27 Apr Help! My Line of Credit has Buried Me – Part 1
You’ve heard the warnings and know by experience the benefits and dangers of a line of credit. You would love to keep your money working FOR YOU 24/7 but you feel like you’re too late.
The key question is, “Is it really too late?” Absolutely not! Regardless of your starting point, you are never too late to begin making your money work for you. The sooner you’re able to get out of the hole, the greater the freedom you’ll enjoy.
Your Keys to Success
Your keys to success are exactly the same as the person who is beginning their journey.
Know Your Goals – Write down your goals. Be specific! What will they cost and when would do they need to be achieved?
Don’t Beat Yourself Up – We learn from our mistakes. Knowing your mistake and deciding what must be done to move forward are necessary steps for personal growth. Continuing to rehash and focus on your mistakes demoralizes you and discourages you from consistently making the small changes necessary to create new habits that will enable you to achieve your goals. I found three great articles that you’ll enjoy. The first, Money’s ’Let Go of Money Regrets in 5 Steps’, the second, Personal Growth Project’s Blog, ’Pick Yourself Back-up 4 Reasons to Love Your Mistakes’, and the third is from Success magazine ’Why Failure is Good for Success’.
Know Where Your Dollars Go – In other words, create, review and update your budget. Know your monthly positive cash flow. Instead of boosting your bank’s profitability by leaving your cash sitting in your checking account, you’re going to begin using it to build your emergency fund and reduce the balance on your line of credit.
Your first goal is to see how you can keep your balance on your line of credit as low as possible. Remember, your line of credit has just one use, to accelerate getting out of debt and building financial wealth. It’s not a back-up emergency fund or a cash reserve for occasions you were unwilling to save.
Build Your Emergency Fund – Cash is King! Build a reserve for the unexpected event. You don’t want your only back-up option to be borrowing from your line of credit or your credit card. Few of us expect to lose their jobs. Be prepared for the unexpected. This also serves as a great way to protect your biggest investment – your home. Banks are not our friends – their job is to make money for their investors. So, should you ever lose your job and are no longer able to make mortgage payments, if’s there’s equity in your home, the bank will quickly foreclose. Both Bloomberg.com and MSN Money cite that along with the recent rise in home values, there has been an accompanying rise in bank foreclosures. An emergency fund protects you.
In my next post, I’ll review how your income can assist in lowering your interest cost on your line of credit.
Ready to start your journey towards financial freedom? Get started today!
I’d love to hear from you. Please send your questions, topics or suggestions to dennis@cashmapconsulting.com. You can also follow me on twitter at cash_map.
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