Oct 17 '09, 09:40 AMAnother moldy old post from another audience i found when looking for the last one about Helping New Investors.
...Get your own finances in order.
What are you going to do with your first $10,000 check from a real estate deal? Reinvest it, pay off all your debt, pay off some of your debt, save it, spend it?
I read posts on REI and gurus teachings and very few teach the importance of having your own finances in order.
Many of you are average americans. Oddly, the average credit card debt per person is less than most people would think. The sad fact is that the people with the most debt seem to have the least income. Read this article to find out about the average american and credit card debt.
http://moneycentral.msn.com/content/Banking/creditcardsmarts/P74808.asp
I find that we as a society need to change our views on finances. Reprogram your brain so to speak. Stop buying consumer products on credit. If you buy a new sofa or stereo with no interest no pay for 12 months, when it comes time to pay for it, it is not new any more. Why do you want to shell out the cash now. It is no fun to pay for old stuff you have had for a year or more. If you have credit card debt and consolodate into a home equity line, pay it off! The reason you should have consolodated that debt was so that you can make a higher payment with a lower interest rate so you can pay it off quicker, not to give you the ability to buy more things on credit!
If you have multiple items to pay off. Pay off the smallest balance first, then the next then the next. This way, you start seeing the debts dry up and feel a sense of accomplishment, it keeps your motivation. When the rest of the debts left are 5,000 or more, start paying the highest interest rate item first, then the next highest until they are all paid off. As you pay off a debt, take the amount towards the paid off debt and pay down the next one quicker.
This doesnt mean you should buy that new 35k car with 0% interest either. Buy a 2-3yr old car for 1/2 to 1/3 of the new price. Pay cash for it if possible or pay it off within 1-3yrs not a 5-7yr used car loan.
And by all means, quit spending money! Learn a little delayed gratification. Spend the time it takes to get out of debt and you will feel a huge load off your shoulders.
If your goal is to become a full time investor or just to utilize REI to fund your retirement, make your fixed life expenses as little as possible. This gives you the best chance to weather hard times or job loss and continue on the journey to financial freedom.
