You may think that financial advisors don’t stress about their own finances, but according to one financial services professional, John R. Schneider III of The Debt Free Guys, your advisor could likely be in a hole of personal debt. Schneider recounts that this was his own predicament while working as a financial advisor for Charles Schwab for two of the 18 years he has spent in the financial services industry.
“I made some grand financial mistakes,” says Schneider. He once charged his credit card for the down payment on a new car, and also spent his MBA tuition reimbursement checks from his company on a trip to Vegas to see a Madonna concert. When he reached rock bottom, he and his partner David were sitting in their rented basement apartment admitting that they had dug themselves into a deep hole: they had racked up over $50,000 in credit card debt. “We knew that we could not continue on the trajectory we were on,” he says.
John and David initiated a turnaround by spending less frivolously on clothing and travel, cutting their grocery bills, and dining out less. “When we pared down our dining out, we saved about $30,000 per year,” Schneider says. That money was used toward paying off their debt and eventually began funneling into their IRA retirement accounts.
Schneider says they also learned the importance of checking their credit score, and creating a savings account for emergencies.
He stresses that almost half of Americans cannot afford a $400 emergency, and says that people should try to “save at least 3 to 6 months’ worth of living expenses in an emergency savings account, should anything adverse happen.”
When most people think of financial advisors, Schneider notes that they conjure up visions of Michael Douglas in Wall Street, or Lehman Brothers’ closure, but the truth is, he says, “financial advisors are vulnerable to making bad decisions with their money just like everyone else. We’re all experts in our own fields, but we aren’t perfect. That’s why nurses smoke and financial advisors file for bankruptcy.”