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January 2012 Newsletter

HOMES AND CARS, THE ONLY LEGITIMATE REASONS FOR DEBT

It’s been a painful wake-up call for Sedona Real Estate, but “debt” is not our friend. The only reason the federal government was able to go from being fiscally responsible (the Clinton years), to an era of horrendous debt (the Bush years) is because the government can print all the money it wants and you and I can’t.

Sedona Homes for SaleIf we tried that tactic we would end up in jail. I guess that’s the advantage of being a Washington D.C. politician. Even so, during the last decade a lot of people were able to find other ways to dig themselves into a financial hole.  The average American today is over $16,635 in debt, excluding mortgage debt.

If you would like to become fiscally responsible, that should get you to think twice when you’re considering your next big purchase. Except for a home or a car, if you have to finance it, you really can’t afford it. If you can’t pay for it with cash, better to wait until you save the cash, and then buy it.

Consumers have an average of 3.5 credit cards and 13 credit obligations with a credit bureau. Want to start getting things under control? Make a larger payment on the card with the highest interest rate and pay the minimum on the rest. Once the card is paid off, apply the amount of its payment to the minimum amount you were paying on the card with the second highest interest rate. When the second card is paid off add that amount to the payment of the third card, etc. until you have paid off all of your credit cards.

When you’ve paid off your credit card debt, congratulate yourself, and continue to apply your monthly payment to your savings account.

Sedona Real EstateIt’s important to maintain a spending plan (a “budget”). Fifty eight percent of Americans do that. It’s the one way to achieve financial freedom, but you must stick with it. Financial freedom may seem like a pipe dream, but by sticking to a spending plan it is possible to eliminate debt. Save for a rainy day and alleviate the stress you feel every month when you pay your bills.

Here are some tips for making a budget actually work. Set 90 day goals. Track daily and weekly expenses to know where your money is going. Enlist a friend or a loved one to help you remain accountable to your budget. Imagine how you will feel when you have paid off your debt and finally achieved financial freedom. And don’t forget to use a small portion of the surplus to reward yourself.

Spend money only for a specific purpose, not on a whim. Always think before you buy. To avoid impulse buying, wait 24 hours before buying an item. It may turn out that you do not need the item after all.

That same advice applies to real estate. Don’t be in a hurry and make sure you are working with a seasoned professional broker. Remember, real estate is a truly local phenomenon. Market conditions can vary greatly by geographic area, property type and price range.

Work with a realtor that knows the territory! You can call me at (928) 300-5050 or visit my website to get all current Housing Reports.

Lee Congdon, Sedona Realtor

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