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Personal Finances / Credit Cards and Consumer Debt


Subject:  Re: New here! Have questions! Date:  5/6/2013  7:16 PM
Author:  LaraAmber Number:  306976 of 312189

I think you should a big fat black line through "investment property" on your wish list.

For an investment property you a cash flow to support a down payment, closing costs, and insurance just to start. Then you will need to have a separate savings fund to cover irregular repairs, your insurance deductible, and periods of the property standing empty. Let's assume you found a property in great shape and selling for less than it's worth and you can get a tenant right away. Now let's say they sign a one year lease. At the end of the year they move out and the property sits empty for 9 months. And while it sits empty, the water heater breaks and floods the downstairs... That would be a big hit even for someone with great credit, decent cash flow, and a savings account.

Right now you are talking about paying off cards with balances below $400. How are you going to handle a $5,000 deductible on an insurance policy?

I would say your goals right now would be:
1. Pay off existing credit cards. Shop for a fee free secured card.
2. Create and track a budget to see if there are any leaks to your finances
3. See if there are ways to increase your income
4. Save up enough savings to cover your family insurance deductible or cover 6 months of expenses, whichever is larger.
5. Look into your retirement savings and see if you are setting enough aside after taking care of food & shelter.

Lara Amber
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