Debt & Cash Management

One of the biggest drawdowns on a person's finances is interest charges paid on debt. It can be for personal loans, credit card bills or mortgages. Rising interest rates have made debt reduction an even greater priority. Interest costs are inevitable when making large purchases, but controlling interest costs can save you plenty of money to invest in your future or to help pay debt down faster. 

Three common approaches to getting debt under control are;

1. Avalanche Strategy

2. Snowball Strategy

3. Debt Consolidation

• Minimum payments are made to all debts owing with any extra cash flow available paying down the debt with the highest interest rate

• Once the highest interest rate debt is paid off, extra cash flow is applied to the next highest interest rate debt and this process continues until all debts are paid off

• Saves you money as your interest costs are reduced substantially allowing you to pay off your debts faster

• Minimum payments are made to all debts owing with extra cash flow available paying down the debt with the lowest balance

• Once the lowest balance debt is paid off, extra cash flow is applied to the next lowest debt and this process continues until all debts are paid off

• Allows you to see debt balances disappear quicker

• Consolidates all debts or a majority of the creditors debts into 1 payment as a loan or mortgage

• Increases a borrower’s cash flow since they are only making 1 payment and not multiple minimum payments

• Helps reduce the borrower’s total interest costs as loans are typically at a lower interest rate

• Provides the borrower with the convenience of only having to make one period payment

• Peace of mind for the borrower knowing that they have a plan in place to pay off their debts

One of the best ways to monitor your cash flow and debt is through creating a budget. Even tracking for as little as 1-3 months will give you insight into where the money is going and if there is anywhere that you can cut your monthly expenses to help improve cash flow or pay down debt more quickly. We can help you set up a quick template to make it easier to track.

We can help you review your current debt and cash flow situation and offer different options to try to help you reduce your debt and get out of debt faster. This can translate into improved cash flow to help you live a more comfortable life and meet your financial goals.