Restructure Your Debt
Let me ask you a question:
Which creates better financial results for you—more income or fewer expenses? I guess you could say it’s the modern equivalent to, “which came first, the chicken or the egg?” This is certainly a question I’ve pondered often.
You see, all of my working life I’ve earned a living based on commission. So, I’ve always been a fan of working harder to increase income. My wife, on the other hand, is a CPA, and like most accountants she prudently works to reduce expenses and manage costs. Our varied backgrounds and experiences, both in business and in our personal lives, sometimes cause us to see things slightly differently. You could say that I’m for more income and she’s for fewer expenses.
Of course, I completely agree with my wife when it comes to personal finances, especially when examining a borrower’s income and debt structure. While I refuse to give up my belief that a perfect solution for everyone would be more income, I’m smart enough to know that it’s not always the practical approach or an easy solution for everyone. Let’s face it – it’s kind of hard to walk into your boss’s office and ask for a 50% increase in your salary, just because you need it. It would certainly be nice, though, don’t you think?
So, that leaves me with the debt structure. I’ve come to the realization that by restructuring the debt, I can help give people more money and less month as opposed to less money and more month! Once you have more leftover income, you can put this surplus to work for you by helping create more wealth with careful planning and investing.
What do I mean by restructuring debt?
Fortunately, the economy currently makes it very easy to restructure debt if you own a house. Our current mortgage interest rates are at record lows, which are far more favorable than those of other debt instruments. All of this makes it easy to roll the short term debt into the long term debt and save both time and money.
Consider a scenario with the following current debt:
An 18-year fixed interest rate loan for $435,000 at 2.59% would have a monthly payment of $2,519. So essentially your payments would be $74.00 less, your mortgage amortization would drop by 12 years, and all of your debts are now paid in full! That’s $50,000 in credit card and credit line debt that you were never going to be able to pay off, because all you could afford to pay was interest. Now it’s gone!
Alternatively, a 25-year amortization at the same 2.59% rate would have a monthly payment of about $1,968; that’s $625 per month of improved cash flow, and your mortgage is still paid off 5 years sooner. It’s amazing that both of these loans save the borrower years of payments and one even improves monthly cash flow as well!
Now the good news: we currently have an economic reality that makes the above example possible for most borrowers. The result is cost saving on expenses, which in turn allows you to make better income—income that, if you reinvest wisely, will result in even more wealth. Use this information to your advantage and always, “Go with the flow—the CASH FLOW!”
Auxilium means to care, aid, assist, and support.
We look forward to helping you with your mortgage needs.
or call 250-590-6520 (Toll-free 1-855-590-6520) to speak with a mortgage planner. We’re open 8:30 a.m. – 5:00 p.m. PT, from Monday to Friday.