Finances 101: 5 Steps to Becoming Debt-Free before Buying a House

Finances 101: 5 Steps to Becoming Debt-Free before Buying a House
  • Opening Intro -

    A new house is a major financial commitment, so it makes sense to improve your personal finances before you make a purchase.

-------------------------------------

Debt is a serious concern for many people. It can weigh down your budget, and it may impact your ability to obtain great loan terms for a new mortgage. However, paying off debts is rarely an easy task. These tips can help you to achieve your goal of being debt-free before making your purchase.

Adjust Your Spending Habits

If you have high debt balances, this may be a sign that your spending habits are excessive or unhealthy. For example, you may be using credit cards to support your lifestyle. Before you can focus on actively reducing debt balances, you must adjust your spending habits so that you stop relying on credit cards and other types of financing. Ideally, you will reduce your lifestyle so that you are living well below your means.

Always Pay More than the Minimum

Depending on your current outstanding debt balances, it could potentially take decades to pay the balances off in full if you only make the minimum payment and do not add onto the balances going forward. Focus on paying more than the minimum on your balances so that debt reduction occurs more rapidly. If you are able to reduce your spending habits more substantially, you will have even more money available for debt reduction payments.

Refinance Your Debt Strategically

High-interest rates create high-interest charges. These charges directly decrease the effectiveness of your payments at debt reduction. Refinancing high-interest rate debt into a lower interest rate program or account is a great idea. You can take advantage of zero-interest introductory credit card offers, an installment loan program or other debt consolidation methods. Having someone else take a look at your home loans is also a good idea.

Pay off the Lowest Balance First

Unless you are able to consolidate all of your outstanding debts into a single account, a smart idea is to pay off the lowest balance first. Rather than try to reduce all account balances at the same time, make the largest payment that you can comfortably afford to the account with the smallest balance. Once this account is paid in full, move onto the account with the next lowest balance.

Get a Second Job

If you are serious about paying off debt as soon as possible so that you can more comfortably buy a new home, consider getting a second job. There are many part-time options available to consider, including work-at-home jobs, ride-sharing driving and more. Use all of this extra income to pay debt balances off faster.

Regardless of how significant your debt situation is, rest assured that you can make excellent progress with debt reduction if you have the right plan. Each of these steps is essential in a smart debt reduction plan. As you customize a debt reduction plan to fit your circumstances, incorporate these steps in helpful ways.

Image Credit: Pixabay

helpful? … then please share it

Amazon Bestsellers: Debt and Home Purchase

Bestseller No. 1
Taming The Monster Mortage
2 Reviews
Taming The Monster Mortage
  • Prime Video
  • English
Bestseller No. 2
Boxclever Press Budget Planner - Check Out The Video! Measures 9.5' x 8'. Start Using Any time. Monthly Income and Home Expenditure Tracker, Regular Bill Organizer, 13 Pockets for Receipts and Bills.
62 Reviews
Boxclever Press Budget Planner - Check Out The Video! Measures 9.5" x 8". Start Using Any time. Monthly Income and Home Expenditure Tracker, Regular Bill Organizer, 13 Pockets for Receipts and Bills.
  • ORGANIZE YOUR SAVINGS, BUDGETS, CREDIT CARDS AND FINANCES IN ONE PLACE - This bill tracker will help keep your money organized 365. Manage all your...
  • EACH MONTH INCLUDES PAYMENT TRACKERS WITH SPACE TO MANAGE REGULAR MONTHLY BILLS, DEBTS, SAVINGS AND EXPENSE SECTIONS - Keep track of your checking...
  • SPECIAL SECTION TO HELP YOU TO TRACK SPENDING FOR CHRISTMAS - Holiday and vacation expenses can be kept separate from the rest of your household month...
SaleBestseller No. 3
Cartman Orange 39-Piece Tool Set - General Household Hand Tool Kit with Plastic Toolbox Storage Case
842 Reviews
Cartman Orange 39-Piece Tool Set - General Household Hand Tool Kit with Plastic Toolbox Storage Case
  • Contains the tools needed for most small repairs around the house
  • Heat treated and chrome plated to resist corrosion
  • Securely housed in a handy blow molded case
SaleBestseller No. 4
SABRE Home Security Alarm Yard Sign and 5 Window Decal Stickers Crime Deterrent
102 Reviews
SABRE Home Security Alarm Yard Sign and 5 Window Decal Stickers Crime Deterrent
  • PRACTICAL & INNOVATIVE - the Yard Sign & Security Decals give your home an added, customizable level of security and help deter intruders by giving...
  • WIDESPREAD PROTECTION - serves as an initial layer of defense for multiple areas of your home
  • VERSATILE & CONSUMER PREFERRED - ideal for home, garage, office and more
Bestseller No. 5
Boxclever Press Budget Book. Monthly Bill Organizer & Budget Planner Accounts Book Keeps Track of finances, Household Expenses & Finance Tracker with Pockets
256 Reviews
Boxclever Press Budget Book. Monthly Bill Organizer & Budget Planner Accounts Book Keeps Track of finances, Household Expenses & Finance Tracker with Pockets
  • ORGANIZE YOUR SAVINGS, BUDGETS, CREDIT CARDS, FINANCIAL PLANNING AND ACCOUNTING - this pretty accounts book will keep your cash flow, payments, taxes...
  • TRACK EACH MONTH'S SPENDING & STORE RECEIPTS - includes pages to note monthly bills and home expenses, income, savings and day-to-day spend. Includes...
  • SPECIAL SECTION TO TRACK CHRISTMAS SPENDING - includes extra pages & pocket for vacation & special occasion spending. Perfect for saving, budgeting or...

Last update on 2018-11-20 / Affiliate links / Images from Amazon Product Advertising API

-------------------------------------------------------------------------------------------------------------

end of post idea

-------------------------------------------------------------------------------------------------------------

Helpful article? Leave us a quick comment below.
And please give this article a rating and/or share it within your social networks.

Categories: Debt Management