Tag Archive for: smart with debt

3 Things to Think About BEFORE You Get a Cash Out Refi

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A cash-out refinance can be a powerful tool to manage your finances. However, it’s important to make smart decisions before diving in. Let’s break it down into 3 things to think about before you get a cash out refi. This will not only protect your future, but it will also help you  get the best deal.

1. Get the Relief You Need, Not What They Offer

When you’re looking to refinance, make sure you’re getting the relief that you actually need. Sometimes, lenders might push you toward a higher amount or different options that don’t match your goals. If you’re aiming for a specific payment reduction, then focus on getting that number. Do not just focus on what the mortgage person suggests.

Example: Imagine you have a credit card balance that’s eating up $400 a month, and your goal is to free up that cash. Don’t let a lender talk you into taking on more debt than you need. Stick to your goal to reduce your payment without adding unnecessary costs to your future.

2. Don’t Pile On Debt That Hurts Your Future

It’s easy to get caught up in lowering payments today, but be careful not to add a mountain of debt to your future. Taking on too much debt can create stress and financial pressure down the road, affecting your well-being and your family’s peace of mind.

Example: If you currently have a great rate on your mortgage—like 3%—and you’re considering refinancing to a new rate of 6%, think twice. That’s doubling your cost of borrowing, which could mean a lot more interest over the life of the loan. Protect your future by not trading low-cost debt for high-cost debt.

3. Explore All Your Options

Before jumping into a cash-out refinance, look at other options. You might find that a home equity loan or a 0% credit card can meet your needs without adding so much long-term debt. These alternatives can give you the breathing room you need without putting your financial future at risk.

Example: A recent situation showed that a family considering a $290,000 cash-out refinance ended up adding over $230,000 in extra interest over time. Instead, they chose a home equity loan that kept their payments low and didn’t pile on that extra interest burden. They protected their finances and avoided unnecessary debt.

Protect Your Finances and Future

Remember, a cash-out refinance is just one of many tools available. Make sure you’re getting the best solution for your situation, not just the one that seems easy. Taking a little extra time to explore your options can help you avoid costly mistakes and keep your financial health on track.

For more guidance on cash-out refinances or to explore other financial tools, check out our Loan Cost Optimizer. We’re here to help you find the best debt solution for your goals.

Contact us today and watch our most recent video to find out more about the 3 things to think about before you get a cash out refi.

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U.S. credit card debt

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Today we are going to share an article regarding U.S. credit card debt. Experts like Rakeen Mabud point out that the Federal Reserve’s rate hikes are making life harder for those who rely on credit cards. Interest rates are becoming a bigger burden than inflation itself.

The credit industry’s lack of competition is also a factor. With fewer options, credit card companies are charging record-high APRs. This is making it tough for consumers to break free from debt. Additionally, new financial tech products like “buy now, pay later” are making it easier for consumers to spend. Another thing to keep in mind is that these products often don’t follow the same rules as traditional credit cards. Therefore these products are adding to debt without having the proper protection in place.

In conclusion, the rise in credit card debt shows how inflation and high interest rates are hitting lower-income families hard, even though their struggles may not immediately affect the overall economy. Where do we go from here and how can we decrease credit card debt? Only time will tell.

To see the complete article please click here.

Do you have questions regarding U.S. credit card debt or how you can decrease your credit card debt? Contact us today!

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How to Accelerate Your Debt Payoff

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Are you tired of feeling stuck in debt? Don’t worry, there are ways to pay off your debt faster without cutting back on everything you enjoy. By repositioning your debt into smarter loans, you can save money and even free up some extra cash each month. Let’s walk through how to accelerate your debt payoff step by step.

Step 1: Understand Your Current Debt

Before you can accelerate your debt payoff, you need to know what you’re dealing with. First, list out your debts, including credit cards, personal loans, or car loans. Next, write down the balance, interest rate, and minimum payment for each one.

For example:

  • Credit Card 1: $7,000 at 19% interest, payment of $184
  • Credit Card 2: $7,000 at 24% interest, payment of $213
  • Credit Card 3: $7,000 at 29% interest, payment of $244

In this example, you’re paying $641 a month to cover the minimum payments on all three cards. Over time, the total you’d pay, including interest, would be over $34,000. That’s more than $13,000 in interest on just $21,000 of debt!

Step 2: Reposition Your Debt for Better Terms

One way to accelerate your payoff is to move your high-interest debt into a loan with a lower rate. If you’re a homeowner, for example, you could use a home equity loan. This allows you to combine all your credit card debt into one payment at a lower interest rate.

Let’s look at how this works:

  • Instead of paying three separate credit cards, you get a home equity loan for $21,500 (to cover the balance and any fees) at 8% interest.
  • You choose to pay $541 per month, which is $100 less than before.

Step 3: Use a Calculator to See Your Savings

Now, it’s time to crunch the numbers. You can use a free online calculator like the one on calculator.net to see how much money you’ll save.

Here’s what happens in this example:

  • With the new loan, you’ll pay off your debt in 3 years and 11 months.
  • You’ll pay about $3,561 in interest, instead of over $13,000!
  • Plus, you’ll save $100 a month, giving you extra money for your budget.

That’s a savings of over $9,400 in total debt payments, and you’re out of debt seven months sooner!

