With the demands of our everyday lives, it’s really easy for our credit cards and lines of credit to get out of hand.
What we thought we would use “once in a while” or “just until the next paycheque” can sometimes turn into a growing battle. If this sounds familiar, you’re not alone. Statistics say that as many as 6 out of 10 Canadians live paycheque to paycheque. Before you know it, you could be right at your credit card and credit line limits. The shocker comes when you take a closer look at one of your credit card statements and see that it can take decades to pay off! And in today’s tight credit environment, it’s best not to wait until your mortgage renewal to consolidate this high interest debt. The good news is if you have equity in your home, you can kiss that credit card or line of credit commitment goodbye.
Ask yourself these 3 questions to see if it’s worth it to add your outside debts to your mortgage and stop the cycle of debt if your payments outside of your mortgage are at least $300 per month. In the next 3 months are you receiving:
1. The proceeds from the sale of an asset (car, trailer, artwork, etc)?
2. A guaranteed work bonus or money you lent someone returned to you
3. An inheritance
If your answer is no to these 3 questions, then it’s better to stop the cycle by rolling this debt into your mortgage (if you have enough equity in your home). Using the $300 a month example (which is usually a $10,000 debt), by refinancing your mortgage, you’ll save $250 a month you can bank so as a cushion in the event another sudden expense comes up, instead of charging it!
Angela Calla, AMP
Host of “The Mortgage Show” on CKNW AM980 Saturdays at 7pm