Approaching Financial Decisions In An Uncertain Economy

As we all navigate these challenging months, we find ourselves facing decisions that financially impact our current lives as well as our futures. This uncertain economic time is forcing people to reevaluate assets and look for avenues of settling debt and increasing cash flow. Regardless of how little or how much debt you may currently owe, bringing that number back to zero is imperative to your financial security. 

Debt And Cash Flow

Debt and cash flow can be examined from many different angles. One can argue that aggressive debt payment is most important to financial health whereas another may point out that debt payment should be prioritized according to factors such as interest rates and equity holdings. Regardless of your approach, there are some actions that can be taken to relieve the burden of your debt and allow you to generate positive income. 

Increase Your Savings

It may sound counterintuitive to say that you must take care of yourself financially before you begin to aggressively pay down your debt. In the same theory of adults in airplanes donning oxygen masks prior to placing them on their children, you must make sure you are in a stable position to move forward. This doesn’t necessarily mean that you should allow debt payments to default while you save money for yourself, but it does mean that you should have at least three months of savings in a bank account prior to aggressively paying off debt. These savings are there to help you through unexpected financial needs, keeping you from using the debt to get by.

Determine Order Of Debt Payments

Determining the order in which you should pay off debt will help you successfully meet your financial obligations in a more efficient manner. Credit cards that carry high-interest rates can be paid down more aggressively by paying over the required monthly payment, saving you on added interest buildup. If you own your home, your mortgage may be able to be paid at its minimum as it’s interest rate is typically lower, and you have equity in your home and not in your credit card accounts.

Home Equity And Cash Flow

Owning a home, even if you have little equity in your home, offers a variety of scenarios for cash flow development. You may be able to take out a Home Equity Loan on the equity you have built into your property, and use this loan to pay down other debt. But this loan will need to of course be paid back itself, and may not provide you with the amount of funds that you need.  Selling your home is also an option to increase your cash flow and pay off debt. Specifically, selling your home for cash can release you from your financial burdens quickly and effectively. 

Your Personal Profile

Developing a personal debt relief plan will depend on your personal financial profile. Take charge of your financial future today.

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