Many people make resolutions for the New Year, which tend to last a couple weeks and are then forgotten about. If your resolution is to find debt relief, start the New Year right by making a plan to erase your debt completely. Now is the time to take a serious look at your financial health and start exploring your options to lose those unnecessary debt ‘pounds.’ Whether you have been carrying this ‘weight’ for a long time or just packed it on recently, our team of Licensed Insolvency Trustees in Vancouver have the tools to help you shed it!
Questions to Ask to Help Relieve Debt
A good starting point for your debt relief journey in Vancouver is to look at your current debts vs. how quickly you’re paying back the principal amount i.e. the amount you originally agreed to pay back. Some questions to help you start this process include:
- How long will it take you to become debt-free at your current rate of repayment?
- How much is it costing you each month to maintain your debts?
- Are your monthly payments reducing your debt or are you solely paying the interest with your total debt remaining the same?
Try one of these calculators to help you better understand how quickly you’re paying back your debts.
Why is this an important first step? Take a look at the example below.
Credit Card Debt Example
A credit card’s basic interest rate is 19.9%. At the very least, your minimum payment will be:
- A flat dollar amount, usually $10, plus any interest and fees
- A percentage of your outstanding balance (typically 3%)
For this example, imagine you are carrying credit card debts that totals $20,000 and are paying $600 a month. This is most likely the required minimum when the maximum credit is utilized. It will take you four years and one month to pay off your debt with this monthly payment. It will also cost you $9,355 in interest. These metrics do not include any additional charges you tack on those credit cards.
With additional debts added onto your credit cards, it will take longer and cost more for you to become debt free. Not only this, but carrying a high-volume of debt also means you are giving up the chance to save money, which in the short term affects your ability to take care of household costs, car maintenance, surprise expenses, and more. In the long-term your debt can hold you back from having a comfortable retirement and secure financial future. Your debt may even affect your relationships or employment advancement.
If you were able to save or even invest the same $600 each month, in four years, you would have more than $28,800 in the bank.
Utilize this calculator to help you manage your debt and saving goals.
Review Your Spending Habits
Next, take a look at your spending habits. Some key areas you can reflect on include:
- Are you holding unnecessary expenses, such as a storage unit you’ve forgotten about completely?
- Are there expense you could minimize, such as the number of subscriptions you hold?
- Do you over-spend on conveniences, such as delivery over pick-up and even coffee on your commute to work?
- Are you often emotionally spending or purchasing things on an impulse?
These are all great starting points to help build a healthy monthly budget. But, if you’re in deep with debt, this likely won’t help you realize the debt relief resolution you were hoping for in the New Year.
Deep in Debt – Your Debt Relief Options
To shed your heavy debt, you’re going to need to make some big changes, and it starts with asking for help.
Don’t be afraid to ask for assistance to get your debt under control. Our experienced Licensed Insolvency Trustees have over 60 years of experience. As a local Vancouver and Surrey business, and neighbor in your community, our team prioritizes one thing – you. We are ready to listen with compassion and respect to help you find a plan that works best for you. Some options our team may offer you could include:
- Debt consolidation – if your total debts are less than 40% of your net income.
- Debt management programs – reduces or stops interest while you pay your debts in full.
- Consumer proposal– a structured payment plan for a reduced amount agreed upon by your creditors.
- Division 1 Proposal – if your debts are more than $250,000 (excluding mortgage).
- Bankruptcy – if you can no longer repay your debts.
Can Filing for Bankruptcy Negatively Impact Me?
If filing for bankruptcy is the only solution for you, it’s not the worst case scenario, living trapped in debt that gets heavier and heavier is. There are many misconceptions about bankruptcies, which may have been true 50 years ago but are no longer the case today. Our Licensed Insolvency Trustees are here to help you understand how each of these debt relief options will affect you now and in the future.
Start Your Debt Relief Journey in Vancouver Today
We understand it may be difficult to make this decision, and you may have some budgeting aches for a little while, this too will go away. Each time you notice yourself getting financially stronger and more flexible, you are going to be thankful for making the choice to get financially healthy. The sooner you start the sooner you will get through this. Don’t waste another second, take advantage of our free consultations and start your debt relief journey today.
At Crowe MacKay & Company, we have over 60 years of experience and offer free initial consultations. If you have any questions regarding the information above, contact our office today and start your debt relief journey.
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This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual needs. This publication is not a substitute for obtaining personalized advice.