KNOW THE DIFFERENCE ......

KNOW THE DIFFERENCE.....

I was driving to my office in Falmouth, MA where I Sell and List Real Estate, (www.peterhawley.com) listening to the morning news, so I can feel fully informed or just frustrated with world events, ever the optimist, I believe news is news and how I choose to interpret it makes it either good or bad. I only like to thinks in terms of good.

What struck me was the discussion of cutting the deficit, spending more than one brings in, which is a good goal, but running a deficit adds to our debt, which is not a good thing.

It is debt and the cost to carry that debt that gets people in financial trouble and the elimination of debt should be the goal of all of us. Yes, when we carry a mortgage that is a debt. The monthly investment we make in our homes is most often required so that we can work toward complete ownership. The amount of that investment is calculated on our monthly earnings and must be at a level that one can make comfortably.

From time to time, we all deficit spend when confronted with an unexpected expense, that just must be addressed, like a home repair, an appliance replacement, work on our cars to keep them running. If we have not saved money and are not prepared for these contingencies, then we do what we have to do. Our goal must then be to eliminate this debt as quickly as possible, and to do so may require cutting back on other monthly spending. One needs to remember that debt has a cost in addition to the amount borrowed, and that costs mounts each month we carry it, possibly getting us further in debt and sometimes more than we ever expected.

The simple answer of course is to live below our means, which can be accomplished with some planning and discipline. Often I have a client visit with me, wanting to purchase a property, and my first question always addresses their present debt load. Although they may think they can comfortably handle their present debt payments, often this is the very issue that will keep them out of the market. These are the folks I call "works in progress", and my job is to work closely with them, preparing a strategy that will get them in a position to buy. I want my clients to buy, that is how I make money, but I also want them to be able to stay in their homes for a long period of time, so they will get a return on their investment in addition to daily use.

I am available at phawley@jackconway.com to discuss where you might be today, so we can work together and plan for tomorrow.