This year, many of us will find ourselves digging out of consumer debt. The holiday season and the spirit of gift giving, combined with the easy access to credit cards and lines of credit, has led many people to exceed their own spending limits.

Despite some difficult times that resulted in economic pressure, for example, Katrina, and the sudden increase in energy costs, surprisingly, Canadians were confident enough to spend heavily this past Christmas. A recent survey, conducted by POLLARA for the Retail Council of Canada indicated that ninety-four per cent of those surveyed planned to give gifts and the average amount that each would spend would be approximately $1,357.00. When the bills start arriving after the holidays, many will experience financial distress as the increased credit card payments pile onto existing household debts. If you are feeling the squeeze of debt , below is an option that may help you.

If you are already a home owner, you will likely have equity in your home. Using that equity to pay off your consumer debts may be an option that will ease some of the stress of paying high interest debts over a long term. Instead of paying your credit card debts at 18 - 28% interest, you may be able to consolidate that debt into your mortgage and pay it off at less than 7%.

Consider above, a recent client with a mortgage balance of $220,000 and other debts totalling $18,857. By consolidating the car loan and credit card debt into a new mortgage contract, the client was able to reduce monthly payments and save $852.25 per month. It is important to note that for this exercise to bear real financial fruit, this monthly saving should be applied to either an investment or as additional principal payments against the new mortgage. All too often the additional cash flow is consumed resulting in a similar crisis a few years down the road. In the above example, by applying half of the monthly savings to the new mortgage, this home owner would be mortgage free much earlier than originally planned.

Such a consolidation will not only reduce monthly debt load but improve and protect your credit rating, a major consideration for any Canadian seeking future loans. Missed or late payments are not the only factors that can reduce your credit rating in the eyes of financial institutions, credit cards and lines of credit that are “maxed out” have the same negative impact. You should always know, validate and protect your credit rating as much as your SIN number and credit cards. When it comes time to renew your mortgage finance, you will be glad you kept your credit rating in good standing. You can check your rating for accuracy once a year free of charge. Just call Equifax at 1-800-465-7166 or go on-line at www.equifax.ca and fill out the form at and fill out the form at

http://www.equifax.com/EFX_Canada/consumer_information_centre/docs/request_report_form_e.pdf