Debt/Save Trap

Breaking the "paycheque to paycheque" chains once and for all.....

Many Canadians live like this, and there is a way out. Let's look at a typical household....

Mortgage, car loans, and credit card debt (most of which have high interest payments), and little to no money saved. With a fixed income or salary, it may seem hard to pay it all off.

First and foremost, you MUST look at the Smart Equity™ system. This is a powerful debt management tool that can save tens of thousands in interest, WITHOUT increasing your current monthly mortgage payments.

Second, let's take a look at the old strategy of paying off all destructive debt first, then saving money. This is the common reason why people are always in debt. If you pay off all destructive debt first (excluding the mortgage) you may feel great, however, you have no money saved. This is where life happens: the transmission in your car goes, need a new roof or deck, hot water tank and furnace go, and on and on. Since you have no money saved, guess what, you go right back into debt for any expenses. What's worse, is a possible lack of discipline and borrowing money for excessive or totally unnecessary wants.

The books say to pay off all destructive debt first, so as to reduce the interest payments on credit cards, credit lines, and so forth. This is a short term view. Yes, you will pay a little more interest by saving first (any interest earned offsets interest paid), however, it is insignificant to the total savings made by following this very simple but effective strategy in the correct order...

1) Save 6 months of gross family income to establish emergency fund, use all disposable income.

2) Make the minimum debt payments along the way without increasing or adding to your debt.

3) Re-allocate the current monthly savings from (1) and attack your debt full force, starting with the highest debt balance (excluding your mortgage).

4) Pay cash for all life's needs: do not use credit cards or credit lines.

It may take 2 - 5 years to reach this Financial Independence goal depending on debt load and income, however, once done, you will have control of your cash flow, no debts (excluding mortgage), and have a healthy emergency fund. Now you can apply the cash flow from (1) to retirement savings, new home purchase, investments, etc.


BTN Financial Services Inc.

205 - 45923 Airport Road

Chilliwack, BC V2P 1A3


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