Mark Huber, CFP SetForLife Financial Services Tel: 604-207-9970 mhuber@HowToBeSetForLife.com ...

Mark Huber, CFP

SetForLife Financial Services

Tel: 604-207-9970

mhuber@HowToBeSetForLife.com http://

www.HowToBeSetForLife.com

Cornerstone to a solid financial plan–wise debt management

Meet David

High expenses

Mounting credit card debt

Meet Terri and Sam

Ready to arrange a mortgage

Floating interest rate

Fixed rate

Meet Sarah

$10,000 in savings

Needs access for emergencies

Sound familiar?

70% concerned about rising interest rates*

75% haven’t reduced debt or increased savings in the past year*

Source: Maritz Research for Manulife Bank of Canada

Not all debt is bad

Expensive debt Credit cards

Regular debt Mortgages, lines of credit, car loans

Tax-deductible debt Investment loans

Remember David?

Credit card debt

Pay with bank loan or line of credit

Reduce interest payments

Out of debt sooner

David’s saving solution

Credit Card Interest

$10,000 X 20%

= $2,000 per year

Loan Interest

$10,000 X 4.25%

= $425 per year

Savings $1,575

Advice for David

Only spend what you can afford

Pay off your balance in full each month

Banking on your own interests

Terri and Sam’s mortgage dilemma

Fixed vs. floating rate mortgage

Study 5 year intervals (1950-2000)*

Better off with floating rate

Renew annually

Source: Prof. Moshe Milevsky, Professor of Economics, York Univ.

Advice for Terri and Sam

Consider floating rate

Lock in only to establish comfort level before moving to variable rate

Sarah’s savings

Wants access to her $10,000

Minimal debt

Concerned about retirement savings

Putting Sarah’s money to work

Non-registered investment

Security for line of credit

Access to cash in emergencies

Low rate of interest

Three problems, one solution

1. Convert expensive debt to regular debt

2. Reduce interest with a variable rate mortgage

3. Put savings to work

Flexible mortgage account

Save yourself a whole lot of money

Flexible Mortgage Account

Combine floating rate approach with savings of debt consolidation

Debts, savings and income in one account

Save thousands in interest

Access to money when needed

Tips for your ‘fiscal fitness’

Pay off credit card debt immediately Pay new charges in full each month Avoid retailer financing Avoid overpaying with interest traps Use windfalls to reduce debt Switch to variable rate mortgage Use credit card to pay monthly expenses

and pay balance when due

What you owe and what you own

Save interest today

Invest for tomorrow

Get on track with debt counseling

Speak to your financial advisor