If you need money to do debt consolidation Calgary - fire me a quick email to see what we can do for you. Consolidating debt is basically taking a number of smaller debt accounts and combining them. Usually you would only do this if the overall interest rate dropped though.
But, how to know when the overall interest rate will drop? Simply follow this basic formula:
(debt balance 1 x decimal value of interest rate)+(debt balance 2 x decimal value of interest rate)+…
debt balance 1 + debt balance 2 + debt balance 3 + …
HERE’S AN EXAMPLE:
Loan 1 balance: $10,000
Loan 1 interest: 10%
Loan 2 balance: $5,000
Loan 2 interest: 7%
Loan 3 balance: $7,500
Loan 3 interest: 6%
($10,000 x 0.10)+($5,000 x 0.07)+($7,500 x 0.06) = $1,000 + $350 + $450 = $1,800 = Average
($10,000 + $5,000 + $7,500) $10,000 + $5,000 + $7,500 $22,500 (0.08) 8%
Basically – your average interest rate is 8%, and if you can beat that – then you should take a cheaper loan.
The answer will give you the decimal value of the overall interest that you are paying on those loans. If you can get a cheaper loan/mortgage, go for it!
Free tip: Don’t be afraid to look at mortgages/loans that are around 18% – I understand that many credit cards say that they charge 18%, and by that math you would not be saving anything – but, I have given people lots of 18% mortgages (when no-one else would lend) and my clients still saved alot of money.
Another way to tell if a new loan is going to save you money – simply add up the payments, whichever loan has the lower overall payment – that’s the one that will save you money. BUT – be carefull not to move from a mortgage into unsecured credit card debt – even if the credit card payments are lower you will likely take WAY longer to pay it off (since mortgages typically have amortization and therefore ensure that the principle is slowly being paid off).
So – should you never use credit cards? NO – credit cards are a wonderful tool – they are great for:
- starting a small company (because you can access the money immediately AND you can pay it off without penalty)
- making quick purchases
- using points/Airmiles (even if you have the cash – sometimes it is better to pay for things on your credit card, get the points, then pay it off)
If you need any help – let me know – thanks!
Suggested article: Calgary Alberta Private Mortgage Lenders
Trevor Hickey, B.A.
Concord Mortgage Group Ltd.
#107 – 1905 Centre Street NW
Bus: (403) 290-1990
Cell: (403) 860-8738
Popularity: 10% [?]