How Badly do you want out of debt

Let’s face it, debt is a huge problem. If you’re in debt, you know that feeling of dread when the bills come in and the balance isn’t what you wanted it to be. The worst part about being in debt is not having any money left over for fun things after paying off your bills each month. What do people do? They go into even more debt because they want to buy something nice or take a vacation but don’t have enough money saved up (or cannot get financing). This leads us to wonder: how badly do you want out of debt?

I don’t want to be rich. I just want my debts paid off… and then some.

You’re not trying to be rich, you just want your debts paid off.

You want the freedom to do what you want, when you want.

Like retire at 60 and travel with your spouse? Do it!

Or maybe start a business that requires lots of work and long hours? Go for it!

Do you know what your debt payments are every month? If you carry over a balance on your credit card, have you looked at the minimum payment lately? Even if you have a payment of $50 on a credit card, that could take decades to pay off if you only pay the minimum.

To calculate how long it will take for your debt to be paid off, use this formula:

Total Debt / (Monthly Interest Rate x 12) = Time to Pay Off Debt in Years

Say you owe $25,000 in student loans with an interest rate of 6%, and you make monthly payments of $250. You would divide 25000 by (6% x 12) and get 210 months or 20 years.

How many credit cards do you have? Why do you have them? Do you really need so many accounts?

Credit cards are not free money. They’re not even a good way to build credit. You should never obtain a new credit card just because you want the rewards, and it’s best to stay away from co-branded cards that offer points for your favorite store or airline.

If you do have a lot of credit cards, consider how many accounts you really need. Do all these accounts come with annual fees? If so, can you cancel them? Are there any promotional deals available for signing up for a new card which would help offset the cost of switching over?

What is something that costs more than it’s worth to you? Is it a meal at a restaurant that doesn’t feed your family enough or make them feel satisfied? Is it a pair of shoes that don’t fit quite right or aren’t quite what you wanted? Is it an item from a store that doesn’t accept returns (or doesn’t offer refunds or exchanges)? You’re probably being wasteful somewhere in your life.

  • Don’t spend money on things that don’t give you value.
  • Don’t spend money on things that don’t fit your needs or budget.
  • Don’t spend money on things that don’t fit your lifestyle.

Are there things you want to do but aren’t doing because of money? Go on vacation. Start an education. Buy a car. Pay off debt so you can eventually retire and travel. For most people, these are things they’d like to do eventually. But for those holding out for someday, this list never seems to get fulfilled.

  • Go on vacation.
  • Start an education.
  • Buy a car.
  • Pay off debt so you can eventually retire and travel.

For most people, these are things they’d like to do eventually. But for those holding out for someday, this list never seems to get fulfilled—and it’s not just because of money but also because of time and other commitments (work, family). Unfortunately, the longer you wait until you start saving and paying down your debt, the more difficult it becomes when it comes time to invest in yourself or plan for something worthwhile later in life (like retirement).

Conclusion

If you want to cut out the waste in your life, it’s important that you start with what matters most. You can’t be wasteful with all of your money if you’re trying to pay off debt and save for retirement. So instead of feeling guilty about spending $5 on coffee each day, focus on where those dollars are going towards something important like retirement or paying down student loans.

Beware of Credit Counseling Scams

Some of the worst scams involve offers to help consumers fix their credit. Our nation is so entrenched in credit use; many will inevitably get behind on their payments. This common malady affects at least one person you know, if not you, personally.

Credit card companies, banks, stockbrokers, stores, and other financial institutions make it sound so easy; who could resist. No interest! No payments until July! No annual fee! Just fill in this form, and you can buy all the things you really can’t afford!

We are sucked into this system easily, but getting out of debt can be extremely difficult and stressful. All these credit providers’ promises become insults and threats as soon as you cannot pay for all the things they promised you could have when you filled out that form.

Many people do not know how to get caught up. Their situation may have changed since they applied for the credit and ran the bill up. They may have lost a job, had a baby, had an illness in the family, or had some other disaster strike which meant they could not make payments they had once agreed to.

The credit providers don’t offer much help. They offered you the credit. Now they want their money. They didn’t worry about whether they were giving you more credit than you could really afford. It’s not their problem. It’s your problem.

Then, here you are. You owe them money. The collectors call and send you notices threatening to take your house, your car, or ruin your credit rating. They tell you that if you do not pay, there will be dire consequences.

Then you see the ad or find the website that says, Credit Counseling. Let us help you get out of debt and get those bill collectors off your back for you. You’re saved! Look, it’s even a not-for-profit organization. They are just there to help me. Where do I sign?

That’s where the trouble begins. Many companies have gotten into this lucrative venture and prey on stressed-out people and have nowhere to turn. The credit card companies who recruited them so vigorously before have now abandoned them. The government isn’t offering to help. Revenue Canada still wants their taxes. And now the knight in shining armor, the credit counseling service, comes to the rescue.

The ad may say Consolidate your bills into one low monthly payment, No Borrowing, Use Federal and Provincial law to keep your property from being foreclosed by creditors, Wipeout your debts, Stop Garnishments, Stop Collectors from harassing you, Keep your property from being repossessed, or other equally great sounding phrases that look just exactly like what you need.

