My First Financial Advisor

My mother passed away over 10 years ago. I was 19 at the time. She had a $100K life insurance policy. And when she died $40k went to me, $40k went to my brother, and $20k to my stepfather. The stipulation in the money was that it would be kept under the guidance of my step-father until I graduate from college or turned 25, whichever happened first.

My stepfather kept the money for us in a savings account. And as I needed some money for expenses at college, he gave it to me. My brother spent quite a bit more of his on college expenses because he didn’t have the full tuition scholarship that I had.

And when I graduated college the first order of duty was meeting with our family financial advisor to switch all of the money into my name. I put it all into Goldman Sachs Mutual Funds. Where it has been for the last 10 years, depreciating and having me remove money from it to pay down debt, afford my way of life, ect.

When I met with the financial advisor I already had my first credit card and a balance of about $2,000 on it.

I wanted to be financially responsible so I asked him: What should I do to be financially responsible? What are the steps?

Here is what he told me:

Step 1: Pay off all debt

Step 2: Save up 3 months of your salary

Step 3: Come back and we’ll set you up with your investment opportunities

It has been 8 years since I met with our family financial advisor. I’m still working on Step 1. Paying off the debt. Granted, I’ve since decided that a single-prong attempt at Step 1, followed by Step 2, followed by Step 3 isn’t the best course.

Which is why I’m savings (a little), while investing (hardly at all), while paying down the debt (currently 38% of my income).

I feel a little guilty that I’ve known since I was 21 (I’m now 29) the path to follow, but I didn’t start SERIOUSLY going along this path until the past year. It is a much longer journey now than it would have been if I had just paid of my $2,000 debt as a 21 year old. Hopefully before I turn 31 I’ll be able to meet up with my financial advisor and plan out the next step. Having paid off the debt, saved 3 months of expenses, and be ready to start seriously investing my money.


4 Responses to My First Financial Advisor

  1. Jessie says:

    I’ve never made it to the investment stage – I’m very risk adverse and find it difficult to trust someone else with my money, even if it’s their profession.

    Knowing and doing are two different things, aren’t they. I think the positive thing is to know that you’re doing the right thing now by taking those steps – rather then focus on the past and what you could have been doing.

  2. I only started when I turned 30… I cringe when I think of all the time lost, but my advisor tells me there are many, many that are older that haven’t started yet, so I use that to encourage myself.

    You’ll pay off your debt before you know it and can go back to your advisor 🙂

  3. vnss says:

    How does the 40k affect your net worth then? Do you have any of that left?
    What is your net worth…if you’ve written it before could you link it as i must have missed it.

    • SS4BC says:

      I have my net worth posted on the right hand column above my “Top Posts” and below my goals.

      Essentially I lost A LOT of that 40K in 2001 with Sept. 11th, About half of it actually – and it never really rebounded for me because I’ve taken out about $20K to pay off debt, to live off of, to use for a downpayment for a car, and to general get me out of “tough times” that I would have asked my parents to do if my mom was still living (my dad is kind of a financially dead beat, which is a whole nother story). I’ve also lost a bit with the current financial recession, so currently I have only around $9k of that original $40k.

      I also got my brother’s remaining portion when he passed away in 2004. That is all in bank stocks and is currently worth around $3K.

      Which is why even though I owe $15K on student loans and $14K on my credit card, I still have a net worth around -$18K. The different there is my mutual funds and stocks.

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