How to set positive financial goals during uncertain times
We all need to adjust to an ever-changing economy. If you find yourself carrying balances on credit cards and lines-of-credit, this will take away from saving for the future.
If you own a house, you have already accumulated equity. You can use this equity in a productive way to help reduce the interest you pay.
Here are a few ideas to get you off to a fresh start to the new year:
1. Pay off higher-interest debt first
Paying-off higher interest debt first, such as credit cards, is a good approach to paying down consumer debt. The interest rates on credit cards are normally much higher than on debt that is secured by a property (such as a mortgage).
If you do not have an aggressive budget that allows you to pay-off your credit cards in a few months, you may want to consider consolidating all your debt into your mortgage. You can then be more aggressive at paying off that one credit facility.
2. Should I use my mortgage to pay off credit card or line of credit debt?
One question that often comes up is “Should I put my debt into a mortgage OR a secured line of credit?” My recommendation is normally to wrap debts into a mortgage. Why? Rates are lower and compounding periods on a mortgage are lower than a secured line of credit which makes it easier to pay off a mortgage. Also, you have only one payment and you can focus on just that!
If this is the approach you’re going to take, ensure you speak to a mortgage broker who has access to many different financial options rather than one bank. The mortgage professional should also help you with your family budget so you don’t run into the same situation again.
The benefits of paying-off consumer debt are that it will allow you to increase your credit score and put you in a better financial position.
3. Understand your relationship to money and debt
How does talking about money make you feel? How does talking about money with your spouse/partner make you feel? If either of these conversations cause you stress, you’re not alone. The challenge is that we don’t have the tools to effectively identify and work through these feelings and what caused them – until now!
That’s where we’ve partnered with Martha Adams, International bestselling Author of Cleopatra’s Riches – How to Earn, Grow and Enjoy your Money to Enrich your Life. We’re hosting a Webinar in January – if you’re interested in learning more, please contact our office and we can fill-you-in!
Finally, keep-in-mind that rates are at historical lows, so you’ll end up saving money. My recommendation is that if your mortgage is coming up for renewal in the next 24 months and you have debt outside of your mortgage, review your budget now and take action on paying off your debts!
To discuss your options in more detail, book an appointment with us today: /contact-us/