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Stop the Cash-Flow Crunch

Most people mistakenly think that the only answer to their financial woes is to increase their income - and in almost every case, they are 100% wrong. The single biggest factor in attaining financial freedom is the ability to effectively manage debt and reduce liabilities - which is a lot easier than it sounds. This article lays out a clear, easy to understand action plan that can save almost anybody a literal fortune in unneccessary interest and expenses...

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Let me ask you a question:

What creates better financial results for you, more income or fewer expenses? I guess you could say, it’s the modern equivalent to, “which came first, the chicken or the egg?”

This is certainly a question I’ve pondered often.

You see, I’ve always earned a living based on commission, all of my working life. So I’ve always been a fan of working harder to increase income. My wife, on the other hand, is a CGA, and like most accountants, she prudently works to reduce expenses and manage costs. Our varied background and experiences both in business and in or our personal lives does sometimes cause us to see things slightly differently; you could say that I’m for more income and she’s for fewer costs.

Of course, I completely agree with her when it comes to personal finances, especially when examining a borrower’s income and debt structure. While I refuse to give up my belief that a perfect solution for everyone would be more income, I’m smart enough to know that it’s not always the practical approach or an easy solution for most people. Let’s face it, it’s kind of hard to walk into your boss’s office and ask for a 50% increase in your salary, because you need it. It would certainly be nice however, huh?

So that leaves me with the debt structure and coming to the realization that by restructuring the debt, I can give people more money and less month, instead of less money and more month! Once you have more leftover income, you can put this surplus to work for you, by helping create more wealth with careful planning and investing.

Fortunately, the economy currently makes it very easy to restructure debt if you own a house. Our current mortgage interest rates are at record lows, which are far more favorable than those of other debt instruments. All of this makes it easy to roll the short term debt into the long term debt and save both time and money.

Look at This Scenario:

Home mortgage $250,000 @ 6.0
(5 Year term with 35 Year Amortization)
Equity Line $50,000 @ 8.00 % $335 (Just interest no principal repaid back)
Credit Cards $25,000 @15.00 % $315 (Just interest no principal repaid back)
Auto Payment $20,000 @ 8.0 % $405
2nd Auto loan $15,000 @ 8.0% $305
Total Debt: $360,000 $2774 per month in debt service

An 18 year fixed interest rate loan for $360,000 at the middle 6% range would have a monthly payment of $2807. So essentially your payments are $33.00 more, but your mortgage has dropped by 17 years, and all of your debts are now paid in full!

That’s $75,000 in credit card and credit line debt that you were never going to be able to pay off, because all you could afford to pay was interest. Now it’s gone! Alternatively, a 25 year fixed rate loan (25 year term and amortization) at the middle 6% range would have a monthly payment of about $2430; that’s $344 per month of improved cash flow, and your mortgage is still paid off 10 years sooner.

Isn’t it amazing that both of these loans save the borrower years of payments and one even improves monthly cash flow as well!

Now the good news, we currently have an economic reality that makes the above example possible for most borrowers to accomplish and results in cost cutting measures which in turn allow you to make better income. Income that if you reinvest wisely, will result in even more wealth, so use this information to your advantage and always, “Go with the flow—the cash flow!”

About the Author:

Kam Brar is a licensed mortgage broker and has been directly involved in the lending industry over the past 10 years, bringing with him a wealth of knowledge and experience. His particular specialty throughout his career has been working with "challenge" customers, where it takes creative financing (and sometimes private loans) to accomplish their goals.

His role with ShangriLoan is that of a consultant and mortgage industry liaison.

ShangriLoan Ventures LTD ( does not provide loans or mortgages, and is also not an acting broker in any capacity. is an editorial & directory publishing service and an advertising intermediary connecting borrowers with brokers or otherwise services relevent to their specified needs. is compensated by its advertisers for referring qualified site users who submit a request for a lending/mortgage quote from advertisers who are matched to the users needs. Please see our compensation disclosure and privacy policy for full details on our operating procedures.

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