Stats have shown that Americans have reached a rather alarming financial milestone: consumers now collectively have the most outstanding revolving debt — or known as credit card debt — in U.S. history, according to a report Monday released by the Federal Reserve. Americans had $1.021 trillion in outstanding revolving credit in June 2017.
This should serve as a wake-up call to say the least. Americans need to realize they must now start to focus on reducing and eliminating their credit card debt.
Chances are you have a client or two that is currently dealing with this issue.
We help clients get their finances in working order for today as well as the future. Managing debt is a huge aspect of organizing finances.
While debt can seem scary and complicated, getting out of it actually boils down to three simple steps.
Apart from these three steps you’re going to need to establish a behavioral plan.
Debt can be highly emotional.
If you’re going to guide a client through it, a special approach will be necessary.
You must offer support while asking delicate questions, and then provide long-range financial projections. Ultimately, you want to always educate clients about wise saving and spending habits.
However, the power to change habits will come down to the client. It’s essential to be respectful and sympathetic towards them. To accomplish this you must follow two methods:
It’s imperative that clients feel that they have control over their finances.
Probe gently and see if you can pinpoint the root of the credit card debt in an attempt to raise a client’s awareness of their current status and issue.
Once you address the problem then you can add up their total household income and expenses.
Next, ask a series of searching questions such as:
“What are your goals and priorities?”
“What’s important to you?”
With the answers to these questions, you can align those stated goals and priorities with future spending decisions.
The client will walk away with a comprehensive financial plan — and a guide for positive behavioral change.
I’ve noticed in my years of experience that clients with credit card debt often need someone to tame their impulsiveness. They find benefit from a perspective of how their behavior influences their financial habits.
To successfully tackle credit card debt there must be open and clear dialogue between the debtor and advisor as well as the debtor and family members.
The goal moving forward is that an individual in debt will have the ability to explain their spending decisions. Equally important is to each them to follow a series of checkpoints before making big purchases.
When communication isn’t clear, one person may seem as if they’re trying to hide something.
Stress the importance of open communication for those involved when you meet with your clients. Assure them that you too will be fully transparent in handling their debt plan.
Being in debt is a terrible feeling and can prevent clients from reaching their goals, like buying a home. It even serves as a source of stress and grief.
If you want more tips on how to approach this sensitive situation, let’s talk. I’ll help you craft the best approach that will grow your business.