home loan finance blog
Most of us have been misled about personal finance over the years. To become financially independent, you need to relearn how to manage your money and manage your debt.
I want to show you how to implement a proven and efficient technique that will put to work the money you already have.
Now, lets start you down the road to becoming debt free. There are two phases towards this goal.
They are:
phase I pay off all of your debt before you continue or start an emergency savings account.
Phase II focus all of your available cash you now have to build wealth and break free from credit card debt.
During phase I and phase ii, operate on 100% cash (this means checks and debit cards as well) try not to use credit. (Of course there are always exceptions to this, but the goal is to not use your credit card for everyday living expenses).
When you put your plan into action and follow phase I and phase ii of this new strategy, you will begin to achieve true financial independence in a relatively short time.
In the next few paragraphs, ill show you how to pay off all your debts.
The first step to reducing your debt is to find hidden money to be used for bill payoff.
Well refer to this as your debt relief cash and it is the amount of money youll be adding to your current monthly bill payment. This is the money that will be your major debt-reducing money. Right now, its buried in your current monthly expenditures. Your debt relief cash doesnt have to be a lot of money.
Its like a snowball you begin rolling down the hill. Pretty soon, it will turn into a boulder-sized ball that you can make a snowman out of.
The debt relief cash should be approximately 10% of your take home income. If the only debt you have is your mortgage, strive for 25% -30% of your monthly take home income for your debt relief cash. For example, if your take home pay is $2,500 a month, try to put together $250.00 a month in debt relief cash.
If you think you cant afford 10%, try these methods:
Cut back on eating out at restaurants
Brown-bag it at least twice a week
Transferring your credit cards to a lower-interest credit card
Buying store brands at the grocery store
Buying items in bulk
Finding a cheaper insurance for your car and home
Increasing your irs deductions on your paycheck
Refinancing your mortgage
Remember, the goal here is saving money to pay back your debt. This should be at the forefront your mind anytime you are about to spend money.
Continue adding money into your debt relief cash fund and continue paying off your debt until it has been completed zapped!
As each debt is paid off, you’ll continue to add what used to be its monthly payment into your debt relief cash.
By the time you get around to your home mortgage, you’ll be able to focus your now much larger debt relief cash fund until your mortgage has been paid in full.
For most people, this process usually takes between 5-7 years and depending on how committed you are, it may even be less.
If you don’t currently have a mortgage payment, you will concentrate on paying off all of your revolving debt first (credit card, store cards, gas cards, charge cards, car loans, boat loans, etc.) before you can focus on putting all the money that you’ve been paying monthly into a low to moderate risk investment account.
You’ll notice that I want you to focus on paying off all of your debt first, before you begin to save money to acquire your own home. This is the only way to truly live a financially stable life.