6 Tips To Reduce Your Debt

Dated: May 9 2013

Views: 2533

From the March 2013 Issue of Realtor Magazine comes this interesting and useful article:

Start your financial spring cleaning with these critical strategies:
1. Assess your debt - Should you aim for zero debt? Not necessarily. There is good and bad debt. Good debt will produce a return in the future, or at least it's deductible. Credit card debt is always bad debt. Pay it off first. Destination: Financial Freedom - Even though money doesn't guarantee happiness, the ability to manage what you have can provide security during uncertain times.
2. Set a monthly target - Figure out how much money you need each month to return to stable financial ground. It may require cutting expenses or it may require finding another source of revenue such as a second job. Don't damage personal relationships by counting on family and friends for credit. Don't dip into your retirement savings, or stop funding your retirement, unless it's unavoidable.
3. Identify smart savings - Try to find savings that won't hurt your household or your business. For example, you could go without letterhead for a month or cancel your cable TV, but don't fall behind on the mortgage or car payment. Late payments have a way of multiplying the problem. As you learn to live with less, gradually increase the amount going into savings or paying off debt.
4. Look ahead -  Be aware of new revenue opportunities and expenses that may come upon you. On the revenue side, don't get so caught up in day-to-day work that you forget to prospect for tomorrow's business. Maintain networks and your connections to allied professionals. On the expense side, keep an eye on what you may need to replace or renew over the next five years. Will you need a new car three years from now? How much should you save annually to make sure that there is a substantial down payment or even better, enough for a cash purchase when the time comes?
5. Prepare for the worst - Ask yourself, if the next three sales fall through, how will I pay my mortgage? A simple "what-if" plan to deal with worst-case scenarios can be comforting because you know that there is already a solution in place.
6. Develop a savings habit - Saving money can be difficult. People tend to drift away from things that are hard or that they don't like or aren't good at. Keep plugging away.The literal payoff will be seeing your debt decrease and your savings increase.
Needless to say, reducing your debt and having more in savings can help you qualify for the purchase of that next home! Please feel free to contact me at david@exitwestrealty.com to discuss these and any other real estate related matters! 
Blog author image

David McKay

I have been with Exit West Realty since 2010 and prior to that have had 14 years of sales experience. I have a BBA and an MBA from the University of Texas at El Paso and have lived in El Paso all my l....

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