Americans Find Themselves Further in Debt - Now What?

Americans Find Themselves Further in Debt - Now What?

CNN’s recent reporting shows Americans once again find themselves further in debt – Now What? As stimulus money has run out, our appetite for debt has not. USA credit card balances rose by $17 billion in just the last quarter and total debt has increased by $1.1 trillion over pre-pandemic 2019 numbers. At the same time, inflation continues to rise and pushes both home and auto prices even higher. So what lessons can we learn from America’s growing debt?
 

The Debt Hole

Let’s take a look at the debt hole that many are in. As an example, suppose you bought a home in Orange County, CA, in January of 2018 for $420,000 with a 20% down payment and a 30-year mortgage at 3.25%. By making your payments for nearly four years, your loan balance would now be hovering around $310,000. Unfortunately. like many Americans, you have accumulated some credit card debt (family sickness, out of work, car repairs, etc.). Let’s suppose you have accumulated $10,175 in credit card debt, leaving you with minimum credit card payments of $204. In this situation, it will still take you 26 years to pay off your home and over 30 years to pay off your credit cards (at an average interest rate of 18% and making only minimum payments). The good news – you can flip the script and not stay on this plan by reorganizing debt.

Reorganizing Debt

It comes as no surprise that most Americans have some level of debt; in California the average household has $10,175 in credit card debt. While we all would love to be debt-free, that is not the situation many are in. Yet, homeowners today may have a fantastic opportunity to put themselves on a path to become debt-free sooner than they could ever imagine. Let’s look at an example of how reorganizing debt could make this happen.

In this same example, the home purchased in 2018 would now have an estimated value of $558,613. By refinancing into a new 30-year mortgage at 2.99% and taking out enough money to pay off your credit card, you could save yourself an estimated $298 a month in payments (credit card and mortgage payments). Imagine what you could do with that savings? However, one of the most effective, debt reduction options would be to use the savings to pay off your home faster instead of paying the credit card companies. Begin by taking all the monthly savings and paying down the principal balance of your home! Making this one change, which doesn’t even change your monthly budget, would pay off your home in 22 years and four months. This pays off your home nearly four years sooner than the original loan you took out when you bought your home and increase your net worth by $63,291. Click here for details.

Debt Reorganization Expertise

As you can see, there are many factors to consider when reorganizing debt. Refinancing is one option and it would be easy to become overwhelmed during the debt reorganization expertise. The GOOD NEWS – you don’t need to tackle this alone. Let Revival Lending, a Certified Mortgage Advisor, help you! Your dreams are not one-size-fits-all; your loan shouldn’t be either.

Revival Lending, Certified Mortgage Advisors

At Revival Lending, we are Certified Mortgage Advisors. We will work to design a customized loan to facilitate your goals.  We want to earn your business over a lifetime and not just through a one-time transaction. We promise to take the time to truly understand your goals and help you map out a plan to use your mortgage and home to reach them.  Call or email us to schedule a complimentary mortgage review today. You will not be disappointed!

How to Improve Your Financial Situation in 6 Steps

How to Improve Your Financial Situation in 6 Steps

Are you tired of being buried in debt? To make your dreams a reality it is important you learn how to improve your financial situation. Following these 6 steps will help you begin to fund your dreams.

1. Pay Off All Debt

Every month it costs you. You can’t achieve financial independence if you’re overwhelmed by debt and interest payments. Credit card debt is the most serious since it tends to incur the highest interest rate.

2. Save 3-6 Months For Emergencies

Most financial experts recommend you have between three – six months of basic living expenses in your emergency fund. An emergency fund helps cover your basic living expenses during a time when your income has been reduced. The current COVID-19 pandemic has reminded us all that emergencies will happen and financial situations can change rapidly. The best way to survive these situations is by having a financial reserve.

3. Save For Your Children’s College

Education is a high value in our family, but the debt that results is a heavy burden for many. According to the Wall Street Journal, the average college graduate’s student loan debt is at a whopping $37,172. At this rate, college grads will be lucky to have their student loans paid off before their kids start college! If your children’s education is a value for you, start saving now.

4. Invest 15% of Your Income Towards Retirement

It’s important for you to start retirement-dreaming. Retirement may be as simple as beginning a new activity, starting a side hustle, or maybe just traveling. Living your retirement dream needs to begin now so you can prevent financial hardships in the future.

5. Pay Off Your House

Eliminating a house payment reduces monthly expenses obviously, but also, the interest savings are significant. Depending on its size and term, a home loan can cost thousands or even tens of thousands of dollars over the long haul. Paying off your mortgage early frees up that money for your future!

6. Find Causes That Impact Lives

Giving back is the key to success. Changing one life, a community or even a nation is the ultimate joy and satisfaction for living. Develop a plan to leave the world a better place!

While the above steps may not be easy, after assisting thousands of borrowers just like you, we have found these to be doable. Give us a chance to help you!