How do you plan to get your debt under control?Feb 01, 2016
We have just come through the eye of the perfect financial storm. Interest rates are historically low, credit is very easy to access, temptations abound on the internet for gifts, vacations, vehicles and just about every other type of consumerism that you can imagine. Is this great news or a financial nightmare? What does this perfect storm mean for Canadians who are already overextended and need to get their debt under control? For many Canadians, January is a time of new beginnings, resolutions, and even relief at having made it through the gift giving season. For others, this time of year is a source of stress and worry due to the additional burden that holiday spending placed on their overall debt load.
It was recently reported by the Parliamentary Budget Office that the debt to income ratio reached an all-time high of 171 per cent. There’s no doubt that many Canadians are overextended. For every one dollar that the average Canadian earns, he or she owes $1.71. It’s time for a change or we are headed for a real crisis. Now is the time to take hold of your finances and get your debt under control. Aside from all of those temptations that you are seeing on the internet, there is also some excellent information on debt relief options that can help you improve your financial picture.
Understand your financial situation
The first step is to understand what your true financial situation looks like. To do this you should do a few things. There are tools you can access on the Financial Consumer Agency of Canada (FCAC) website which will assist you with preparing a budget. The FCAC also has guidelines and resources that can help you determine how much your debt is costing you. Download an assessment form that will let you list all of your assets and liabilities to calculate your net worth. Use an online debt calculator to help you determine how much interest you’re paying on your credit card debt or loans and how long it will take you to pay off your debt, based on your monthly payment(s).
Learn about your debt control options
Once you have this information compiled, there are a number of resources that will help you learn more about different debt control options. You can find tools and tips online for getting out of debt on your own, using strategies like this 5-Step Plan. The FCAC website provides helpful details on options for getting help with your debt.
For personal debt advice, your best course of action is to schedule a free initial consultation with a debt relief professional like an insolvency counselor or Licensed Insolvency Trustee to review your financial situation. A Trustee will explain all of your debt control options, including debt consolidation, credit counselling, consumer proposals and bankruptcy. A consumer proposal, is a settlement offer to creditors, most often for a percentage of your total debt, with no interest or fees on top of the monthly proposal payment. This can be a way for you to turn a holiday spending hangover into a fresh financial start.
Many people do not realize the stress that can be created by debt and the impact it can have on your daily life. Constant calls from collectors to your home and work, even to your relatives or neighbors can be a terrible cause of stress. As a Licensed Insolvency Trustee, I assist people every day who say that they feel like a huge weight has been taken off their shoulders once they’ve taken their debt in hand; they are finally able to get a good night’s sleep. Don’t wait to get your fresh financial start.
Is debt control an issue for you? How to you plan to tackle your debt in 2016? #LetsTalkDebt #BDOdebtrelief