Pay Down Debt, Plan for Success

Financial adviser offers tips to build wealth, pursue dreams

and invest at these lows. This market will come back. Remember, five years after the Great Depression, the market was up over 200%.

What criteria should someone use in deciding whether they need a financial adviser? What is the best way to go about finding a financial adviser?

When you hire an adviser, you are hiring the intellectual capital of the person regardless of the firm they are with. You should seek an adviser with meaningful experience, someone with extremely high integrity, someone who respects your money, someone who has a definable view of the market and someone who will listen to you, not the firm that they work for. Trust is important, but do not confuse trust with capability.

No. 3 of the Black Enterprise Wealth for Life principles says, “I will effectively manage my budget, credit, debt, and tax obligations.” For someone looking to pay down and manage debt, what should be the first step? Why?

The first step should be to understand your debts and how you generated them. Take a credit card, look at the outstanding balance and write down what you spent the money on. If you do not know, then you are likely not focused enough on your spending patterns.

In this instance, the first step to reducing debt is to understand your spending tendencies so that you won’t run it back up. The second step is to segment debts into long term and short term, then by interest rates and finally by maximum payment amount. Third, you want to first pay down short term debt with the highest payment amount to increase cash outflow. And lastly, pay down short-term debt with the highest interest rate and finally, you want to begin to pay-down longer term debts. However, do not pay down all your debts and be left with no cash to protect yourself in case of an unanticipated event.

Financial experts often say “pay yourself first.” Why is this important? What is the best way to do so?

Paying yourself first means making sure that your business (you) is receiving compensation as you provide compensation to the businesses of others (creditor and service providers). It is important because if you pay out every dollar to creditor or service providers, you’ll never get ahead. You are simply living day-to-day without consideration for your future or future generations. The best way to do it is set a number — hopefully no less than 5% of your net income — that you are going to pay yourself. Then follow instructions outlined in question No. 1.

How can someone go about finding financial opportunity amid the economic slowdown?

Many people are scared right now so they can never see opportunity because their mind focus is on not losing any more — fear. The key is to gear your mindset for opportunity and create a mental profile of what types of opportunities you know you can access. Ask yourself these questions:

What am I most interested in. What excites me and what am I best at?

What area do I know

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  • Carl E. Carey

    I found this post very helpful. It gave me a place to start, something to think about. I’m a little older (42) and should have my things in order but the truth of the matter is, I’m just not organized enough. I make decent money but still have nothing to show for it. It come in and goes out. I even went as far as dating women I thought were good with money but found they were good with there money but not with mine. At anyrate, I’m going to subcribe to your magazine with hopes of getting more information to get me on track.
    Thanks, Carl

  • Diane

    I’m in the same situation as Carl. Do you think that Debt Settlement would help if you are overwhelmed with Credit Card payments and doctor bills?

  • Joanna

    How do you start to reduce debt when your net income in less than you monthly expenses?

  • markeith mitchell

    I’am running a small Trucking company.With the way the economy going its hard to save and pay the bills. What are some way to stay above water,I cannot make money to pay other and myself. I need some help.

  • Lamar M

    I’m a 37 y/o male with pretty much the same issues. My income to debit dosen’t allow me much leway in regards to being able to save. I have 2 car notes and a mortgage to flip every month. Any advice, please I’m all ears,,,

  • Alexis M

    I kind of have not much debt compare to must people/ but i want to start now i,m still young and i have time to get back in track financially. my total debts are no more than $3800 dollars and i have a $4500 net income but its just hard for me to save money , i just started putting away 10% of my income , and plan to get 401k . anybody has a good sugestion?

    by the way i,m 33 !

  • Pamela Cartwright

    About 2-3 years ago I was debt free.
    I am single parent, divorcee, 12 yr old and 23 yr old graduate from college past May.
    I have 2 credit cards I want to get rid off, pay off. There are other debts. I read your info and resolutions, some of which I have incorporated in my plan to pay down debt but extremely difficult. I am now 53. Trying to restablish good credit and would like to buy a home. Because of my age, is it legal that any banking institution or mortgage lender could deny me credit?

    Please advise.

    Thank you,

    Pamela

  • Tiarra Jackson

    I am a 24 year old college graduate who’s goal is to become financially savy in 2009! I have many medical bills, my student loans, and some credit cards, however those accounts have been closed but is counted as negative accounts on my report. As of now, I have a low credit score, but I want to buy my first home soon. What are the first steps that I should take to achieve financial stability?

  • Lynn

    Hello
    I had a lot of debt, now I’m down to two credit cards (CC). As it stated in the steps above. I paid myself first and not even as much as 5% while still paying min.on CC. I’d tuck away $20. which is not much, but I was able to save $1,000. That started my emergency fund. I added more money to that amount until (1,500) I felt comfortable to tansfer $1,000 to my CC. Leaving w/$500 to continue to add on. Just take small steps. You will get there. I hope this helps.
    Lynn

  • clayton

    Years ago I opened a store credit card to establish a credit history. Being new to me I maxed it out. Holiday time, girlfriend, and family you know. It took a number of months but I paid it off. Being acquired by Chase I updated my mailing preferences. No solicitation, no third party, etc. With a zero balance I recieved no mailings. I inquired by phone Jan 09 and to my surprise zero balance and a closed account. Apr 07 was the last activity. Are credit card issuers responsible for a mailed notice of cancelation? I had no payment due,no solicitations, no activity, and now no card. I was told by the supervisor they could not re open the account. “i could always re-apply” and “the way the account was closed will not affect my credit.” No thanks I’m considering closing my Washington Mutual Chase accounts and going to a credit union.

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    I learned a lot good points from this piece and will definitely save it in my favoritse. Thanks for the effort you took to explain this subject so deeply. I look forward to future posts.