Oh the Holiday Debt Hangover!
The downside of last month’s festivity and generosity is this month’s credit card bills. You may suddenly be looking at some huge balances with no idea how to pay them off. And what’s worse, you’ll be paying anywhere from 10-20% interest on what you owe.
Fortunately, the solution is close to home. If you’ve been in your house for a while, you may have enough equity to refinance your mortgage, consolidate your credit card debts, and end up paying mortgage interest in the 2-3% range.
What can you do?
The first step is talking to a mortgage broker. I can help determine how much equity is available and advise whether debt consolidation is right for you. Even if you have to pay a penalty to break out of your existing mortgage, that cost is usually more than covered by the interest savings of debt consolidation. I’ll do the math and show you how much you can save.
The goal of refinancing should be to save interest and get out of debt faster. It’s important to understand that you’re going to have to change your spending habits though – during the holidays and year-round – or you’ll be refinancing again before you know it.
The best strategy is to use the money you save from consolidation to start a savings plan or to invest in an asset that will generate a return, such as revenue property.