Financial Zip

For many of us we are struggling to get right side up with our financial situation. It seems to get worse and worse. Most consumers right now are depending on consumer debt, aka your credit card to stay a float. While this may seem like a good idea it just puts you in the same place that you were in to begin with. Not a good idea. So here are some possible ways to create a positive cash flow and pay off you debt.

Debt Roll Down

This is a great strategy. It takes the money you already have existing and paying it down with that. The strategy is to stop using credit cards. Then as you pay your first credit card off take the payment and roll it into the next payment and so on and so forth until all your debt is paid down. The best thing to do with this strategy is list them all down on a piece of paper and figure the one you want to tackle first. I recommend the highest interest rate or the highest minimum balance.

Consolidate your Debt

Most people you are in deep credit card debt have ridiculous rates. So it might be a good idea to consolidate the debt. It helps here to have good credit, but occasionally people who don’t can. What you are looking for is a reduced rate that makes it manageable for you to pay and reduce your overall payments to free up additional cash.

Sell an Investment.

If you have an investment whether it is stock, 401k, or an IRA it may be advantageous for you to take a lump of that to pay down the debt and build up a cash reserve. Be sure to talk your broker or investment professional to understand all the terms and conditions of withdrawing retirement money. In my opinion it is counter productive to try to save while your debt is eating away at your cash flow.

Hold Off Contributing to Your Retirement Accounts

This goes along with what I said in the previous paragraph. If you are contributing to a retirement fund it might be a good idea to take that money and pay down your debt. If you are contributing to a 401 k put in the bare minimum. You will have plenty of time to build it after you are out of debt. It is good to contribute to a 401k because most companies will match a percentage of what you put in.

Move to a Less Expensive and Smaller House

This may be a little extreme but if you are drowning in debt it is a good option. A lot of people live in homes and drive cars and live a lifestyle they can’t afford. By moving out of the city and driving a cheaper car and living a more appropriate lifestyle you can free up a lot of cash to pay down your debt. One advantage of selling your home and buying less expensive home is you can take the equity and invest it in your debt and build up a cash reserve. Instant debt relief.

By following some of these suggestions it would help to eradicate your cash squeeze and stave off financial failure.