Debt Consolidation

DEBT CONSOLIDATION

Are you feeling the pinch every month when it comes time to pay your bills? Do you have outstanding credit card or line of credit debt? What about vehicle payments – are they high enough that they make you uncomfortable every month?
Many people find that managing so many payments can be time consuming and annoying – not to mention hard to keep track of. You might even find yourself getting to the point where you’re getting behind on your payments and it is affecting your credit score. Nightmares and unnecessary stress can be the result – and we know what can happen to our relationships when financial stress enters the scene. It’s not a pretty situation.

Thankfully, There is a Better Way!

Wouldn’t the simplicity of one single payment be great?  Wouldn’t it be nice to get all of your debt payments consolidated organized so you can manage your life again?  Wouldn’t it be great to free up a few hundred dollars every month so you can save for retirement, your children’s education, or even have a little fun again?

If You Own a Home, You Can Qualify!

The good news is that all of this is possible – and more.  You might be surprised to find out that you can save thousands of dollars in interest expenses and free up hundreds or thousands of dollars a month in cash with a Debt Consolidation Loan. The key to qualifying for a Debt Consolidation Loan is equity in real estate.

How Does it Work?

Here is an example.  Let’s say we have a couple – Joe and Suzy Smith.  The Smiths work hard, they both have jobs, and they own a home.  They also have a hard time keeping up with their monthly obligations. 

Between keeping little Johnny in hockey equipment and little Jenny in piano lessons, and the new car payments they have because the old mini van finally broke down, it’s tough.  They needed a break last winter so they finally took that trip to Mexico they’ve always wanted, but didn’t have the cash so it went on their credit card.  If all that wasn’t enough, Joe’s father passed away recently and didn’t have a very good insurance policy, and the family had to come up with the funeral costs.

Under this scenario the Smiths are faced with the following monthly obligations:

Debt Interest Rate Amount Owing Monthly Payment
Mortgage 5.55% $212,500 $1,1412.22
Personal Line of Credit 8% $12,365 $370.95
Credit Cards 18.5% $8,486 $254.58
Car Loan 7.95% $27,259 $457.23
Total N/A $260,592 $2,494.98

A Debt Consolidation Loan Can Set You Free!

Given the above example, the Smiths are in over their heads.   That said, all is not lost!  There is a solution!

If the Smiths made the good decision to consolidate their debts using the equity they had accumulated in their home over the years, it would look something like this:

Debt Interest Rate Amount Owing Monthly Payment
Mortgage 5.35% $260,592 $1567.95

Total Savings:

$2,494.98 – $1567.95 = $927.03 a month! That’s incredible! The Smiths, by simplifying their lives, reducing the interest rates they are paying on their various debts, and using the equity in their home, have managed to save themselves almost a thousand dollars a month!

It Gets Better! 

We know the Smiths were having trouble paying their bills before the debt consolidation loan, so we won’t assume that they’ll use the entire $927.03 to invest, HOWEVER, we will assume a more modest monthly contribution of $500 a month towards retirement.  We will assume in this example that the Smiths will use that $500 a month to catch up on their RRSPs.

Based on an anticipated rate of return of 10% over the next 30 years (this is consistent with past rates of return) the Smiths, by saving $500 a month in their RRSPs will have saved $1,087,405.49 for retirement!

$1,087,405.49!!! 

So, if you find yourself in a situation where you would like to:

  1. Simplify your payments
  2. Protect your credit rating
  3. Reduce your interest expenses
  4. Save hundreds, if not thousands a month in cash
  5. And invest more for your retirement... Give us a call today!