Financial tips for starting 2019 off right. Clear up debt for 2019: A great financial goal, especially if you own a house
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.
Because you own a house, you have equity that you can use to consolidate debts and improving cash flow.
Here are a few ideas to get off to a fresh start for 2019:
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 has a mortgage).
If you do not have a budget that’s aggressive to allow you to pay-off your credit cards in a few months, you may want to consider consolidating all your debt into one line-of-credit or mortgage. You can then be more aggressive at paying off that one credit facility.
2. Pay off debt that has the highest payments first
Positive cash flow is the most important aspect of an individual or family’s financial health.
Another approach to paying-off debt is to review all the monthly payments on your debts and look at paying off the ones with the highest payments first. The highest payments usually come with car loans or credit cards. Once you eliminate a car or credit card payment, you can then focus on the other debt.
3. Consolidate debt into a lower-interest mortgage
If you’re still finding that you can’t pay-off your outstanding debt in six months, consider wrapping it into your mortgage. There will often be a penalty to pay, even if you go with your existing mortgage provider. However, the penalty may be of-set because you are paying off high interest debts.
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.
Contact us! We love helping people with technically-supported honest mortgage advice!
© Sandra Lastovic is the Principal Broker with the Mortgage Centre in Guelph. With over 15 years’ experience and holds a M.Sc. from the University of Guelph. She was recently ranked at the top 75 agents in Canada by The Canadian Mortgage Professionals annual survey and 2017 Most Influential Women in the Mortgage Industry. She can be reached at 519-763-3900 x1001 or www.skipthebank.ca™