Step 4: Adjust Your Payments to Speed Things Up

Once you reposition your debt, you can choose how fast you want to pay it off. Let’s say you’re happy with the lower payment and want to keep it at $541. That’s great because you’re already saving time and money. However, if you can afford a bit more, adding just a little extra each month will help you pay off your loan even faster.

Step 5: Enjoy the Benefits

By repositioning your debt, you:

  • Save money on interest: A lower rate means you pay less overall.
  • Free up cash for your budget: With lower monthly payments, you’ll have more money to cover other expenses or treat yourself.
  • Get out of debt sooner: No more dragging out debt for years and years.

In our example, the homeowner saves seven months of payments and reduces their interest by over $9,400. That’s a big difference, especially when you have other priorities like family expenses or planning for the future.

Final Thoughts

Accelerating your debt payoff doesn’t have to be painful or complicated. By flipping your debt into a better loan, like a home equity loan, you can save thousands and free up room in your budget. Use online tools to explore your options, and see how much you can save.

If you have any questions, feel free to reach out! And remember, share this advice with others so they can learn how to get into better debt too. Together, we can all learn how to use debt wisely instead of letting it take control.

 

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Cash Out Refi vs Home Equity Loan – Which One is Better?

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Cash Out Refi vs Home Equity Loan – Which One is Better?

Today we are going to discuss the difference between a cash out refi vs home equity loan. In both of the following examples there are a lot of similarities. This includes identical houses, similar lifestyles, as well as $465,000 in debt. Let’s take a closer look at how Jack and Jane can achieve monthly debt relief both quickly and easily.  

Jack Jane
Loan Type Cash Out Refinance Home Equity Loan
New Loan $295,000 (mortgage, auto,  as well as credit cards) $90,000 (auto and credit cards)
Interest Rate 7% 9%
Old Monthly Payment $2,700 $2,700
New Monthly Payment $2,000 $2,000 (Home equity loan payment $800 + Current mortgage $1,200)
Monthly Savings $700 $700
New Debt $720,000 ($2,000 per month  x 360 payments) $476,000 ($2,000 per month)

To clarify, both Jack and Jane both had a monthly savings of $700. However, their lifetime debt is very different. In the end, Jack will pay $244,000 more than Jane. As a result, Jane will get to enjoy life a lot more because her mortgage payment wasn’t altered. 

In conclusion:

To sum it up, both a cash out refi and a home equity loan create a monthly savings of $700. However, a cash out refi comes with more new debt that will follow you for a longer period of time. Which path would you take? Keep in mind that times will change as well as available products! However, the differences between a cash out refi vs home equity loan will remain the same. That is why it is so important to do your research along with listening to the math in order to live your best life.

Watch our most recent clip to discover more and contact us today to find out more! We are here to help you get on the right path for your future! 

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How to Pay Off Your Debt FAST and Enjoy Life MORE

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Debt can weigh you down, but with the right plan, you can pay off your debt fast and enjoy life more. It’s all about finding the right strategy to cut your interest rates and speed up your payments without changing your budget. Let’s walk through how you can do this.

Step 1: Reposition Your Debt to Save Money

One of the easiest ways to pay off your debt fast and enjoy life more is to move high-interest debt to a lower interest option. Think of it like this: if you’re paying 19-29% interest on credit cards, that’s a lot of extra money going to the bank. But, if you can move that debt to something with a lower rate, like a home equity loan at 8.5%, you’ll pay less in the long run.

For example, let’s say you have $21,000 in credit card debt spread across three cards:

  • Card 1: $7,000 at 19% interest, with a $184 payment
  • Card 2: $7,000 at 24% interest, with a $211 payment
  • Card 3: $7,000 at 29% interest, with a $244 payment

Altogether, you’re paying $641 a month. If you keep paying at this rate, it will take over four years and cost you about $34,320 to pay off that $21,000.

Step 2: Use a Home Equity Loan

Now, imagine moving that $21,000 to a home equity loan at 8.5% interest. With the same $641 payment, you would pay off your debt in just three years and four months. Not only would you save 14 months of payments, but you’d also save around $9,000 in interest!

By taking action and repositioning your debt, you can pay off your debt fast and enjoy life more. That’s money back in your pocket, and fewer months spent worrying about payments.

Step 3: Use 0% Credit Cards for Faster Payoff

Another smart strategy is to transfer your credit card balances to 0% interest cards. Many of these cards offer an introductory period where you don’t pay any interest for up to 18 months. That means every dollar you pay goes directly toward paying off your balance, not interest.

Imagine moving your $21,000 balance to a 0% card. You keep paying $641 a month, and for the first 18 months, it all goes toward paying down the debt. You’ll knock out a big chunk of what you owe before the interest kicks in, helping you pay off your debt fast and enjoy life more.

Step 4: Stick to Your Plan

Once you’ve repositioned your debt, the key is to stick with it. Keep making the same payments, and don’t add new debt. It might feel like a slow process at first, but you’re saving time and money in the long run.

By using the same payment but shifting your debt to a lower interest rate, you can shave months or even years off your payoff schedule. And that’s how you pay off your debt fast and enjoy life more.

Conclusion

Paying off debt doesn’t have to be a burden. With simple steps like moving to lower interest rates or using 0% credit cards, you can pay off your debt fast and enjoy life more. It’s about being smart with your debt, sticking to a plan, and letting interest work for you, not against you.

Watch our most recent video to find out more!

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