Wouldn’t spring cleaning be so much more gratifying if – somewhere under dusty barbecue parts and outgrown hockey skates – you found an envelope with, say, $5,000 in cash? Wouldn’t that make spring cleaning worthwhile? Of course it would!
you may not uncover a financial windfall when you’re cleaning the garage this
spring, but a little time and attention to the task of spring cleaning your
financial house can be very rewarding. This spring, dust away the cobwebs and
take a hard look at your debt servicing costs.
you continuously carrying a large monthly balance on your credit cards? Take
some comfort in knowing that you’re not alone. However, this particular kind of
financial clutter – ongoing, unsecured consumer debt – is both confusing and
costly. Guess what? It’s time to spring clean your debt!
by making a quick list of the interest you are being charged on your loans,
credit cards or other unsecured debts. What are you paying in debt servicing
costs? Do you have tax bills piling up? Don’t forget to include that debt in
your spring cleaning project.
Next, take a look at
our historically low mortgage rates, and make an appointment with a mortgage professional for a review of your situation. You have a golden opportunity
right now to give yourself a tremendous financial boost. By rolling your other
debt into a mortgage – either new or existing – you can reduce the number of
payments you’re making each month, save big on interest costs, be mortgage free
quicker, and greatly improve your cash flow. Most of all, you’ll be able to
start building wealth.
Worried about penalties? Don’t think it can make much
difference? Think again. It can be as good – or
better – than finding the $5,000 envelope of cash in your garage. Why? As an
example, assume you have a $175,000 mortgage at 4.5%, high interest credit
cards and other loans of $50,000, and a total monthly payment of $2,119. Now if you took that $225,000 and added on an
approximate $8,000 penalty to refinance your mortgage, you could roll that
$233,000 into a 3.5% mortgage (OAC, rates subject to change) that would reduce
your overall monthly payment to $1,163. That’s a monthly savings of $956. Your monthly payment has been reduced, you’re
saving on interest charges, and all of your high interest credit card debts are
gone. Imagine if you funneled some of
that cash flow back into your mortgage, or invested in RRSPs, TFSAs, or RESPs!
of where you are in the life of your mortgage, if you have equity in your home
and your cash flow has slowed to a trickle because of your debt, talk to a
mortgage professional who can analyze your situation and outline your spring cleaning
as you polish the windows, shake out the carpets and clear out the garage,
don’t forget the most rewarding task of all: spring cleaning your debt. Your
financial house will enjoy the fresh beginning too!