Debt’s an ordinary part of life – you take on debt to buy a car, to buy a home, or even just for the convenience of paying with a credit card. While credit can be used to improve your financial standing, by investing in property or helping you make a livelihood, taking on too much debt can poison your financial future. Debt growth beyond your ability pay for it isn’t just bad for your financial health, it can also keep you up at night.
As far as solutions go, debt consolidation loans are well-advertised and may seem like an answer to your prayers, but anyone who has sought them out to pay down looming debts knows that there’s more than meets the eye. Far from being a real solution to your debt problem, they can only make it worse. If you’ve missed debt payments or received collection calls, you likely won’t qualify for a debt consolidation loan from a bank. That leaves private lenders, who can charge exorbitant interest rates – some as high as 30 percent, and that can leave you owing more money in the end. The only way to get out of debt is by paying it down, but with the help of a Licensed Insolvency Trustee, you may not be on the hook for everything.
#1 Make a Budget, Track Your Expenses
Budget your income and make sure you’re living within your means; that means no impulse buying, and no straying outside of your budget. Track your expenses to make sure you’re living within your budget and that you’re leaving money aside to bring your debt down. With Christmas coming up, it’s all too easy to be tempted by your credit cards, especially if you’ve successfully paid one off. There are too many gifts to buy, preparations to make, and parties to attend. Don’t let seasonal excuses break your budget – they happen every year, and it’s important to budget for them.
#2 Accelerate Your Payments
Small payments pay off, especially when you’re talking about credit card debt. Stop paying the minimum payment and start making that credit card debt disappear, payment by payment. One of the things you learn in credit counselling with a Licensed Insolvency Trustee like David Sklar & Associates is that the best way to use a credit card is to pay your full balance every month. When you start carrying over balances from month to month, you start paying for the privilege of borrowing.
#3 Pay Down Your Student Debt
Juggling multiple types of debt is a quick way to get into trouble, and you can’t free yourself from student debt by declaring bankruptcy (at least until seven years after you’ve graduated). Pay down your student debt before you start looking for a mortgage, or you might find yourself stretched thin financially.
#4 File a Consumer Proposal in Ontario
When your debt grows beyond your ability to pay it, it’s time to ask about a Consumer Proposal. In Ontario, Licensed Insolvency Trustees like David Sklar & Associates create and file Consumer Proposals for you. In addition to overseeing your Proposal, they provide credit counselling, a requirement for filing a Consumer Proposal. In credit counselling, you learn how to budget, cut expenses, eliminate credit card debt, and using credit to build a credit rating. If you’re buried in debt, check out Davidsklar.com to learn more about Consumer Proposals in Ontario. Consumer Proposals reduce your debt, stop collection calls, and take garnishes off your wages. They’re designed to help you get back to solvency by paying back your debts with time.