3. Make Sure You Have a Balanced Budget
If you spend more than you earn, you’ll be financing your lifestyle with higher payments when interest rates go up. Life will only become that much more expensive, at a time when the high cost of living is already stressing so many people out. Avoid working against yourself – apply any of these 7 tips after you’ve balanced your budget.
Learn More About Budgeting and Get Tips That Work
4. Make Sure That Your Mortgage Payments are Affordable
If you can barely afford your mortgage payments right now, what will you do when your payments go up? As interest rates rise, you will likely be renewing your mortgage at a higher rate. This may be several years down the road, but can you afford a higher mortgage payment? If you can’t, start planning now so that your lender doesn’t make the decision for you.
Will Downsizing Your Home Help If You’re in Debt?
5. Generate Income With Your Home
Since a home is most people’s biggest asset, see if it can generate some income to help get you by. You may be able to rent a room to a student or offer your storage space for rent. If you have a 2 bedroom apartment and don’t need the second parking spot it comes with—but the guy down the road needs a spot to park his motorcycle, rent the space to him for extra cash. That little bit extra might be just enough to help you make do. Here are other ideas to help you generate income if you’re looking for some ideas.
6. Lock Your Mortgage Interest Rate In for Many Years
If you believe that mortgage rates may rise substantially, now would be a great time to consider locking in your variable rate or open mortgage for a good number of years. If rates do rise, this could be one of the best moves you could make. Speak to someone you trust and decide what will work best for you.
7. Lock In a Low Interest Rate for Debt That You Can’t Afford to Pay Off Quickly
If you are carrying a significant line of credit balance or if you have credit cards or loans that you don’t think you will be able to pay off any time soon, now may be a great time to consider locking in those debts at a lower interest rate. Consider changing your revolving forms of credit into pay-down loans and get rid of the debt. This option isn’t ideal for everyone, but it may work for you if you need to reign in your temptation spending.
Keep Life Affordable When Interest Rates Keep Going Up
When it comes right down to it, a balanced approach will likely protect you the most during times when interest rates keep going up. A balanced budget that gets you away from the never-never plans of revolving credit is key. Then look for ways to reduce your expenses and increase your income. Pair your efforts with shopping around for the lowest rates you can find, a frugal lifestyle, and doing all you can to protect your credit rating. As they say, what goes up must also come back down again, so savvy money management is what it will take to ride out the waves.
Learn more: 8 Reasons Why Interest Rate Announcements By the Bank of Canada Matter