The Best Debt Advice for You
Whether we like it or not, debt is slowly becoming a way of life for most Canadians. When viewed in a positive sense, i.e., to fund one’s education or finance a property investment, it can be good but there’s a flip side to debt too.
You may have a good job, earn a good income and be seemingly well settled. But if you don’t watch out, you could be slowly racking up all sorts of debt. Thanks to bad money management, many people find themselves drowning in huge debts accruing from credit cards, automobile loans, home equity lines of credit and a myriad of others. Even among the younger generation, debt is rising at an alarming rate, accentuated by student loans, unemployment, easy access to credit cards and more.
The best debt advice – Be a victor, not a victim.
The first thing you need to do is to step up and own the debt. Go from a victim mentality to victor mentality, take full responsibility and resolve to pay it off. Being honest about what you owe and committing to cutting expenses can be a good start.
Set up a SMART debt-reduction Goal.
Take control of your debt reduction with a SMART plan. It will require you to roll up your sleeves, make a plan and take decisive action. Set goals that are Specific, Measurable, Achievable, Relevant, and Timely. This helps to change your behaviour and establish good money habits for staying out of debt so that you do not go back to the same challenges again.
Start with the basics.
The first step, is to write down exactly how much you owe to whom, including interest rates and minimum payments if it involves credit cards. The next step is to come up with a budget, see how much it costs you to live and what expenses you can cut – to find the money to pay off your debts. Evaluate every monthly bill closely and ask yourself – ‘Is that adding value in my life?’ If not, start eliminating habits like frequently eating out and taking exotic vacations.
To improve your credit score, the sooner you do it the better.
It’s better to tackle debts sooner rather than later as a strong, solid credit gives you more options – including the flexibility to negotiate lower interest rates or secure a balance transfer credit card, compared to those whose debts have been turned over to debt collection firms.
Customize your debt-reduction plan.
What works for one person won’t necessarily work for another, so most people need to experiment to find the best debt-payoff method. Find the method that suits your personality, calculate what you owe and address one debt at a time. Start with the smallest debt to quickly pay it off. Then go to the debts with the highest interest rate.
Your needs are unique and you need a trained credit counsellor who can listen to you and help customize a plan just for you. You can reach any of our trained credit counsellors at 1-844-329-7254 or contact us online through our online debt analysis and a counsellor will reach out to you shortly.
Track your monthly expenses.
This is really a no-brainer. The best debt advice you can get is to first understand where your money is going on a regular basis. You can start by calculating your daily living expenses, such as groceries, personal items, transportation and cell phone bills.
With a little effort, you can cut expenses like dining out, gym memberships and fun shopping. If the debt situation is serious, you may even need to consider shifting to a smaller home, moving your kids from private to public school, selling off your car or moving back in with your family.
Make a budget.
These days there are apps for everything so take advantage of what’s available on the internet. Or if you believe in traditional methods, start by writing down every dollar you spend. You can use the envelope system, with envelopes for each expense category plus savings.
Increase your income.
You can switch to a new job that pays better, take a part-time job or take up project work on the side. By increasing your income sources, you will be able to take control and move towards a debt-free future.
Refinance your mortgage.
If you own a home, now’s the best time to consider refinancing your mortgage, thanks to low mortgage rates. Once you do your research you can confidently identify a reliable lender and proceed.
Manage your credit card usage.
Consolidating all payments on one credit card is one option. You could even consider transferring balances to get a lower interest rate. This is a viable alternative for people with solid credit, as long as you can pay off the balance during the introductory period. While you can sometimes refinance your mortgage or take out a home equity line at a lower interest rate to pay off credit card debt, remember that failing to make those payments can endanger your home.
Consider renegotiating your credit card bill.
Get in touch with your credit card company. If you’re current or not far behind on payments, some credit card companies can consent to lower the interest rate or agree to a smaller minimum payment for a period.
Take legal help.
If you are already on the brink, it is time to call your lawyer. This is especially helpful if you’re considering bankruptcy or have been sued.
The final debt advice – contact a trained credit counsellor.
Start with a trained credit counsellor, who may recommend other options to pay off or reduceyour debts. Working with an accredited and reputable non-profit credit counselling agency provides a clear picture of your financial options. They will review your budget, evaluate debt-relief alternatives and suggest solutions.
There are several professional debt reduction options available to help you reduce or even get rid of your debt in a consistent and logical manner. You can contact our trained credit counsellors at 1-844-402-3073. If you prefer contacting us online, try our online debt analysis and a counsellor will reach out to you shortly.
Life definitely leaves clues. Focus on what caused you to accumulate all the debt in the first place. Learn from your mistakes, so you do not end up repeating them again and master the art of living within your means, starting now.
Ready to embark on your journey to becoming debt-free? Call us today to speak with a trained credit counsellor at 1-844-402-3073.