Are you getting ready to purchase your first home? I remembered what that feels like. It feels both exciting and scary...... Are you not sure you are doing the right thing? Got some debt strap you down for a while?

My advice for saving for homeownership is not typical. I know that. But I do know if you follow these steps, you walk on solid grounds for sure. There is nothing better than knowing every step you take sets up foot firmly in the ground.

My advice: Pay off consumer debts first, then build a good savings prior to buying your first home. Why? Debt can take a toll and joy out of homeownership. Even if you purchase a fairly new home, who is to say that things do not break? Or better yet, what guarantees you to not be in car wreck? I do not claim to be a devil's advocate but for those whom I had advised and worked with several months prior to purchasing the house ends up feeling at peace when they move it.

How Do You Do It?
Lay out all your debts on paper. List from smallest amount to largest (regardless of interest rates or payment size). Stop your 401K/ investments. That frees up additional cash you can now put towards the smallest debt. Attack it first. Then after you pay off that debt, take that amount you were using, attack the next largest debt.

In this exercise, the Power of Focus superceeds the power of math. While most "mathematical intellects" choose to pay off the highest interest rates, you must realize that when dealing with financials, you are dealing with "emotions" more than you are dealing with "mathematics". After all, it was emotions that got you into the debt in the first place. What we try to do here is to generate a huge intensity to eliminate debt.

If you have a huge mountain of debt to pay off, you might loose focus after a while because you feel it is going no where. If you attacked the smallest first, you gather more and more intensity about paying the debts off one-at-a-time (smallest-to-largest).

Try it. You will be glad you did. Good luck!