Debt Relief: Creating a Weekly Financial Checklist

We can all use a little help sometimes, and when it comes to financial planning, some of us are more likely than others to need that helping hand. If you are struggling with debt and need some debt relief, there are countless ways that this can be done – but sometimes it starts with a little push at home.  Thinking about debt relief and actually finding it are often two different things, and so it is helpful just to have a starting point.

Here is that starting point. Use this debt relief weekly financial checklist for September and see just how much you can accomplish on your own! Take some time at the beginning of each week and work through these points.

First week of September: Sit down and create a budget. Include all of your monthly expenses (and we mean all) and all of your monthly income. Make a chart that will help you better determine where your extra cash is going, and think about the best ways to bring that expense number down.  Set out jars with cash for each category of expense and live strictly on cash for the month, setting aside the amount that meets your expenses, but on a budget.

Second week of September: Check your credit report. When you start to pay off debt and subsequently rebuild your credit, one of the most important things that you can do is check your current credit status. This is actually something that you should do a few times a year, not only to see where you stand credit-wise, but also to ensure that all information contained within your credit report is accurate. If it is not, you need to deal with discrepancies immediately.

Third week of September: Devise a long-term plan to pay off your debt. If most of your debt is in the form of credit cards, think about paying off the one with the highest interest rate first – after all, it is the one that is actually costing you the most money.

Fourth week of September: Go back to that chart created at the beginning of the month and see how well you were able to stick to it. Take any money accumulated from leftovers in the jars and put it right onto your debt. Give yourself a pat on the back, and get ready for next month!

If your leftover cash wasn’t what you had hoped, or following the budget was just a bit too difficult, it might be time to head to a professional for some help. DebtCare has you covered. Call us today at 1-888-890-0888.

Fast Cash = Big Problems: The Notorious Payday Loan

It seems as though payday loans are becoming alarmingly more prevalent for many individuals looking for a quick financial fix. But borrower beware: if you are considering a payday loan to help with some upcoming bills, or to make a big-budget purchase, you might want to think again. 

There has been a great deal in the news lately, and for good reason, regarding the actual borrowing consequences for payday loans. Sure, $100 for $20, as their advertisements typically claim, may sound like an okay deal, but in the long term, these loans are far too often much more costly than they initially appear to be. Payday lenders are actually quite infamous for their sky-high interest rates, thus their propensity for sending borrowers into a self-destructive cycle of debt that can be incredibly hard to get out of.

Here is an example of why: It is the end of the month, and payday is not for another week, but you find yourself strapped for cash with a few bills still outstanding and no way to cover them. Looking for some fast cash, you head to a payday loan centre and leave with $1000 in about 15 minutes, after agreeing to terms of $20/$100 (so about $200 to cover the entire loan). Time goes by, and everything seems good at the end of the month, but then you realize you are on the hook for that cash. If you were strapped last month, the chances are quite high that things will be the same again this month. That means re-borrowing the money, and again paying that $200, and again being on the hook at the end of the month.

See the problem? The cycle is one that far too many people find themselves stuck in repeatedly, and without additional funds, can’t get out of. If you have been considering just how attractive these easy-to-get loans seem to be, you might also want to seriously consider, firstly, why they are so easy to get, and secondly, what the long term impacts are if you are not 100% certain you’ll be able to pay them back in a short period of time.

So what are your options if you are already stuck in the revolving payday loan of your nightmares? Well, you have a few options. If a payday loan is just one of your financial worries, and is more like the proverbial cherry on top of your rotten debt sundae, you might think about the benefits of a consumer proposal or bankruptcy. And, since a payday loan is a form of unsecured debt, it is often included in a bankruptcy or consumer proposal.

For more about how bad payday loans actually are, or for other debt help, DebtCare Canada is here to help you. Contact us today by calling 1-888-890-0888.

Say Goodbye to Credit Card Debt

With Canada’s consumer debt continuing to rise, although at a slower rate, it is no surprise when individuals come to us looking for credit card debt relief. The ease with which credit card companies extend credit, even to those with less than stellar credit, and with credit limits far exceeding what is necessary, it can be really easy to get in over your head relatively quickly. And with all of that spending, at month’s end, or a few months down the road, you might find yourself in the common position of wondering how you are ever going to pay down those debts!

