It has long since been accepted and “normal” to carry debt in one form or another. When interest rates dropped to near zero, it seemed stupid not to.
Now that the interest rates have increased for the first time in years, the era of cheap cash is beginning to end.
The effect of the rate hike won’t hit home until you get that letter stating that your rate has just gone up, or that first statement saying your mortgage payment just went up by a hundred and so dollars.
So, where does this leave the individual who took advantage of all that cheap cash? What do you do when you have: a mortgage, line of credit(s), auto loans, and credit cards?
Just relax, one pundit says . . . you can absorb the increase in payments. To that I say, sure, just eat less . . . maybe drive less . . . or just . . . well . . . who knows.
The thing to keep in mind is this . . . this is the first of a few steady rate hikes that are coming.
The time to do something about this is now, not the third or fourth rake hike when you can’t make your payments, but now.
Sit down, figure out what you owe, and make a plan to Eliminate Debt, don’t “Manage Debt.” Managing Debt is just making the payments, those just keep taking.
My best advice is to start by cutting costs and increasing income, such as you can. Then focus on getting rid of the smallest debt, then work on the next highest debt.
Freeing up room in your cash flow will allow you to focus on getting rid of your debts and finally take back control of your paycheque and your financial life.
Sorry for the rant, but I just wanted to offer a bit of advice on this issue before it really starts to hurt people in a big way . . . and hurt a lot of people.
As always: Keep your head up, your attitude positive, and keep moving forward!