So you have decided to invest. That’s great, but where do you start? When I first decided to buy my first investment home, it was a quick and easy decision for me. I realize that not everyone is going to get up one day and just do it. But I will walk you through the steps if you are wanting to get started. This post is for the person who is thinking about the process and cannot get over the mental hurdles. There are a lot of obstacles in this decision that are mental, financial, and knowledge based. I will try my best to guide you through it.
1. Change your mindset
Getting your mind right is the first step in getting into investing. This is the most important step, and the reason why I list it first. Deciding to invest is no walk in the park. It takes a special kind of person to ignore the risks to gain the rewards. You are going to hear “no”, you will have people around you doubt your decision (even your family), and you may have little to no support. You will have to shift your thinking from getting an “easy and guaranteed” paycheck, to working diligently to work towards your future. There are high risks ahead. You can lose money and lots of it. You could fail, head first. There’s always a chance of things not working out the way you want, but if you are positive and persistent, it will happen for you. You don’t necessarily have to be the smartest person to do this, but what you do have to have, is grit. Identify your “why”. This is the reason why you want to start. This can be for your family, financial freedom, freedom of time, control over your overall life, whatever that reason, remember it during those hard times.
Get your finances together
I could write a whole post on this subject alone. I am very passionate about educating about money, but I will break this down the best I can. Getting your finances together looks like a few things: being aware of your credit, having money saved up, reducing your debt, and having a budget. These all apply to your personal credit in the beginning phases.
2. Knowing your credit
Being aware of your credit and knowing your credit score are similar but not the same. When I worked in banking, one of our trainings was on how to read a credit report. If I was working with a client and they have a loan and they had a lower score, but good payments, we could possibly work to get that loan approved. You can have a “decent score” but if you have collection items, a judgement, past bankruptcy, etc the chances of someone wanting to loan you money can be slim to none. Make sure you have a clean and diverse credit. I’m not going to go into the details of what your credit should look like, but most people who have challenging credit, already know it. And YES, it is a big deal. Don’t wait for that collection item to “fall off” of your credit. If you need help, use a well vetted credit repair company. I prefer to use local in most of my business aspects because I like to know a person and build a relationship with them. Your local realtor should have some connections as well.