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They have $1,500 in a short-term savings account at 2% and maintain a minimum balance in their chequing account of $2,000.
Their joint take home pay is $6,500.
They have expenses, not counting debt, of $4,500 per month.
They want to increase their RRSP contributions by $250 per month.
By combining their debts and savings together in Manulife One, their initial balance is $159,700
after they pay legal fees of $500.
If they maintain their current expenses and current interest rate of 6.75% holds, they will be out of debt in 10 years, 10 months, over 4 years earlier than their present
strategy. The total interest they would pay on their Manulife One would be $66,250 vs. the $98,650 they would have to pay under their current plan. That’s a savings of $32,400!
As well, prudent use of pay increases, bonuses, tax refunds, etc. will allow them to reduce their debt balance faster and reduce interest cost further.
What Can Manulife one do for you?
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