It sounds Utopian to suggest wiping out your debt fast; if it were so, millions would not today be reeling under loan burdens. The road to clearing off debts is overwhelming and fraught with challenges, more so if you have multiple high-interest debts in your loan portfolio that are a drain on your income.
However, being totally debt-free is not a feasible proposition in the modern, fast-paced, and digital world. Nobody carries wads of money around; credit cards are there to make life simpler, but only if you use them judiciously and do not go on frequent spending binges.
In the past, people would fall back on advice from financial planners to help them get over the debt hill, but that was never foolproof and more of a hit-and-miss affair. It entailed projections of income and expenses that were way off the mark when compared to actual data.
Fortunately, AI-based financial advisor software that relies on AI prompts to clear debts for its clients has come to the fore, with higher success rates in helping others become debt-free. With an AI financial planner platform, all that is required is to enter current financial data, and a debt payoff plan is ready within minutes that will give you the luxury of being debt-free, or at a minimum, bring debt levels to manageable levels.
The advantage of using an AI financial advisor is that the activity is not focused solely on working with pending debts; rather, a comprehensive plan is chalked out that also includes improving your financial health. The sources of piled-up debts are analyzed, and debt repayment solutions are created to ensure that there is no repeat of the circumstances and that the resolutions are fair for both the creditor and the debtor.
What is an AI Financial Advisor – An Overview
Before going into the intricacies of how AI prompts to clear debts, let us understand the functioning of financial advisor AI.
An AI financial advisor is a digital tool that uses artificial intelligence to provide financial guidance. It is an automated financial management platform that offers advice on investments, creates financial plans, issues AI prompts to clear debts, and projects cash flow estimated in the next 6 to 12 months.
This AI-based tool can analyze vast amounts of data and information culled from individual income and expenses, as well as the markets. This processed data is then used for managing investments, increasing savings, reducing debts, evaluating risk assessment, and gaining more insights to offer personalized financial plans and advice.
How does the financial advisor AI tool work?
The process of offering financial advice, including AI prompts to clear debts, starts with the collection of financial data, such as income, expenses, and savings. This data is analyzed by algorithms in the software to identify trends and patterns in financial behavior. Finally, AI provides customized financial advice based on the analysis, including strategies for lowering debt levels.
The AI financial advisor platform does not stop here. It continuously monitors your account to check whether your financial plan is following the set goals, making course corrections wherever necessary.
What are the benefits of the AI financial planner?
The main benefit of the financial advisor AI is that it analyzes specific financial situations, such as income, expenses, and risk tolerance, to create personalized plans, investment approaches, and strategies to reduce debts. The analysis is processed by AI algorithms that find trends within large financial datasets to arrive at optimized financial recommendations.
Another advantage of using an AI financial advisor is that the complete process of financial planning and recommendation is fully automated without the need for human intervention at any stage. It can automatically align with goals per changes in market conditions, set financial goals, and track progress made toward those objectives.
Through digital guidance and automating routine tasks, financial advice is now more accessible to the common person. Moreover, it is not only the software that matters; AI for financial advisors has helped traditional human advisors automate their regular jobs. These include quick data collection, generating compliance reports, and other routine tasks.
Hence, they can now focus better on client interaction and strategic planning without being bogged down by data collection and processing activities.
Creating A Debt Repayment Plan – Prompts From an AI Financial Advisor
We will now go into the details of prompts issued by an AI financial advisor, which, if followed, will go a long way to reduce your debt burden for a worry-free life. These prompts are very useful in debt-clearing activities.
So, let us dive into the optimized prompts.
# Estimate your debt: When you want a financial advisor AI to work out a debt repayment plan for you, the first step is to provide an accurate and complete picture of your debt portfolio. This statement should be prepared meticulously with all information, such as interest rate for each loan, outstanding balances, and the minimum monthly payment.
# Creating a financial plan: You will next be prompted by the AI financial advisor to create a financial plan, which will be a realistic estimate of your income and expenses. This is very critical since this exercise will give you the quantum of surplus funds (income over expenses) with which to clear off your debts.
