Today’s story is called “Too Much Debt”
Tom and Sally live in a great family neighbourhood. They love the schools their kids go to and their neighbours.
Tom and Sally purchased their home 3 years ago for $350,000 and today its worth $500,000
As of today, they have a mortgage of $320,000 and their payments are up to date, but they are starting to struggle since they have debt from when Sally was on mat leave.
Sally is now back to work full-time, but with the added daycare expenses, they are actually not getting ahead and paying off any debt.Tom works full-time and tries to get as much overtime as he can, but its limited.
Tom’s income is $55,000 per year including his overtime
Sally’s income is $40,000 per year
They have aprox $30,000 of debt that is costing them aprox $600 per month in interest only payments – they are not making a dent in it at all. At this point they are just paying to hold their debt.
Tom and Sally have a car payment of $450 each month
Their mortgage payments are $1,608 per month and daycare is about $1,500 per month on top of that.
They are struggling but don’t want to sell their home.
Their friend Julian, told them to call Ana Cruz for some advice on how they can get ahead.
Ana met with Tom and Sally and she could tell that these people were stressed out of their tree. Ana told Tom and Sally that they had lots of equity in their home and they would figure out a solution that will allow them to stay in their home, Together they figured that Tom and Sally’s monthly expense are aprox $3,000 for their debt, mortgage, car loan, property taxes. Then there is the cost of daycare and life which is not included in this number.
After their meeting Tom and Sally walked away with a spring in their step. They saw the light at the end of the tunnel.
The plans was to refinance their home to take out some of the equity to reduce their monthly expenses.
They added $50,000 to their mortgage to pay off their debt car, penalty and a little extra for closing costs and legal fees.
The new mortgage will be $370,000 and will be $1,835 per month, this pays off all their debt and still leaves them with penalty of equity.
Tom and Sally were so excited they now have an extra $1,165 each month. With that extra money, they have started to save for their daughters RESP, and for the first time, they are not stressing out and worried that wont be able to make the mortgage payment. They are happier at home and work, without this cloud of worry over their heads.
Moral of the story: Don’t sit quietly stressing out about debt, talk to someone before you miss a payment on anything. There are always options, it’s finding the right partner to help you find them. So you are in a situation like this or know someone who is, please share this post with them.
That’s today’s story! See you next time, for STORY TIME.
Have a great evening,
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