Debt is debt, right? Wrong

Armen Hareyan's picture
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(NC) Living debt-free sometimes seems like an impossible dream since most of us can't pay cash for our homes, cars or that second honeymoon Mediterranean cruise. Many of us have mortgages, car loans or credit card balances that never seem to go away. Many think debt is debt and it's all the same.

Not all debt is equal. There's good debt and bad debt.

Good debt can help you financially in the long term. Examples are:

  • Mortgages-as long as it's a manageable amount with a reasonable payment schedule;

  • School loans-adding to your education can lead to better jobs, and

  • Investment loans-leveraged investing can put you in a better financial situation down the road.

Bad debt sets you back if you borrow to buy things that fall in value.

Examples are:

  • Car loans-chances are your vehicle depreciates in value as soon as you drive it off the lot;

  • Vacations-you may love your week in the sun, but if you charge it (and don't pay it back right away), you'll pay with more than a sunburn, and

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  • Credit card balances-it doesn't matter what you bought, if you don't pay it back immediately, you end up paying more than the sticker price.

Keeping track of debt and the individual interest rates charged can feel like a full-time job. One possible solution is to roll all of your debts into one consolidation loan, with easy monthly payments. If you have a mortgage, another option is to roll all of your outstanding debts into a variable-rate "all-in-one" flexible mortgage account like Manulife One.

Since Manulife One charges a single low interest rate, you automatically save more money in interest charges than by carrying higher-interest credit card balances or most personal lines of credit. Plus you can withdraw what you need for that vacation or car and keep paying the same rate as before, without penalty. Traditional mortgages don't allow you to do that.

If you would like to learn more about flexible mortgage accounts, visit Manulife One's web site at www.manulifeone.ca or call 1-877-765-2265.

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- News Canada

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