Financial Advisor ‘s Take on 2nd Mortgages
Financial advisors often discourage taking 2nd mortgages for home improvements or for the purchase of a new car. The interest is usually higher and the payback period is usually shorter. Your financial advisor will likely advise you that if you cannot afford it – do not buy it until you can afford it.
Good financial habits can lead to less stressful lives. If you do not have to constantly worry about your debt – you will feel more relaxed. Start to develop good financial habits by paying yourself first. Before you pay other accounts, pay into your retirement account – ira versus 401k account does not matter – just develop the habit of investing into your retirement account.
Another good financial habit is to separate the spending and investing of each of your paychecks. Use your first paycheck of the month to pay your fixed expenses (mortgage or rent, car payment, taxes). Use your second paycheck to invest and to pay for your variable expenses (investing, entertainment, food).