Sometimes no matter how much you try to make ends meet, your monthly expenses stretch you thin.
In this case, you have two options: the first is to earn more money (easier said than done sometimes!). The second option is to reduce your monthly expenses.
There are several ways to cut down on what you spend every month. But it depends on where your monthly expenses are actually going.
One of the biggest budget items that can eat up the most money are your debt payments. If you have a monthly budget of $2,000, for instance, and $1,000 of that is going towards debt payments, there’s a lot more your money could be doing for you.
Debt payments can include credit card bills, monthly utility bills, cell phone payments, your car loan, and more. In some cases, you might be spending almost as much in interest as you are on your purchases themselves.
This is where debt consolidation can come in handy.
Stop spending unnecessary money on debt payments by lowering what you have to pay back.
Option #1: Second Mortgage
Say for example that you take out a second mortgage of $20,000 and repay it at a $250 per month fixed rate.
This would give you $20,000 to pay off your high-interest debts, like credit card bills. With this payment schedule, you would go from spending $500 (or more!) on outstanding credit card debt, to only paying $250 per month to repay the second mortgage.
Option #2: Filing for a Consumer Proposal
If you have many high-interest, unsecured debts that couldn’t be paid off with a second mortgage, or home equity, then filing for a consumer proposal may be something to consider.
In a consumer proposal, a settlement offer is made to your creditors to repay only a portion of your debt. The majority of your creditors must agree to this, so it has to be in their favour – i.e. they will want to know that they are getting more money than if you were to declare bankruptcy.
A consumer proposal will also stop collection action.
If your consumer proposal is approved, you would have to repay the proposal, but even then the amount you are repaying would be lower than what it would otherwise cost.
Both of the above can be better options than taking out a line of credit. While a line of credit is useful in some cases, it also provides more opportunity to go into even further debt and often comes with high, fluctuating interest rates.
At Prudent Financial, we offer many debt consolidation options, including second mortgages, and can assist you with filing for a consumer proposal.
Contact us today for a free consultation to cut your monthly expenses by 50% – or more! Call 1-888-852-7647 or visit www.prudentfinancial.net.
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