But don’t get sucked in a second time. If you think the credit card companies sucked you into debt, you haven’t seen anything yet compared to what a disreputable credit counseling company can do to you.

Some of these companies offer to help you eliminate your debt. If you get an email like that, delete it. If you find a website that says that, hit the back button and go somewhere else. Do not walk, run!

Sometimes, the best answer is to negotiate directly with the creditor. Be firm. Tell them what you can actually afford to pay. Do not promise more than you can deliver. They really have to take what you can actually pay if they want you to pay them off eventually. Avoiding them doesn’t work.

Many of these scams do not tell you what they actually charge, and their fees can be worse than what you already owe. These companies will try to avoid giving you straight answers to your questions about their fees and have hidden costs they may not disclose at all. They know you turned to them because you are afraid your credit is about to be ruined and that they can pressure you into paying them later.

They also don’t tell you they are receiving a portion of whatever payments you are making to your creditors through them. That’s one of the ways they hide what they make from you.

Some of them will take the payments from you, then not pay your creditors with it on time, or in some cases, not pay your creditors at all.

Never pay a credit counseling service an up-front fee to fix your credit or give you counseling or anything else. Many of these companies are only in place to make money from collecting that fee and never provide you with any credit counseling or other services at all. They’ve made their money and gone on to the next victim.

Many credit counseling scams are under investigation by the government, and those claiming to be nonprofit are being investigated by Revenue Canada. Their nonprofit status is in danger of being revoked.

However, our government agencies will not save you. These unscrupulous credit counseling services will change their business names and be right back in business bilking consumers in no time at all as long as there is a buck to be made. Only your common sense can keep you from being ripped off by credit counseling scams.

Check them out with the Better Business Bureau. Search their company name online to find others who have used their service. Do not believe testimonials that appear on their own website or ones they send you in an email. They can make those up.

When you’re dealing with debt, one of the most stressful things can be the constant harassment from debt collectors via phone calls and letters. Fortunately, you do have some rights and protection as you deal with them.

Debt collectors are required to follow certain guidelines as they attempt to collect outstanding debts. They are different from Province to Province. For example, they can’t call before 8:00 am or after 9:00 pm.

There are a few ways to deal with debt collectors. The simplest is to simply not answer the call. If you have caller ID on your phone and don’t recognize who is calling, don’t answer. If it turns out to be somebody you would like to talk to, he or she can leave a message.

The most obvious and effective option for dealing with debt collectors is to actually pay the debt. After all, you agreed to pay the debt when you acquired it and you, therefore, should repay the creditor who lent you the money.

If you are unable to repay the debt in full at once for some reason, you may be able to negotiate a reduced interest rate or partial repayment if you explain your situation. Keep in mind, however, that telling a creditor you’ve run up the debt by doing too much unnecessary shopping is not going to gain you much sympathy. On the other hand, if you’ve just been fired from your job and are going through legitimately difficult financial times while you look for another, this will likely give you some room for negotiation.

If you do negotiate a better deal with your creditors, be sure to keep your word and pay what you’ve said you would. While bill collectors may seem relentlessly cruel, they’re really just there to collect the money you owe. That’s their job. Once you have made arrangements with creditors to repay what you owe them and have shown that you can be trusted to keep your word, bill collectors will move onto other people and leave you alone.

Alternatively if your are in a tight spot and need assistance beyond just paying the debt. Reach out to us and we would be glad to assist you in a debt rescue plan.

Is consolidating credit card debt a good option?

Well, the answer will more often be yes than no. Consolidating credit card debt is often regarded as the first step towards credit card debt elimination. However, even before you move to take the first step towards consolidating credit card debt, you must understand that consolidating credit card debt (or balance transfer) is an action that you are taking to eliminate credit card debt. Consolidating credit card debt is not a means of deferring the problem for later.

Consolidating credit card debt is indeed a good option in more than one sense. Not only do you get relief from the rapid increase in your credit card debt, but you also get other benefits too. Offers for consolidating credit card debt are in abundance and are very attractive indeed. Almost all the offers for consolidating credit card debt have an initial low APR period during which the APR is generally 0% (or some low figure). This is one of the main things that make consolidating credit card debt a desirable option. Besides this low APR, the offers for consolidating credit card debt also include no interest rate on the purchases made during the first 5 months (or some other initial period) of the balance transfer. This is another thing that lowers the speed at which your credit card debt gallops. These are the two most important benefits that credit card suppliers deploy to attract people into consolidating credit card debt with them. There are other benefits, which include things like additional reward points on the member’s reward program of the credit card you are consolidating credit card debt to. These reward points can be redeemed for other attractive goods/rebates/rewards etc. Sometimes, the new credit card (i.e., the one you are consolidating credit card debt to) might be a credit card that caters more to your current spending needs regarding the credit limits and the way you spend your money. For example, the new credit card might be a co-branded one offered by an airline that you have started traveling with very frequently in recent times, and consolidating credit card debt on such a card may open up much more benefits as compared to your current credit card which was based on your needs at the time of you applying for your current credit card. The credit card you are consolidating credit card debt to might open up discount offers to you.