ISFMA the Blog

Suze Orman, in her 9 Steps To Financial Freedom, says that you must cut up all your credit cards, or you will never be able to get ahead financially. What does this mean for those of us carrying significant credit card debt and with no immediate prospect of winning the lottery? Fortunately, if you own your home, you can get home refinancing tips to consolidate your credit card balances as part of a new mortgage, which will allow you finally to get rid of those expensive credit cards!

However, unless you change your spending habits to keep your outgoings within your current income, you will be unable to complete the 9 Steps To Financial Freedom. The cards will simply run up again, and your home refinancing will have been pointless. Worse than pointless, because you will now be carrying a larger mortgage as well as being back to the same level of fiendishly expensive and crippling credit card debt.

You see, home refinancing is not a magic wand. You feel instant relief from lowering the interest rate on your credit card balances - escaping from the dreadful credit card rate to the merely nasty mortgage rate - but this by itself is not a solution to the problem; it is merely spreading the pain over 30 years. You can’t take that feeling of relief as an indication that your work here is done.

Following the 9 Steps To Financial Freedom involves much more than merely financial restructuring by home refinancing. Suze Orman makes this clear. The first steps in her 9 Steps To Financial Freedom are all internal. You really need to restructure your mind, and then your habits, and eventually your financial results will follow.

If you get good home refinancing information, you will hear exactly what I am saying here. Use home refinancing to improve your immediate situation, but make sure the cards don’t run up again, or you will be in an even worse position than before the home refinancing. Anyone offering home refinancing information will be able to tell you that there is an inevitably painful end to that particular merry-go-round. The more times you have gone around the loop, the more painful the inevitable crash will be - when you no longer have equity to extend your mortgage any further. The power of home refinancing depends on constantly rising house values, and in today’s weak housing market, more and more people are hitting the home refinancing wall.

By all means use refinancing your home to create some valuable breathing space, shake things up, lower your monthly interest bills, and clear your credit card debts. But don’t stop there - cut those cards up, and resolve never again to buy anything on credit. It’s the only way. Grit your teeth and bear the short-term pain of forming new spending habits. The end results are worth it.