Carpenter Real State Group

We are licensed with FICOM – Financial Institutions Commission and are governed by the Mortgage Brokers Act and have educational standards that are set out.  Part of these standards is ongoing education.  We know the mortgage market and we are not just trained in one company’s product.

We can shop many institutions for your mortgage, most have access to over 50 lenders.  Therefore they can offer you more choices and more competitive rates regardless of where in Canada you live.  You are not bound by one company and the products they offer.

Over the years you have been told may things about debt, get rid of it, good debt, bad debt, consolidated debt and so on.  Everyone has an opinion about it and depending on whom you ask they will tell you what to do with it.

Lets get real and have a frank discussion.  Most people have debt, other than a mortgage.  Some debt is “good” this means the interest can be deducted on your tax return, this is debt you use for investing, investing in things like the stock market, mutual funds, rental properties or other investment opportunities. 

Other debt, consumer debt is the “bad” debt.  First of all let’s get real about this debt, you incurred it, good or bad decisions but the debt is here.  So stop beating your self up over it and just accept it, the debt is here and now we need to do something about it.

Conventional thinking says pay off the debt at all costs, don’t do anything until it is done.  Concentrate on the debt and only the debt. 

I am challenging conventional thinking and want you to think about something radical.  Saving while you are paying of debt.  Set a specific payment that you will put away rain or shine.  The concept of pay yourself first is about creating wealth to run circles around your debt.

I challenge you to be thinking about saving while paying off debt – let’s elaborate on that.

Establish a wealth account – Take a portion of your earnings and put it into a wealth account.  This is a specific payment that you put away rain or shine.  The concept of pay yourself first is about creating wealth to run circles around your debt, so that you can spiral up your wealth and pay off your debt.  Then you can take the money in your wealth account and put it towards the purchase you want to do.

Set up the account and get yourself in the habit of making it a priority payment each month.  Once you have established the account, you pay a minimum amount on a scheduled basis.  The amount is not as important as starting right way.  Do it now!   Priority means priority, which means you really and truly must pay into your wealth account first, before you pay anything else.  Even if you just start with $10 per month, you will be amazed how quickly it will add up.   Even if you are in debt, deposit a portion of your earnings into the wealth account now.  It does not matter the amount, the important factor is to form the habit of regularly deposition the money.

Then make a plan to get rid of the debt. 

Lets talk a little about debt – you have it and the goal is to reduce it.    One part of building wealth is saving with your wealth account and the second part is to reduce your debt, both of these need to happen at the same time.  This is one of the proven ways to pay off your debt, there are may out there but this one works well for my clients.  As part of my practice,  I have clients coming to me with lost of plans, no savings and debt. 

Here is a 5 step plan:

Step 1:  Fill out debt elimination box, list everything that is not secured against an asset.

Step 2: The Factoring #

Take the # is column 2 and divide that number by the number in column 3. Fill in the factoring number for each item

Step 3: Priority Payoff Box

Take the debt with the lowest factoring # and put it on top. This debt is the first priority payoff.  Continue to list the debt in order of the factoring number, with the debt with the lowest factoring number in first place, the debt with the second lowest factoring number in the next and so on.

Step 4 The Jump Start

In addition to the min payment required you are going to take $200 from your current spending and allocate this to your debt.  This is about $7 per day – it will be easier than you think. Once you have completed a budget you will have a clear understanding of where your money is coming from and where it is going.  Finding $200 will not be difficult.  When you do you budget it will be easier to find where you are spending, when you honestly dig up your expenditures you’ll discover items that you could cut down or do away with.

Stet 5 – Debt payments

Take the debt listed in the first spot of the priority box and apply the $200 allocation to the min payment listed with the debt while you continue to pay the normal monthly payments on all the other debts.   Once you finish paying the debt in the number one stop move to the next debt listed.

In this plan it is vital that you commit to making the minimum payments and also adding the jump start allocation.  The number must be specific and consistent, you also must have the mindset that as you pay off the one dent the minimum payments stay in this debt pool and contribute to the next debt’s payment.

By the time you get to the one at the bottom, the one with the highest factoring number, with represents the months it should take to pay it off based on the original monthly payments you’ll see that you will pay the debt off much faster than the factoring number.