With the current economic uncertainty, many people are looking for ways to reduce expenses. A relatively painless way to reduce your monthly expenses is to have a second look at the way you’re managing your debt.
A painless way to cut back on expenses
Over time, most of us take out a variety of loans for different purposes. These can include things like credit card debt, car loans, home renovation loans and, of course, the mortgage.Â
If you have more than one loan, you’re most likely paying a different interest rate on each loan. One of the easiest ways to reduce your monthly interest costs is to consolidate your debt at the lowest rate.Â
Typically, your lowest-rate debt will be a loan that is secured by an asset, such as your home.
If you have sufficient equity built up in your home, consider switching to a product that allows you to access your equity, such as a home-equity line-of-credit.
Which loan should I pay off first?
Then, use this line of credit to repay your higher-interest loans. This is an option you can use to bring all of your debts together into a single account, at a single rate.
Some line-of-credit products allow you to track different debt separately within the account so you can keep track of interest costs and repayment schedule.Â
Not only will debt-consolidation save you interest but it will make it easier for you to keep track of what you owe and how you’re progressing in paying it down.
Conclusion
Reducing your monthly expenses is one way to deal with economic uncertainty – and it doesn’t have to be painful. By borrowing smarter you can reduce your interest costs and increase your cash flow each month.
If you’d like to learn how to reduce your monthly interest costs, contact us to learn how we can help you become financially free.
