Before you can do any type of personal finance investing, beginning investing, or even real estate investing, you have to get your personal situation and money in order. There is no sense in going out and creating other money concerns if you financial house isn’t in order. And as many of us know from first hand experience, the economy has thrown us a lot of curve balls that we have to get out from behind.
Over the last two years, it is likely that your income has decreased if you are a small business owner or maybe you have been laid off from your job and working something temporary. Either situation tends to lead to less money than you were making before and few difficult decisions to make. You want to do more with your investment opportunities, but your personal finances may have feel behind. Let’s focus on getting those together before you jump into more investment situations.
Getting Personal Finances in Order
Now is the time to get your personal finances in order. It takes work, but you have to be laser focused on making this happen if it is going to work out for you and your future.
1) Decide to eliminate personal debt
Like most things that happen in life, it all begins with a decision. You have to know that you want to get it done. This usually occurs for those that are behind on their personal bills after they reach the point where they cannot take the letters, phone calls, and embarrassment anymore. People tend to find themselves in a financial corner and there is only one thing to do and that is to move out of the corner. Believe it or not, this is a good situation because money can pile up on you and make you not want to face your future, but you must.
So make a decision that you are going to change your financial situation for the better. This resolve is what is going to give you the energy and enthusiasm to see this task to the finish line. But it all starts with a decision. You must decide this is the path you want to journey down. And yes, we all know it is the best decision to make, but you have to make it.
2) Face the Music, Pull Out ALL Your Debt
Now the time has come for you to face the financial music. This step involves taking inventory of your debt situation. I know this is a hard move to make as it pains me to even think about my debt, but it is best for your future. You have to take responsibility for the debt, face the music, stare it down, and find out exactly where you are. Are you $5,000, $15,000, or $50,000 in debt?
Either way, the moment that you find out for sure after resolving to get rid of the debt, is the next step to paying if off. There is something magical about finding out where you are financially as it helps you move forward to the next step of making things happen.
But I feel it is important for you to eliminate your debt. We as a country cannot continue down this path borrow, spend, borrow, spend, borrow spend. The Federal Government needs to tighten it’s fiscal belt and so do we. Let’s take control of our personal finance situation and make a difference in our own wallet.
3) Create a Plan
Now that you have made a decision and faced the music, now is the time to create a plan to reduce the debt you have. Hopefully, you are making the minimum payments on all of your debts so that you are not further ruining your credit score. Either way, you need to list your debts from the smallest to the largest. This is the order that we are going to begin eliminating the debts that you have.
If you are not making any payments, then you are best off saving your debt reduction money each money in an account and one by one offer each company a settlement payment to eliminate the debt for a fraction of what you owe on the property. And yes, it is best to make regular monthly payments, but sometimes this isn’t possible cause you just don’t have the money. Once the payment is agreed and made to the debt company, then at least you stop the bleeding at that point. You should repeat this process until you have eliminated your debt or at least got it to the point where it is manageable and you are able to make your minimum monthly payments.
If you are making your minimum monthly payments, then you should still take that debt list and work from the smallest debt to the largest. What you do is take all extra money after making minimum payments and apply it to the smallest debt on the list. Once that one is eliminated, you take that minimum payment and the extra money you have and apply it to the next debt on the list. You repeat this pattern until you have eliminated all the debt you have and are ready to build another financially responsible life for yourself.
Hopefully, this article has giving you some practical ideals to move forward with, but more importantly given you some motivation to know that you can do this if you just sit down, make a decision, face the finances, and make a plan to eliminate your debt. It can be done for the benefit of your personal finance investing future.
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