Case Study: Mr & Mrs Smith

Mr & Mrs Smith have two children John 9 and Samantha 13. Mr smith is self employed and Mrs Smith works 20 hours per week as an employee.

Mr Smith has an overdraft debt of $50,000 and a credit card debt $10,000.

Mrs Smith has 3 credit card debts. They had purchased their dream home a number of years ago with a major Australian bank. Life was very good. Both Mr & Mrs Smith were sensible with their finances however they realised they were not able to save on a monthly bases and weren’t really getting a head. So they decided to contact their bank and asked if they would consider reducing their home loan interest rate but to their surprise their bank declined the offer.

Smith’s total debt before debt consolidation was:

Loan Account Total Amount Monthly Repayments
Mortgage $ 375,000 $ 2,037.35
Overdraft $ 50,000 $665.10
Credit Card $ 5, 500 $ 137.50
Credit Card $ 7,280 $ 282.20
Credit Card $ 4,500 $ 112.50
Credit Card $ 6,500 $ 162.25
Total $ 448,780 $ 3,396.90

With monthly repayments amounting to $2,472 coupled with everyday living expenses, life was becoming difficult. Mrs Smith dreaded family holidays and birthdays as it meant spending money she didn’t have. She was too embarrassed to let friends and family know why she had suddenly become a hermit.

That’s when Jane decided to give Finance and Loan a call. A new low interest rate loan was negotiated for the Smiths. They consolidated their debts and are now paying off $300,280 with one easy payment of $ 1,700. They’re not only saving on monthly payments but also on the interest that would have paid on the credit cards in the long run.

Mrs Smith is in charge of her finances and looks forward to holidays and social events. The Smiths are making additional payments to clear the loan faster.

After debt consolidation and loan restructure:

Loan Account Total Amount Monthly Repayments
Mortgage #1 $ 398,790 $ 1,997.05
Mortgage #2 $ 50,000 $ 251.20
Credit Card $ 0 $ 0
Credit Card $ 0 $ 0
Credit Card $ 0 $ 0
Credit Card $ 0 $ 0
Total $ 448,780 $ 2,248.25

Monthly Savings

$1,148.65

Yearly Savings

$13,783.80