Personal Finance Interview with Paul Golden on Finding Unbiased Financial Advice

It can often be quite difficult to find sound, unbiased financial advice. That's part of the reason why the website Smart About Money (SAM) exists: To provide you with completely free, independent and unbiased financial advice and information.

We decided it would be great to ask SAM a few questions, so we got in touch with Paul Golden from SAM to solicit some advice and info we think you'll be able to benefit from and use.

Tell us all about Smart About Money (SAM) and why it was formed.

Managing your money is a life-long process. Every time you experience a life event, your financial circumstances are sure to change. Whether planning for college, buying a home, having a child or planning for end-of-life issues, Smart About Money (SAM) is designed to empower people to make wise financial decisions through every stage of life. And let's face it, a lot of financial information out there can be pretty biased. SAM is offered by the leading nonprofit National Endowment for Financial Education (NEFE), so it is completely free and unbiased. Our only responsibility is to the public, not to any bank or investment firm, so you can trust that SAM will provide consumers with the most reliable information possible.

Do you think banks are not providing the right kind of information, or enough information, to the general public?

It's difficult to argue against the merits of financial education and there are many programs out there that are well intentioned. While financial institutions try to provide their customers with the best service possible, they also have to keep their own interests in mind. Many options may be presented to a customer and the financial institution may not be able to assist them in the decision making process as an unbiased resource.

How do you encourage people to not feel overwhelmed with all the accounting-speak and legal-speak when it comes to banks, investments and managing their money?

Often times, understanding financial terminology is difficult, especially when it comes to dealing with the nitty-gritty accounting and legal disclosures. The key to avoid feeling too overwhelmed is to know your budget and what you can afford, and become familiar with common concepts and ideas.

Another great way to decode this information is to find a reliable source to use as a guide, which could include everything from a trustworthy website to a financial services agency. Through its work, the National Endowment for Financial Education (NEFE) tries to demystify personal finance.

Is debt consolidation really effective in helping with debt? Why would you say it is?

When it comes to debt, there isn't anything like a get-out-of-jail free card. Debt consolidation may appear to be a promising option for individuals swamped in debt, however it will not magically solve financial difficulties. This option can even cost thousands of dollars more than sticking with the original debt if you do not do your homework on researching debt consolidation firms.

In most cases, debt is caused by irresponsible financial decision making, which will not be remedied simply by consolidating debt. Every financial situation is different, and therefore all options should be explored when deciding how to handle debt.

Can we all grow our money and have some kind of wealth, regardless of our background?

Absolutely! With proper planning, saving early and often, investing and budgeting, everyone has the opportunity to grow their money and become financially secure. Although making smart money decisions is challenging at times, there are tools available to help consumers with the process. SAM is one resource that provides multiple tips, calculators, worksheets and more.

How do tools like Mint help people manage their money better?

Everyone should set short-term and long-term financial goals and pay attention to their money on a regular basis. Tools like Mint help consumers do this in today's tech savvy environment. Organization is a key factor to managing money successfully. Mint is useful because it allows a user the ability to monitor all of their accounts, set a budget, and update their progress in one place. These types of tools also have other great features, such as reminders to pay bills or check bank account balances, which ultimately gives the user the support to be much more successful.

What's your recommended debt pay-off method?

The best way to pay off debt is simply to make a plan. Start by assessing all of your debts, paying particular attention to the interest rate of each account. Pay off the highest interest rate account first and move funds to the next when paid off. While paying off debt you should stop running up new charges, eliminate unnecessary expenses and possibly may have to increase income. You also might look at shifting higher interest rate loans to a single lower interest loan. Financial experts recommend that no more than 15 percent to 20 percent of income be used to pay for consumer debt so your goal is to get below this number based on your own budget.

Why do we get into unnecessary debt? And what would you define is 'unnecessary'?

There are many reasons why people get into unnecessary debt, from impulse buying and irresponsible use of credit to poor planning of finances. Understating the difference between needs and wants is one of the core concepts of personal finance.

An unnecessary debt is one where the costs of the debt outweigh the benefits. An example of unnecessary debt would be debt acquired by a shopping addiction, whereas debt incurred by a mortgage is considered to be better because it meets long-term goals.

What's the number one thing you say to people to inspire them to budget?

Although creating a budget may seem like a difficult thing to do, it actually can turn into an extremely inspirational process.

The trick is to calculate the amount of money you have saved after one week of following a strict budget; the numbers may shock you. By cutting out a little extra spending here and there, you could save up enough money to pay off a chunk of your debt or finally afford to go on a vacation you have been saving for. Don't think of budgeting as a chore; think of it as an opportunity to increase your financial potential.

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