A debt consolidation is when you take your mortgage along with your personal and miscellaneous debt and wrap it up into one loan. You are now able to extend the time period to pay off that loan. At first, this may not seem like a great idea because you are going to be in debt for a longer period of time. But… if you can take it one step further you will see why this is such a great idea. By stretching out the amortization period you will shrink down the monthly payments. You can literally save over a thousand dollars per month in certain situations. If you take the money that you are saving each month and apply 100% towards the loan you will pay off your debt in 10 years as oppose to 20 or 25 years.
For example here is a typical households debt situation.
$230,000 in total debt (mortgage, credit cards, store cards, personal loans).
$2,500 in monthly payments.
Debt free in 25+ years.
$233,000 debt consolidation loan.
$1,320 in monthly payments.
Apply 100% of savings to loan = debt free in 10 years.
Apply 50% of saving to loan = debt free in 15 years.
Apply 0% of saving to loan = debt free in 30 years.
Our financial statements here in Canada are looking a lot like they did in Europe about 5 years ago. It’s about time that we take this crisis into our own hands. This problem is fixable just by educating the people on what options are available. This is a great option and can change your life if you can qualify for such a great program.
You can get out of debt years earlier and save thousands in interest.
”The average American who lives to the ripe old age of 100 will spend $3.5 million in his or her lifetime, according to an analysis of data from the Bureau of Labor Statistics” (SmartMoney 2/12). –Via http://www.facebook.com/Primerica
Many people know we are now reaching the deadline to contribute to your RRSP’s. If you are expecting a refund back from the government, that is great! It may be really tempting to take that money and go buy yourself something nice….but really what you should be doing is, apply that refund to some of your debts! Especially those with high interest rates. It will save you a lot more in payments over the next year by doing that!
Maybe you are one of the fortunate people that have paid off all of your debts. Great! Now you may think that the best thing to do, would be to go blow that money! Big screen TV’s seem like a great idea at the time… But the smartest thing to do would be to reinvest it! If you haven’t already started a TFSA, take your refund and start that up! If you are getting a good rate of return you will be happier down the road that you turned your small tax refund into a retirement nest egg!
1. Self-Knowledge (awareness)
4. Courage (Fortitude)
This is the ratio in which your total income should be distributed to make sure you are on the right path. If this does not look like your current situation you might have to reorganize your financial situation and get on a game plan!
Spend no more than 35% of net income on housing expenses. (This includes mortgage or rent, utilities, insurance, taxes, and home maintenance)
Spend no more than 20% of net income on transportation. (This includes car payments, insurance, license, maintenance, gas and parking.)
Spend no more than 20% of net income on all other expenses. (This Includes Food, enertainment, clothing, all entertainment and leisure activities, child care, medical health expenses)
Spend no more than 15% of net income on any type of debt. (Including Loans, Credit cards, any other type of liability or debt)
Save at least 10% of you income. This is the most important category. If you can scrape by anywhere else and maximize your savings it will pay off in the long run.
-How Money Works, secrets to financial success.
Drive free cars for life and retire rich!
Dave Ramsey explains how to do it in this video
Drive Free, Retire Rich – Automobiles – daveramsey.com.