YOU CAN PAY OFF YOUR MORTGAGE AND CREDIT CARD DEBTS SOONER THAN YOU THINK
If you already own a home and carry a mortgage or you have credit card bills, you already know what I am talking about. Those debts never seem to go away.
Not too long ago, people took mortgages that would be amortized over 40 years. The new law now makes it 25 years. If you pay the minimum monthly payment on a $10,000 credit card without borrowing back, it would take you 10 years to finish paying it off.
By the time you finish paying a $240,000 mortgage over a period of 25 years would have paid at least double what you borrowed ie $480,000 depending upon the interest rate you got. If you can pay it off in 10 years or less, you can save a lot in interest. In fact, many financial advisors advise that you should not even attempt saving money if you have credit card debt and carry a mortgage.
But, there is a way to pay off mortgage loans and credit card balances in less than 10 years after incurring them. You must be disciplined and follow strict rules. There are programmes available to assist you, if you are disciplined enough to follow them.
The programme which follows a mathematical algorithm can get a bit complicated, especially if you have a mortgage, car loan, many credit card loans and lines of credit.
A simple explanation that I can give is as follows:
Let us say you have the following debts:
- CIBC Visa - $1,000 interest rate 15%
- Canadian Tire MasterCard $2,500 interest rate – 10%
- Bank of Montreal Line of Credit - $5,000 interest rate – 8%
The idea would be to tackle the small balances first. You pay the minimum required on
The Canadian Tire and Bank of Montreal debts and you put all excess funds left at the end of the month against the $1,000 CIBC Visa until you pay it off. Once that is paid off, you move to the $2,500 Canadian Tire debt until that is also paid off. As you pay off each loan, more funds become available from your budget to pay off other debts quicker.
If you need further information about mortgage or debt problems, contact
Ken Ntiamoa, MBA
BIA Insolvency Counsellor
(416-398-1877 ext 201)