Surviving the fluctuating price of oil

So due to international forces well beyond our control it appears that the price of oil is falling. As Albertans we are well aware of the financial ramifications this can have to us personally. A decreased profit margin may lead to cut backs by the oil companies in the form of decreased hours and possibly even layoffs.

So what can you do to make it easier? Read on good friends as I share a few ideas with you.

Refinance your home. The last few years have seen an increase to property values. When you put this together with the fact that you have been paying your mortgage down you could be in a great position to do refinancing. Consider this scenario:

Your house value is $400,000. Your mortgage at $280,000 at 3.75% which equals $1,435/month. Credit cards are at $7,500 which equals $200/month. Your line of credit is $20,000 for $600/month. That is a total of $2,235/month.

If you refinance your home to $320,000 at today’s much lower rates your payment drops to $1,514/month which allows you to pay out all of the above and have a savings account of about $10,000 just in case.

You will also save $721 which you then start putting away into your savings account every month.

Keep in mind that you will incur a penalty to break your current mortgage so call your lender to see exactly how much this will be. No lender will pay this for you but some of them will pay your legal fees and appraisal costs which can save you up to $1,000.

Get a line of credit. Perhaps you do not have the home equity necessary to do a refinance. Consider getting yourself a line of credit in case of emergency. The payments on this type of a loan are often interest-only and the funds are easily accessed if you need them.

Start a savings plan. We all say we would like to save more. Perhaps the potential downturn will remind you to actually act upon this. Consider setting yourself up on an automatic savings plan. Most people find an automatic monthly withdrawal from their account to be relatively painless when compared to actually having to transfer funds.

Make sure you have an account like a TFSA where you have cash that is easily accessible without any penalties as seen with a savings account like an RSP.

Take a close look at the little expenses. The devil is in the details they say and this is true of your finances as well. Take a look at your expenses.

Did you know that some banks offer fee-free banking? Maybe its time to consider a move. This could save you $20/month. Are you being charged an annual fee on your credit card or maybe a higher rate? Take a look around and see who is offering a better deal. Call your current credit card provider to negotiate a better rate. This is another potential $20/month.

And really this list could go on and on. Just these two ideas could save you nearly $500/month. There are coupons and discounts all around us, web sites written by the thrifty to help steer you to great deals. Until next time my friends.

Pam Pikkert is a mortgage broker with Dominion Lending Centres – Regional Mortgage Group in Red Deer.

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