House Hackers! Whats going on? Today let's explore how to kill bad debt faster without pinching pennies through House Hacking. So you might have some credit card debt or a loan that you would like paid of faster, or better yet - the dreaded student loan debt. Through house hacking you’ll be able to pay off these debts much faster without reducing your existing expenses.
Generally when we hear debt reduction, we think about either reducing current expenses and/or generating more money to make additional payments.
While these methods work, theres always an opportunity cost involved. If you reduce your expenses, maybe you’re missing out on some things that make you happy. If you generate more money, you’re probably losing some of your existing free time to work a 2nd job.
With househacking you’re able to generate passive income - which is income that keeps flowing without you having’ to exert active energy to produce income.
Let’s take a look at an example:
You make 4000/month
You currently pay 1500/month for a 2 bedroom apartment. and you have about 150 in utilities, a car payment of 400/month; stunned loans 400/month and cc payment of 200/month that leaves you with 1350/month for groceries, entertainment, gas, etc.
Lets say you buy a 3/2 house and the mortgage payment is 1600/month. With utilities at 250/month and all your other debts are the same. increased your monthly obligation and leaves you with 1150/month which decreases the amount you can use to pay of your debt.
Not let’s say you decided to house hack with your house:. Mortgage payment is the same, and how you have 700/month coming in from a 1 bedroom rental. Now that leaves you with 1850/month which gives you an extra $700/month to make an additional payments to your existing debt without having to cut back on your existing expenses or reduce your free time.
The numbers don’t lie. To pay off your debt faster would you rather cut back on existing resources. sacrifice your time, or house hack and earn passive income?
As always, please consult with a house hacking specialist since you’ll need a through understand of your current real estate market to select the right property.
That’s it for now, and until the next hump day, happy house hacking!
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