How to manage debt and get back to financial health

In this article you will learn about:

• Good vs bad debt
• Consolidating debt
• Debt management tips
• Where to get help

Identify your debts and trouble areas

Create a list of all your debts and for each one, figure out what you owe, your monthly payments, and the interest rate.

Examples may be your mortgage, or personal loans for a vehicle or RV. Other debt to consider are taxes, payday loans, student loans, and of course your credit card.

Once you have compiled your list, you can start to see which debt are ‘good’ or necessary and which ones aren’t serving you. From there you can make a plan of action.

One way to help manage debt is through consolidation

Consolidating your debts can be done by applying for a loan or line of credit to pay off as much of your high interest debt as possible. You then would be paying one payment as opposed to each debt individually. This benefits you because you will be paying a loan with a traditionally lower interest rate. You will start saving money that can be put towards your debt faster. 

When considering a consolidation loan, you need to make sure not to use the credit you are working on or you will acquire even more debt than you had before.

Consolidation loans don’t affect your credit rating so long as you make your payments on time.

Shop around at financial institutions for a consolidation loan and make sure to compare interest rates with lines of credit. Be aware of predatory companies offering consolidation loans but have much higher interest rates after a certain amount of time has passed.

Once you have a good plan in place, focus on decreasing your debt 

Keep track of your daily spending and find ways to make reductions. The more money you learn to save the faster you will get yourself out of debt. Think- Do I need this or want it?

Make small changes like making your coffee at home and bringing your lunch to work can really add up.

Keep your credit cards in your wallet! Until you have your debt in a manageable place, keep those cards in their little wallet home.

Avoid those too good to be true deals. If you can’t afford it now, you won’t be able to afford it when the term is due and suddenly the interest rate jumps far from zero.

Don’t struggle, help is there when you need it

Sometimes, you need help making decisions on what to do next and expert advice is needed. You are not alone in your journey back to credit health and there are plenty of professionals out there to help you. 

Here is a list of dedicated professionals you can rely on:

• Financial advisors
• An accredited NOT-FOR-PROFIT credit counsellor
• A Licensed Insolvency Trustee