INVESTORS’ CORNER: Steps to getting out of debt

The recession is over for now and spending is going up. Interest rates may even begin to rise. According to a recent study Americans are carry $683 Billion in revolving credit card debt. That is no how much we charge but the outstanding balance that we pay interest on each month. Using a credit card on a regular basis is nothing more than habit. If you want to change your results just change your habit.

Make a list of what you owe. This is the hardest part of dealing with the fact that you may owe more than you think. Get out all of your statements and list them on a legal pad. Lists the ones with the highest balances first. Beside the balance list the minimum payment and the interest rate you are paying.

Prioritize your debts. Pay off the smallest ones with the highest rates first. This is a no brainer right? You may even want to pay off entire balances this month and then you have just eliminated one of your monthly bills. This means more to go to the next bill.

Don’t roll your balances from card to card. This may sound like an easy way to lower your interest rate but don’t be fooled into thinking that you are making progress when you may not.   Every time you apply for another (lower) interest rate card your credit is pulled. This could lower your score not to mention if you are applying for a loan on an investment property the lender may think that you are just rolling the balances from card to card.

Get a copy of your credit Report. You would be surprised at the mistakes that are on credit reports. You should look at a copy at least once a year. If you are buying houses and getting loans, then you would probably know if something is on there that is not yours anyway.

Set a budget. Ouch!! I know it hurts but if you set a simple budget and stick to it you will see your liabilities decrease and your equities increase.

Be careful of the equity in your home. Many people think that using your home equity is a wise thing to do and it can be however you need to make sure that if you tap into the equity in your home you need to use the money for wise investments instead of buying something that will go down in value.

Study success. Read everything you can on finance and credit that you can. The more you learn the more you can earn.

Larry Goins a vendor member, life time member and past president of Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region, www. MetrolinaREIA.com. Larry has forms and other information available at www.LarryGoins.com.