000 into that. Make sure you spend it all. That money goes in pre-tax.

Figure every dollar that gets applied somewhere pre-tax is saving you (earning you) 20%.

I haven't even looked in detail, and I bet I can save you $1000 in taxes alone.

Do I need a financial advisor?

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