Most debt elimination strategies want you to increase your payments, but who has extra money?
Here is one of a few strategies that don't require extra money, and as Manulife states in the video above, you can save thousands of $$$.
If you didn't watch the video here is the summary: Replace your mortgage and all other debts with a large line of credit. Use the line of credit for your chequing and savings accounts. Have your pay cheques deposited into the line of credit. Stop saving money, instead pay down your line of credit.
Over the course of the month you will need some money to live on, so withdraw it from the line of credit. To be more effective, use a credit card to pay for all your monthly expenses and then pay off the card at the end of the month. Just make sure you are not withdrawing more than you are putting in.
This works because the interest you are charged on a mortgage is charged daily but you don't have to pay it until the end of the month. So even if you only reduce the amount owing for a few days in a month, you will reduce the interest owed.
The potential drawbacks of doing this are:
1. The line of credit interest rate may be higher than other mortgages.
2. If you take out more than you put in you may never pay off your mortgage.
So here is the solution:
1. Take the lowest rate traditional mortgage offered (shop around).
2. At the same time, get a secured line of credit for $20,000 (depending on your situation).
3. Immediately borrow $10,000 from your line of credit and pay down your mortgage.
4. Now use the line of credit like the Manulife One concept. When you have paid it down borrow another $10,000 against it and pay down your mortgage.
