If you find that finances are a major source of stress in your life, you are not alone. Many Canadians struggle with debt, and it can significantly impact the quality of your relationships and your life.
You don’t have to wait until all of your debts are paid off to breathe a little easier, though. You can substitute smart debt for your current bad debt and reduce both your expenses and your stress level.
What is Bad Debt?
There are lots of kinds of debt, and they all fall into two categories: bad debt, and smart (or good) debt. Bad debt consists of high-interest debt, like credit cards and other unsecured loans. Medical bills can also be bad debt.
You may not be paying high interest on those medical bills, but it doesn’t take long before they get turned over to a collections agency. If that happens to you, it can seriously damage your credit.
What is Smart Debt?
Smart debt is low-interest, secured debt. Your mortgage is smart debt, because it has a very low interest rate, and it is secured by your home. A home equity loan or line of credit is also smart debt.
Right now in Canada, mortgage rates are low, and home values are high. This creates the perfect opportunity to substitute smart debt for your bad debt. Since real estate values are rising, you are likely to have some extra equity in your home.
You can consolidate all of your bad debt – credit cards, high-interest loans, unsecured debt – and pay it off with a low-interest home equity loan that is secured by your home.
How Can Smart Debt Reduce Stress?
If you are already stressed out about money, you may feel like the last thing you want to do is take out another loan. However, trading your bad debt for smart debt can significantly reduce your monthly expenses and really take a load off your back.
Instead of making a whole list of payments to various creditors each month, like credit card companies, medical providers, tax bills, and other loans, you could make just one lower payment.
Credit card rates are often extremely high – some near 30% interest. You can dramatically cut your interest rates by choosing a home equity loan to pay off those debts. This means that you save a lot of money every month and you have only one bill to pay.
How Can I Make My Debt Smarter?
You can get a handle on your debt and choose a smarter debt option by talking to a mortgage broker. Mortgage brokers have access to many different lenders, so they can find the best loan and interest rate for you.
“You don’t have to shop around and apply at many different banks, because a mortgage broker can take all of your information and see what lenders can offer you the best options.”
A mortgage broker will help you to eliminate your bad debt, like high-interest credit cards, and replace it with smart, low-interest, secured debt.
If you are feeling stressed out by bad debt, call the Mortgage Ladies at 905-789-8198. The Mortgage Ladies will help you explore all of your options in regard to debt consolidation, refinancing, and accessing a home equity loan.
We will help you turn your bad debt into smart debt and minimize your monthly expenses. Call the Mortgage Ladies today or visit our office to learn more about how we can help you reduce stress and turn bad debt into smart debt.