Video: Becoming Financially Fit – How to Reduce Debt Without an Attorney

Minnesota attorney Aaron Hall speaks with of Financial Fitness about becoming financially fit.

Aaron Hall: I am Aaron Hall, and attorney in Minneapolis. A lot of our clients have money problems and legal problems. Once we solve those though, they have still have fundamental issues that led to those problems and that’s where Dave Jacobson comes in. Dave works with Financial Fitness of Maple Grove and he helps people with on-going money issues to address some of the underlying causes of the money issues. Dave how did you get into this?

Dave Jacobson: How did I get into this? I struggled with the same thing a lot of the things my clients struggled with. We looked up in the year 2000 we had $58,000 in consumer debt. We thought we were good with handling money. We made decent money, we still found ourselves living check to check and thought, what is going on. We added it up, we had $1,500 going out a month going out in payments. Gee what if we eliminated that. So by the year 2003 we eliminated the $58,000. So that’s about a $20,000 per year reduction in debt. Initially it was to reduce the numbers because that is the issue. But we found, in order to reduce $20,000, my wife and I had to be on the same page. We had to communicate. I could be out golfing while she was saving. It got us closer and our relationship improved. So yes it started about the money and the numbers, the other things were the piece that was really cool.

Aaron Hall: With your clients, what types of common problems do you see that they’re facing which leads them to you?

Dave Jacobson: Communication. Husband and wife not on the same page.

Aaron Hall: I thought that you might say money issues but you went right to communication.

Dave Jacobson: It is a lot of times they are both doing good things. One may be wanting to pay off the credit cards so they are putting extra towards this, the other is doing college funding. The other has the idea that we are going to have to home mortgage earlier because that’s a good idea. We are doing all these different things and they aren’t wrong, but we can get so much more traction when we are aligned in a plan and we set up a system for doing this one first, this one next and we tackle them all.

Aaron Hall: Do clients realize they have a communication problem before they come to you or do they see other symptoms first?

Dave Jacobson: Yes and no. Some know it and they literally tell me they want a referee and a lot of them know that they need an accountability partner.

Aaron Hall: How often are your clients small business owners? You run into small business owners much?

Dave Jacobson: A lot of solo-entrepreneur and small business and what happens there is like spaghetti. The personal and business finances just intermingle. It gets to be a mess and a lot of times they think they can’t do much in planning because of the irregular income. They end up chasing their tale and they’re always in a spin.

Aaron Hall: So they don’t have a regular salary they can rely on from an employer. The market goes up and down, sometimes they may be busy. I imagine that may lead to time pressures working extra hours, which then in turn causes stress on family and relationships. So sometimes it gets overwhelming. What do you do then when you sit down with those folks? They come to you as a financial coach and say here’s this mess. Our money is a mess, as a result we are having a lot of financial and personal issues. Where do we go from here? What is the step?

Dave Jacobson: The first thing we do is we need to develop a why. We can talk about budgets. I can talk about strategy, it just won’t matter until we have a strong enough reason why we are going to do it. And it’s not my why. It is not my definition of wealth. Wealth is not a pile of money and debt free. It may be work-life balance, spirituality, financial peace is definitely a part of it, health. All of those things tie together. I have to find out from them what they want and that’s the communication piece. So the very first thing we are going to work on is what I call a vision or why discussion. If there’s one thing that’s most important to you as a couple, what is it? Oh I thought we want to get out of debt. No it’s not all about money. In life, what is the most important? Go talk about that and come up with number 2. If there’s another thing that is most important to you, what is it? Once we have that framework, and they’re on the same page, it is weird. For some, they’re able to say, this is it. Others it takes a little while. But once we have that foundation, we can take all of the pieces that we put into it, and use it as our compass for our decisions and it’s really cool.