Today we’re excited to share that Chip Bromley, one of iNNOVA’s principals, was interviewed by Moneygeek.com! Below is his interview and a link to the entire panel’s conversation around debt!
Expert Insight on Coping With Debt
Chip Bromley, AIF, CAIA
Principal at iNNOVA Wealth Partners
What behaviors can consumers adopt, regardless of their debt loads or socioeconomic circumstances, to begin alleviating their debts?
A common financial behavior for consumers to adopt (and potentially begin paying down existing debt) is to live within their means. The foundation of all financial planning is income vs. expenses, or money in and money out. This begins by gaining an understanding of where your money is going. We often speak to prospective clients and ask how much they spend monthly.
Once we dug into their expenses on a line-by-line basis, the true number was 150% or even 200% larger than their original guess. In our subscription-based economy, losing track of expenses and paying for products and services we no longer utilize is very easy. Reviewing these expenses monthly or quarterly helps prevent them from getting out of control. As technology has evolved, the great news is that many great apps can help you track expenses and even subscriptions.
If someone is in a low-income job and feels trapped in a debt cycle, what might a path out of that situation look like?
Once that person has gained a sound understanding of their expenses, homework must be done to understand better the interest rates and terms of all their debts. Individuals often feel trapped in a debt cycle because they have multiple credit cards, personal loans and other debts. It often makes sense to begin the path to being debt-free by recognizing the debt with the highest interest rate and paying that down first.
What are the best steps consumers can take to reduce their dependence on debt and avoid accumulating high debt in emergencies or other unexpected situations?
First and foremost, cut up those credit cards! Having one credit card (or maybe two) helps avoid complicating your debt. Then, once all debts are paid off, the job doesn’t end there. We usually suggest clients have anywhere from 3–12 months’ worth of emergency cash to ensure they don’t fall into the debt trap during financially difficult times.
If you’d like to read the entire expert panel of interviews you can find it here: https://www.moneygeek.com/debt/#expert=chip-bromley-aif-caia
INNOVA is a SEC registered investment adviser. Information presented is for educational purposes only intended for a broad audience. INNOVA is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed. The opinions expressed herein are those of the firm and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of author, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.