While creating a financial budget, the crucial aspect is to set your expense goals. Divide your expected spending into mandatory expenses like groceries and transportation, and discretionary expenses, such as entertainment and dining out.
If you ever see that your spending goals are exceeding the budgeted goals, you can always cut back on the second category to get your budget back on track again to clear your debts.
# Prioritize your debt clearance: Though a debt is a debt regardless of the balance outstanding, not all of them are equal. It is necessary to work out the priority list when planning to eliminate them.
Debts may be classified into two types, and the AI financial advisor will help you categorize each debt based on fixed parameters and level of burden. First, you have small debts with low interest rates but high in number. Next, you have a few debts, such as credit card dues, that have high interest rates. Your AI financial planner will explain the pros and cons of clearing a specific category to start your debt-free journey.
You will be prompted by an AI-based financial advisor about which debt classification to focus on. Clearing several low-interest debts with small balances will reduce your total outstandings and the number of your loans, but will not significantly lower your overall debt burden. On the other hand, clearing high-interest debt will substantially bring down your monthly funds outgo.
Once you input all the outstanding debt data into the AI financial advisor, you will be prompted about the best course of action in the debt clearance exercise. The goal is to work out a plan that reduces your debt burden while ensuring you have sufficient funds remaining to meet your other financial goals.
# Combine your outstanding debts: Typically, the debt burden becomes unbearable when you have several high-interest loans to service monthly. An example is running a few credit cards simultaneously with outstanding balances near the sanctioned limits, a tough situation by any standards.
When you enter all the data into the financial advisor AI tool, you will be prompted to consolidate your debts and move them to a lower-interest-rate platform to make repayments easier. One of the most preferred solutions is to shift the balances to a credit card company that has lower interest rates and extended payment terms. Your debt repayment burden will be considerably lowered.
If debt consolidation does not work well for you, try negotiating interest rates and repayment terms directly with the creditors. If covering your minimum monthly payments is becoming difficult and overwhelming for you, meet with the creditors and explain the situation to them.
Generally, they are receptive to clients’ pleas and try to help them out through lower interest rates, a lower monthly repayment amount, or both. They would rather help you out than see their loans slipping into irrecoverable debt.
# Increasing income opportunities: This is a no-brainer; it is the most obvious prompt from any AI-based financial advisor and the best way to lower your debt portfolio. With rising income levels, you have more leverage to fast-track your debt repayments.
Though this prompt might not be easy, especially when you are gainfully employed in a regular 9-to-6 job, you can try part-time jobs or freelancing over the weekends to bolster your income. Post-COVID, work from home is common, and it makes sense to enter this ecosystem for faster debt relief.
# Decrease expenses: This again is a very common prompt from any AI financial advisor to wipe out your debts fast, and is the quickest way to build up savings to be debt-free. By reducing expenses, you are building up savings and being on your way to optimized financial health through a reduction in debt burden.
As mentioned before, expenses will either be mandatory or discretionary. To increase savings, it makes sense to put the axe to the latter category comprising entertainment, vacations, dining out, and others. However, in cases where the debt burden is severe and higher income possibilities are restricted, you might have to curtail your compulsory expenses too.
For example, you can reduce transportation expenses by availing public transport or a car pool to work, or reduce rent or mortgage payments by downsizing your home. Even if your lifestyle is temporarily affected, there is no better alternative to a worry-free and debt-free existence.
Help from AI-based financial advisors: Take help from a financial advisor using AI if you are unable to work on an AI financial advisor platform. Often, the advice offered by the AI tool or the solutions to become debt-free might be too complex to understand. In this case, you require the human touch to explain the details to you.
The advisor, using AI, will explain strategies in very common terms so that you know fully how the app is working and how to implement the suggestions provided in your daily life.
Summing Up
The highlight of AI financial advisor is that it functions optimally to create financial plans that match your requirements. One of them is to customize payment plans that go a long way to reduce debt burdens quickly without affecting other aspects of your routine financial life.
The focus of financial advisor AI is to ensure your overall financial well-being. By evaluating your past spending patterns and projecting your future cash flow, the best plans will be drawn up to make you debt-free fast.
