Mounting credit card debt, unpaid mortgages and auto loans and other debts can take a toll on your finances and cause you to make poor choices, which sink you deeper into the quagmire. However, this does not have to be the end of the road for you. With the right credit counselling services, you can be debt free for life.
Evaluating Your Financial State
Typically, most people fall into the debt trap when their outflow is more than their inflow. As a result, people are unable to meet their commitments and this causes them to fall deeper and deeper into the debt trap. Credit counselling offers a way out by carefully evaluating your debt. The counselling helps you segregate your debt into good debt and bad debt.
Good debt, like a mortgage, is one with a low interest rate, while bad debt refers to debt that has a high interest rate, such as credit card debt. The counselling will help you evaluate the amount of good and bad debt. This is the first step to becoming debt free for life.
Once you know your obligations, it is time to determine how much income is going towards paying your debt. This will give you the monthly debt-to-income ratio.
Selecting a Payment Plan
To become debt free, it is necessary to carefully review your financial situation. This is done during the credit counselling and the counsellor then identifies ways to reduce your expenses, so that you have more money to clear your debt. The counsellor will negotiate on your behalf with your creditors to come up with a payment plan that is acceptable to all parties. In addition, you also will work with the counsellor to come up with a payment plan, which the counsellor will help you maintain until you pay off your debt.
Prioritising Your Payments
Once you decide the repayment plan, it is necessary to get organized. You will have to keep your bills, letters from creditors and other financial documents systematically, so that you can know exactly how much debt you have and what your outflow will be. Many credit counsellors recommend clients create a visual representation of their repayment strategy. This can be done on the computer using MS Excel. The reason for this is very simple. All the data is in one place and when you know the interest rates, minimum payments and other details, you will be able to see the progress you are making. This will keep you motivated to continue on your journey to becoming debt free for life.
The Bottom Line
Credit counselling helps you form new lifestyle habits. As a result, you are able to make these habits a part of your life in the present as well as the future. With the right guidance, you become more aware of how you are spending your money and you begin looking for ways to save instead of making unnecessary purchases and expenses. Basically, credit counselling helps you become debt free for life by eliminating high-interest credit card debt, preventing you from filing bankruptcy and also improving your money management skills, so that you do not fall into the same trap again.
If you are struggling with debt, get in touch with our friendly and professional staff. Our accredited counsellors can transform your life and help you become debt free for life. So why wait? Contact Credit Counselling Services of Atlantic Canada today!