Tips to Reduce Your Credit Debt So You Can Begin Investing

Most financial consultants advise clients to reduce their debt before they start investing in any kind of investments. While I agree with this to a certain extent, I feel that you really should invest and reduce your debt. Although advisors will tell you to minimize your debt before you invest, these same people will tell you that you should pay yourself first.

If you’d like to get rid of the amount of debt that you are carrying, fortunately, there are a couple of approaches to do this. When you are in significant debt, then the task will not be simple at the beginning but with time you will eventually see positive results from your efforts. I have listed a couple of techniques that you could implement immediately. It is important that you realize that in order to be successful at reducing your debt you have to have a goal, a program, and the discipline to follow your program.

First and foremost, try to develop a cash only policy. If you can’t pay for it using cash, then you shouldn’t buy it. What you will find by implementing this strategy and sticking to it is that you will begin to be more attentive with your purchases. You will often ask yourself do I really need this. When we have credit cards at our disposal we tend to become impulsive when it comes to making purchases. As result, we build up massive debt.

Moving on, you’ll want to make an effort to get rid of high interest credit card debt first. Let me preface by saying I am merely saying that you should pay the card down and ultimately off. DO NOT CANCEL THE CARD. Lots of individuals, when they are drowning in credit card debt, will panic and commence to canceling all of their credit cards. Doing this will affect your credit score negatively. You should aggressively pay the balances down on these cards. You will have to pay more than the minimum amount due.

At one point after college I was drowning in credit card debt and I made the mistake of ignoring my debts. This was an incredibly bad decision on my part. My credit score suffered terribly due to the fact I did not talk to my creditors. Do not make the mistake of avoiding your creditors or bill collectors. If you come to a point where you are struggling financially, then it may be best to call your creditors to let them know your situation. Most creditors will work out special arrangements for you.

At last, formulate a program and come up with a financial budget. List all of your expenses which would incorporate debt payments like credit cards, car note, bank loans, and home mortgage. Conversely, you need to list all your earnings sources. Once you have a list your source of income and expenses, you will have a clear view of your financial standing. Then you have to figure out ways that you can improve your income and lower your expenditures. From all of the information that you have compiled you will be able to create a doable financial budget.

As soon as you have paid down your debts then you should consider putting some of that extra money into some type of investment. I prefer stock market investing primarily because I like the idea of receiving high returns on my investment. The potential for high returns also means that I encounter more risk. Other investments that you could take into consideration are mutual funds, savings bonds, and certificate of deposits.

Once I have paid off my debt I need to learn more about stock market investing.

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