Take a Good Idea and Make It Yours
Tasha and I were talking yesterday about the Manulife One product. She’d seen the ads on TV and was wondering if it was too good to be true. It’s not. The Manulife One is an excellent example of how a financial institution can come up with a great idea… or at least steal it from Down Under.
I’ve blogged on the Manulife One before. The idea behind it is simple. If instead of using a chequing account and a mortgage, you deposit all your money into the Manulife One account, which also holds your mortgage and line of credit, then every day the money is in the account is a day you’re not paying interest on that part of your debt. In other words, it’s like making a prepayment against your mortgage. Then, when you need the money, you pull it out again. But for the time the money is applied against your debt, you save on interest. And since chequing accounts pay nothing, it’s a great way to put your money to work for as long as it’s in your hot little hands.
I told Tasha she could probably set up exactly the same system on her line of credit. Here’s how:
- When she and her husband get paid, they’d transfer all the money to their line of credit to pay it down,
- They would ask their bank to link their LOC to their chequing account so that when a cheque or debit had to clear, it would come off the line. If the bank couldn’t do that (gawd, some of them are so archaic with their dumb “systems,”) then she’d simply use the line to pay everything, transferring money into her chequing account to cover stuff as necessary.
- Another way to do it would be to put everything they usually put through their bank account on a single credit card. I do this with my telephone bill, internet, satellite, and a host of other fixed expenses. Then they would use the line to pay off the credit card every month. It would save all that transferring action since everything could be paid from the line in one swoop. And since the card would be paid in full each month, there’d be no interest.
There ya go: A TashaOne Account… an account that let’s her use the money in hand to reduce her interest costs for as long as she has that money, while banking right where she is happiest.
Of course, you have to be incredibly disciplined to make this work. You can’t increase your line… you have to pay it down consistently. And you have to live on a strict budget so your spending doesn’t get out of hand and drive your line of credit balance through the stratosphere.
If you’re committed to putting every extra cent you have towards getting your line of credit paid off, and you’re living on a budget so your spending is totally within limits, then you too can create a (yournamehere)One Account and put your hard-earned money to work every single day it’s in your account!