Debt - Societies Dirty Little 4 Letter Word

Debt is a fact of life for many individuals and families. For those with good money management skills, access to credit cards and lines of credit can provide for security and flexibility allowing them to take advantage of opportunities they might not otherwise have. However , for those with poor money management habits, debt can become a crippling source of financial and mental stress.

Multiple credit cards with balances approaching their limits, a line or credit, an account at a furniture store or two and of course your mortgage. Minimum payments soon barely if at all cover the monthly interest accumulating on the accounts and there just isn’t any surplus income left for day to day needs.
If this sounds familiar you’re not alone! More and more Canadians than ever before are struggling with overwhelming debt loads, and looking for a way out!

Refinancing your mortgage to consolidate your debt may provide an avenue for getting back on the right track.

The goal of debt consolidation is to better manage your overall debt load with the intention of paying off the debt faster. This is primarily done by eliminating higher interest loans and credit card payments so a larger portion of your payments go toward paying off the loan instead of the interest. While this will not reduce the amount you owe, it will reduce the interest rate you’re paying, significantly reducing your interest charges. It also reduces your monthly repayments freeing up cash which can now be applied toward savings or investments. The convenience of only tracking one payment can also help keep your credit score in good standing by avoiding missed or late payments.

Debt consolidation provides you with a second chance and gives you a fresh start toward better money management. The danger of course is that you return to the bad financial habits which got you into trouble in the first place. To avoid this, any debt consolidation plan should include a new family budget with detailed strategies for debt repayment, as well as regular savings and investments.

With a little discipline and a sound financial plan you can make your mortgage work for you!

By: Domenic Mirabelli

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Domenic Mirabelli Mortgage Agent 416.303.4480 dmirabelli@morcan.ca Lic # M10000364 Morcan Financial