Because they carry such high interest rates, and because the balance is revolving (meaning once you have paid off a portion, that credit becomes available again), credit cards are often the most difficult types of debt to pay off. But there is always hope. Start by paying more than the minimum payment each month, as much as you can. The minimum payment is typically little more than interest, and therefore not much is actually going onto the principal.

Don’t have enough extra each month to pay that much more than the minimum on more than one card? One of the best ways to deal with this situation is to start with the card with the highest interest rate and pay as much as possible. Since this card is costing you the most, work harder at paying it off. Once it is paid off, move to the one with the next highest rate.

So how can you cut down that monthly spending in order to find the cash to add to each month’s payment and cut down your credit card debt? What about taking advantage of these useful, but all too often ignored, money saving strategies:

-        Have a yard sale – you have all of that stuff lying around anyways – why not get rid of it and make some money in the process.

-        Save your change – when you empty your pockets, instead of using that money tomorrow, put it in a jar and save it up – you might be surprised how fast it actually grows.

-        Make your own lunch and brew your own coffee – sure, this might mean a bit of extra time and effort, but just think about the fact that that $2 a day coffee habit is actually costing you $40 a month!

-        Coupon clip – check the flyers, look online, and search for deals in store. Again, this might take a bit of extra time but the savings in your pocket can actually be well worth it!

-        Visit the library – don’t think that the theatre or overpriced bookstore are your only options for entertainment. Your local library probably has a great selection that is largely underused – and free!!

-        Plan your meals and groceries in advance – buying everything at once lets you take advantage of bulk buys, and can mean useful ways to stretch the budget and the food.

Credit card debt can be a nightmare to deal with, but with the right support and guidance it is possible to pay it off. DebtCare can help. Call us today at 1-888-890-0888.

Know the Difference: Secured Versus Unsecured Debt

In the world of finance, there are so many different types of debt that it can be really tough to wrap your head around those differences. Furthermore, when you find yourself struggling to make the minimum payments or trying diligently to get out of debt those subtle differences can be easy to ignore.  In an effort to help you make some sense of those differences, we thought we’d take the time to explain two of the most common types, secured and unsecured debt, and what those differences mean to you.

Secured Debt: When a debt is secured, this means that an asset has been used as collateral when borrowing the money. This gives the lender more security and reduces his/her risk against default.

When you take out a secured debt, but fail to make payments on it, the lender then has a recourse to secure the money owed (usually that means selling that asset to recover the losses).
For most people, the largest secured loan is a mortgage. When you take out a mortgage, this loan is secured by the house itself. However, there are several other types of common secured debts, including car loans or loans secured by investments (i.e. property).

In bankruptcy, most secured loans are not released, meaning they are not covered by the bankruptcy contract, and thus if you claim bankruptcy these are not included in the term or payments.

Unsecured Debt: When a debt is unsecured, this typically means that there is no security behind a loan, and thus the lender runs a higher risk of not recovering their money if you default on a loan.  Since there is more risk, this usually means that the interest rate on unsecured debt is significantly higher than secured debt.

There are several types of unsecured debt, but the most common is credit card debt. Other types include student loans, payday loans, or other bills (i.e. utilities).

Unlike a secured debt where your creditor can just use the collateral to recoup their losses, with unsecured debt this is not an option. However, they may use other avenues, such as a collection agency, garnishing your wages, or placing a lien on your assets until you have paid off the debt.

In bankruptcy, these are the types of debts that are included, and thus wiped out in exchange for a
monthly payment in bankruptcy.

When you are in debt, it usually makes sense to pay off more of those secured debts first because there is often more to lose if you default on these. However, when looking to make larger than minimum payments, start with the unsecured debts because they often carry much higher interest rates.

For more about secured vs. unsecured debt, and how to prioritize when trying to get out of debt, please contact DebtCare Canada today by calling 1-888-890-0888.