Welcome to the New Year! Ah yes the holidays are over and it’s time to start thinking about your resolutions for 2010. Well unless you haven’t been listening you have no doubt heard the warning shots fired across the land regarding interest rates and consumer debt. Yes the drums are beating, the towers are ablaze, and the warnings have never been as strong. So this might be the ideal year to get your fiscal house in order before the storm hits.
Woman and their money is our specialty and I know too well it’s probably the very last thing you want to deal with. Survey after survey reveals that women think the worst when it comes to money. The Meredith Corporation in the US has completed one of the most extensive surveys on the growing Financial Pressures on Family Live. 68% of the women cited “financial strain” as the biggest threat to Family life ahead of divorce which came in at 48%. Even for me that is shocking. Yielding family finances to your spouse is such an easy thing to do and often it perks along until there is a big problem and then the blame game begins. How many times have I sat with people and thought there was no need for things to come to this. So before you stick your head in your Yoga class for inner peace take a look at your finances and get a plan you can manage. Don’t leave it to Providence (or whatever your pet name for your spouse is).
Since it is now all but certain interest rates will go up marketing campaigns will no doubt spring up from every type of lending institution repeatedly warning you that you can only win if you act now. But before you touch that dial there are few things you should know:
1. Refinancing your home is not always a good idea! Don’t be lured into using the equity in your home to create cash flow. Trust me – 4% interest rate over the next 25 years is not better than 9% over the next 6 months. Lenders make money based on how long you take to pay back the money not the rate. Factor in the costs of the lawyer; discharge fees etc and this could be a very expensive solution. My advice is compare amortization tables not interest rates. Any lender should be able to provide you with some very detailed amortization schedules and not just tables to show your new “cash flow”.
2. Check the Product carefully: “The devil is in the details”. Banks have wonderful mortgage products but the nuances may not be suited to you. You can shop around from lender to lender yourself or you can work with a mortgage broker who can do that for you.
3. Know Good Debt vs. Bad Debt: Doesn’t take a lot to realize that lenders score different types of debt differently. Here’s how to tell the difference. If you cringe when disclosing the debt it’s probably a “bad debt”. Word of warning – Gen X statically is carrying more non mortgage debt that Gen Y. Perhaps because they’ve been at it longer, who knows, but the difference is staggering.
4. Men can negotiate a lower mortgage rate than a woman: Absolutely not true. Banks work on a spread and the more they “give” you in perks the higher the rate. Also, restrictive mortgages often come with lower rates. Women tend to negotiate a strategy and men focus on rate. Which is the better way to go? Well... at Mortgages4women I don’t think I need to tell you how we think.
5. Credit bureaus can change: If your credit score is not where it should be you can get on the road to recovery. Never get discouraged but do get help.
There you have it. A few tips to get you on your way and hopefully inspire you have the “tough discussions” surrounding money. It is my hope for all of you that you learn to love and manage your debt. When you use someone else’s money to get you financially further ahead there can be nothing wrong with that. If you have any questions you know where to find to me. Wishing you a Happy Prosperous New Year.
