This has been a challenging year for many, with the COVID-19 pandemic creating so much uncertainty and instability.
And now we’re heading into the holiday season, which is a tough time for anyone to be struggling with debt.
Instead of waiting to face your post-holiday debts in January, why not lay the foundation for a fresh start now? Here are some suggestions to help you start 2021 off on the best financial footing possible.
Start managing your credit now
Do you know the number one way to increase your credit score? Pay down your credit cards. Many don’t realize you should only be using 30% of your limit. Credit card debt is considered revolving debt; it impacts your credit score much more significantly than a car loan or a line of credit would.
Stay on top of your credit and ensure everything is up to date. Do regular, frequent check-ins to make sure there are no outstanding bills. Also, keep an eye on accuracy; dispute any mistakes or situations that could harm your credit score immediately.
The best approach is to pay your balances down or off completely before the end of your statement period. If you can’t pay the balance off in full each month, making the minimum payment on or before the due date will preserve your credit history.
Remember, the older your credit, the better. To keep credit current, continue to use your credit card in a responsible way.
Last, don’t let yourself be pressured into over-spending this holiday season. Make do with less; come January, you’ll be so glad you did.
Look into refinancing your mortgage in Guelph
If you need some help paying off high-interest credit card debt, you may want to consider refinancing your mortgage. It can free up money you can then use to pay down the amount you owe.
If you have some equity built up in your home and a manageable credit score, refinancing can help. By using this money to pay off high-interest debt, you can improve your cash flow each month.
If you have debt and you’re embarrassed about it – there’s no reason to be and likely a good explanation. Worrying can cause more stress and it’s important to take steps to resolve your debt situation. Booking an appointment with a mortgage professional is a good first step. Most professionals can meet you on-line or over-the-phone during Covid-19 – so you can also stay safe.
The good news is that interest rates are at a 40-year-low. A lower interest rate alone can save you lots of money, sometimes as much as thousands per year.
Remember though to use these funds wisely, as this is money you worked hard to make and diligently paid towards your mortgage. Its best, most effective use is to manage debt. Some choose to make investments, do home renovations or invest in their children’s education with the money. Be sure to use the funds responsibly; focus on paying down debt and bettering your financial future. Set up a budget and stick to your goals.
Are there any drawbacks to refinancing? It will likely extend the time it takes for you to pay off your mortgage. You may want to consult a mortgage agent with The Mortgage Centre. They can determine whether your financial situation can be repaired quickly or if the road to credit recovery will be a longer one. No matter what they find, solutions are available. If your situation is beyond their expertise, they can connect you with other professionals, including credit counsellors and bankruptcy trustees.
Take advantage of the help and advice that’s available and brighten your financial future. For more information, visit The Mortgage Centre (Guelph) or call 519-763-3900.