Last week we opened up a very vulnerable topic that many Canadians are feeling: the  stress of staying afloat with your mortgage payments. We talked about approaching  your bank, things you should never skip and how to get real about your debt. Today,  we’ll dive into other ways you can protect yourself. 

 

Don’t Play the Shell Game 

It’s easy to get sucked into a never-ending financial shell game, where you pay one  debt off with another. Don’t pay your mortgage with an advance from your credit card.  Don’t pay your credit card with your credit line. Don’t pay your credit card with your  overdraft protection. And please, please, please, don’t ever get a payday loan.  Moving your debt from one pile to another won’t help you in the long run. It just means  more piles of debt, more interest to pay and more pain in the long run.  


 

Stop the Bleeding and Commit to a Cash Lifestyle 

It's not just about cutting out your daily Starbucks – if you’re struggling to make  your mortgage payments, it may be time for a serious ‘Necessities Only’ budget. No  more eating out. No Amazon purchases or online shopping. No new clothes or books  or travel. There are lots of great online resources to help you create a budget and cut  expenses, but if the process intimidates you, start with this: 

 

• Check ALL your credit card and bank statements for the last 12 months. Cancel  any subscriptions or recurring charges unless they are ABSOLUTELY necessary.  I guarantee you’ll find at least 3 monthly expenses for things you don’t even  remember signing up for.  

 

• Ask for loyalty discounts. For the recurring charges you deem ‘necessary’, call  the companies and see if you qualify for any loyalty discounts. Do this at least  once a year.  

 

• Remove your credit card details from the online stores where you shop. If you  have to input that information each time you make a purchase, you’ll buy less.  We’re all lazy that way.  

 

• Take those credit cards out of your wallet – better yet, cut them up. Pay for  everything with cash. Don’t have the cash? Don’t make the purchase. While  this won’t help your existing debt problem, it will help prevent your debt from  getting even higher. 

 

• Talk to your lender about consolidating your non-mortgage debt into your  mortgage by refinancing your current mortgage (to a max of 65% of the value of  your home). While this will deplete the equity in your home, it’ll save you from  paying high-interest credit card rates and may help bring your monthly debt  obligations in line with your income.  

 

• Remember that your HELOC (home equity line of credit) is NOT a bank machine.  Don’t dip into it unless it’s an emergency. HELOCs deplete the equity in your  home and can cost you tens of thousands of dollars in interest over time.  


 

Find Ways to Bring in More $$  

Cutting expenses only goes so far – if you want to get out from under that pile of debt so  that you can continue to make your mortgage payments, you need to get creative about  bringing IN more money. Consider: 

 

• Getting a part-time job 

 

• Starting a business or side hustle (provided it won’t cost you much to start)


• Moving to a higher-paying job

 

• Selling unused items 

 

• Renting out a room in your home 

 

 • Occasionally Airbnb-ing your home and bunking with a friend when it’s booked


• Dipping into savings (talk to your bank or accountant if you’re thinking of dipping  into your RSP or TFSA so that you understand the full implications)


• Asking family for help  


 

If All Else Fails… 

If you’re in a lot of consumer debt (in other words, non-mortgage debt) with no  manageable way to make your payments, you might want to consider talking to a  trustee about a Consumer Proposal or bankruptcy. While both options will affect your  credit rating and future ability to obtain credit, they may solve your cash flow problems  and help you stay in your house.  


 

Don’t Forget To Talk to Your Real Estate Agent! 

If you’re having a hard time making your mortgage payments, talk to your Real Estate  Agent, ASAP. In addition to having lots of financial contacts and strategies, your agent can help  you understand how much your home is worth in today’s market and what real estate  options you might have.



 

This last suggestion is very important. Like I mentioned on last Monday’s blog post, I’ve  been a real estate agent for over three decades and have helped a lot of homeowners  navigate this unfortunate situation. It can get overwhelming, and you may just want to  throw your hands up and just say “sell it”. But there may be other options for you. If this  is you, please reach out and call me at 905-683-7800. I’m here to help.





 

Thanks For Reading Today’s BLOG!

Brian Kondo
Sales Representative / Team Leader
The Brian Kondo Real Estate Team
Re/Max Hallmark First Group Realty Ltd.
905-683-7800 office
905-426-7484 direct
brian@briankondo.com
www.BrianKondo.com
www.BrianKondoTeam.com

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