Your Debt Threat

Posts Tagged ‘Reduce’

Article by John Bolton

Looking for a way to reduce your mortgage faster and save interest? Revolving credit is the secret many lenders are reluctant to let home owners in on, but it’s a tactic financial advisors swear by. While it’s not for everybody – least of all those who don’t trust themselves with the temptation of a credit card – revolving credit is an exceptionally versatile means of dropping the term of your mortgage by as much as a decade, and potentially saving you in the ballpark of ,000 based on a mortgage of over 0,000. The key is using revolving credit in the smartest way…

Because while it isn’t the only way to financial freedom, it is a trusted system that works well with a little discipline.

How does it work?

Simply put, when using revolving credit to pay off your home more quickly the main principle is that any extra money that goes into your transaction account ultimately decreases your mortgage balance. In turn your interest is also lowered. So how does this delightfully simple process work? The strategy is to put part of your mortgage into your transaction account, which will basically seem like working with a big overdraft, based on the normal mortgage interest rates.

The main reason many people tend to disregard revolving credit is that is can sound overly complicated to the uninitiated. After all, if you handle your mortgage and daily living expenses all from a single account, what’s to stop it from becoming one giant financial nightmare? How can you be sure if you’re doing the right thing? And how do you stop yourself against dipping too far into your mortgage money when it seems like it’s right there to use?

Two Transaction Accounts

The simplest and most utilised option for property owners working productively with a revolving credit plan is to set up two transaction accounts. This option has become even more popular given that many banks now offer affordable or even free electronic transaction accounts.

We recommend having your salary/wages paid into the Revolving Credit. Your regular costs and the mortgage will be paid from the Revolving Credit. But, for daily costs set up a weekly automatic payment to a second transaction account and use that one.

Budget is critical for anyone with a mortgage, and the easiest budget to manage for any home owner is based on the notion that your costs should never exceed your earnings. Of course unexpected expenses are sure to crop up – especially if you are supporting a family – so if you do think you need some additional cash you can access this from your revolving credit in emergencies. Making the conscious decision to transfer money out of your revolving credit and into your everyday transactions account is far safer than just using one big account, so make this strategy the first thing you put into practice in your revolving credit strategy.

Another option is to use your Credit Card as the day-to-day account and pay it off in full from the Revolving Credit every month. You reap the rewards of the 55 days interest-free and any incentive points, if you’re into that.

What percent should my revolving credit be?

It’s best to speak to your bank for the best guidance on how much you should initially set your revolving credit at. Based on your income and costs, most lenders will approximate the percentage of your mortgage you will be able to pay off within a few years. This number will form the basis to figure out how big they make your revolving credit.

The rest of the mortgage is generally set at a 25 year term so any additional payments can be focused onto the revolving portion. As soon as your fixed interest rate matures, your financial advisor will then be able to reassess your requirements and payment capabilities, and with any luck reduce your fixed rate mortgage by transferring more of it into the revolving credit portion. This continual process is the best way to ensure your mortgage plan evolves to meet your particular and changing requirements, while also reducing your debt as fast and efficiently as possible.

Aside from being able to become debt free quicker than you might have ever expected, one of the other significant benefits of the revolving credit strategy is versatility. This strategy of mortgage management not only lets you to become free-hold sooner, but is adjustable enough to continue to meet your requirements if and when your situation changes. Planning a family? Do you need to cut back to one income instead of two? Revolving credit can also allow you to slow down your repayments if you ever need to, making it a great tool to future-proof your financial stability.

Step 1

Get Organized.
First, make a note of each credit card you own.
Column two, enter the amount of debt on each
card. Column three: enter the interest rate you pay
for each card. Column four: enter the credit limit of
each card. Your list should look something like this:

Step 2

Check which Transfer Offers are
Available.
• Call each credit card company and ask them what
balance transfer offers are available for you. Take
notes. (It is best to call because not all offers are
available online.)
• Ask them what the transfer fee is for each offer.
• Ask them what interest rate will you pay on the
transfer amount.
• Ask them what date you need to transfer by in
order to receive the offer.

Step 3

Evaluate your Existing Offers.
Look at each offer and see if there are any offers
with “no transfer fee.” If you have the chance to
transfer a balance with a high interest rate to a
lower interest rate with no transfer fee, it makes
sense to make the transfer.

Step 4

Find New Transfer Offers.
If there aren’t any transfer offers available with “no
transfer fee,” look to apply for a new credit card.
Even if you were able to transfer to a lower inter-
est rate card with no transfer fee, it may be worth
it to start looking for a better credit card to trans-
fer to and start saving you more money.

Find More How To Reduce Credit Card Debt Articles

Article by Daniel Major

First things first, it may seem like we as a nation are in a terrible financial situation that we will struggle to get out of, and yes you are probably right, but trust the history books; history perpetually repeats itself and we have been here before, on more than one occasion, so take some resolve from the fact that recovery will happen and prosperous times will come again.

But, in the meantime it’s about taking care of business and the business that puts us most at risk is debt. Over the past many years people have become more and more reliant on credit and to be fare to us all, we have been encouraged to spend, spend, spend and have been constantly told we’ve never had it so good and things have never been better.

Only the wisest saw through the charade, fully expecting the bubble to burst and they have been proven to be absolutely right; but the majority of us have unfortunately been like lambs to the slaughter, trusting everything we had been told; and now our financial chickens have come home to roost, we cannot be totally excused from responsibility but, at the end of the day, we were being told that we could easily afford it