To get to the top of the real estate investing mountain, you’ll want and need to use every tool available in your financial tool belt. While you can theoretically build a house with just a few tools, the quality of the house can suffer if you don’t have certain specialized tools at your disposal. The same is true when trying to finance your real estate transactions.
First, a key truth in real estate: You don’t have to have a great credit history or access to a ton of cash to make a fortune as a real estate investor. But you’ll get to the Promised Land of real estate investing much faster if you do.
Because your ultimate goal is to build a thick real estate portfolio and a large residual monthly income that comes in regardless of whether you decide to get out of bed every morning or choose to sleep in late, you’ll want to make sure your finances are in good shape. maximum health status. That requires you to give your finances a thorough check-up, like your personal doctor would to make sure you’re the picture of good health.
Step one: get into the right frame of mind
The most critical step in analyzing your financial situation is realizing that the way you approach money and financial decisions plays a critical role in your ultimate success or failure. If you have a proven track record of shooting yourself in the foot with poor financial decisions, it’s imperative that you make a radical change and change your spending habits.
If you waste a ton of money on music downloads, splurge every day on expensive gourmet coffee, or go on first-name basis with the Walmart clerk, I have a news flash for you: your budget has more meat than pig than a congressional spending bill. By removing much of the waste from your personal finances, you can generate cash out of thin air that you can use for much better purposes than instant gratification. Instead, you can change your life for the better. But the choice is yours alone.
Step Two: Relentlessly Cut Expenses
When you finish paying bills at the end of the month, do you usually have cash left over, or do you tend to spend it all within a day or two of payday, then limp along until your next paycheck arrives? Most people spend most of their salary on bills, food, and other necessities. If they’re lucky, they can save a few bucks for a rainy day. The difference between those who are in control of their finances and those whose financial lives are in disarray is that being in control means taking control and staying in control. Although many people have trouble increasing their income, it is possible to reduce expenses. To do that, you need to monitor your spending and identify areas of your budget that can be cut. While this isn’t the sexiest topic of conversation, it’s absolutely vital to your ultimate success as a real estate investor. Budgeting monthly expenses and spending only what’s on your list is one of the hardest aspects of taking control of your financial life. By eliminating unnecessary expenses, you will reach your goals faster. Here are some ideas to get started:
Gut the cable pig: That’s how it is; cancel your cable. You’re constantly complaining that there’s nothing good about it anyway, right? Instead, talk to your spouse, take a walk, listen to a podcast, or read a good book on investing.
Reduce your cell phone plan to suit you: Most people load themselves up with expensive and wasteful cell phone bundle deals. Unlimited texting, mobile web, and bulk calling plans are great, but most people don’t use all of their phone’s features. Do you need mobile navigation, or is it just a toy you use to watch YouTube videos when you should be doing something else? Do you need unlimited texting, or can you give your thumbs a rest if it will save you $20 a month?
Check your credit card statement: See if you have any recurring charges each month. Are they items you need? You may even incur a few small charges each month that you forget to sign up. Delete the ones you don’t need and keep them up to date to make sure you’re not throwing money out the window.
Stay out of the drive-through—your waistline and wallet will thank you. These often daily trips to McDonald’s and other fast food outlets are killing your health and your budget, sometimes to the tune of $5-$10 per trip. This also applies to coffee. Caribou and Starbucks are tempting, but do you really need to stop in for a $5 cup of coffee every day, or would you save money by brewing it at home?
Step Three: Pay Off Excessive Debt
Another area that is probably holding you back is excessive debt. High credit card balances, store credit card balances, and computer payments are a reality for millions of us. However, if they’re holding you back financially, they should go the 8-track way and join the growing list of things that once served a useful purpose and no longer do. Make extra payments, have a garage sale, or do whatever it takes to eliminate excess debt. If you can’t find the cash to pay some of these bills, consolidate or at least make larger payments. If the thing in your wallet, credit cards, is eating up too much of your cash, it’s time to take control and protect your financial interests. No one else will.
Step Four – Check Your Credit Report and Score
How is your credit history? Do you have a long history of consistently paying your bills on time, or do you tend to pay a lot of your bills late, anyway? If you’re like most people, your history of paying bills on time falls somewhere in the middle. The first step in making that determination is to look at your credit report and find out what your credit score is. Once you know those details, you can get to work improving your credit and positioning your finances to take advantage of real estate opportunities when they come your way. The good news is that you won’t have to spend a small fortune to get your credit report. The federal government, for once, finally had a pro-consumer idea that makes sense. The three major credit reporting agencies, Experian, TransUnion, and Equifax, have partnered with a single website www.annualcreditreport.com that allows you to get your credit report once a year for free. Whether you get all three at the same time, or stagger them to examine a different one every four months, that’s your choice. The important thing is that you get these reports and see what information is in them. They will have most of your credit transactions on them, as well as any cancellations, late payments, etc., along with your current balances. If you find that your report contains errors, omissions, or fraudulent accounts (accounts listed in your name that were opened by someone other than you), there is a mechanism to correct these entries. Because your ability to borrow money and the interest rate you’ll pay depend on the accuracy of these reports, it’s in your best interest to make sure the story on your credit report is true. While you may not get free credit scores with your free credit reports, it’s important that you have an accurate understanding of your current credit score as part of a comprehensive review of your finances. You are much more than a number, but to a potential lender, numbers are all that matters. If your FICO score is too low, your chances of getting approved for a loan are reduced. This knowledge will allow you to act decisively to improve your credit score, and the rate and terms that you can demand in all your financial transactions.
Step five: increase your income
You have two options to increase your income: work harder at your job or find a business opportunity that can put you on the path to financial success. Investing in real estate is a proven method of building wealth, residual monthly income, and life-changing opportunities.
Pine Financial Group aims to continue to provide you with tools you can put to work in your life today to increase your income and build real, sustainable wealth. What you do with this knowledge is up to you.