Too Much Debt to Live Your Dream?
The holidays are over, and you may suddenly find yourself with high credit balances. With so many better uses of your hard-earned money, you may wonder about the best way to reduce your interest payments and debt.
Our team would be happy to meet with you to review your short- and long-term goals and situation, and to help you create a plan to balance your lifestyle now and in the future. Key to the success of your plan is taking a holistic approach to determine what's really important in your life.
Of course, the first priority should be to pay off your highest-cost debt - typically credit cards, which are charging close to 20% in annual interest. As interest is paid in after-tax dollars, it means someone in the top tax bracket (46.41%) is paying about 36% on a pre-tax basis to carry a balance! If you expect a tax refund this year, consider using it to clear your credit card debt.
At today's historically low interest rates, consolidating your debt into one loan or line of credit may be a good option, possibly secured by the equity in your home for more attractive rates. Another option is to arrange for automatic loan repayments from a savings account on payday. As independent advisors, we are in an ideal position to help you shop the market for some of the very best borrowing options and rates.
Converting "bad" debt to "good" debt is a sound strategy for many of our clients. It involves liquidating non-registered assets to pay off consumer debt and then borrowing to repurchase investments for your taxable portfolio. In this way, interest on the loan may be tax deductible. Our team can help you explore this opportunity.
As your debt is reduced, consider using freed-up cash flow to fund real goals, whether a vacation, home renovation or retirement lifestyle - using your Tax-Free Savings Account or RRSP, where possible.
Give us a call so we can help you take control of your debt, and your dreams.
Return to Newsletter
The information contained herein is for ON residents only and does not constitute an offer to sell or solicit sales in any other Canadian or foreign jurisdictions.
If you wish to unsubscribe from this newsletter, click here.