In today’s world, it is very easy to get into unmanageable debt without even realizing it. The accessibility of credit cards, car loans and low-interest lines of credit mean that we constantly have access to money that we haven’t yet earned. And that can be extremely dangerous.
Oftentimes, we end up well above our heads in debt without even realizing it. With so many different credit lines, debt has a way quietly piling up on you. Before you know it, you’re overwhelmed, and trying to work your way out of it can be a very frustrating experience.
Cash flow, interest rates, family obligations and even a decreased income as a result of a tough economy can all conspire against you in solving your debt problem.
However, getting out of debt is by no means an impossible task. With a little bit of planning, discipline and patience, you can successfully pull your head above the ocean of debt you currently find yourself in.
If you feel overwhelmed but want to get out of debt, there is one small easy step you can take to get on the path to a debt-free life.
It may sound simple, but the first step to getting out of debt is to get organized. Figure out what needs to be paid and when. Make a list of all the debts that require payment, with the most important ones, such as your mortgage or income tax payment, at the top. You never want to default on money owed to the CRA or your bank, as this will result in major repercussions, such as losing your house or having your wages garnished.
Secondly, identify the interest rates of each loan and aim to pay down the high-interest loans first. This will ensure that you’re not stuck in a vicious cycle of only paying interest and thus never getting out of debt.
Once you know exactly what debts you owe, to whom, how often, and what the interest rates are, you can make a debt repayment plan.
Consider debt consolidation
Once you’ve organized your debt payments, you may have the option to consolidate your debt. By transferring all of your debt into one consolidation loan with a lower interest rate than the rates typical credit card, you’ll lower your debt obligations and make your life easier. Instead of paying back several different loans each month, you’ll only have one monthly debt payment to deal with.
While in the process of paying off your debts, hide your credit cards to avoid the temptation of using them again. Once you pay off certain credit card balances, cut up the cards and close the account. You generally need only one credit card for your day to day needs, and choosing one that has a lower interest rate or a great rewards program will save you a lot of money down the road.
Know when to get help
If you are so overwhelmed with your debt that you feel you will never get out of it, get help. Seeking the advice of a credit counsellor is the best first step towards digging yourself out of that debt hole.
Our certified debt counsellors can help you understand your best options. Whether it be to secure a consolidation loan, create a budget with a practical debt repayment plan, or file for bankruptcy, we will review all of your choices with you.
To get a free consultation today, please contact us.