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Do you recall receiving your first credit card? You undoubtedly felt as if you had financial independence in the palm of your hands. You might remember how thrilling it was to swipe that thin piece of plastic for the first time. Perhaps you enrolled because you were bored with your ramen noodle diet in college or university.
Probably a car breakdown prompted you to break down as well. Forcing you to ask for a loan so that you can finance the repair. “Financial independence is mine!” you undoubtedly thought in either case.
However, one card multiplied into two, and two multiplied into twenty. Your vision of unrestrained spending has now turned into a nightmare of enormous debt, exorbitant fees, and collection calls. If this describes you, rest assured that you are not alone. In non-mortgage debt, the average Canadian owes more than $22,000 today!
The good news is that you and millions of other people like you can obtain help getting out of debt. Here’s how to get out of debt and live a debt-free life, with helpful hints and ideas along the road.
How to Get Out of Debt on a Low Income
It’s time to pay off debt now that you’ve recognized which credit cards are digging the largest holes in your pockets!
There are three common methods for reducing debt and paying it off on your own:
1. The Snowball Technique
The snowball strategy requires you to pay off the debt with the smallest sum first, regardless of interest rate, while continuing to make minimum payments on all other loans and credit cards. When that loan is completely paid off, you go on to the next smallest debt, and so on.
Some people prefer this type of debt repayment since it allows them to pay off lesser debts fast, depending on the size of the sum, which can be incredibly motivating, especially when they’re just getting back in control of their finances.
Having these quick triumphs will help you stay motivated to pay off your other obligations in the future.
2. Avalanche Technique
The avalanche strategy requires you to prioritize paying off the debit or credit card with the highest interest rate first while continuing to make minimum monthly payments on all other debts and credit cards. You go on to the next highest-interest-rate card once it’s paid off in full.
Although this technique lowers the rate at which your existing outstanding debt grows owing to interest, it rarely provides the instant delight of paying off a credit card bill quickly.Both the snowball and the avalanche methods have proponents and merits. It all boils down to your own finances, as well as your personality to some level.
When using one of these methods, it’s crucial to remember to make additional payments whenever possible. You can make more than one payment every month, despite what credit card companies would have you believe. So, if you get a windfall, put it toward the card. If you’ve already made the minimum payment for the month, the entire amount of the extra money will be applied to your debt’s actual balance! You may be able to save hundreds of dollars in the interest charges.
3. Debts Consolidation
Debt consolidation is the process of consolidating many debts into a single payment that is easier to manage.
Of course, there are a variety of approaches to this. A home equity loan, a line of credit, credit card balance transfers, or debt consolidation loans, for example, can all be used to combine debt.
Unfortunately, because they demand a lot of discipline, many debt consolidation strategies can lead to you getting deeper into debt, while others may not be a possibility owing to poor credit or little income.Another option for reducing your debt is to enroll in a debt consolidation program. A Debt Consolidation Program is a personalized strategy that follows a simple method to help you live a stress-free, debt-free life.
It entails consolidating all of your unsecured debts, such as credit card debt and payday loans, into a single monthly payment. Other advantages of a Debt Consolidation Program include the elimination or reduction of interest on your debt, as well as the elimination or reduction of collection calls. You will also receive free one-on-one counseling from a licensed Credit Counsellor who will guide you through your debt-free journey by providing budgeting guidance tailored to your unique circumstances. Most Debt Consolidation Programs can get you out of debt in as little as 3-5 years!
The best part is that you’ll finally get out of debt on a low income.
The Bottom Line
At Lionsgate, we specialize in helping people obtain funding private mortgages for land purchases as well as for other real estate transactions. If you are looking to buy land in Canada, get a mortgage or apply for a loan, leave us a message and we will try to connect you with local realtors and sourcing for financing.
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