I started to volunteer with a university-affiliated, volunteer financial coaching program (thanks to Mapgirl for telling me about it!).
All they really expect you to do is provide basic, common sense advice to people in a financial bind. There is a 12-hour training course and a big, fat binder full of materials to use in session so you're not just making stuff up or flailing about when meeting with your client. But I was still a little nervous because I am not a professional and money is not an issue to mess around with.
Especially not for these clients. These are usually people or the heads of families who are seeking some kind of government assistance and one of the requirements is for them to get financial counseling. They're not like me -- young, gainfully employed with a steady paycheck and benefits, no children and no worries as to where I'll sleep or when I'll eat in a given day. They might be facing eviction, have lost their jobs, have more than one child, are in debt and have cut their spending down to the bone as it is.
I got a client about a week ago and went to meet her. She was a mother of two and in debt because she wasn't making enough money to cover all the regular bills. She had borrowed against her 401k and took cash advances from her credit card. When she laid her numbers in front of me, I thought "Um, ok, you're screwed. You'd need to earn three times this to clean up this mess."
But of course, I didn't SAY that.
I just sat there eyeballing her balance sheet.
The money she spent on daycare and her rent essentially ate up her entire check. Thus, anything else she spent money on that month put her in the red.
"Ok," I said, feeling terribly inadequate and unprepared. "Let's break this into small chunks."
We spent the next hour hunting for money in her budget. I kept pressing her (nicely though) to find out where she might be blowing cash and not realizing it -- snacks for the kids? The movies? Starbucks? Cable? She did wind up spending quite a bit on birthday parties and all those random, annoying school expenses and dining out with other families. But she didn't know just how much. "Ok, you're going to keep a spending record for a month and track every single penny."
I told her to get in touch with her social worker and find out if there's any way she can get assistance with child care. I stared at her numbers some more. Her car note was big, but she was five months away from paying off the whole thing. "Ok, when's the last time you shopped around for car insurance?" She hadn't. "Good! Check into lowering that too without losing coverage."
Finally, we came up with the following action steps and I meet with her again in September to figure out where we can trim more fat to blast away her debt and build a small emergency fund (I'm talking maybe $500 to start).
1. Keep track of your expenses for one month. Hold onto all receipts and sit down each day to write it all down.
2. Shop around for car insurance with the same coverage, but lower premiums.
3. Visit HR to discuss adjusting tax withholding to keep more money in the paycheck.
4. Check with social worker and the county to find childcare assistance.
5. Check to see if the children are eligible for Medicaid (she was spending quite a bit on her son's dental work, which Medicaid would cover). If they are, see how much money you'd save if they were enrolled and not on your work health plan.
She seemed far more hopeful when she left than when she first arrived. She told me it was a big help and she'd be back in a month. I'm crossing my fingers.
Ok, so, how did I do? Anything that I missed in these initial action steps (and be gentle with the critique, it was my first time :-) )