The Name of the Game is Creating Cash Flow

It’s time to go on a reconnaissance mission throughout your home and have a garage sale on all your unnecessary items, even things you consider junk. Remember one man’s trash is another man’s treasure. Then take the proceeds from your garage sale and pay down the most expensive debt you owe (excluding your mortgage). If you’re planning on staying in your home, investigate whether you can refinance your mortgage at a lower monthly payment and/or secure a home equity line of credit, so you can consolidate credit card debt and bills at a lower interest rate. Warning: this only works if you terminate charge accounts and credit cards. If you can’t lower your payment or secure a home equity line of credit, you need to consider down-sizing to a smaller home with a smaller monthly mortgage payment. You may want to elect to pay your mortgage bi-monthly to shave 4-6 years off your amortized schedule.

Tom Hegna, best selling author and economist, has a couple of debt reduction strategies that may work for your situation to attack your credit cards and charge accounts. Watch the video interview at https://youtu.be/fxn7TzLEHIw. Hold on to your existing car as long as you can to steer clear of new car payments or lease obligations. You’ll need to keep up on your car’s maintenance to stretch its usefulness. Eating out and paying for it with credit cards can wreck havoc with your waistline and your wallet. It is one of the most expensive activities to engage in and generally the least profitable for your health.

 Debt reduction and spending strategies can generate cash flow, but adding revenue with a part time job or home business can increase household income to begin creating an emergency fund for unforeseeable life events like periods of unemployment, maintenance for home and care repairs, as well as medical expenses. When you’ve fully funded your emergency account then you can begin saving for bigger items like replacing broken down appliances, a down payment on a home or a college fund. You should participate in your company’s 401(k) plan, especially if your employer matches your contributions. It’s free money, but there’s generally a minimum-vesting schedule such as 5 years. If you’re not going to be there through the vesting schedule, you can always ask for a raise in the amount of the match. The name of the game: spend less, pay down debt and increase household income.