Five Tips On How To Get Out Of Debt And Into Your Own Home
We understand that getting out of debt and into your own home can be quite a challenge, but with a little preparation, you can handle this problem quickly and easily. To get out of debt, you need a plan, and you need to execute that plan. As you work on your plan, you’ll need to make all necessary adjustments to your budget along the way so you don’t overspend and slide back into debt. Plus, if you don’t have an emergency fund, consider setting some money aside in savings beforehand.
That’s why as a mortgage specialist, I’ve created this simple, five-step, get-out-of-debt checklist that can help you leave that financial burden behind you. Keep this checklist someplace where you’ll see it often (like your refrigerator door), and make it your goal to check a task off the list each day (or each week), depending on how quickly you want to become debt-free.
Make a list
Take all your bills and put them in a chart that includes the name of the creditor, interest rate, balance, and minimum monthly payment. Figure out how long it will take you to pay the balance down to zero. Many credit card statements now feature this.
Lower your rates
This is easier than you think. Call up each of your credit card companies, starting with the ones with the highest interest rates, and ask them to lower your interest rate. You can tell them that other credit cards are offering lower rates and you wanted to let them keep your business. They won’t give you an answer on the phone, but you should receive a letter with a new lower rate within a couple of weeks.
Another possible solution is a balance transfer. Often a credit card company will allow you to transfer your balance from another card to theirs, and they charge you 0% for six months. They assume that you will see zero being added and will spend more. Show them that you are disciplined and keep paying the balance down as if it was still at 19%. Consider getting a debt consolidation loan.
If you have a home with equity, you can often get a very good rate and clear up all your debts. Often you can get these loans at considerably less than your credit cards. Once again, keep your monthly payments up as if you were still paying a credit card of 19% interest and your balance will go down quickly. Next, contact your car loan company. If you have been paying your loan on time, they may lower your rates. Now you are ready to tackle the utility companies.
In Alberta, The gas/electric companies really want your business. You can often get a better rate just by threatening to switch. This also works with cellphone companies. They often have better plans than the one you are on but will only offer it when you say you are going to leave.
Get your Number
What is the amount you need to pay off all your debts? Now that you have a number in mind, you can set a goal. Can you pay this off in six months? Twelve months? Two years? Get your credit score number. How much does it have to improve before you can qualify to buy a house? Check with Raj Gera, your mortgage broker at Dominion Lending Centres, for help in getting this.
Make a plan
What will be your target debt? Is it the credit card balance with the highest interest rate? The lowest balance? Set a short term goal to pay one card off in a manageable amount of time. One down and three to go sounds better than tackling all the debt at once. Pay each debt off one by one. Does your community library offer debt counseling financing planning courses? Consider signing up for one.
Monitor your progress
How quickly are the debts coming down? Is your credit score going up? It should if the debts are coming down. Do you have to adjust your plan to make your deadlines? Don’t be discouraged. Large companies make plans and set budgets and then adjust them quarterly based on how the previous three months’ performance was. Stick with your plan, and if you show some self-discipline, you can achieve your goals in time. Finally, tell your local Dominion Lending Centres mortgage broker what your goal is and what your timeline is. They will be happy to help you along the way. Nothing makes them happier than to tell people like you that they are approved for home financing.
If you have any concerns about mortgages or if you’re looking for a mortgage specialist to help simplify the process, reach out to Raj Gera, a licenced mortgage specialist with Dominion Lending Centres in Oakville, ON. Whether you’re looking to purchase your very first home or upgrade to a new home, purchase investment properties or vacation homes, or lease business-related equipment, we have a variety of products available to meet your unique needs. To learn more about my services, please click here. Have a question? I’d love to hear from you. Contact me here.